September 30, 2014 Interim report on operations 2014

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(1)2014 Innovation. MARKET. Investments Growth. JOB. Interim report on operations September 30, 2014. www.a2a.eu. WorldReginfo - dc4653d2-d899-4254-860a-40e1a9dca9e4. 4 SECTORS.

(2) Interim report on operations – September 30, 2014. Contents. . Corporate boards. Key figures of the A2A Group. 6. Areas of activity. 7. Geographical areas of activity. 8. Group structure. 9. Financial highlights at September 30, 2014. 11. Shareholdings. 12. A2A S.p.A. on the Stock Exchange. . Consolidated results and report on operations. 16. Summary of results, assets and liabilities and financial position. 23. Significant events during the period. 33. Significant events after September 30, 2014. 36. Outlook for operations. . Consolidated financial statements. 38. Consolidated balance sheet. 40. Consolidated income statement. 42. Consolidated statement of comprehensive income. 43. Consolidated cash-flow statement. 44. Statement of changes in Group equity. . 1. Notes to the Interim report on operations. 48. General information on A2A Group. 49. Interim report on operations. 50. Financial statements. 51. Basis of preparation. 52. Changes in international accounting standards. 59. Scope of consolidation. 60. Consolidation policies and procedures. WorldReginfo - dc4653d2-d899-4254-860a-40e1a9dca9e4. 3.

(3) Interim report on operations – September 30, 2014 Contents. 69. Seasonal nature of the business. 70. Results sector by sector. 74. Notes to the balance sheet. 91. Net debt. 92. Notes to the income statement. 100. Earnings per share. 101. Significant non-recurring events and transactions. 102. Guarantees and commitments with third parties. 103. Other information. 130. 1. List of companies included in the consolidated financial statements. 132. 2. List of shareholdings in companies carried at equity. 134. 3. List of available-for-sale financial assets. 2. Attachments to the notes to the Interim report on operation. 138. . Changes in legislation Changes in legislation. Scenario and market. 170. Macroeconomic scenario. 172. Energy market trends. . Analysis of main sectors of activity. 178. Energy Sector. 183. Environment Sector. 186. Heat and Services Sector. 189. Networks Sector. 193. Other Services and Corporate. 196. 210. Risks and uncertainties Risks and uncertainties. Certification by the Manager in charge Certification by the Manager in charge. This is a translation of the Italian original “Resoconto intermedio di gestione – 30 settembre 2014” 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 - dc4653d2-d899-4254-860a-40e1a9dca9e4. .

(4) Interim report on operations – September 30, 2014. Corporate Boards. BOARD OF DIRECTORS CHAIRMAN Giovanni Valotti DEPUTY CHAIRMAN Giovanni Comboni CHIEF EXECUTIVE OFFICER Luca Camerano DIRECTORS Antonio Bonomo Stefano Cao Michaela Castelli Elisabetta Ceretti Mario Cocchi Luigi De Paoli Fausto Di Mezza Stefano Pareglio Secondina Giulia Ravera. 3. BOARD OF STATUTORY AUDITORS. STANDING AUDITORS Cristina Casadio Norberto Rosini SUBSTITUTE AUDITORS Onofrio Contu Paolo Prandi. WorldReginfo - dc4653d2-d899-4254-860a-40e1a9dca9e4. CHAIRMAN Giacinto Gaetano Sarubbi.

(5) WorldReginfo - dc4653d2-d899-4254-860a-40e1a9dca9e4.

(6) WorldReginfo - dc4653d2-d899-4254-860a-40e1a9dca9e4. Key figures of the A2A Group.

(7) Interim report on operations – September 30, 2014. 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:. Sectors of the A2A Group Energy. Environment. eat and H services. Networks. ther Services O and Corporate. Thermoelectric and hydroelectric plants. Collection and street sweeping. Cogeneration plants. Electricity networks. Other services. Energy management. Treatment. District heating networks. Gas networks. Corporate services. Sale of electricity and gas. Disposal and energy recovery. Sale of heat and other services. Integrated water cycle. This breakdown into sectors reflects the organization of financial reports regularly analyzed by management and the Board of Directors in order to manage and plan the Group’s business.. WorldReginfo - dc4653d2-d899-4254-860a-40e1a9dca9e4. 6.

(8) Interim report on operations – September 30, 2014. Geographical areas of activity. Updated through to September 30, 2014 December 31, 2012 Hydroelectric plants Thermoelectric plants Cogeneration plants Waste treatment plants Technological partnerships. WorldReginfo - dc4653d2-d899-4254-860a-40e1a9dca9e4. 7.

(9) Interim report on operations – September 30, 2014. Group structure. A2A S.p.A. 79.50%. 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%. Edipower. 8. Abruzzoenergia. A2A Energia. 70.00%. 100.00%. A2A Alfa. Aspem Energia. 50.00%. 50.00% 33.33%. 43.70%. 50.00%. Ergosud. Premiumgas Lumenergia. EPCG. A2A Ambiente A2A Calore & Servizi. 100.00% 60.00% Amsa. Proaris. 100.00% Aprica. Metamer. 39.49%. A2A Reti Elettriche. 100.00% A2A Ciclo Idrico. 90.00% Aspem (2). A2A Reti Gas. Selene. 100.00% 100.00% A2A Servizi alla A2A Logistica distribuzione. 91.60% Retragas. 21.94%. ACSM-AGAM. 74.50% Camuna Energia. 49.15%. Rudnik Uglja ad Pljevlja. ASVT (1). Areas of activity Energy Environment Heat and Services. (1) Of which 0.38% held through A2A Reti Gas S.p.A.. (2) There are put options on an additional interest in the company’s share capital.. Networks Other companies. This chart shows the most significant shareholdings of the A2A Group. See attachments 1, 2 and 3 for full details of shareholdings.. WorldReginfo - dc4653d2-d899-4254-860a-40e1a9dca9e4. 100.00%. A2A Trading.

(10) Interim report on operations – September 30, 2014. Financial highlights at September 30, 2014 (*). Net profit_______________________________________________. 159 million euro. Income statement figures. 01 01 2014 09 30 2014. 01 01 2013 09 30 2013 (a). 3rd Quarter 2014. 3rd Quarter 2013 (a). Revenues. 3,632. 4,080. 1,050. 1,235. Operating expenses. Millions of euro. (2,372). (2,744). (671). (857). Labour costs. (477). (497). (147). (149). Gross operating income. 783. 839. 232. 229. Depreciation, amortization, provisions and write-downs. (364). (432). (115). (152). Net operating income. 419. 407. 117. 77. 11. 17. 11. 20. Financial balance. (132). (134). (36). (53). Result before taxes. 298. 290. 92. 44. Income taxes. (127). (118). (26). (24). –. –. –. –. (12). (13). (4). 6. Result from non-recurring transactions. Net result from discontinued operations Minorities Group result of the period Gross operating income/Revenues. 159. 159. 62. 26. 21.6%. 20.6%. 22.1%. 18.5%. (a) According to the new adopted Income Statement structure the comparative figures for the period January-September 2013 and third quarter 2013 have been reclassified.. (*) The figures serve as performance indicators as required by CESRN/05/178/B.. 9. WorldReginfo - dc4653d2-d899-4254-860a-40e1a9dca9e4. Gross operating income__________________________________. 3,632 million euro 783 million euro. Revenues_______________________________________________.

(11) Interim report on operations – September 30, 2014 Financial highlights at September 30, 2014. Balance sheet figures Millions of euro. 09 30 2014. 12 31 2013. Net capital employed. 6,874. 7,222. Total equity attributable to the Group and minorities. 3,408. 3,348. (3,466). (3,874). Consolidated net financial position Consolidated net financial position/Equity attributable to the Group and minorities. 1.02. 1.16. Consolidated net financial position/Average market capitalisation. 1.29. 1.95. 01 01 2014 09 30 2014. 01 01 2013 09 30 2013. Net cash from operating activities. 724. 559. Net cash used in investing activities. (201). (152). 523. 407. Financial data Millions of euro. Free cash flow. Average market capitalization in 2014 _______________________. 2,689 millions of euro. 10 09 30 2014. 12 31 2013. Share capital (euro). 1,629,110,744. 1,629,110,744. Number of ordinary shares (par value 0.52 euro). 3,132,905,277. 3,132,905,277. Number of treasury shares (par value 0.52 euro). 26,917,609. 26,917,609. Key indicators. 09 30 2014. 09 30 2013. 0.350%. 0.333%. 107.01. 108.54. 1.36. 1.32. Average price of Brent crude (euro/bbl). 78.94. 82.39. Average price of coal (euro/tonne). 56.22. 61.46. Average 6-month Euribor Average price of Brent crude (US$/bbl) Average exchange rate euro/US$ (*). (*) Source: Italian Foreign Exchange Office. WorldReginfo - dc4653d2-d899-4254-860a-40e1a9dca9e4. Key figures of A2A S.p.A..

