815600B7FD80E48C1896 2023-01-01 2023-12-31 815600B7FD80E48C1896 2022-01-01 2022-12-31 815600B7FD80E48C1896 2022-12-31 815600B7FD80E48C1896 2021-12-31 815600B7FD80E48C1896 2023-12-31 815600B7FD80E48C1896 2021-12-31 ifrs-full:IssuedCapitalMember 815600B7FD80E48C1896 2021-12-31 ifrs-full:TreasurySharesMember 815600B7FD80E48C1896 2021-12-31 ifrs-full:ReserveOfCashFlowHedgesMember 815600B7FD80E48C1896 2021-12-31 ext:OtherReservesAndRetainedEarningsMember 815600B7FD80E48C1896 2021-12-31 ext:ProfitLossAttributableToOwnersOfParentMember 815600B7FD80E48C1896 2021-12-31 ifrs-full:EquityAttributableToOwnersOfParentMember 815600B7FD80E48C1896 2021-12-31 ifrs-full:NoncontrollingInterestsMember 815600B7FD80E48C1896 2022-01-01 2022-12-31 ext:OtherReservesAndRetainedEarningsMember 815600B7FD80E48C1896 2022-01-01 2022-12-31 ext:ProfitLossAttributableToOwnersOfParentMember 815600B7FD80E48C1896 2022-01-01 2022-12-31 ifrs-full:EquityAttributableToOwnersOfParentMember 815600B7FD80E48C1896 2022-01-01 2022-12-31 ifrs-full:NoncontrollingInterestsMember 815600B7FD80E48C1896 2022-01-01 2022-12-31 ifrs-full:ReserveOfCashFlowHedgesMember 815600B7FD80E48C1896 2022-12-31 ifrs-full:IssuedCapitalMember 815600B7FD80E48C1896 2022-12-31 ifrs-full:TreasurySharesMember 815600B7FD80E48C1896 2022-12-31 ifrs-full:ReserveOfCashFlowHedgesMember 815600B7FD80E48C1896 2022-12-31 ext:OtherReservesAndRetainedEarningsMember 815600B7FD80E48C1896 2022-12-31 ext:ProfitLossAttributableToOwnersOfParentMember 815600B7FD80E48C1896 2022-12-31 ifrs-full:EquityAttributableToOwnersOfParentMember 815600B7FD80E48C1896 2022-12-31 ifrs-full:NoncontrollingInterestsMember 815600B7FD80E48C1896 2023-01-01 2023-12-31 ext:OtherReservesAndRetainedEarningsMember 815600B7FD80E48C1896 2023-01-01 2023-12-31 ext:ProfitLossAttributableToOwnersOfParentMember 815600B7FD80E48C1896 2023-01-01 2023-12-31 ifrs-full:EquityAttributableToOwnersOfParentMember 815600B7FD80E48C1896 2023-01-01 2023-12-31 ifrs-full:NoncontrollingInterestsMember 815600B7FD80E48C1896 2023-01-01 2023-12-31 ifrs-full:ReserveOfCashFlowHedgesMember 815600B7FD80E48C1896 2023-12-31 ifrs-full:IssuedCapitalMember 815600B7FD80E48C1896 2023-12-31 ifrs-full:TreasurySharesMember 815600B7FD80E48C1896 2023-12-31 ifrs-full:ReserveOfCashFlowHedgesMember 815600B7FD80E48C1896 2023-12-31 ext:OtherReservesAndRetainedEarningsMember 815600B7FD80E48C1896 2023-12-31 ext:ProfitLossAttributableToOwnersOfParentMember 815600B7FD80E48C1896 2023-12-31 ifrs-full:EquityAttributableToOwnersOfParentMember 815600B7FD80E48C1896 2023-12-31 ifrs-full:NoncontrollingInterestsMember iso4217:EUR xbrli:shares iso4217:EUR

2023

Report on Operations

Report

on

Operations

2023

these Financial Statements are available at the website

gruppoa2a.it

2 A2A Report on Operations 2023

Business Units 12

Geographical areas of activity 14

Group structure 16

Financial highlights

at December 31, 2023 17

Shareholdings 20

A2A S.p.A. on the Stock Exchange 21

Alternative Performance Indicators (APM) 24

1

Key figures

of the A2A Group

Sustainability and sustainable finance 32

2

Sustainability

and sustainable finance

3

Consolidated results

and report on operations

Summary of results, assets and liabilities

and financial position 38

Significant events during the year 47

Significant events after December 31, 2023 54

Climate change 55

Taxonomy 62

Outlook for operations 63

Proposal for the allocation of net profit for the year ended December 31, 2023 and the distribution of a dividend 65

Contents

5

Letter to Shareholders

and Stakeholders

9

Corporate boards

2023 Report on Operations A2A 3

Risks and uncertainties 120

Other information 132

7

Risks and uncertainties

8

Other information

6

Evolution of the regulation

and impacts on the Business Units

of the A2A Group

Generation and Trading Business Unit 100

Market Business Unit 102

Waste Business Unit 105

Smart Infrastructures Business Unit 110

5

Analysis of main sectors

of activities

Summary of results sector by sector 74

Results sector by sector 78

Generation and Trading Business Unit 80

Market Business Unit 83

Waste Business Unit 87

Smart Infrastructures Business Unit 90

Corporate 94

Macroeconomic scenario 68

Energy market trends 70

4

Scenario and Market

This is a translation of the Italian original “Relazione sulla Gestione 2023” and has been prepared solely for the convenience of international readers. In the event of any ambiguity the Italian text will prevail. The Italian original is available at the website gruppoa2a.it

Letter to Shareholders and Stakeholders 2023 Report on Operations A2A 5

Letter to Shareholders and Stakeholders

For the third year in a row, we write our letter to stakeholders having to take into account a geopolitical context of increasing complexity and rapid change.

The ongoing conflicts in many areas of the world, Europe, the Middle East, Africa, highlight more intense social conflict and are the source of a strong sense of insecurity that contributes to the increase in migratory phenomena, as a consequence of the lack of prospects, droughts and, more generally, climate change.

From an economic point of view, gas prices halved during 2023 and even reduced to a quarter of their 2022 peaks. Inflation has also started to slow down, despite the crisis in international trade due to transit through the Red Sea and the Panama Strait.

Despite these emergencies, international diplomacy has not forgotten the priority of combating climate change. The final text approved at COP28 enshrines, for the first time, the principle of exit from all fossil fuels. Agreement only partially satisfactory since, while admitting the distance to the decarbonization trajectory outlined in the Paris Agreement, it failed to define effective targets for the phase-out of non-renewable sources.

And, while in 2023, the European Union started the process of passing important legislation to protect biodiversity, the WWF notes that there is about 70% less wild animal population on Earth than in 1970, and for science we have lost 50% of the trees since the dawn of civilisation.

All this, in the hottest year on record.

At such a complicated time, the budget, and this accompanying note, are an essential appointment for us to reflect on the journey and share the challenges and opportunities of the near future. We are once again faced with unstable scenarios that we have decided to tackle by confirming our commitments and, at the same time, setting new goals. In 2023, we therefore worked assiduously to contribute to the improvement of the system we are part of as a Life Company. Our technology,

infrastructures and services aim to contribute to the development of society, the well-being of people and the preservation of ecosystems, thanks to a model that we believe is sustainable and virtuous, and which rests on two distinct but closely interconnected pillars: the circular economy and the energy transition.

Before commenting on the results we have achieved and which have seen us conclude a year of great satisfaction, we would like to pause to remember the colleague who lost his life in a dramatic accident last November, the first fatal accident in A2A’s albeit brief history. Our thoughts are with him and his family. And to all the people of the Group, the confirmation of a constant commitment to the application of the best safety rules and practices that everyone must respect, for themselves and their loved ones.

Thanks to the contribution of all Group Business Units, in particular the Generation and Trading BU and the Market BU, we ended 2023 with our best results ever: EBITDA amounted to 1,971 million euro, +32% compared to the previous year, and Net Profit was 659 million euro, +64% compared to 2022. Numerous industry targets set in the first Strategic Plan 2021-2030 presented in January 2021 were exceeded, including, for example, the customer base (from 2.9 million customers in 2020 to 3.5 million in 2023; +0.2 million customers compared to 2023P 1) and power generation capacity from renewable sources (from 0.1 GW in 2020 to 0.6 in 2023; +0.2 GW compared to 2023P 1). In addition, we have further increased investments in key infrastructure for the ecological transition in 2023, 11% more than in 2022 for a total of 1,376 million euro.

On the energy transition front, 2023 for our Group was a year of important actions aimed at increasing production from renewable sources. The main one was the start-up of the Matarocco wind farm in Sicily, with an installed capacity of 30 MW.

During the year, investments in improving the resilience of electricity grids continued with the inauguration of a new primary substation

1 Value planned in the first 10-year plan 2021-30, presented in January 2021

Letter to

Shareholders and Stakeholders

in Vobarno in the province of Brescia, designed with attention to the landscape and environmental compensation activities. We have patented and inaugurated at Unareti’s Smart Lab in Milan a completely watertight underground secondary station, to respond to the increasingly frequent flooding. Also in 2023, after a great deal of dialogue with the territory and local institutions, we obtained authorisation to proceed with the reconversion of the Monfalcone plant: the new cogeneration plant will replace the current coal-fired plant, helping to rationalise the Group’s production, becoming a fundamental asset for the country’s energy security.

