The A2A S.p.A. Board of Directors has examined and approved the quarterly Information as at September 30, 2017

13 November 2017 - 12:46

Gross Operating Margin at 888 million euros, up by +2% compared to September 30, 2016, despite significantly lower non-recurring income. Excluding non-recurring items, the increase in the Gross Operating Margin exceeded 7%
Ordinary Net Profit at 319 million euros recorded strong growth (+14%) compared to the corresponding period of 2016
Group Net Profit, amounting to 226 million euros (323 million euros at September 30, 2016) penalized by the effects of exercising the PUT Option on EPCG (negative for 93 million euros)
Investments of 271 million euros, up by 16% compared to the first nine months of 2016
The Net Financial Position, up to 3,252 million euros, reflected the effects deriving from the full deconsolidation of the EPCG Group and the acquisitions, partially offset by the good cash flow generation

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Milan, November 13, 2017 – At today’s meeting of the Board of Directors of A2A S.p.A., chaired by Mr. Giovanni Valotti, the Board examined and approved the quarterly Information as at September 30, 2017.

The economic-financial results of the first nine months of 2017 continue to be satisfying and robust. The Gross Operating Margin (EBITDA), amounting to 888 million euros (+2% compared to the corresponding value in the first nine months of 2016), benefited from the conditions in the energy markets, the contribution of the newly acquired companies and good organic growth in all the Business Units. These positive contributions partially offset the reduced margins deriving from the lower levels of hydroelectric production and the lack of contribution by EPCG Group margins in the third quarter of 2017 following the shift from full consolidation to consolidation at equity.

The scenario of the first nine months of 2017 was characterized by high electricity and gas prices, although they were slightly down on those recorded in the first months of the year: the PUN Baseload amounted to 51.3 €/MWh, rising by 34% compared to 38.3 €/MWh in the same period of the previous
year and the average price of gas at the PSV (Virtual Trading Point) amounted to 18.8 €/MWh, up by 29% compared to the first nine months of 2016.
These price levels in the Italian wholesale markets were influenced by many factors, including:

the stoppage of several French nuclear power plants in the early months of the year;
the particularly harsh temperatures recorded mainly in the month of January;
the exceptional heat wave which struck the Italian peninsula in the summer months.

The spreads, on both the CCGTs and coal production, expanded.
The lower rainfall at the end of 2016 and in the first nine months of 2017 has instead had a very negative
effect on hydroelectric production (both in Italy and in Montenegro), which reduced overall by almost
30%.

The Group’s Net result for the first nine months of 2017 reached 226 million euros (323 million euros at September 30, 2016) and was significantly influenced by the effects arising from the decision to exercise, on July 1, 2017, the PUT Option on the entire stake in the share capital held by A2A S.p.A. in the Montenegrian company EPCG (41.75%).

Since July 1, 2017, as a result of exercising the PUT Option, the stake in EPCG was in fact reclassified from a permanent investment to an held-for-sale investment with the consequent change in the valuation criteria. A2A valued EPCG’s assets and liabilities in accordance with the IAS 36 principle of the lesser of their book value and their “fair value” as inferable from the compensation following the exercising of the PUT Option. The new valuation led to a total write-down of 93 million euros, 60 million euros of which corresponds to the adjustment of the asset value to the PUT Option value (250
million euros) and 33 million euros to the effects of the discounting of the seven equivalent annual transfer and disposal instalments.

As of July 1, 2017 the stake in EPCG was therefore consolidated at Equity and posted under “Assets held for sale”.

The reduction in the Net Profit of the Group in the first nine months of 2017, amounting to 97 million euros (-30%), is mainly due to two extraordinary items (one positive in 2016 and one negative in 2017):

the booking in 2016 of a non-monetary capital gain of 52 million euros, related to the partial, non-proportional demerger of Edipower with effect as of January 1, 2016, in favour of Cellina Energy;
the total write-down in 2017 for 93 million euros of the assets of EPCG recorded in 2017.

Gross of all the extraordinary effects, the “Ordinary” Net Profit would therefore be up by 38 million euros, from 281 million euros as at September 30, 2016 to 319 million euros as at September 30, 2017.

The Net Financial Position as at September 30, 2017 amounted to 3,252 million euros (3,136 million euros at the end of 2016).
Net of the effects deriving from the deconsolidation of the EPCG Group (206 million euros of deconsolidated financial assets) and the acquisition of the 5 companies owning photovoltaic plants (for a total amount of 34 million euros), the net cash flow generation for the period was positive by 124 million euros, after investments of 271 million euros and the payment of 153 million euros of dividends.

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For further information:
Media relations: tel. 02 7720.4583, ufficiostampa@a2a.eu
Investor Relations: tel.02 7720.3974, ir@a2a.eu

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13 November 2017 - 12:46