(12) Interim report on operations – September 30, 2014. Shareholding (*). Municipality of Milan Market 40.5%. 27.5%. 11 Municipality of Brescia UBS Group 2.0% Carlo Tassara 2.5%. 27.5%. WorldReginfo - dc4653d2-d899-4254-860a-40e1a9dca9e4. (*) Stakes higher than 2% (updated at September 30, 2014) Source: CONSOB.

(13) Interim report on operations – September 30, 2014. A2A S.p.A. on the Stock Exchange. A2A in figures (Italian Stock Exchange) 2,459. Average capitalisation in the first 9 months of 2014 (millions of euro). 2,689. Average volumes in the first 9 months of 2014:. 15,414,275. Average price in the first 9 months of 2014 (*). 0.858. Maximum price in the first 9 months of 2014 (*). 1.029. Minimum price in the first 9 months of 2014 (*). 0.737. Number of shares. 3,132,905,277. (*) euro per share Source: Bloomberg. A2A stock is also traded on the following platforms: Chi-X, BATS, Turquoise, Equiduct, Sigma-X, BOAT OTC, LSE Europe OTC, BATS Chi-X OTC. On June 26, 2014 A2A S.p.A. distributed a dividend equal to 0.033 euro per share.. WorldReginfo - dc4653d2-d899-4254-860a-40e1a9dca9e4. 12. Market capitalisation at September 30, 2014 (millions of euro).

(14) Interim report on operations – September 30, 2014 A2A S.p.A. on the Stock Exchange. Rating Current M/L Term Rating Standard & Poor’s. Short Term Rating Outlook. Moody’s. M/L Term Rating Outlook. BBB A–2 Negative Baa3 Stable. Source: rating Agencies. A2A forms part of the following indices FTSE MIB STOXX Europe EURO STOXX WisdomTree S&P Developed Ex-US 13. Ethical Indices ECPI Ethical Index EMU Axia Sustainable Index Solactive Climate Change Index FTSE ECPI Italia SRI Benchmark Standard Ethics Italian Index Source: Bloomberg. WorldReginfo - dc4653d2-d899-4254-860a-40e1a9dca9e4. Moreover, A2A has been included in the Ethibel Excellence Investment Register..

(15) Interim report on operations – September 30, 2014 A2A S.p.A. on the Stock Exchange. A2A in the first nine months of 2014 1.10. 140,000,000 120,000,000. 1.00. A2A (€/share) A2A (€/share). 100,000,000 140,000,000. Volumes. 1.10 0.90. 60,000,000 100,000,000 40,000,000 80,000,000. 0.90 0.70. 20,000,000 60,000,000. 0.80 0.60 Ja n 0.70 -14 0.60. Ja. Fe. Ma. b-. Fe. n-. b-. 14. 14. Ma. Ma. r-. 14. 14. Ma. Ju. 14. Au. l-. 14. Volumes. 130 (Price December, 30 2013 = 100). g-. 14. Price n-. 14. Au. l-. 14. Ju. y-. 14. Ju. n-. Volumes r-. 14. Ju. y-. 14. Ap. r-. A2A vs FTSE MIB. g-. 14. 14. Se. 0. p-. Se. 14. 40,000,000 20,000,000 0. p-. 14. Price. 125 120. Historical volatility in the first 9 months of 2014: A2A: 30.5% FTSE MIB: 20.2%. 115 130 110 125 105 120 100 115 95 110 90 105. 85 100 8095. Ja. n 90 -14 85. 80. Ja. n-. 14. Fe. b-. Fe. 14. Source: Bloomberg. b-. Ma. 14. r-. Ma. 14. r-. 14. Ap. Ma. r-. y-. 14. A2A. 14. Ap. r-. 14. Ma. A2A. y-. Ju. n-. 14. Ju. l-. FTSE MIB. 14. Ju. n-. 14. 14. Ju. FTSE MIB. l-. 14. Au. g-. Au. 14. g-. Se. 14. p-. Se. 14. p-. 14. WorldReginfo - dc4653d2-d899-4254-860a-40e1a9dca9e4. 14. Ap. r-. 14. Volumes. 80,000,000 120,000,000. 1.00 0.80.

(16) WorldReginfo - dc4653d2-d899-4254-860a-40e1a9dca9e4. Consolidated results and report on operations.

(17) Interim report on operations – September 30, 2014. Summary of results, assets and liabilities and the financial position. Results The results for the first nine months of 2014 are not comparable with those for the corresponding period of the previous year as the figures for 2013 include the contribution coming from 77% of the production of the thermoelectric and hydroelectric plants of Edipower S.p.A. until October 2013. The production of the Turbigo thermoelectric plant and the Tusciano hydroelectric unit are not included from November 2013 onwards following the non-proportional demerger from Edipower S.p.A. into Iren Energia S.p.A., while the other plants of Edipower S.p.A. made a full contribution. Millions of euro. Revenues. 01 01 2014 09 30 2014. 01 01 2013 09 30 2013 (*). Change. 3,632. 4,080. (448). 3,464. 3,922. (458). 168. 158. of which: - Revenues from the sale of goods and services - Other operating income Operating expenses. 10. (2,372). (2,744). Labour costs. (477). (497). 20. Gross operating income. 783. 839. (56). (348). (365). 17. (16). (67). Depreciation, amortization and write-downs Provisions Net operating income Results from non-recurring transactions Net financial charges Affiliates Result from disposal of other shareholdings. 419. 407. 11. 17. (139). (142). 7. 8. 372. 51 12 (6) 3 (1). –. –. –. Result before taxes. 298. 290. 8. Income taxes. (127). (118). (9). 171. 172. (1). –. –. Result after taxes from operating activities Net result from discontinued operations Minorities. (12). Group result of the period. 159. (13) 159. – 1 –. (*) The comparative figures for the period from January to September 2013 have been reclassified on the basis of the new income statement structure.. WorldReginfo - dc4653d2-d899-4254-860a-40e1a9dca9e4. 16.

(18) Interim report on operations – September 30, 2014 Summary of results, assets and liabilities and the financial position. The A2A Group earned revenues of 3,632 million euro in the first nine months of 2014, a decrease of 448 million euro over the corresponding period of the previous year due mainly to a contraction in sales of energy for heating use resulting from the relatively high temperatures during the period and a fall in sales of electricity. Key quantitative data for the period contributing to the formation of these revenues, with comparative figures for the first nine months of 2013, are as follows: 09 30 2013. 20,081. 17,402. Electricity sold on the Power Exchange (GWh). 8,937. 9,801. Electricity sold on foreign markets (GWh). 9,945. 8,628. Electricity sold – EPCG (GWh). 2,888. 3,118. Gas sold (Mcm). 2,068. 1,648. Heat sold (GWht). 1,249. 1,568. Electricity distributed (GWh). 8,066. 8,301. Electricity distributed – EPCG (GWh). 1,810. 1,897. Gas distributed (Mcm). 1,139. 1,365. Water distributed (Mcm). 45. 48. Water purified (Mcm). 26. 27. 1,891. 1,875. 09 30 2014. 09 30 2013. 3,841. 5,501. 983. 919. Waste disposed of (Ktonne) Production details Thermoelectric production (GWh) Thermoelectric production – EPCG (GWh) Hydroelectric production (GWh). 4,765. 3,671. Hydroelectric production – EPCG (GWh). 1,159. 1,969. Heat production (GWht). 1,305. 1,618. Electricity produced by cogeneration (GWh). 157. 196. Electricity sold coming from waste-to-energy and biogas plants (GWh). 830. 831. “Gross operating income” of 783 million euro decreased by 56 million euro over the first nine months of 2013.. 17. WorldReginfo - dc4653d2-d899-4254-860a-40e1a9dca9e4. Electricity sold to wholesale and retail customers (GWh). 09 30 2014.