While the area of energy transition has been very satisfying, in the area of the circular economy we have been working just as hard: incoming waste treated at our plants has increased by 16% compared to 2022. From the collection a percentage close to zero was destined for landfill, which shows how in our business model waste is a raw material from which new resources can be obtained, to fuel the production of electricity and heat.

Along these lines, in 2023, we further developed the technology of our waste-to-energy plants to increase the capacity to supply the electricity grid and district heating with an alternative source to fossil fuels, thus contributing to the decarbonization of the country. In particular, on the Brescia waste-to-energy plant, the revamping of the flue gas filtration system with heat recovery was completed in 2023, which made it possible to reduce the emissions of acid components and nitrogen oxides and to recover the energy currently dispersed by the flue gas. As a result, we have increased heat production to the value of heating 12,500 households.

In partnership with Phononic Vibes, a spin-off of the Politecnico di Milano, a second patent was also obtained for the development of a technology capable of absorbing sound and mechanical waves during the glass recycling process, helping to contain noise typical of the urban environment.

As a result of all these investments in the ecological transition and an external context that has seen a mitigation of the energy crisis, climate-changing emissions from our plants were substantially reduced to 5.6 million ton in 2023, a reduction of 36% compared to 2022.

In response to the demands around us for a transition that is also fair and shared, we have continued, with even greater determination, to work for the development of the country and the well-being of the communities we serve.

For our colleagues. We have updated the DE&I Declaration of Commitment, 6 Group companies have obtained Gender Equality Certification and, for the first time, more than half (52%) of the entry level positions among employees (under 28 years of age) are filled by women. In 2023, more than 1,500 people joined our Group, 39% of them under 30, giving many young people the chance to have a secure job (more than 97% of contracts are permanent), with a net increase of 263 new colleagues.

For our customers. We launched Noi2, the innovative lighting offer dedicated to domestic consumers; a real partnership for 10 years, to jointly support the growth of production from renewable sources: thanks to V.I.P. (Virtual Innovative Panel), our customers have a daily mix of energy available from A2A’s wind and photovoltaic plants in Italy.

For our suppliers. We have raised the weight of the ESG area in supplier assessment to 30% and supported companies in our territories in implementing sustainability practices within their processes, publishing and disseminating three training documents in ‘guidelines’ format, specifically for drafting their own Code of Ethics, Environmental Policy and Human Rights Policy.

For our territories. We celebrated water in Valtellina and Valchiavenna with a busy program of initiatives aimed at promoting good practices for correct use, reduction of losses, recovery, reuse and improvement of services dedicated to the water resource. We received over 670,000 visitors at the A2A “Festival of Lights” during the Brescia and Bergamo Capitals of Culture 2023 initiatives.

For our stakeholders. We crossed Italy with the annual program “Alliances for Ecological Transition”, holding 11 Multistakeholder Forums in the main territories where we are present, involving some 200 partners including institutions, associations, cultural bodies, universities and community representatives to build together shared-value projects for the sustainable development of the various local realities.

For future generations. We have chosen to actively interpret the new Article 9 of the Constitution with an expansion of activities dedicated to the world of schools, children and young people. We developed our educational and outreach activities by involving over 100,000 people this year in educational projects, plant visits, and by launching a new initiative to give a voice to the new generations, the “Futuro in Circolo” movement, which unites children and adolescents in the mission of raising awareness of environmental protection in their communities.

6 A2A Report on Operations 2023 Letter to Shareholders and Stakeholders

The Chairman

Roberto Tasca

The Chief Executive Officer

Renato Mazzoncini

In this context, aware of the challenges posed by the scenario around us and the need to have a clear long-term vision in order to be effective in our choices and investments, we wanted to relaunch our commitment with a new Strategic Plan, presented to the market on March 12. The two pillars of the Circular Economy and the Energy Transition remain at the heart of our strategy but project goals to 2035, an intermediate goal compared to the continent’s net zero at 2050, however fundamental for the sustainability of the Group, for the well-being of people, the prosperity of the companies we work with and the preservation of nature.

The Group will invest 22 billion euro over the period 2024-2035, of which 6 billion euro will be allocated to the Circular Economy and 16 billion euro to Energy Transition. With respect to the latter, investments will also include the acquisition of a large part of the electricity distribution network in the province of Milan and, in the Brescia area, in Valtrompia: 17 thousand kilometers of electricity grid, on which 800 thousand POD and 60 primary substations are located. The Business Plan confirms the Group’s focus on a balanced

and sustainable financial structure, aimed at maintaining A2A’s credit profile at a solid investment grade. The careful allocation of capital will enable the company to achieve important economic results: EBITDA is expected to reach 2.2 billion euro in 2026 and over 3.2 billion euro with a profit of over 1 billion euro in 2035.

To keep these promises we work every day, together with our 14,000 colleagues, whom we would also like to thank in this letter, because our vision aims far ahead, but our awareness tells us that we build the future today, acting consciously, with our daily work and the ethical rigour of our behaviour.

Letter to Shareholders and Stakeholders 2023 Report on Operations A2A 7

Letter to

Shareholders and Stakeholders

Corporate boards

Board of Directors

Chairman

Roberto Tasca

Deputy Chairman

Giovanni Comboni

Chief Executive Officer and General Manager

Renato Mazzoncini

Directors

Elisabetta Bombana

Vincenzo Cariello

Maria Elisa D’Amico

Susanna Dorigoni

Fabio Lavini

Mario Motta

Elisabetta Pistis

Maria Grazia Speranza

Alessandro Zunino

Board of Statutory Auditors

Chairman

Silvia Muzi

Statutory Auditors

Maurizio Dallocchio

Chiara Segala

Alternate Auditors

Vieri Chimenti

Patrizia Riva

Independent Auditors

EY S.p.A.

Corporate boards 2023 Report on Operations A2A 9

Corporate

boards

Report on Operations

2023

1

Key figures

of the A2A Group

12 A2A Report on Operations 2023 Key figures of the A2A Group

1.1

Business Units

The A2A Group operates in the production, sale and distribution of gas and electricity, district heating, environmental services and the integrated water cycle.

These sectors are in turn attributable to the “Business Units” specified in the following scheme identified following the reorganization made by management:

Generation and Trading

• Thermoelectric, hydroelectric and other renewable plants

• Energy Management

Market

• Sale of Electricity and Gas

• Energy efficiency

• Electric mobility

Waste

• Waste collection and street sweeping

• Treatment

• Disposal and energy recovery

Smart Infrastructures

• Electricity networks

• Gas networks

• Integrated water cycle

• District Heating services

• Heat management services

• Development and management of technological infrastructures for integrated digital services

• Public lighting

Corporate

• Corporate services

This breakdown into Business Units 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.

Key figures of the A2A Group 2023 Report on Operations A2A 13

1

Key figures

of the A2A

Group

1.1

Business Units

1.2

Geographical

areas of activity

1.3

Group

structure

1.4

Financial

highlights at

December 31,

2023

1.5

Shareholdings

1.6

A2A S.p.A.

on the Stock

Exchange

1.7

Alternative Performance

Indicators

(APM)

14 A2A Report on Operations 2023 Key figures of the A2A Group

Pavia

Monza

Mantova

Brescia - Registered Office

Varese

Lecco

Lodi

Sondrio

Bergamo

Cremona

Como

Milan

Lombardia

1.2

Geographical areas of activity

Plants

Energy

Thermoelectric

Hydroelectric

Photovoltaic

Wind

Environment

Waste-to-energy

Waste treatment plant

Material recovery plant

Landfill

Biogas production

Services

Waste

Waste collection

Distribution and transport

Electricity distribution

Gas distribution

Gas transport

District heating

District heating

Water

Integrated water service

Lighting

Public lighting

Electric mobility

e-Moving charging stations

Partnership

Partnership

Technological

Updated at 12.31.2023

Key figures of the A2A Group 2023 Report on Operations A2A 15

1

Key figures

of the A2A

Group

1.1

Business Units

1.2

Geographical

areas of activity

1.3

Group

structure

1.4

Financial

highlights at

December 31,

2023

1.5

Shareholdings

1.6

A2A S.p.A.

on the Stock

Exchange

1.7

Alternative Performance

Indicators

(APM)

16 A2A Report on Operations 2023 Key figures of the A2A Group

1.3

Group structure

This chart shows the most significant shareholdings of the A2A Group. Reference is made to annexes 1, 2 and 3 of the file of the Consolidated Financial Statements for a complete detail of shareholdings.

1 30% h eld through A2A Integrambiente S.r.l..