(19) Interim report on operations – September 30, 2014 Summary of results, assets and liabilities and the financial position. The following table provides an analysis of this figure by business sector: 09 30 2014. 09 30 2013. Energy Sector. 377. 399. Environment Sector. 165. 217. Heat and Services Sector. 34. 48. Networks Sector. 221. 193. Other Services and Corporate Sector. (14). Total. 783. Millions of euro. (18) 839. The Gross Operating Income of the Energy Business equalled 377 million euro, a decrease of 22 million euro compared to the same period of the previous year. This reduction can essentially be attributed to the results of the subsidiary company EPCG which, although positive and amounting to 28 million euro, in this sector show a reduction of 26 million euro compared to the first nine months of 2013, which benefited from a higher hydroelectric production. Net of this effect, the Gross Operating Income of the Energy Business is essentially in line (+4 million euro) with the first nine months of the previous year: the greater margins achieved on the environmental certificates markets and the positive performance of the trading activity, together with the strong hydraulicity recorded in the first nine months of 2014 and careful management of the gas purchasing sources, partially offset the economic effects deriving from the drop in electricity prices on the wholesale markets. The Gross Operating Income of the Environment Business equalled 165 million euro, a reduction of 52 million euro compared to the first nine months of 2013. This performance can mainly be attributed, for 27 million euro, to the presence in the first nine months of 2013 of a positive element of income pertaining to the year 2012 relative to the sale price of electricity produced under the CIP 6 scheme and, for 24 million euro, to lower revenues due to the expiry of the CIP 6 agreement of the waste-to-energy plant in Brescia. Net of these components, the Gross Operating Income of the Business is in line with the same period of the previous year. The Gross Operating Income of the Heat and Services Business equalled 34 million euro, a decrease of 14 million euro compared to the first nine months of 2013. The reduction of the margin, relative to both the District Heating Sector and the Heat Management Sector, can essentially be attributed to the unusual climatic conditions recorded above all in the first quarter of 2014. The first months of 2013, on the contrary, recorded temperatures lower than the historical averages. This negative effect was only partially offset by the effective action of commercial development and by greater margins achieved from the sale of white certificates awarded for the management of the district heating service in the cities of Milan, Brescia and Bergamo.. WorldReginfo - dc4653d2-d899-4254-860a-40e1a9dca9e4. 18.

(20) Interim report on operations – September 30, 2014 Summary of results, assets and liabilities and the financial position. The margin of the Networks Business amounted to 221 million euro, up by 28 million euro compared to the same period of the previous year. The result of the first nine months of 2013, however, included the allocation of mobility charges relating to the corporate restructuring plan for around 10 million euro. Net of this effect, the Gross Operating Income of the Business is up by 18 million euro compared to the same period of the previous year. This increase can essentially be attributed to the electricity distribution sector: the application of Resolution 258/14/R/eel of AEEGSI published in June resulted in higher revenues allowed for the company A2A Reti Elettriche relative to the years 2012, 2013 and 2014. The contribution of the electricity distribution sector of the EPCG Group was positive due to the effect of the increase in the distribution tariffs. The “Result from non-recurring transactions” is positive by 11 million euro at September 30, 2014 and mainly incorporates, for 12 million euro, the execution of the exchange agreement between A2A S.p.A. and Dolomiti Energia S.p.A. which provided for the sale to A2A S.p.A. of Edipower shares owned by Dolomiti Energia in exchange for the sale of Dolomiti Energia shares held by A2A S.p.A. plus the balance in cash or assets for a total of 16 million euro. This income mainly derives from the difference between the value attributed. 19. to the shareholding in Dolomiti Energia S.p.A. within the scope of the exchange and the book value of the same in the consolidated financial statements of the A2A Group. In the corresponding period of the previous year this item was positive for 17 million euro and included, for 23 million euro, the result of the disposal of five small flowing water hydroelectric plants for an installed power of approximately 8 MW and, for 6 million euro, the negative effect of non-recurring charges incurred by the subsidiary company EPCG. The “Depreciation, amortization, provisions and write-downs” equalled 364 million attributable to lower amortisation and depreciation, to lower risk provisions related to surpluses recorded during the period in question following the resolution of some disputes with local Authorities and lower provisions for bad and doubtful debt as there was no longer any risk of not collecting certain receivables from customers for which provisions were made in previous years. Due to the effect of the dynamics explained above, the “Net Operating Income (EBIT)” equalled 419 million euro (407 million euro at September 30, 2013). “Net financial charges” equalled 139 million euro (142 million euro at September 30, 2013). The reduction compared to the corresponding period of the previous year, equal to 3 million euro, can be attributed to lower net payable financial charges on the debt for 33 million euro adjusted by the negative performance of the variation in the fair values of the financial derivative contracts for 30 million euro.. WorldReginfo - dc4653d2-d899-4254-860a-40e1a9dca9e4. euro (432 million euro at September 30, 2013). The decrease of 68 million euro is essentially.

(21) Interim report on operations – September 30, 2014 Summary of results, assets and liabilities and the financial position. “Affiliates” were positive for 7 million euro (8 million euro at September 30, 2013), and can mainly be attributed to the valuation, according to the equity method, of the shareholdings in associated companies. “Income taxes” in the period in question equalled 127 million euro (118 million euro at September 30, 2013). With reference to the reduction of the IRAP percentage the Group recalculated the value of the deferred tax assets and liabilities which resulted in an increase to the taxes for the period in question of 4 million euro. The “Group result for the period”, after the “Minorities” were deducted, came to 159 million euro (unchanged compared to September 30, 2013).. Financial position and assets The consolidated “Capital Employed” at 30 September 2014 amounts to 6,874 million euro and is covered by the Net Equity for 3,408 million euro and the net financial debt for 3,466 million euro. The “Working capital” amounts to 486 million euro, reduced by 255 million euro compared to December 31, 2013 mainly as a result of the reduction of the trade receivables. The “Net fixed assets” amounted to 6,388 million euro, down by 93 million euro compared to December 31, 2013. The “Net financial position”, equal to 3,466 million euro, improved by 408 million euro compared to December 31, 2013 following the positive generation of cash flow attributable to the operations, partially offset by the resources absorbed by the investments in tangible and intangible assets for 205 million euro and by dividends paid for 102 million euro.. WorldReginfo - dc4653d2-d899-4254-860a-40e1a9dca9e4. 20.

(22) Interim report on operations – September 30, 2014 Summary of results, assets and liabilities and the financial position. 09 30 2014. 12 31 2013. Net fixed capital. 6,388. 6,481. (93). - Tangible assets. 5,787. 5,930. (143). - Intangible assets. 1,310. 1,306. 135. 196. (302). (379). 77. 331. 372. (41). - Provisions for risks, charges and liabilities for landfills. (518). (605). 87. - Employee benefits. (355). (339). (16). of which with counter-entry to equity. (372). (379). Working capital. 486. 741. - Inventories. 350. 284. 66. - Trade receivables and other current assets (*). 1,682. 2,272. (590). - Trade payables and other current liabilities (*). (1,582). (1,872). 290. Millions of euro. Change. CAPITAL EMPLOYED. - Shareholdings and other non-current financial assets (*) - Other non-current assets/liabilities (*) - Deferred tax assets/liabilities. 4 (61). (255). - Current tax assets/tax liabilities. 36. 57. of which with counter-entry to equity. (11). (8). Assets/liabilities held for sale (*). –. –. of which with counter-entry to equity. –. –. 6,874. 7,222. (348). 3,408. 3,348. 60. 3,983. 3,942. TOTAL CAPITAL EMPLOYED. (21) –. 21. SOURCES OF FUNDS Equity Total financial position beyond one year Total financial position within one year Total net financial position of which with counter-entry to equity TOTAL SOURCES. (517). (68). 3,466. 3,874. 40. 31. 6,874. 7,222. 41 (449) (408) (348). WorldReginfo - dc4653d2-d899-4254-860a-40e1a9dca9e4. (*) Excluding balances included in the net financial position..

(23) Interim report on operations – September 30, 2014 Summary of results, assets and liabilities and the financial position. Millions of euro. NET FINANCIAL POSITION AT THE BEGINNING OF THE PERIOD. (3,874). 01 01 2013 09 30 2013 (4,372). Net result (**). 159. 148. Depreciation and amortization. 346. 362. Write-downs/disposals of tangible and intangible assets Affiliates. 5. 10. (7). (8) (29). Net taxes paid. (57). Change in assets and liabilities (*). 278. 76. Net cash from operating activities. 724. 559. Investments in tangible and intangible assets. (205). (194). Investments in shareholdings and securities. –. (3). Disposal of fixed assets and shareholdings. –. 42. Dividends received from shareholdings Net cash used in investing activities. 4. 3. (201). (152). Free cash flow. 523. 407. Dividends paid by the parent company. (102). (81). (4). (6). (106). (87). Dividends paid by subsidiaries Cash flow from the distribution of dividends Changes in financial assets/liabilities with counter-entry to equity NET FINANCIAL POSITION AT THE END OF THE PERIOD. (9) (3,466). 4 (4,048). (*) Excluding balances with counter-entry to equity. (**) The net result is stated excluding gains on the disposal of shareholdings.. WorldReginfo - dc4653d2-d899-4254-860a-40e1a9dca9e4. 22. 01 01 2014 09 30 2014.

(24) Interim report on operations – September 30, 2014. Significant events during the period. The EIB provides financing of 115 million euro for A2A’s investment plan The European Investment Bank (EIB) and A2A have entered an agreement for a 15-year loan of 115 million euro for carrying out investments relating to integrated waste management and power generation. 23. Settlement of the dispute between A2A Reti Elettriche S.p.A. and ENEL On March 18, 2014 the dispute between A2A Reti Elettriche S.p.A. and ENEL regarding the value of the electricity distribution business in the Municipalities of Milan and Rozzano came to a close, as described in further detail in the section “Other information”. This business was acquired in 2002 as part of the liberalization measures included in Legislative Decree no. 79/1999, and in the absence of an agreement on the price with the seller ENEL the amount to be paid was calculated by an arbitration panel.. to A2A Reti Elettriche S.p.A... Amsa S.p.A. and the Municipality of Milan sign an agreement for 20142016 On April 3, 2014, Amsa S.p.A., a subsidiary of A2A S.p.A., entered a service agreement with the Municipality of Milan covering waste management, street and green area cleaning, special services and other services upon request (such as the removal of illegally dumped waste, reclamation and snow removal) for the period from January 1, 2014, to December 31, 2016.. WorldReginfo - dc4653d2-d899-4254-860a-40e1a9dca9e4. The settlement agreement agreed by the parties requires ENEL to repay 89.5 million euro.

(25) Interim report on operations – September 30, 2014 Significant events during the period. Moody’s upgrades its outlook to stable and keeps its rating for A2A S.p.A. unchanged at Baa3 Moody’s has upgraded its outlook for A2A from “negative” to “stable” and confirmed its long-term rating for the company at Baa3.. A2A S.p.A.: the Supervisory Board approves the 2013 financial statements Meeting on April 29, 2014 under the chairmanship of Prof. Pippo Ranci Ortigosa, the Supervisory Board approved the separate and consolidated financial statements for the year ended December 31, 2013 prepared by the Management Board. The Supervisory Board also approved the Management Board’s proposal for the distribution of a dividend of 0.033 euro per ordinary share, to be paid from June 26, 2014 (ex-dividend from June 23, 2014) with record date June 25, 2014, for submission to the Shareholders’ Meeting of June 13-16, 2014.. A2A S.p.A. and the trade unions sign an agreement for dealing with the crisis in the electricity production sector On May 23, 2014 A2A S.p.A. and the electricity sector trade unions signed an important agreement at the offices of Assolombarda. Given the critical situation on the electricity market, which deteriorated even further in the first quarter of 2014 (demand for electricity fell for the tenth consecutive quarter and has now reached 2002 levels), the objective was set to improve the competitiveness of the Group’s production plants while at the same time minimizing the effects on employment. This agreement, together with the confirmation of a number of lay-off schemes and other arrangements already used in 2013 with the aim of maintaining jobs (solidarity contracts and the state-subsidized “cassa integrazione ordinaria” scheme), envisages the early retirement of 120 workers and the start of a “mobilità” scheme to encourage the redeployment and retraining of the Group’s staff at a local level, including by way of transfer to business areas less affected by the crisis. During the various meetings with the unions, the company also illustrated the progress made by the “Networks Area” reorganization project (regarding A2A Reti Elettriche S.p.A., A2A Reti Gas S.p.A. and A2A Servizi alla Distribuzione S.p.A.) agreed with the unions in July 2013.. WorldReginfo - dc4653d2-d899-4254-860a-40e1a9dca9e4. 24.

(26) Interim report on operations – September 30, 2014 Significant events during the period. This project also has the aim of increasing the competitiveness of the companies involved through job retraining and the development of skills already to be found in the Group. When fully implemented the project will create new job opportunities for around 50 people, who will partly be selected from within the Group and partly by hiring around 30 young graduates and high school leavers over the next two years. This operation has led to the recognition of a lay-off provision of approximately 9 million euro.. A2A S.p.A.: lists submitted for the appointment of the Board of Directors and the Board of Statutory Auditors The following lists of candidates were submitted on May 20, 2014:. For the Board of Directors:. 25. The Municipality of Brescia and the Municipality of Milan put forward the names of the following persons: Giovanni Valotti (as Chairman of the Board of Directors), Giovanni Comboni (as Vice Chairman of the Board of Directors), Luca Camerano (jointly put forward as Chief Executive Officer by the Municipality of Milan and the Municipality of Brescia), Stefano Cao, Elisabetta Ceretti, Michaela Castelli, Fausto Di Mezza, Stefano Pareglio, Antonio Bonomo, Luciana Ravicini, Maria Elena Costanza Bruna Cappello, Marina Brogi and Enrico Corali.. Giambattista Brivio. The Municipality of Bergamo and the Municipality of Varese put forward the names of the following persons: Marco Baga and Renzo Torchiani. A group of asset management companies and institutional investors put forward the names of the following persons: Luigi De Paoli, Dina Ravera and Vittorio Mongino.. For the Board of Statutory Auditors: The Municipality of Brescia and the Municipality of Milan put forward the names of the following persons: Norberto Rosini and Cristina Casadio as standing auditors and Paolo Prandi as substitute auditor.. WorldReginfo - dc4653d2-d899-4254-860a-40e1a9dca9e4. Carlo Tassara S.p.A. put forward the names of the following persons: Mario Cocchi and.

(27) Interim report on operations – September 30, 2014 Significant events during the period. Carlo Tassara S.p.A. put forward the names of the following persons: Franco Carlo Papa and Stefano Spiniello. A group of asset management companies and institutional investors put forward the names of the following persons: Giacinto Sarubbi and Onofrio Contu.. A2A S.p.A.: Shareholders’ Meeting At a general meeting on June 13, 2014, the shareholders of A2A S.p.A.: 1) approved the proposed distribution of a dividend of 0.033 euro per ordinary share to be paid as from June 26, 2014 (ex-dividend from June 23, 2014) with record date June 25, 2014; 2) voted in favor of the first part of the 2014 Compensation Report; 3) authorized the Board of Directors to purchase and dispose of treasury shares (the maximum number of treasury shares that may be held is 313,290,527, taking into account the shares already held by A2A S.p.A. and its subsidiaries, being one tenth of the shares making up the share capital); 4) approved the new bylaws which provide for the adoption of the “traditional” system of management and control; 5) appointed the following Board of Directors of 12 members for a term of three years using the voting list system: Giovanni Valotti – Chairman, Giovanni Comboni – Vice Chairman, Luca Camerano, Stefano Cao, Elisabetta Ceretti, Michaela Castelli, Fausto Di Mezza, Stefano Pareglio and Antonio Bonomo (taken from the list jointly submitted by the Municipality of Brescia and the Municipality of Milan, owners of a total shareholding equal to 55.124% of share capital), Mario Cocchi (taken from the list submitted by the minority shareholder Carlo Tassara S.p.A., owner of a total shareholding equal to 2.512% of share capital), Luigi De Paoli and Dina Ravera (taken from the list jointly submitted by a group of asset management companies and institutional investors, owners of a total shareholding equal to 1.178% of share capital). All appointees have declared that they meet the requisites of independence prescribed by article 148, paragraph 3 of Legislative Decree no. 58/98 and article 3 of the Corporate Governance Code; 6) established the annual compensation for each director at 80,000 euro; 7) appointed the following Board of Statutory Auditors of 3 standing members and 2 substitute members for a term of three years using the voting list system: Norberto Rosini – standing auditor, Cristina Casadio – standing auditor and Paolo Prandi – substitute auditor (taken from the list jointly submitted by the Municipality of Brescia. WorldReginfo - dc4653d2-d899-4254-860a-40e1a9dca9e4. 26.