100% A2A gencogas

100% A2A Energiefuture

100% A2A Rinnovabili

100% Linea Green

41.34% Acinque

33.52% AEB

100% A2A Ciclo Idrico

100% A2A Calore & Servizi

100% A2A Smart City

100% Unareti

95.60% LD Reti

91.60% Retragas

89% Camuna Energia

74.80% ASVT

50% Ergosud

99.75% Acinque Energia

100% Acinque Ambiente

100% Lereti

100% Acinque Tecnologie

90% VGE 05

100% Gelsia

100% Gelsia Ambiente(1)

100% A2A Illuminazione

Pubblica

100% RetiPiù

100% A2A Energia

100% A2A Energy Solutions

99.98% LumEnergia

50% Metamer

100% A2A Ambiente

100% Amsa

100% Aprica

100% AGRIPOWER

100% Linea Ambiente

100% A2A Airport Energy

100% Termica Cologno

Generation

and Trading

Market

Waste

Smart

Infrasctructures

Other companies

Key figures of the A2A Group 2023 Report on Operations A2A 17

1.4

Financial highlights

at December 31, 2023 (**)

Income statement figures

m illions of euro

01 01 2023

12 31 2023

01 01 2022

12 31 2022

Restated

Revenues

14,758

23,156

Operating expenses

(11,972)

(20,893)

Labour costs

(815)

(765)

Gross Operating Income - EBITDA

1,971

1,498

Depreciation, amortization, provisions and write-downs

(954)

(816)

Net Operating Income - EBIT

1,017

682

Result from non-recurring transactions

2

157

Financial balance

(140)

(88)

Result before taxes

879

751

Income taxes

(199)

(344)

Net result from discontinued operations

3

41

Minorities

(24)

(47)

Group result of the year

659

401

Gross Operating Income/Revenues

13.4%

6.5%

14,758

mln €

Revenues

1,971

mln €

Gross Operating Income

0.0958

€ per share

Dividend

659

mln €

Result of the year

(**) The figures serve as performance indicators as required by CESRN/05/178/B.

1

Key figures

of the A2A

Group

1.1

Business Units

1.2

Geographical

areas of activity

1.3

Group

structure

1.4

Financial

highlights at

December 31,

2023

1.5

Shareholdings

1.6

A2A S.p.A.

on the Stock

Exchange

1.7

Alternative Performance

Indicators

(APM)

18 A2A Report on Operations 2023 Key figures of the A2A Group

Balance sheet figures

millions of euro

12 31 2023

12 31 2022

Net capital employed

9,485

8,725

Equity attributable to the Group and minorities

4,802

4,467

Consolidated net financial position

(4,683)

(4,258)

Consolidated net financial position / Equity attributable to the Group and minorities

0.98

0.95

Consolidated net financial position / EBITDA

2.4

2.8

Financial data

millions of euro

01 01 2023

12 31 2023

01 01 2022

12 31 2022

Net cash flows from operating activities

1,040

1,260

Net cash used in investing activities

(1,365)

(1,142)

Free cash flow (Cash Flow Statement figure)

(325)

118

Energy scenario

12 31 2023

12 31 2022

Average of the PUN (Single Nationwide Price) Base load (Euro/MWh)

127.4

303.1

Average of the PUN (Single Nationwide Price) Peak load (Euro/MWh)

137.4

333.6

Average price of gas to the PSV* (Euro/MWh)

42.3

121.9

Average price of emission certificates EU ETS** (Euro/tonne)

85.0

81.3

(*) Price of gas of reference for the Italian market.

(**) EU Emissions Trading System.

Key figures of the A2A Group 2023 Report on Operations A2A 19

Group’s key operational indicators

12 31 2023

12 31 2022

Generation and Trading

Thermoelectric production (GWh)

9,134

15,636

Hydroelectric production (GWh)

3,743

2,729

Photovoltaic and wind production (GWh)

806

638

Electricity sold to wholesale customers (GWh)

10,217

14,791

Electricity sold on the Power Exchange (GWh)

13,561

18,726

Market

Electricity sold to retail customers (GWh)

22,964

20,737

POD Electricity (#/1000)

1,935

1,491

of which POD Electricity Free Market

1,307

1,128

Gas sold to retail customers (Mcm)

3,032

2,677

PDR Gas (#/1000)

1,555

1,579

of which PDR Gas Free Market

1,178

1,043

Waste

Waste collected (Kton)

1,787

1,785

Residents served (#/1000)

3,928

3,965

Waste disposed of (Kton)

3,640

3,368

Electricity sold by waste-to-energy (GWh)

2,071

2,121

Smart Infrastructures

Electricity distributed (GWh)

10,882

11,238

Gas distributed (Mcm)

2,503

2,726

Water distributed (Mcm)

69

75

RAB Electricity (M€)

953

827

RAB Gas (M€)

1,594

1,498

RAB Water Cycle (M€)

457

399

Heat sales (GWht)

2,898

2,894

Cogeneration production (GWh)

726

421

1

Key figures

of the A2A

Group

1.1

Business Units

1.2

Geographical

areas of activity

1.3

Group

structure

1.4

Financial

highlights at

December 31,

2023

1.5

Shareholdings

1.6

A2A S.p.A.

on the Stock

Exchange

1.7

Alternative Performance

Indicators

(APM)

20 A2A Report on Operations 2023 Key figures of the A2A Group

1.5

Shareholding (*)

25.0

Municipality of Brescia

25.0

Municipality of Milan

Market

45.5

Other municipalities

4.5

Key figures of A2A S.p.A.

12 31 2023

12 31 2022

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)

-

-

%

(*) Sources: Shareholders’ Register updated at dividend payment date (May 24, 2023) and communications received in accordance with Art. 120 of Legislative Decree February 24, 1998, no. 58 (“TUF”).

Key figures of the A2A Group 2023 Report on Operations A2A 21

1.6

A2A S.p.A. on the Stock Exchange

A2A S.p.A. in figures (Italian Stock Exchange)

Market capitalisation at December 29, 2023 (millions of euro):

5,824

Share capital at December 29, 2023 (shares):

3,132,905,277

Price at December 29, 2023 (€/share)

1.86

2023

Average market cap (millions of euro)

5,108

Average daily volumes (shares)

9,834,571

Average price (€/share)

1.63

Maximum price (€/share)

1.99

Minimum price (€/share)

1.27

Source: Bloomberg.

A2A stock is also traded on the following platforms: Aquis, CBOE, Equiduct, ITG Posit, LSE OTC, Sigma-X, Turquoise

On May 24, 2023 A2A distributed a dividend equal to 0.0904 euro per share.

A2A forms part of the following indices

FTSE MIB

STOXX Europe 600

STOXX Europe 600 Utilities

EURO STOXX

EURO STOXX Utilities

MSCI Europe Small Cap

WisdomTree International Equity

S&P Global Mid Small Cap

S&P Global Dividend Aristocrats

ESG Indices

MIB ESG

FTSE4Good

ECPI Indices

Ethibel Sustainability Index Excellence Europe

EURO STOXX Sustainability

Euronext Vigeo Index: Eurozone 120

Standard Ethics Italian Index

Bloomberg Gender Equality Index

Solactive Climate and Energy Transition Index

Source: Bloomberg and company information.

In 2023 A2A obtained the following ESG ratings:

Assessment

Rating ESG

CDP Climate Change

B

CDP Water

A-

FTSE ESG Rating

3.8/5

ISS ESG

B-

MSCI

BBB

Refinitiv

B+

Standard Ethics

EE+

S&P CSA

67/100

Sustainalytics

21.3/40

Vigeo

61/100

Debt Rating

Current

Standard & Poor’s

M/L Term Rating

BBB

Short Term Rating

A-2

Outlook

Stable

Moody’s

M/L Term Rating

Baa2

Outlook

Stable

Source: Rating Agencies.

Moreover, A2A has been included in the Ethibel Excellence Investment Register and in the Ethibel Pioneer Investment Register.

1

Key figures

of the A2A

Group

1.1

Business Units

1.2

Geographical

areas of activity

1.3

Group

structure

1.4

Financial

highlights at

December 31,

2023

1.5

Shareholdings

1.6

A2A S.p.A.

on the Stock

Exchange

1.7

Alternative Performance

Indicators

(APM)

22 A2A Report on Operations 2023 Key figures of the A2A Group

Source: Bloomberg.

A2A vs FTSE MIB and EURO STOXX UTILITIES

(Price 30th December 2022 = 100)

Historical volatility in 2023

A2A: 21.9%

FTSE MIB: 15.9%

A2A: price and volumes

Key figures of the A2A Group 2023 Report on Operations A2A 23

European stock markets closed 2023 with significant growth: CAC 40 +16.5%, DAX +20.3%, IBEX +22.8%. In the US, the Nasdaq (+43.4%) reached record levels, supported by big tech and AI-related topics, while the S&P 500 (+19%) was more in line with European markets. Slightly positive was the London stock exchange (FTSE 100 +3.8%), sharply down was the Chinese stock exchange (CSI 300 -11.4%).

The year was marked by the continuation of restrictive monetary policies by the major central banks: in particular, the ECB raised rates by 200bps (from 2.5% to 4.5%, last increase in September), the Fed by 150bps (from 3.875% to 5.375%, last increase in August).