(28) Interim report on operations – September 30, 2014 Significant events during the period. and the Municipality of Milan, owners of a total shareholding equal to 55.124% of share capital), Giacinto Sarubbi – Chairman and Onofrio Contu – substitute auditor (taken from the list jointly submitted by a group of asset management companies and institutional investors, owners of a total shareholding equal to 1.178% of share capital); 8) established the annual compensation for the Chairman of the Board of Statutory Auditors and each standing auditor at 100,000 euro and 70,000 euro respectively.. A2A S.p.A.: Resolution of the Board of Directors On June 17, 2014, A2A S.p.A.’s Board of Directors held its first meeting under the chairmanship of Giovanni Valotti. The Board appointed Luca Valerio Camerano as Chief Executive Officer, vesting him with broad powers for the Company’s ordinary operations. The Board assigned the Chairman specific responsibilities concerning relationships with shareholders, the institutions, regulatory authorities and the media and external relations,. 27. and, in conjunction with the Chief Executive Officer, with regard to drawing up proposals for extraordinary operations. The Board of Directors also appointed an Executive Committee made up of three members: the Chairman Giovanni Valotti, the Vice Chairman without powers Giovanni Comboni and the Chief Executive Officer Luca Valerio Camerano. The Committee mainly has functions of a consultative nature for coordinating the executive directors’ work and functions of a propositional nature for the Board of Directors.. decision making, provides for a balance of powers and emphasizes the central role of the Board of Directors in managing the Group and, in particular, determining and pursuing its strategic objectives. As part of the meeting the Board also ascertained the existence of the independence requirements prescribed by article 148, paragraph 3 of the Consolidated Financial Act for all the directors and statutory auditors and the existence of the independence requirements prescribed by article 3 of the Corporate Governance Code for listed companies for the directors Giovanni Comboni – Vice Chairman, Antonio Bonomo, Stefano Cao, Michaela Castelli, Elisabetta Ceretti, Mario Cocchi, Luigi De Paoli, Stefano Pareglio and Dina Ravera, and the statutory auditors Giacinto Sarubbi – Chairman, Cristina Casadio and Norberto Rosini.. WorldReginfo - dc4653d2-d899-4254-860a-40e1a9dca9e4. This detailed framework clearly defines responsibilities, facilitates effective and timely.

(29) Interim report on operations – September 30, 2014 Significant events during the period. Finally, the Board of Directors set up the following three committees, in place of the previous four, appointing their members as follows: • Control and Risks Committee: Michaela Castelli – Chairman, Mario Cocchi – Vice Chairman, Fausto Di Mezza and Dina Ravera; • Appointments and Compensation Committee: Giovanni Comboni – Chairman, Antonio Bonomo and Stefano Cao; • Committee for the Territory: Giovanni Valotti – Chairman, Stefano Pareglio – Vice Chairman, Elisabetta Ceretti and Luigi De Paoli.. Increase in share capital by EPCG In addition to approving the 2013 financial statements, at their general meeting on July 17, 2014, EPCG’s shareholders resolved a share capital increase arising from the conversion of the company’s tax liability. In detail, this operation was carried out as follows: • 5,883,737 shares, each with a nominal value of 7.6482 euro, were issued in favor of the State of Montenegro for a total of approximately 45 million euro as payment of past tax liabilities; • as a result, EPCG’s shareholding structure has changed slightly as follows, with no variations in A2A’s rights to manage the company as established in the agreements signed in 2009: – State of Montenegro: 57.02% – A2A S.p.A. : 41.75% – minority shareholders: approximately 1.23%.. A2A S.p.A. and Dolomiti Energia S.p.A.: shareholding exchange agreement finalized In execution of the agreements signed by A2A S.p.A. and Dolomiti Energia S.p.A. on March 15, 2012 for the acquisition of the control of Edipower S.p.A. on May 22, 2012, and as a consequence of the exercising by Dolomiti Energia S.p.A. of the rights included therein, on September 3, 2014 A2A S.p.A. and Dolomiti Energia S.p.A. finalized the exchange of the 8.54% of the share capital of Edipower S.p.A. held by Dolomiti Energia S.p.A. for the 7.91% of the share capital of Dolomiti Energia S.p.A. held by A2A S.p.A... WorldReginfo - dc4653d2-d899-4254-860a-40e1a9dca9e4. 28.

(30) Interim report on operations – September 30, 2014 Significant events during the period. A2A S.p.A. will additionally pay Dolomiti Energia S.p.A. a settlement balance of 16 million euro in four quarterly installments from October 1, 2014 to July 1, 2015. The final installment may also be settled through the transfer of certain assets currently owned by A2A S.p.A.. Following the finalization of the above operation, the shareholding structure of Edipower S.p.A. is now as follows: A2A S.p.A. 79.5%, SEL 8.5%, Mediobanca 5.1%, Fondazione CRT 4.3% and BPM 2.6%. In accordance with the requirements of IAS/IFRS the A2A Group has already considered the effects of the operation in its previous financial statements, to which reference should be made for further details. In conclusion, with the completion of this operation the trading agreement between the A2A Group and Dolomiti Energia S.p.A. for the supply of “green energy” produced by the plants of Edipower S.p.A., under which approximately 480 GWh of energy was sold in 2013 and 160 GWh in the first half of 2014, has come to an end.. 29. A2A S.p.A.: Brescia’s water improves with the new plants to reduce hexavalent chromium Thanks to the research and testing carried out by A2A Ciclo Idrico S.p.A. over the past few months, the quality of Brescia’s drinking water has been further improved as far as the presence of hexavalent chromium is concerned.. chromium that were under 2 micrograms/lire, a concentration below which the analytical methods currently used are unable to detect the presence of the substance. By the end of 2014 the proportion of drinking water put into the network after treatment by the new system will exceed 70%, and will reach 100% by the end of 2015 on the completion of the plan to install the new hexavalent chromium reduction plants. The process carried out by A2A Ciclo Idrico S.p.A. involves the removal of hexavalent chromium from well water before it is fed into the distribution network. The plants built following testing conducted on a well temporarily out of use since the beginning of 2013 convert the hexavalent chromium (soluble in water) into trivalent chromium (insoluble in water) by adding Ferrous Sulfate (FeSO4). The trivalent chromium is then removed by filtering the water through a bed of activated carbon.. WorldReginfo - dc4653d2-d899-4254-860a-40e1a9dca9e4. In September 2014, 60% of the water distributed in the city already had values of hexavalent.

(31) Interim report on operations – September 30, 2014 Significant events during the period. A2A Ciclo Idrico S.p.A. has begun installing the hexavalent chromium reduction system at wells with a greater presence of the substance (Sereno 2, San Donino, Grazzine and San Bartolomeo). The A2A Group will incur expenditure of more than 4 million euro over a two-year period in order to achieve an improvement in the quality of the water distributed in the city of Brescia. It is worth remembering that a current limit of 50 micrograms/liter is set by legislation for total chromium (consisting of trivalent chromium and hexavalent chromium), a level also confirmed in the latest edition of the Guidelines for Drinking-water Quality issued by the World Health Organization. The Brescia aqueduct, managed by A2A Ciclo Idrico S.p.A., is subject to rigorous controls based on a protocol of analyses agreed with the local health authority. This protocol requires samples to be taken on at least a monthly basis from the network control points (26 situated throughout the city), which are representative of the local distribution network as a whole, together with samples of water taken at the sources of procurement and the treatment plants, with the frequency, at least annual, depending on the quality of the untreated water sampled. In 2013, in the city of Brescia alone, A2A Ciclo Idrico S.p.A. carried out 1,944 tests (1,557 to check chemical and physical parameters and 378 to check microbiological parameters) and analyzed a total of 35,553 chemical, physical and microbiological parameters. These analyses confirmed that the water distributed from the civic aqueduct complies fully with Legislative Decree no. 31/01. Each year a copy of all the analyses is sent to the local health authority which carries out its own sampling and analyses as a means of ensuring the utmost independence and efficiency of the checks with respect to the operator.. A2A S.p.A.: resolution of the Board of Directors On September 24, 2014, A2A’s Board of Directors, chaired by Mr. Giovanni Valotti, approved the compensation of the company’s Executive Chairman, Vice Chairman and Chief Executive Officer on the proposal of the Appointment and Compensation Committee and the favorable opinion of the Board of Statutory Auditors. The total compensation of senior management – the Chairman, Vice Chairman and Chief Executive Officer – has been reduced by 50% over the previous payment structure. The overall cost to the group has fallen by more than 65%.. WorldReginfo - dc4653d2-d899-4254-860a-40e1a9dca9e4. 30.

(32) Interim report on operations – September 30, 2014 Significant events during the period. None of the three members of senior management is engaged under an employment contract. More specifically, at the meeting the Board approved the following compensation for each specific position: • Executive Chairman, all-inclusive gross annual compensation of 390 thousand euro, with no variable component. • Vice Chairman, gross annual compensation of 40 thousand euro, with no variable component, recognized for the position as head of the A2A Group’s internal audit function. • Chief Executive Officer, gross annual compensation of 620 thousand euro. The Chief Executive Officer also receives a variable portion of up to 40% of the total compensation based on achieving the objectives stated in the Incentive Plan. The Chief Executive Officer has waived any variable remuneration that may be due to him for 2014. 31. The Municipality of Milan and A2A S.p.A. present the municipality’s new public lighting Thanks to a replacement program being implemented by the Municipality of Milan and carried out by A2A S.p.A., all the lighting points located in the territory of the municipality, meaning over 140 thousand, will use LED equipment by August 2015, while 80% of systems will have already been renewed by the start of the Expo exhibition on May 1, 2015. An innovative decision in the wake of similar decisions taken by cities such as Los Angeles, efficacy and savings of 5% in consumption and 31% in the Municipality of Milan’s “electricity bill”. As a result of this new lighting annual consumption per head will be halved, falling from the present 87 kWh to 42 kWh. Taken overall, there will be a reduction from over 114 million kWh a year – a quantity of energy sufficient to satisfy the energy needs of 42 thousand apartments – to 55 million kWh, corresponding to the theoretical consumption of 20 thousand apartments. A result which will take Milan to a consumption level that is lower than the average in the European Union (51 kWh per head) and in the leading countries in Europe (France, Spain and Germany), and on a par with Great Britain.. WorldReginfo - dc4653d2-d899-4254-860a-40e1a9dca9e4. Copenhagen, Stockholm and Oslo, which will ensure equal efficiency and higher luminous.

(33) Interim report on operations – September 30, 2014 Significant events during the period. The A2A Group will incur expenditure of 38 million euro over a two-year period for replacing all of the city’s lighting bodies and 500 control panels and installing the remote control system. The decision taken in favor of LED will mean a clear improvement in terms of efficiency, lighting efficacy and safety. The new lighting bodies will guarantee an efficiency equal to that of the traditional lamps used until now (100 lumens per watt), but the light beam will be better pointed and the lamps will have a much longer lifecycle (up to 5 times that of traditional lamps); in terms of service quality and safety this will mean fewer broken lamps on the city streets. At least 10 thousand fewer lights will be burnt each year, and by introducing the new technology – remote control – information on the condition of the systems or any malfunctioning will be available in real time, enabling action to be taken far more quickly.. WorldReginfo - dc4653d2-d899-4254-860a-40e1a9dca9e4. 32.

(34) Interim report on operations – September 30, 2014. Significant events after September 30, 2014. District heating in the metropolitan area of Milan: A2A’s network is increasing and pollutants are decreasing With the start of the 2014-2015 heating season the number of apartment equivalents served by A2A’s district heating network in the Milan metropolitan area has risen to 170 thousand, representing an increase of 4.3% over the previous year. The volumes connected total 41.5 million cubic meters.. 33. Approximately 16.5 kilometers of network (double piping) has so far been laid in the municipalities of Milan, Sesto San Giovanni, Cinisello Balsamo and Novate Milanese in 2014. During 2013 the use of district heating enabled the emission of approximately 5 tonnes of fine dust particles, 110 thousand tonnes of carbon dioxide, 129.2 tonnes of nitrous oxide and 46.2 tonnes of sulfur dioxide and the consumption of 38 thousand toe (tonnes of oil equivalent) to be avoided. Twenty seven new public buildings in Milan will use district heating as a source, for a total of. Among the new public buildings connected to the network are the following: the Sormano Library, 23 elementary, middle and high schools, the centre for senior citizens in Via Don C. S. Martino and the judicial offices in Via Guastalla and Via Andreani. A2A’s district heating networks are mainly fuelled by renewable sources – waste-to-energy plants and heat pumps – and by high yield simultaneous electricity and heat production systems, ensuring a significant saving in the use of fossil fuels (such as diesel and methane) and providing a service with high standards of quality, safety and respect for the environment. The district heating development plan for the towns in the Milan metropolitan area is drawn up and implemented in line with guidelines for town-planning and road works scheduling that have been agreed with the municipal administrations.. WorldReginfo - dc4653d2-d899-4254-860a-40e1a9dca9e4. over 710 thousand m3 and approximately 16 MWt of installed power..

(35) Interim report on operations – September 30, 2014 Significant events after September 30, 2014. A2A S.p.A.: resolution of the Board of Directors On October 15, 2014, with the favorable opinion of the Board of Statutory Auditors, the Board of Directors approved the appointment of Rita Daniela Giupponi as manager in charge of preparing the corporate accounting documents pursuant to article 154-bis of Legislative Decree no. 59/98.. Acerra waste-to-energy plant: environmental management effectiveness is confirmed The Acerra waste-to-energy plant worked to 100% production capacity over the first nine months of 2014, confirming the high standards of efficiency that have been reached and providing a fundamental contribution to the waste cycle in Campania. A total of 436 million kilowatt hours of electricity were produced from the processing of the 515 thousand tonnes of waste received by the plant, which when put into the grid satisfied the requirements of over 200 thousand households for nine months. Figures for atmospheric emissions, continuously recorded by a double monitoring system capable of guaranteeing uninterrupted measurement, confirmed values which were well below those set by European legislation and also the stricter limits established by the Integrated Environmental Authorization which regulates the Acerra site. Thanks to the best environmental protection practices that have been adopted in running the plant, the waste-to-energy plant obtained the prestigious EMAS Registration in 2014. Compared to the legal limits required to be met by the Acerra waste-to-energy plant to enable it to operate, during the first nine months the plant had emission levels, certified by third party laboratories, which were lower on average by 89% for fine particles, 76% for carbon dioxide, 37% for nitrous oxide, 97% for sulfur oxide, 99.9% for mercury and 99.7% for dioxins and furans. The way in which the plant operates – it is run by A2A Ambiente – enabled atmospheric emissions of approximately 100 thousand tonnes of carbon dioxide and the consumption of approximately 90 thousand tonnes of oil equivalent to be avoided, as well as the resort to other fossil fuels such as hydrocarbons, gas and coal. During 2014 ordinary maintenance was carried out on the plant’s firing lines enabling it to work at full efficiency, thus complying with the high safety levels set for operating without jeopardizing its ability to process the planned quantities of waste.. WorldReginfo - dc4653d2-d899-4254-860a-40e1a9dca9e4. 34.

(36) Interim report on operations – September 30, 2014 Significant events after September 30, 2014. A2A Group: the first solar thermal power plant for district heating in southern Europe in Varese On October 31, 2014 work began in Varese on the construction of the first solar thermal power plant for district heating in southern Europe. The plant is being built for A2A by Varese Risorse and will contribute to producing heat to be supplied to buildings through the city’s distribution network. This innovative plant will produce heat from fully renewable sources and will be used to replace production by the other “historical” district heating plants already run by the A2A Group in Varese. The plant will be integrated into the city grid and will enable water to be stored, before distribution, in tanks having a capacity of 430 m3. An investment of 400 thousand euro is planned. It has been estimated that the solar plant will produce 450 MWh of thermal energy a year, equivalent to the sanitary hot water requirements of 150 apartments, avoiding the need to resort to 43 toe (tonnes of oil equivalent) of fossil fuels and accordingly providing both an economic and environmental benefit.. 35. Thanks to this plant, atmospheric emissions of 108 tonnes of CO2 will also be avoided each year. The A2A Group is the leader in Italy in the district heating sector as the result of its experience of over 40 years in planning and managing activities in the Milan, Brescia, Bergamo and Varese areas. The construction of this innovative plant forms part of the Group’s strategy, which as ever is directed towards adopting the best technologies available and placing the utmost emphasis on managing infrastructure in order to protect the environment, save raw WorldReginfo - dc4653d2-d899-4254-860a-40e1a9dca9e4. materials and reduce polluting emissions..

(37) Interim report on operations – September 30, 2014. Outlook for operations. Although there are weak signs of recovery in the wholesale markets, for the fourth quarter of 2014, the electricity prices and the domestic demand, are however expected at a lower level compared to the same period of the previous year. The Group will continue its effort to offset, through operational efficiency and asset optimization, the foreseeable negative performance of the market. Moreover, the path of financial position strengthening will carry on.. WorldReginfo - dc4653d2-d899-4254-860a-40e1a9dca9e4. 36.

(38) WorldReginfo - dc4653d2-d899-4254-860a-40e1a9dca9e4. Consolidated financial statements.

(39) Interim report on operations – September 30, 2014. Consolidated balance sheet (1) Assets. Note. 09 30 2014. 12 31 2013. 09 30 2013. Tangible assets. 1. 5,787. 5,930. 6,169. Intangible assets. 2. 1,310. 1,306. 1,383. Shareholdings carried according to equity method. 3. 126. 187. 218. Millions of euro. NON-CURRENT ASSETS. Other non-current financial assets. 3. 49. 53. 53. Deferred tax assets. 4. 331. 372. 261. Other non-current assets. 5. TOTAL NON-CURRENT ASSETS. 63. 53. 81. 7,666. 7,901. 8,165. CURRENT ASSETS Inventories. 6. 350. 284. 307. Trade receivables. 7. 1,407. 1,889. 1,714. Other current assets. 8. 275. 383. 489. Current financial assets. 9. 137. 107. 66. Current tax assets. 10. 47. 70. 46. Cash and cash equivalents. 11. 509. 376. 650. 2,725. 3,109. 3,272. –. –. 346. 10,391. 11,010. 11,783. TOTAL CURRENT ASSETS NON-CURRENT ASSETS HELD FOR SALE TOTAL ASSETS. (1) The effects of significant non-recurring events and transactions on the consolidated financial statements are presented in Note 36 as required by Consob Communication no. DEM/6064293 of July 28, 2006.. WorldReginfo - dc4653d2-d899-4254-860a-40e1a9dca9e4. 38.