The effects of these policies, together with the normalization of energy commodity prices, led to a gradual slowdown in inflation (Eurozone from +9.2% yoy in December 2022 to +2.9% in December 2023, Italy from +11.2% to +0.6%), from which equity markets benefited, especially in the first half of the year.

The FTSE MIB recorded the best annual performance in Europe (+28.0%), breaking through the 30,000-point threshold for the first time since 2008.

The Italian utilities sector recorded an annual increase of +26.8%, outperforming the euro area sector index (11.9%) thanks to the normalization of the energy scenario and the gradual stabilization of interest rates.

The A2A share rose by 49.3% year-on-year to close 2023 at 1.86 euro/share, after having reached the highest level since autumn 2008 in November (around 2 euro). Market capitalization at the end of the year was over 5.8 billion euro.

The share price’s growth, which exceeded that of the benchmark indices and other companies in the sector, was driven by the positive reception of interim results, significant upward revisions to 2023 guidance, and an improved outlook on corporate debt by Standard & Poor’s and Moody’s.

1

Key figures

of the A2A

Group

1.1

Business Units

1.2

Geographical

areas of activity

1.3

Group

structure

1.4

Financial

highlights at

December 31,

2023

1.5

Shareholdings

1.6

A2A S.p.A.

on the Stock

Exchange

1.7

Alternative Performance

Indicators

(APM)

24 A2A Report on Operations 2023 Key figures of the A2A Group

1.7

Alternative Performance Indicators (APM)

Earnings per share

euro per share

Dividend

euro per share

Dividend Yield

Key figures of the A2A Group 2023 Report on Operations A2A 25

Gross Operating Income

millions of euro

Net Financial Position/EBITDA

millions of euro

ROE

Net Investments

millions of euro

ROI

Net Financial Position

millions of euro

1

Key figures

of the A2A

Group

1.1

Business Units

1.2

Geographical

areas of activity

1.3

Group

structure

1.4

Financial

highlights at

December 31,

2023

1.5

Shareholdings

1.6

A2A S.p.A.

on the Stock

Exchange

1.7

Alternative Performance

Indicators

(APM)

26 A2A Report on Operations 2023 Key figures of the A2A Group

Alternative Performance Measures (APM)

In this Report on Operations, a number of Alternative Performance Measures (APM) have been used that are different from the financial indicators expressly provided for by the international accounting standards IFRS-EU adopted by the Group.

These alternative measures are used by the A2A Group in order to more effectively submit information on the profitability of the business in which it operates as well as on the financial situation, useful to improve the overall capacity to assess financial and equity performance.

These indicators are shown in the “Summary of results and financial position of the A2A Group”. For the Income Statement and the Balance Sheet, the comparative values refer to December 31, 2022.

With reference to alternative indicators, on December 3, 2015, Consob issued Communication no. 92543/15, which transposes the Guidelines on the use and presentation of Alternative Performance Measures as part of regulated financial information, issued on October 3, 2015 by the European Securities and Markets Authority (ESMA). These Guidelines - which have updated the CESR Recommendation on Alternative Performance Measures (CESR/05 - 178b) - are intended to promote the usefulness and transparency of alternative indicators to improve their comparability, reliability and understanding.

On March 4, 2021, ESMA also published a new version of its Guidelines on disclosure requirements pursuant to the prospectus regulation (ESMA/32-382-1138), applicable from May 5, 2021 and updating the previous CESR Recommendations (ESMA/2013/319), with the aim of providing issuers with indications relating to the assessment of relevant information to be included in the financial disclosure.

In accordance with the Guidelines, the descriptions, content and bases of calculation used for the construction of the Alternative Performance Measures adopted by the Group are described below.

Gross operating margin

Gross operating margin is an alternative indicator of operating performance, calculated as the sum of “Net operating income” plus “Depreciation, amortization, provisions and write-downs”.

This APM is used by the A2A Group as financial target in presentations both within the Group (Business Plans) and external (presentations to financial analysts and investors) and represents a useful measure to assess the operating performance of the Group (both as a whole and in terms of individual Business Unit), also through a comparison between the operating results of the

reporting period with those relating to previous periods or years. This indicator also allows conducting analyses on operational trends and measure performance in terms of operational efficiency over time.

Result from non-recurring transactions

The Result from non-recurring transactions is an alternative performance measure designed to highlight the capital gains/losses arising from the valuation at fair value of non-current assets sold and the results from the sale of equity investments in unconsolidated subsidiaries and associated companies and other non-operating income/expenses.

This measure is positioned between net operating income and the financial balance. In this way net operating income is not affected by non-recurring operations, making it easier to measure the effective performance of the Group’s ordinary operating activities.

Net fixed capital

Net fixed capital is determined as the algebraic sum of:

• tangible assets;

• intangible assets;

• capex accounted for using the equity method and other non-current financial assets;

• other non-current assets and liabilities;

• deferred tax assets and deferred tax liabilities;

• provisions for risks, charges and liabilities for landfills;

• employee benefits.

This APM is used by the A2A Group as financial target in presentations both within the Group (Business Plans) and external (presentations to financial analysts and investors) and represents a useful measure of the net fixed assets of the Group as a whole, also through the comparison between the reporting period with those relating to previous periods or years.

This indicator also allows conducting analyses on operational trends and measure performance in terms of operational efficiency over time.

Key figures of the A2A Group 2023 Report on Operations A2A 27

Net Working Capital and Other Current Assets/Liabilities

Net Working Capital is determined as the algebraic sum of:

• inventories;

• trade receivables;

• trade payables;

Other current assets/liabilities include:

• other current assets;

• other current liabilities;

• current tax assets/tax liabilities.

This APM is used by the A2A Group as financial target in presentations both within the Group (Business Plans) and external (presentations to financial analysts and investors) and represents a useful measure of the ability to generate cash flow from operations within a period of twelve months, also through the comparison between the reporting period with those relating to previous periods or years.

This indicator also allows conducting analyses on operational trends and measure performance in terms of operational efficiency over time.

Invested capital/Net invested capital

Invested capital/Net invested capital is calculated as the sum of Net fixed capital, Net working capital and Assets/Liabilities held for sale.

This APM is used by the A2A Group as the financial target in presentations both within the Group (Business Plans) and external (presentations to financial analysts and investors); it represents a useful measure for the evaluation of total net assets, both current and fixed.

Sources of funds

Sources of funds are calculated by adding “Shareholders’ Equity” and “Total Net Financial Position”.

This APM is used by the A2A Group as financial target in presentations both within the Group (Business Plans) and external (presentations to financial analysts and investors) and represents the various sources by means of which the A2A Group is financed and the degree of autonomy that the A2A Group has in comparison with third party capital. This indicator also allows measuring the financial strength of the A2A Group.

Net financial position/Net debt

Net financial position/Net financial debt is an indicator of the financial structure, calculated as the sum of net financial position beyond one year and net financial position within one year. Specifically, total net financial position beyond one year is obtained from the algebraic sum of:

• Total medium and long-term debt: the item includes the non-current portion of bonds, bank loans, financial leasing and other non-current liabilities; Pursuant to the new ESMA recommendations, this item should also include the non-current portion of trade payables and other non-interest-bearing payables with a significant implicit financing component (payables with maturities of over 12 months);

• Total medium and long-term financial receivables: this item includes Non-current financial assets (including those with related parties) and Other non-current assets.

The net financial position within one year is derived from the algebraic sum of:

• Total short-term debt: this item includes the portion due within twelve months of bonds, bank loans, financial leasing, current financial liabilities to related parties and other current liabilities;

• Total short-term financial receivables: this item includes Other current financial assets (including to related parties) and Other current assets;

• Cash and cash equivalents and Cash and cash equivalents included in assets held for sale.

1

Key figures

of the A2A

Group

1.1

Business Units

1.2

Geographical

areas of activity

1.3

Group

structure

1.4

Financial

highlights at

December 31,

2023

1.5

Shareholdings

1.6

A2A S.p.A.

on the Stock

Exchange

1.7

Alternative Performance

Indicators

(APM)

28 A2A Report on Operations 2023 Key figures of the A2A Group

This APM is used by the A2A Group as financial target in presentations both within the Group (Business Plans) and external (presentations to financial analysts and investors) and is useful for the purposes of measuring the Group’s financial debt, also through the comparison between the reporting period with those relating to previous periods or years.

The A2A Group’s net financial position is calculated in accordance with Recommendations ESMA/32-382-1138 of March 4, 2021.

Capex in tangible and intangible assets

Investments in tangible and intangible assets are extrapolated from the information contained in the Notes of the Balance Sheet.

This APM is used by the A2A Group as financial target in presentations both within the Group (Business Plans) and external (presentations to financial analysts and investors) and is a useful measure of the resources used in the maintenance and development of the investments of the A2A Group (as a whole and in terms of individual Business Unit), also through the comparison between the reporting period with those relating to previous periods or years. This allows the A2A Group to conduct analyses on investment trends and measure performance in terms of operational efficiency over time.

Investors should not place undue reliance on these APM and should not consider all APM as: (i) an alternative to operating or net profit as calculated in accordance with IFRS; (ii) an assessment of the Group’s ability to meet cash needs alternative to as deduced from the cash flow from operating, investing or financing activities (as determined in accordance with IFRS); or (iii) an alternative to any other performance measure provided by IFRS.

These Alternative Performance Measures derive from the historical financial information of the A2A Group and are not intended to provide indications relating to future financial performance, financial position or cash flow of the Group. Moreover, these APM were calculated uniformly for all periods.

Special Items

Special Items are non-recurring events that occurred during the year and had an effect on the consolidated income statement

Ordinary Net Result (Ordinary Net Profit)

The Ordinary Net Result is calculated by excluding the impact of Special Items from each item in the Income Statement.

ROI

ROI, or return on net invested capital, is the ratio of net operating margin to net invested capital. It aims to measure the ability to generate wealth through operations and thus to remunerate equity and debt capital.

ROE

ROE, i.e. return on equity, is the ratio of ordinary net result to equity. It is intended to measure the profitability obtained by risk investors.

2

Sustainability

and sustainable finance

Report on Operations

2023

32 A2A Report on Operations 2023 Sustainability and sustainable finance

The A2A business model seeks to create shared sustainable value for the company over time and for its reference community. The objective of the model is to make a concrete contribution to the achievement of 11 of the 17 Sustainable Development Goals of the UN 2030 Agenda, enhancing the six capitals (Financial, Manufacturing, Natural, Human, Intellectual, Relational) on which the organization depends to ensure its services. Through the Integrated Report, the Group has for years reported annually on this value creation and on the commitments made with a view to sustainability.

On April 28, 2023, the seventh Group Integrated Report was presented to the A2A Shareholders’ Meeting, which for the sixth year, is also the Non-Financial Disclosure pursuant to Legislative Decree 254/16. This document continues to be drawn up according to rigorous and internationally shared standards and methodologies, in particular the Integrated Reporting Framework (IR Framework) and the international standards of the Global Reporting Initiative (GRI). In addition, for the third year, a new section has been included dedicated to the management of financial risks connected with climate change, in line with the recommendations of the Task Force on Climate-related Financial Disclosure (TCFD), with the aim of providing the world of finance with all the information it needs to properly assess A2A’s strategy for managing climate-related risks and opportunities. Furthermore, in anticipation of the regulatory changes to be introduced by the Corporate Sustainability Reporting Directive (CSRD). During 2023, the methodology of the financial materiality analysis was refined to be more in line with the requirements of the new European Reporting Standards (ESRS), which will become mandatory as of FY 2024 reporting. During 2024, further steps will be taken to achieve full alignment with the new European regulations. In addition, for the first time, the KPIs required by EU Regulation 2020/852 - Taxonomy of Sustainable Investments - for activities aligned with climate change mitigation and adaptation objectives were represented in the disclosure.

The Group’s Integrated Report was awarded at the fifty-ninth edition of the “Oscar di Bilancio” (Financial Statements Award), an initiative promoted by FERPI, in collaboration with Borsa Italiana and Bocconi University. The Integrated Report was recognized as the winner of the Special “Integrated Reporting” Award for the second year running, as it is “mature and consolidated and also strongly adheres to the International Framework. With a clear focus on continuous improvement by the

company, information connectivity, strategic focus and attention to governance and its impact on value creation are excellent. Risk analysis is excellent. It is balanced and easy to read.” Furthermore, the document has obtained recognition as part of the second edition of the Sustainability Report Award, the initiative promoted by Corriere della Sera and Buone Notizie newspapers conducted in collaboration with NeXt Nuova Economia with the aim of fostering the proper promotion and dissemination of sustainability issues and ESG development strategies. The Sustainability Report Award recognizes companies and organizations, which are systematically and punctually committed to the implementation of the ecological transition and by virtue of this have chosen to submit their work to evaluation. Specifically, A2A received a special mention for the category ‘Best CO2 Emission Reduction Policy’ in the Sustainability Report Award 2023. Lastly, at the annual CCH Tagetik InTouch event, A2A was awarded in the “ESG Front Runner” category as a pioneer in the use of the Tagetik solution in ESG and EU Taxonomy reporting and to support the definition of strategic ESG targets. This recognition is the result of the Group’s ongoing commitment to periodic and transparent reporting on actions taken and results achieved.

Environmental

Despite the contingent situation, the Group wanted to reaffirm its commitment to decarbonization. In 2022, in fact, the Group started working on the definition of a specific roadmap to achieve this goal and on the testing of carbon capture technologies. In 2023, A2A Ambiente and A2A S.p.A. were awarded Hercules funding under the European Horizon research funding schemes. This project, which involves 27 partners from 10 European countries, includes a five-year plan of studies to test new solutions in the CO2 capture, transport, utilization and storage (CCUS - Carbon Capture Utilization and Storage) supply chain in order to implement a scalable industrial process, envisages the small-scale realization of an experimental prototype for CO2 capture using calcium oxide (CaO) at the Silla 2 waste-to-energy plant in Milan. On February 15, 2023, the project was officially launched at the Piacenza campus of the Politecnico di Milano, with Laboratorio Energia e Ambiente Piacenza (LEAP), a consortium company owned by Polimi, as coordinator.

During the first half of 2023, the Group continued to act as a facilitator of the infrastructural growth of cities and their simultaneous decarbonization. April 2023

2.1

Sustainability and sustainable finance

Sustainability and sustainable finance 2023 Report on Operations A2A 33

saw the inauguration of the first series of City Plug columns in Brescia, thus promoting the development of private electric mobility in urban contexts with an increasingly capillary and innovative recharging network, accessible also to electric cars with small batteries and plug-in hybrids. The aim is indeed to offer a more widespread and affordable service, sustainable for the city and for those who decide to drive electric. Furthermore, our Group joined Eurogas to renew its commitment to decarbonization and to strengthen European interlocutions.

Social

As part of the Group’s stakeholder engagement activities, the Territorial Roadshow of the Multistakeholder Forums, a path of dialogue with the main stakeholders in the main territories where A2A is present, was also proposed in 2023.

The path, started in 2021 with The European House Ambrosetti, has been imagined as a circular scheme that can be replicated over the years. For this reason, for 2023, mirroring what was done last year, listening activities have been planned, starting from the format of the Svolte Giuste, in the six ‘historic’ territories of the North (Cremona, Bergamo, Brescia, Valtellina-Valchiavenna, Milan, Friuli Venezia-Giulia and Piedmont) and activities to build projects between A2A and its stakeholders in the three territories of the South (Calabria, Sicily and Apulia), enriching the program with two new stages: South Lombardy (former LGH area) and Monza-Brianza, for a total of eleven stages.

Thanks to this engagement program, 29 initiatives dedicated to the sustainable development of local realities were implemented in 2023 with the commitment of 18 internal Group structures.

In order to support a sustainable value chain, through the internal ESG supplier qualification platform, it was possible to develop, together with trade associations and suppliers, a vademecum useful for companies to achieve significant results in the process of integrating sustainability into their business models. As part of the same program, a SWG survey supported by A2A was carried out in 6 territories in northern Italy to analyze the relationship between specific local realities and sustainability. The results were shared

and discussed with stakeholders with the aim of disseminating targeted advice and good practice among citizens in each geographical area involved.

The engagement process also led to the establishment of the Sustainable Consumption Advisory Board for the cities of Milan, Brescia and Bergamo, an initiative dedicated to the major urban areas where the Group is present. The work was attended by the main stakeholders of the cities concerned, including Entities and Associations. The Advisory Board defined priorities and actions for sustainable consumption by citizens and businesses, collected in the city’s Sustainable Consumption Charter, which sets out the principles for a transition in the local context.

At each Forum, the 2022 territorial Sustainability Reports were presented, in order to report on the Group’s activities in the respective geographical areas of reference.

Considering national stakeholder engagement activities, in 2023, the Group developed the initiative: “Life Talks”. The objective of the format, which offers a series of conferences, is to focus on responsible resource management and the safeguarding of the essential elements of life and the very pillars of a Life Company: Energy, Water and Environment. The first event was held on July 10 with a focus on the resource “water”; the second event, dedicated to the environmental element, took place on November 23. The topics were discussed in depth with industry experts, researchers, scientists and key opinion leaders. Each event was accompanied by the release of the conference proceedings and a podcast series aimed at a wider audience.

During the first half of 2023, educational activities dedicated to schools continued in line with as planned for the 2022/23 school year. In the second half-year, the educational offer for the 2023/24 school year was prepared and launched.

By June, all national and territorial educational projects for all school levels were completed. 28 Intercultura scholarships have been made available for summer programs of linguistic study with a STEAM address abroad, reserved for deserving young male and female students. In addition, the annual cycle of webinar meetings for teachers was renewed for the new school year.

2

Sustainability and sustainable finance

2.1

Sustainability and sustainable finance

34 A2A Report on Operations 2023 Sustainability and sustainable finance

The 40-hour certified digital path of PCTO (Paths for Transversal Skills and Orientation) launched for 2022/23 and dedicated to high schools, ended in July and restarted continuously in September for the following school year.