(40) Interim report on operations – September 30, 2014 Consolidated balance sheet. Equity and liabilities. Note. 09 30 2014. 12 31 2013. 09 30 2013. Share capital. 12. 1,629. 1,629. 1,629. (Treasury shares). 13. Reserves. 14. 1,086. 15. 159. Millions of euro EQUITY. (61). Result of the year Result of the period. 1,161. (61) 1,195. 62. Equity pertaining to the Group Minority interests. (61). 2,813 16. Total equity. 159 2,791. 2,922. 595. 557. 856. 3,408. 3,348. 3,778. 39. LIABILITIES NON-CURRENT LIABILITIES Non-current financial liabilities. 17. 4,016. 3,982. 3,913. Employee benefits. 18. 355. 339. 319. Provisions for risks, charges and liabilities for landfills. 19. 518. 605. 602. Other non-current liabilities. 20. Total non-current liabilities. 372. 436. 407. 5,261. 5,362. 5,241. Trade payables. 21. 1,080. 1,306. 1,105. Other current liabilities. 21. 502. 566. 624. Current financial liabilities. 22. 129. 415. 934. Tax liabilities. 23. 11. 13. 46. Total current liabilities. 1,722. 2,300. 2,709. Total liabilities. 6,983. 7,662. 7,950. –. –. 55. 10,391. 11,010. 11,783. LIABILITIES DIRECTLY ASSOCIATED WITH NON-CURRENT ASSETS HELD FOR SALE TOTAL EQUITY AND LIABILITIES. WorldReginfo - dc4653d2-d899-4254-860a-40e1a9dca9e4. CURRENT LIABILITIES.

(41) Interim report on operations – September 30, 2014. Consolidated income statement (1). Millions of euro. Note. 01 01 2014 09 30 2014. 01 01 2013 09 30 2013 (*). 3rd quarter 2014. 3rd quarter 2013 (*). 3,464. 3,922. 989. 1,183. Revenues Revenues from the sale of goods and services Other operating income Total Revenues. 25. 168. 158. 61. 52. 3,632. 4,080. 1,050. 1,235. 2,183. 2,579. 589. 804. 189. 165. 82. 53. Operating expenses Expenses for raw materials and services Other operating expenses Total Operating expenses. 26. 2,372. 2,744. 671. 857. Labour costs. 27. 477. 497. 147. 149. Gross operating income - EBITDA. 28. 783. 839. 232. 229. Depreciation, amortization, provisions and write-downs. 29. 364. 432. 115. 152. Net operating income - EBIT. 30. 419. 407. 117. 77. Result from non-recurring transactions. 31. 11. 17. 11. 20. Financial balance Financial income. 15. 45. 3. 15. Financial expense. 154. 187. 41. 69. Affiliates. 7. 8. 2. 1. Result from disposal of other shareholdings. –. –. –. –. Total financial balance Result before taxes. 32. (132). (134). (36). (53). 298. 290. 92. 44. (1) The effects of significant non-recurring events and transactions on the consolidated financial statements are presented in Note 36 as required by Consob Communication no. DEM/6064293 of July 28, 2006. (*) According to the new adopted Income Statement structure the comparative figures for the period January-September 2013 have been reclassified.. WorldReginfo - dc4653d2-d899-4254-860a-40e1a9dca9e4. 40.

(42) Interim report on operations – September 30, 2014 Consolidated income statement. Millions of euro. Income taxes. Note. 01 01 2014 09 30 2014. 01 01 2013 09 30 2013 (*). 3rd quarter 2014. 3rd quarter 2013 (*). 33. 127. 118. 26. 24. 171. 172. 66. 20. –. –. –. –. 171. 172. 66. 20. Result after taxes from operating activities Net result from discontinued operations Net result Minorities. (12). (13). (4). 6. 159. 159. 62. 26. – basic. 0.0512. 0.0511. – basic, from operating activities. 0.0512. 0.0511. Group result of the period. 34. 41. Earnings (loss) per share (in euro):. – basic, from activities held for sale. –. –. – diluted. 0.0512. 0.0511. – diluted, from operating activities. 0.0512. 0.0511. –. –. – diluted, from activities held for sale. WorldReginfo - dc4653d2-d899-4254-860a-40e1a9dca9e4. (*) According to the new adopted Income Statement structure the comparative figures for the period January-September 2013 have been reclassified..

(43) Interim report on operations – September 30, 2014. Consolidated statement of comprehensive income. Millions of euro. Net result of the period (A) Actuarial gains/(losses) on Employee's Benefits booked in the Net equity Tax effect of other actuarial gains/(losses). 09 30 2013. 3rd quarter 2014. 3rd quarter 2013. 171. 172. 66. 20. (21). 4. –. –. 6. (1). –. –. Total actuarial gains/(losses) net of the tax effect (B). (15). 3. –. –. Effective part of gains/(losses) on cash flow hedge. (11). (10). 28. 6. 4. 4. (10). (2). (7). (6). 18. 4. Other gains/(losses) of companies valued at equity net of the tax effect (D). –. –. –. –. Total comprehensive result (A) + (B) + (C) + (D). 149. 169. 84. 24. 137. 156. 80. 31. 12. 13. 4. (7). Tax effect of other gains/(losses) Total other gains/(losses) net of the tax effect of companies consolidated on a lineby-line basis (C). Total comprehensive result attributable to: Shareholders of the parent company Minority interests. With the exception of the actuarial effects on employee benefits recognized in equity, the other effects stated above will be reclassified to profit or loss in subsequent years.. WorldReginfo - dc4653d2-d899-4254-860a-40e1a9dca9e4. 42. 09 30 2014.

(44) Interim report on operations – September 30, 2014. Consolidated cash-flow statement. Millions of euro CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE PERIOD/YEAR. 09 30 2014. 12 31 2013. 09 30 2013. 376. 553. 553. Operating activities Net Result (**). 159. Tangible assets depreciation. 301. 420. 314. 45. 66. 48. 5. 260. 10. Intangible assets amortization Fixed assets write-downs/disposals Result from affiliates. (9). (7). 23. Net taxes paid (a). (57). (122). Gross change in assets and liabilities (b). 278. 141. Total change of assets and liabilities (a+b) (*). 148. (8) (29) 76. 221. 19. 47. 724. 779. 559. (160). (227). (150). (45). (57). (44). Investments in shareholdings and securities (*). –. (3). (3). Disposal of fixed assets and shareholdings. –. 53. 42. Cash flow from operating activities. 43. Investment activities. Dividends received Cash flow from investment activities FREE CASH FLOW. 4. 3. 3. (201). (231). (152). 523. 548. 407. Financing activities Change in financial assets (*) Change in financial liabilities (*) Net financial interests paid Dividends paid by the parent company Dividends paid by the subsidiaries Cash flow from financing activities. (47). (96). (59). (189). (369). (80). (48). (173). (84). (102). (81). (81). (4). (6). (6). (390). (725). (310). CHANGE IN CASH AND CASH EQUIVALENTS. 133. (177). 97. CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD/YEAR. 509. 376. 650. (*) Cleared of balances in return of shareholders’ equity and other balance sheet items. (**) Net Result is exposed net of gains on shareholdings’ and fixed assets’ disposals.. WorldReginfo - dc4653d2-d899-4254-860a-40e1a9dca9e4. Investments in tangible assets Investments in intangible assets and goodwill.

(45) Interim report on operations – September 30, 2014. Statement of changes in Group equity. Net equity at December 31, 2012 44. Changes in the first nine months of 2013 2012 result allocation Distribution of dividends IAS 19 revised reserves (*) IAS 32 and 39 reserves (*) Put option on Edipower S.p.A. shares Other changes Group and minorities result of the period Net equity at September 30, 2013 Changes in the fourth quarter of 2013 IAS 19 revised reserves (*) IAS 32 and 39 reserves (*) Put option on Edipower S.p.A. shares Effect from non-proportional Edipower S.p.A. demerger Other changes Group and minorities result of the period Net equity at December 31, 2013 Changes in the first nine months of 2014 2013 result allocation Distribution of dividends IAS 19 revised reserves (*) IAS 32 and 39 reserves (*) Other changes Group and minorities net result of the period Net equity at September 30, 2014 (*) These form part of the statement of comprehensive income. Share capital. Treasury shares. Cash Flow Hedge. Note 12. Note 13. Note 14. 1,629. (61). (16). (6). 1,629. (61). (22). 1. 1,629. (61). (21). (7). 1,629. (61). (28). WorldReginfo - dc4653d2-d899-4254-860a-40e1a9dca9e4. Description Millions of euro.