In addition, two new virtual plant tours were published in 2023, dedicated respectively to the Brescia waste-to-energy plant and to the discovery of renewable energies: wind power and photovoltaics. Finally, a guidebook was published for teachers on topics related to the circular economy and energy transition.

Governance/Finance

In 2023, the company has also been confirmed in nine ESG ethical indices (MIB ESG, FTSE4Good Index, ECPI ESG Equity, Ethibel Sustainability Index Excellence Europe, EURO STOXX Sustainability Index, Euronext Vigeo Index, Eurozone 120, Standard Ethics Italian Index, Solactive Climate Change Index, Bloomber Gender Equality Index).

In June 2023, moreover, Standard Ethics, an independent rating agency that measures corporate sustainability, reconfirmed the A2A Corporate Rating to “EE+” with “Positive” outlook, positioning A2A as the company in its sector with the highest rating.

In the last quarter of 2023, the Group saw its MSCI rating rise from BB to BBB, consolidating its position in the reference scenario. Furthermore, the efforts made during 2022 and 2023 were recognized by the ESG Sustainalytics index, which raised the Group’s rating from 3.7 to 3.8, confirming its alignment with best practices.

A2A has a Sustainable Finance Framework, updated in February 2022.

The Sustainable Finance Framework, which represents the set of guidelines that strengthen the link between the Group’s financial strategy and sustainable strategy, combines two approaches: the Green-Use of Proceeds, which allows utmost transparency regarding the use of proceeds for specific projects, and the Sustainability-Linked component, which allows an overall reading of the Group’s longer-term strategy, linking debt instruments to one or more of the Group’s sustainability objectives.

The Sustainable Finance Framework, which covers any type of financial instrument, has been prepared in compliance with the Green Bond Principles (2021) and Sustainability-Linked Bond Principles 2020 published by the International Capital Market Association (ICMA),

and the Green Loan Principles (2021) and Sustainability-Linked Loan Principles (2021) published by the Loan Market Association (LMA).

Vigeo Eiris, now Moody’s, one of the leading international ESG rating agencies, issued a Second Party Opinion confirming the robustness of the Sustainable Finance Framework and attesting its alignment with ICMA and LMA principles. The agency also highlighted A2A’s commitment to the development of sustainable finance and its “Advance” position as an issuer.

During the first half of the year, A2A issued a new 500 million euro Green Bond, the net proceeds of which will go to finance Eligible Green Projects: strategic circular economy and energy transition projects linked to the development of renewables, the environmental sector, energy efficiency and electricity networks defined within A2A’s Sustainable Finance Framework. The Group selected projects eligible for the European Taxonomy - the EU regulation listing economic activities that can be considered sustainable.

During the second half-year, A2A subsequently signed a number of Use of Proceeds (Green Loan) loans, including a new loan with the European Investment Bank (EIB) in the amount of 200 million euro. This financing, in line with REPowerEU, supports the A2A commitment to promote the electrification of consumption and the use of energy from renewable sources, to the benefit of the country’s decarbonization. In fact, the A2A plan of action related to the financing includes the upgrading of its medium-voltage network with more than 200 km of new lines and the renovation of 247 km of existing network, in addition to approximately 86 km of new low-voltage lines and the replacement of 152 km of existing low-voltage network. The Group also plans to build a new primary substation and 286 new secondary substations, to renovate and expand 12 primary substations already in operation, and to modernize 423 active secondary substations.

As a result of these operations, the share of ESG debt in total gross debt at December 31, 2023 was 70%.

In addition, A2A further expanded its range of sustainable instruments by extending it to a KPI-linked insurance policy and a credit line for green guarantees. The new Pollution insurance solution is linked to the achievement of seven sustainability goals concerning the management of environmental risks. These include: number of audits related to the environmental component, percentage of plants monitored with respect to potential interference with biodiversity, and some specific KPIs related to prevention activities and aimed at obtaining the Protected Environment

Sustainability and sustainable finance 2023 Report on Operations A2A 35

certification. The new credit line for green guarantees allows guarantees to be issued in a green format, classified according to the eligibility criteria of the underlying projects based on A2A Sustainable Finance Framework, the EU Taxonomy of Sustainable Activities and the relevant international guidelines (including the UN Sustainable Development Goals Guidelines, the Green Bond Principles issued by ICMA and the Green Loan Principles issued by LSTA and LMA).

Finally, A2A considers it crucial to involve all relevant stakeholders, including investors, banking partners, institutions and companies in its sector, on the subject of sustainable finance, to compare and share best market practices in order to accelerate concrete action aimed at market development. Based on this approach, A2A continues to be a member of the Corporate Forum on Sustainable Finance (CFSF) from 2019 and of the Nasdaq Sustainable Bond Network (NSBN) from 2023. In addition, in January 2024, A2A became a member of the International Capital Market Association (ICMA).

2

Sustainability and sustainable finance

2.1

Sustainability and sustainable finance

3

Consolidated

results and report

on operations

Report on Operations

2023

38 A2A Report on Operations 2023 Consolidated results and report on operations

3.1

Summary of results, assets and liabilities and financial position

Results

It is noted that the consolidation scope as at December 31, 2023 changed compared to December 31, 2022 for to the following operations:

• the acquisition by AEB S.p.A. of 90% of VGE 05 S.r.l., a company operating in the photovoltaic sector, with the consequent line-by-line consolidation;

• the acquisition by A2A Calore & Servizi S.r.l. of 100% of Termica Cologno S.r.l. with the consequent line-by-line consolidation;

• the incorporation on April 11, 2023 by A2A S.p.A. of A2A Services & Real Estate S.p.A. (formerly A2A Servizi S.r.l.), which is consolidated on a line-by-line basis, and contribution by A2A S.p.A. on October 1, 2023. (81.33%), Acinque S.p.A. (10.29%) and Ambiente Energia Brianza S.p.A. (8.38%), of a BU relating to employee, customer, supplier and building services;

• the acquisition by A2A Rinnovabili S.p.A. of 100% of Juwi Development 12 S.r.l. and Juwi Development 13 S.r.l. with consequent line-by-line consolidation;

• the incorporation of the companies R2R 01 S.r.l., R2R 02 S.r.l., R2R 03 S.r.l. and R2R 04 S.r.l., by R2R S.r.l., which owns 100% of it, consolidated on a line-by-line basis;

• the incorporation of the company Mogorella S.r.l. by A2A Rinnovabili S.p.A., which owns 100% of it, consolidated on a line-by-line basis;

• the sale by A2A Ambiente S.p.A. of 80% of Bioenergia Gualdo S.r.l., 55% of Energia Anagni S.r.l. and its 100% owned subsidiary Bionergia Roccasecca S.r.l., with the resulting exit from the scope of consolidation.

Moreover, the economic figures at December 31, 2023 are not consistent with the previous year due to the following extraordinary transactions in 2022:

• acquisition in September 2022, and line-by-line consolidation by A2A Calore & Servizi S.r.l. of 100% of A2A Airport Energy S.p.A., a company engaged in the production and sale of electricity, heat and cooling;

• acquisition by A2A Rinnovabili S.p.A. of 100% of 4New S.r.l. and 3 New & Partners S.r.l., companies operating in the photovoltaic and wind power sectors, consolidated as of June 2022. A2A Rinnovabili S.p.A. also acquired, through its subsidiary 3 New & Partners S.r.l., 100% of 3 New & Partners Rinnovabili S.r.l. (a company incorporated in November 2022) resulting in the line-by-line consolidation, as of November 2022, of Daunia Calvello S.r.l. and Daunia Serracapriola S.r.l., companies that hold a portfolio of wind farms in Italy.

It should be noted that certain income statement items, referring to assets related to the integrated water service in accordance with IFRS 5, have been reclassified to “Net result from discontinued operations”. As a result, the values as at December 31, 2022 have been restated.

Consolidated results and report on operations 2023 Report on Operations A2A 39

The results of the A2A Group at December 31, 2023 are set out below together with comparative figures for the previous year.

millions of euro

01 01 2023

12 31 2023

01 01 2022

12 31 2022

Restated

Change

%

2023/2022

Revenues

14,758

23,156

(8,398)

(36.3%)

of which:

- Revenues from the sale of goods and services

14,492

22,938

(8,446)

(36.8%)

- Other operating income

266

218

48

22.0%

Operating expenses

(11,972)

(20,893)

8,921

(42.7%)

Labour costs

(815)

(765)

(50)

6.5%

Gross Operating Income - EBITDA

1,971

1,498

473

31.6%

Depreciation, amortization and write-downs

(803)

(724)

(79)

10.9%

Provisions

(151)

(92)

(59)

64.1%

Net Operating Income - EBIT

1,017

682

335

49.1%

Result from non-recurring transactions

2

157

(155)

(98.7%)

Net financial expenses

(139)

(90)

(49)

54.4%

Affiliates

-

2

(2)

(100%)

Result from disposal of other shareholdings

(1)

-

(1)

n.s.

Result before taxes

879

751

128

17.0%

Income taxes

(199)

(344)

145

(42.2%)

Result after taxes from operating activities

680

407

273

67.1%

Net result from discontinued operations

3

41

(38)

(92.7%)

Minorities

(24)

(47)

23

(48.9%)

Group result of the year

659

401

258

64.3%

In 2023, Group Revenues amounted to 14,758 million euro, down 36.3% compared to the previous year (23,156 million euro). More than 80% of the change is attributable to falling energy prices and the remainder to lower volumes sold and brokered in the wholesale markets, partially offset by higher quantities sold in the retail sector.

Operating expenses amounted to 11,972 million euro, down 42.7% year-on-year: in line with the revenue trend, the contraction is related to lower raw material procurement costs due to lower commodity prices.

Labour costs increased by 50 million euro (+6.5%), amounting to 815 million euro: about 50% of the change is related to the higher number of FTE (Full-Time Equivalent) in 2023 compared to the previous year (+402 FTE, +3%) as a result of the acquisition of new companies, the awarding of tenders in the urban hygiene sector and recruitment for the start-up of new plants and the expansion of certain facilities and business areas, in line with the Group's development objectives. The remainder of the increase is mainly attributable to salary increases for contractual renewals and remuneration policy.

EBITDA equaled 1,971 million euro, an increase of 31.6%, +473 million compared to the previous year (1,498 million euro).

Net of non-recurring items (+41 million euro in 2023, +10 million euro in 2022), the Gross Operating Margin amounted to 1,930 million euro, an increase of 29.7% compared to 2022 (1,488 million euro) thanks to the excellent performance of the Generation and Trading Business Unit and the Market Business Unit.

3

Consolidated results and report on operations

3.1

Summary of results, assets and liabilities and financial position

3.2

Significant events during the year

3.3

Significant events after December 31, 2023

3.4

Climate change

3.5

Taxonomy

3.6

Outlook for operations

3.7

Proposal for

the allocation of net profit for the year ended December 31,

2023 and the distribution

of a dividend

40 A2A Report on Operations 2023 Consolidated results and report on operations

The following table shows the composition of the Gross Operating Margin by Business Unit:

millions of euro

12 31 2023

12 31 2022

Restated

Delta

Delta %

Generation and Trading

829

554

275

49.6%

Market

299

125

174

n.s.

Waste

375

359

16

4.5%

Smart Infrastructures

534

512

22

4.3%

Corporate

(66)

(52)

(14)

n.s.

Total

1,971

1,498

473

31.6%

The Gross Operating Margin of the Generation and Trading Business Unit amounted to 829 million euro, an increase of 49.6%, +275 million euro compared to 2022. Net of the non-recurring components recorded in the year in question (+37 million euro) and in the previous year (-9 million euro), the Ordinary EBITDA increased by 229 million euro.

The positive change is mainly attributable to:

• positive effects resulting from the increased hydraulicity that the year under review benefited from compared to the previous year, which was penalized by a severe drought that had led to a significant drop in hydroelectric production and consequently, where necessary, a very costly recourse to the spot market in a context of rising prices;

• the contribution of production from other renewable sources, in particular wind power plants;

• effective hedging strategies, which, at the same time as the conclusion of the measure of the support decree ter (two-way compensation mechanism on the price of electricity fed in for RES plants), made it possible to offset the reduction in the price of energy commodities in the year under review.

The positive impacts were partly offset by a contraction in margins on the ancillary services markets (MSD) both due to fewer requests from Terna and a lower valorization of quantities, the lower contribution of combined cycle thermoelectric production and higher costs of structure (labor and costs for maintenance and operation).

EBITDA of the Market Business Unit equaled 299 million euro (125 million euro at December 31, 2022).

Net of non-recurring items (-18 million euro in 2023 and +2 million euro in 2022), Ordinary EBITDA increased by 194 million euro.

The growth in margins for 2023 compared to the previous year was attributable to:

• higher volumes of electricity sold in the safeguarded market;

• growth in volumes sold to the large customer segment, particularly gas;

• increase in the customer base of the mass market segment;

• increase in unit margins, also thanks to the full recovery of the contraction recorded in 2022 due to the different temporal distribution of the margins of fixed price sales, which confirmed the overall contractual margin on an annual or biennial basis.

These positive effects made it possible to absorb the higher charges related to retention actions, activated by the Group during 2023 on its customer base, and the increase in operating costs to support customer development and management (particularly ICT costs, indirect channels, marketing and communication).

In 2023, the Waste Business Unit recorded revenues of 1,458 million euro, an increase of 2.5% compared to the previous year (1,422 million euro at December 31, 2022): the increase in revenues from the sale of electricity from waste-to-energy plants more than compensated for the decrease in revenues from paper disposal resulting from the drop in prices recorded in 2023 compared to the previous year.

The EBITDA of the Waste Business Unit equaled 375 million euro (359 million euro at December 31, 2022).

Net of the non-recurring components recorded in the two comparison periods (+3 million euro in 2023 and +9 million euro in 2022), the Ordinary Gross Operating Margin stands at 372 million euro, an increase of 22 million euro compared to the previous year (+6.3%).

Consolidated results and report on operations 2023 Report on Operations A2A 41

This result was determined by:

• +8 million euro related to the Collection segment mainly due to lower costs for the disposal of the organic fraction of waste and lower expenses for vehicle maintenance and fuel, which more than offset the increase in personnel costs;

• +14 million euro related to Municipal Waste Treatment Plants mainly due to the increase in electricity revenues from waste-to-energy plants and the higher margins of biomass plants (Sant'Agata di Puglia), despite the increase in raw material costs.

The Gross Operating Margin of the Smart Infrastructures Business Unit in 2023 was 534 million euro (512 million euro at December 31, 2022).

Net of non-recurring items (+19 million euro in 2023; +17 million euro in the previous year), the Business Unit's ordinary Gross Operating Margin was 515 million euro, up 20 million euro compared to 2022.

The change in margins is distributed as follows:

• +17 million euro related to the electricity distribution network due to an increase in revenue allowed for regulatory purposes as a result of increased investments and inflation, and higher connection contributions;

• +11 million euro relating to the gas distribution network due to an increase in the restriction on revenues admitted for regulatory purposes due to an increase in investments and inflation;

• +15 million euro related to the water cycle attributable to the decrease in electricity costs and the increase in regulated revenues;

• -17 million euro relating to heat due to lower volumes of district heating sold by companies in the sector with the same perimeter and higher operating costs. This contraction in margins was partially offset by the contribution of the new company A2A Airport and the marginality of heat management related to the superbonus business;

• -6 million euro related to the public lighting segment due to the adjustment of fees to changes in energy costs.

“Depreciation, amortization, provisions and write-downs” totaled 954 million euro (816 million euro at December 31, 2022), representing an increase of 138 million euro.

“Depreciation, amortization and write-downs” amounted to 803 million euro (724 million euro as at December 31, 2022).

Amortization of intangible assets amounted to 278 million euro (231 million euro at December 31, 2022). The item includes increased amortization of 47 million euro relating to the integrated water service, gas distribution and metering, implementation of information systems and new customer lists for 42 million euro and 5 million euro for the change in the scope of consolidation.

Depreciation and amortisation of tangible assets, which amounted to 523 million euro, increased by 32 million euro compared to December 31, 2022 and mainly related to increases in investments and changes in the scope of consolidation. In particular:

• higher depreciation of 15 million euro, mainly relating to the investments which went into production after December 31, 2022;

• higher depreciation of 17 million euro, relating to the first-time consolidations;

• higher depreciation of 3 million euro for rights of use;

• higher depreciation of 3 million euro related to the new appraisals and change in discount and inflation rates on the closure/post closure provisions for landfills and decommissioning;

• lower depreciation of 6 million euro related to the disinvestment plan for the assets of the Linea 1 waste-to-energy treatment and storage plant in Parona and to some photovoltaic plants.

Write-downs for the year amounted to 2 million euro (2 million euro as at December 31, 2022) and mainly related to the cancellation of projects no longer in the company’s core business.

3

Consolidated results and report on operations

3.1

Summary of results, assets and liabilities and financial position

3.2

Significant events during the year

3.3

Significant events after December 31, 2023

3.4

Climate change

3.5

Taxonomy

3.6

Outlook for operations

3.7

Proposal for

the allocation of net profit for the year ended December 31,

2023 and the distribution

of a dividend

42 A2A Report on Operations 2023 Consolidated results and report on operations

“Provisions for risks” had a net effect of 68 million euro (net effect of 2 million euro at December 31, 2022) due to the provisions for the year of 80 million euro relating to the provision for derivation fees public water for 46 million euro, to provisions for closure and post-closure costs of landfills and decommissioning for 13 million euro, to provisions relating to compensation linked to delays in the management of active connection practices for 13 million euro and to other provisions for 8 million euro, adjusted for 12 million euro by surpluses mainly following the release of tax provisions, closure and post-closure expense provisions on landfills and other provisions.

The “Bad debt provision” amounted to 83 million euro (90 million euro at December 31, 2022).

As a result of these changes “Net operating income” amounted to 1,017 million euro (682 million euro for the year ended December 31, 2022).

The “Result from non-recurring transactions” amounted to 2 million euro (157 million euro at December 31, 2022) and refers to the capital gain deriving from the sale of land in the Bovisa area located in the City of Milan, while in the previous year, it referred to the sale of three properties located in Milan that took place in February 2022.