(46) Interim report on operations – September 30, 2014 Statement of changes in Group equity. Result of the period/year. Note 14. Note 15. 1,034. 260. 260 (81) 3. 159 159. (18). 5. 62 (102) (15). (97) 62. 2,846. 851. 3,697 45. (81) 3 (6) (2) 3 159 2,922. (6). (2) 13 856. 5 (97) 2,791. (297) (2) 557. (87) 3 (6) (2) 1 172 3,778. (18) 1 (22) (297) 3 (97) 3,348. (62). (13) 1,114. Total Net shareholders equity. Note 16. (18) 1 (22). (22). 1,182. Minority interests. (260). (2) 3 1,217. Total Equity pertaining to the Group. 159 159. (102) (15) (7) (13) 159 2,813. (4). 30 12 595. (106) (15) (7) 17 171 3,408. WorldReginfo - dc4653d2-d899-4254-860a-40e1a9dca9e4. Other Reserves and retained earnings.

(47) WorldReginfo - dc4653d2-d899-4254-860a-40e1a9dca9e4.

(48) WorldReginfo - dc4653d2-d899-4254-860a-40e1a9dca9e4. Notes to the Interim report on operations.

(49) Interim report on operations – September 30, 2014. General information. A2A S.p.A. is a company incorporated under Italian law. A2A S.p.A. and its subsidiaries (the “Group”) operate both in Italy and abroad, in particular following the acquisition in Montenegro which took place in 2009. The A2A Group mainly operates in the following sectors: • the production, sale and distribution of electricity; • the sale and distribution of gas; • the production, distribution and sale of heat through district heating networks; • waste management (from collection and sweeping to disposal) and the construction and management of integrated waste disposal plants and systems, also making these available for other operators; • integrated water cycle management.. WorldReginfo - dc4653d2-d899-4254-860a-40e1a9dca9e4. 48.

(50) Interim report on operations – September 30, 2014. Interim report on operations. The interim report on operations (in the following the “Report”) of the A2A Group at September 30, 2014 is presented in millions of euro; the euro is also the functional currency of the economies in which the Group operates. The Report of the A2A Group at September 30, 2014 has been prepared: • in compliance with Legislative Decree no. 58/1998 (art. 154-ter) as amended and with the Issuers’ Regulations published by Consob; • in accordance with the International Financial Reporting Standards (IFRS) issued by the. 49. International Accounting Standard Board (IASB) and adopted by the European Union and in particular IAS 34. IFRS means all the revised international accounting standards (IAS) and all the interpretations of the International Financial Reporting Interpretations Committee (IFRIC), formerly known as the Standing Interpretations Committee (SIC). In preparing the Report the Group has applied the same principles as those used in the preparation of the annual financial report at December 31, 2013. The principles and interpretations described in detail in the paragraph below “Changes in. This Report at September 30, 2014 was approved on November 6, 2014 by the Board of Directors, which authorized publication.. WorldReginfo - dc4653d2-d899-4254-860a-40e1a9dca9e4. international accounting standards” were adopted for the first time on January 1, 2014..

(51) Interim report on operations – September 30, 2014. Financial statements. The Group has adopted a format for the balance sheet which presents current and noncurrent assets and current and non-current liabilities as separate classifications, as required by paragraphs 60 and following of IAS 1 (Revised). The income statement is presented by nature, a format which is considered more representative than a presentation by function. The selected format is in agreement with the presentation used by the Group’s major competitors and in line with international practice. 50. The cash flow statement has been prepared using the indirect method as permitted by IAS 7. The statement of changes in equity has been prepared in accordance with IAS 1 (Revised). The formats adopted for the financial statements are the same as those used to prepare the. WorldReginfo - dc4653d2-d899-4254-860a-40e1a9dca9e4. annual consolidated financial statements at December 31, 2013..

(52) Interim report on operations – September 30, 2014. Basis of preparation. The Report at September 30, 2014 has been prepared on a historical cost basis, with the exception of those items which under IFRS must be or can be measured at fair value, as discussed in further detail in the accounting policies. The consolidation principles, the accounting principles, the accounting policies and the methods of measurement used in the preparation of the Report are consistent with those used to prepare the annual consolidated financial statements at December 31, 2013.. WorldReginfo - dc4653d2-d899-4254-860a-40e1a9dca9e4. 51.

(53) Interim report on operations – September 30, 2014. Changes in international accounting standards. The accounting principles adopted in the first nine months of 2014 are the same as those used in the prior year, with the exception of those discussed below in the paragraph “Accounting principles, amendments and interpretations applied by the Group from the current year”. A summary is provided in the following paragraph “Accounting principles, amendments and interpretations not yet adopted by the European Union” of the changes that will be adopted in future periods, stating the expected effects on the A2A Group’s Report to the extent this is possible.. Accounting principles, amendments and interpretations applied by the Group from the current year A series of amendments introduced by international accounting standards and interpretations have been applied from January 1, 2014, none of which however has led to a significant effect on the Group’s financial statements. The main changes are described in the following: • IFRS 10 “Consolidated Financial Statements” was issued by the IASB on May 12, 2011 and is applicable from January 1, 2014. The new principle supplements the requirements of IAS 27 “Consolidated and Separate Financial Statements”, in which control is defined as the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities, clarifying that an investor controls an investee when it is exposed, or has rights, to variable returns from its involvement with the investee and when at the same time it has the ability to affect those returns through its power over the investee. An investor controls an investee if and only if the investor has all of the following: 1. the power to direct the relevant activities of the investee; 2. the exposure to future returns from the investee; 3. the ability to use its power over an investee to affect the investor’s returns. The power to direct activities that significantly affect the results of the subsidiary (relevant activities) may more easily be exercised through voting rights (including potential voting rights), but also through contractual arrangements. When control is exercised through voting. WorldReginfo - dc4653d2-d899-4254-860a-40e1a9dca9e4. 52.

(54) Interim report on operations – September 30, 2014 Changes in international accounting standards. rights, relevant activities are represented by operating activities (development, purchasing and product sales) and financial management activities (obtaining and negotiating loans, acquisitions and sales of financial assets). Future returns also include dividends and payment for services provided by the parent for the subsidiary’s activities. The third condition for establishing whether control exists regards the interaction between the first two conditions. In particular, in certain circumstances an entity may have an interest in a group of the subsidiary’s assets and liabilities as part of a legal or contractual condition. IFRS 10 establishes that to determine the existence of control, this group of assets and liabilities can only be considered a separate entity if it is economically separate from the entity as a whole, and is therefore a subsidiary for the purposes of the consolidated financial statements. Following the introduction of this standard, revised versions of IAS 27 “Separate Financial Statements”, which remains the main reference standard for separate financial statements, and IAS 28 “Investments in Associates and Joint Ventures” were issued. The interpretation SIC 12 “Consolidation – Special Purpose Entities” has been superseded.. 53. This standard has been subsequently amended, restricting the need to present comparative figures solely to the year or period preceding that of application; • IFRS 11 “Joint Arrangements” was issued by the IASB on May 12, 2011 and is effective from January 1, 2014. This standard establishes that in a joint arrangement two or more parties have joint control and decisions regarding relevant activities require the unanimous consent of the parties. IFRS 11 identifies two different types of joint arrangement: 1. joint operations; The two types differ in the rights and obligations of each party to the joint arrangement. In a joint operation, the parties have rights to the assets and obligations for the liabilities of the arrangement, whereas in a joint venture the parties have rights linked to the net assets of the arrangement. IFRS 11 requires an entity to fully recognize the assets, liabilities, revenues and expenses relating to a joint operation on the basis of its interest, while it should account for a joint venture using the equity method, as required by IAS 28 “Investments in Associates and Joint Ventures”. Joint operations are recognized in the same way in both the separate and consolidated financial statements, with an entity recognizing the assets, liabilities, revenues and expenses on the basis of its interest; joint ventures and investments in subsidiaries and associates on the other hand may be recognized in the separate financial statements either at cost or on the basis of IFRS 9 “Financial Instruments” (and IAS 39 “Financial Instruments: Recognition and Measurement”), as also specified in IAS 27 “Separate Financial Statements”. As regards disclosures for the purpose of completeness,. WorldReginfo - dc4653d2-d899-4254-860a-40e1a9dca9e4. 2. joint ventures..