“Net financial expenses” amounted to 140 million euro (88 million euro at December 31, 2022) and showed a net increase of 52 million euro mainly due to increases in interest rates on bonds issued in the previous year (which in 2022 had started to accrue interest from the date of issue) and the 500 million euro bond issue carried out during the first quarter of 2023, as well as the increase in financial expenses to credit institutions mainly attributable to the rise in the interest rate curve, which was offset by the remuneration, at a variable rate, of liquidity that mitigated the interest rate risk on the Group’s variable and non-hedged debt.

The “Affiliates” was less 1 million euro, 2 million euro at December 31, 2022, and was mainly related to the positive valuation of the shareholdings held in some associated companies.

The “Result from disposal of other shareholdings” had a negative value of 1 million euro and derived from the effect of the disposal of the shareholding in Suncity Group.

“Income taxes” for the year amounted to 199 million euro (344 million euro at December 31, 2022). The decrease of 145 million euro, compared to the previous year, is mainly attributable to extraordinary taxes recognized in the previous year such as the extraordinary solidarity contribution expected for the year 2023, determined pursuant to article 1, paragraphs 115-119 of the Law December 29, 2022, no. 197 (Budget Law 2023) equal to a total of 117 million euro, as well as the extraordinary contribution based on Law Decree March 21, 2022, no. 21, converted into Law May 20, 2022, no. 51 (LD Taglia Prezzi) equal to a total of 5 million euro.

It should be noted that in the financial year under review, the right was exercised to opt for the “exemptive revaluation” regime which, based on the provisions of art. 15, paragraphs 10 et seq. of Decree Law no. 185/2008, provides for the recognition of the higher tax values of the controlling interests arising from the Purchase Price Allocation (PPA) process and recorded in the consolidated financial statements as goodwill and other intangible assets.

Against the payment of the substitute tax of 33 million euro, the derogatory revaluation resulted in the recognition of net deferred tax assets of 55 million euro, relating to off-balance-sheet deductions of the higher revalued values. These deferred tax assets will be released pro rata in connection with off-balance-sheet deductions starting in 2025.

The “Net result from discontinued operations” amounted to 3 million euro (41 million euro at December 31, 2022) and mainly refers to the sale relating to the Integrated Water Service to Acque Bresciane.

The “Group result of the year”, after the minorities of 24 million euro were deducted, was positive and amounted to 659 million euro (positive for 401 million euro at December 31, 2022).

Consolidated results and report on operations 2023 Report on Operations A2A 43

Below is the income statement table with evidence of the special items that influenced both the result for the financial year 2023 and the result for the previous year, thus enabling a clearer representation of the performance of the core business.

millions of euro

01 01 2023

12 31 2023

01 01 2022

12 31 2022

Restated

Change

%

2023/2022

Revenues

14,758

23,156

(8,398)

(36%)

Operating expenses

(11,972)

(20,893)

8,921

(43%)

Labour costs

(815)

(765)

(50)

7%

Gross Operating Income - EBITDA

1,971

1,498

473

32%

Depreciation, amortization and write-downs

(803)

(724)

(79)

11%

Provisions for risks

(68)

(2)

(66)

n.s.

Provisions for credit risks

(83)

(90)

7

(8%)

Net Operating Income - EBIT

1,017

682

335

49%

Net financial charges

(139)

(90)

(49)

54%

Affiliates

-

2

(2)

(100%)

Result from disposal of other shareholdings

(1)

-

(1)

n.s.

Result before taxes

877

594

283

48%

Income tax expenses

(221)

(174)

(47)

27%

Net result from discontinued operations

3

7

(4)

(57%)

Minorities

(24)

(47)

23

(49%)

Ordinary Group Net Profit

635

380

255

67%

Special Items

24

21

3

14%

Group net result of the year

659

401

258

64%

The special items for the 2023 financial year amounting to 24 million euro refer to the tax effect of redemption, which, net of the payment of the substitute tax of 33 million euro, amounts to 22 million euro, and 2 million euro for gains on the sale of real estate.

The special items for the previous year amounted to 21 million euro and mainly referred to the net effect of gains generated by the sale of certain assets (sale of real estate and gas ATEM deemed non-strategic) in the amount of 143 million euro net of the tax effect, partially offset by charges for extraordinary contributions on the economic results of energy companies provided for by legislative measures (Price Cut Decree as per LD 21/2022 and Solidarity Contribution as per L.197/2022) in the amount of 122 million euro.

Balance sheet and financial position

For changes in the scope of consolidation at December 31, 2023, reference should be made to the section “Income statement” in this Summary of the A2A Group’s financial position, results of operations and cash flows.

3

Consolidated results and report on operations

3.1

Summary of results, assets and liabilities and financial position

3.2

Significant events during the year

3.3

Significant events after December 31, 2023

3.4

Climate change

3.5

Taxonomy

3.6

Outlook for operations

3.7

Proposal for

the allocation of net profit for the year ended December 31,

2023 and the distribution

of a dividend

44 A2A Report on Operations 2023 Consolidated results and report on operations

Sources/uses statement

millions of euro

12 31 2023

12 31 2022

Change

Capital employed

Net fixed capital

9,567

8,849

718

- Tangible assets

6,643

6,162

481

- Intangible assets

3,630

3,515

115

- Shareholdings and other non-current financial assets (*)

83

82

1

- Other non-current assets/liabilities (*)

(188)

(296)

108

- Deferred tax assets/liabilities

464

363

101

- Provisions for risks, charges and liabilities for landfills

(828)

(729)

(99)

- Employee benefits

(237)

(248)

11

of which with counter-entry to equity

(98)

(112)

Net Working Capital and Other Current Assets/Liabilities

(82)

(124)

42

Net Working Capital

(246)

(308)

62

- Inventories

319

536

(217)

- Trade receivables

3,540

4,680

(1,140)

- Trade payables

(4,105)

(5,524)

1,419

Other current assets/liabilities

164

184

(20)

- Other current assets/liabilities (*)

193

283

(90)

- Current tax assets/tax liabilities

(29)

(99)

70

of which with counter-entry to equity

(7)

27

Assets/liabilities held for sale (*)

-

-

-

of which with counter-entry to equity

-

-

Total Capital employed

9,485

8,725

760

Sources of funds

Equity

4,802

4,467

335

Total financial position after one year

5,571

5,834

(263)

Total financial position within one year

(888)

(1,576)

688

Total Net Financial Position

4,683

4,258

425

of which with counter-entry to equity

-

(10)

Total Sources

9,485

8,725

760

(*) Excluding balances included in the net financial position.

Consolidated results and report on operations 2023 Report on Operations A2A 45

Net fixed capital

The “Net fixed capital” amounted to 9,567 million euro, up by 718 million euro compared to December 31, 2022.

The main changes were related to:

• total investments of 1,376 million euro, of which 947 million euro in tangible assets and 429 million euro in intangible assets;

• contribution from the first 2023 consolidations on intangible assets in the amount of 22 million euro;

• ordinary amortisation/depreciation for the year for 801 million euro;

• net increase in Other non-current assets and liabilities of 108 euro million mainly due to the increase in receivables from Ecobonus, new security deposits from the Municipality of Milan, and the decrease in security deposits from customers;

• increase in deferred tax assets for 101 million euro; Contributing to this increase was the recognition of the higher tax values of certain controlling interests arising from the Purchase Price Allocation (PPA) process and recognized in the consolidated financial statements as goodwill and other intangible assets. Against the payment of the substitute tax of 33 million euro, the derogatory revaluation resulted in the recognition of net deferred tax assets of 55 million euro, relating to off-balance-sheet deductions of the higher revalued values;

• increase in provisions for risks, charges and liabilities for landfills by 99 million euro;

• decrease in provisions for employee benefits for 11 million euro.

Net Working Capital and Other Current Assets/Liabilities

The “Net Working Capital and Other Current Assets/Liabilities” were negative and amounted to 82 million euro, up by 42 million euro compared to December 31, 2022.

The main changes were related to:

• decrease in trade payables of 1,419 million euro, mainly attributable to the dynamics of energy commodity prices, as well as an efficient Net Working Capital management policy;

• decrease in trade receivables of 1,140 million euro mainly attributable to the reduction in tariffs for the sale of electricity and gas that occurred during the year in the reference scenario;

• net decrease of 217 million euro in inventories, mainly fuel inventories, reflecting the decreasing trend observed during the year in the reference scenario;

• net increase in payables Cassa per i Servizi Energetici e Ambientali for 134 million euro;

• net decrease in current tax liabilities for 70 million euro;

• increase in receivables of 41 million euro for the sale of certain assets related to the water cycle;

• other increases in current assets of 3 million euro.

“Assets/liabilities held for sale” had no value as at December 31, 2023.

Consolidated “Invested capital” at December 31, 2023 amounted to 9,485 million euro and was financed by Equity for 4,802 million euro and the Net financial position for 4,683 million euro.

“Equity” amounted to 4,802 million euro and showed a positive change for a total of 335 million euro.

The net profit for the year generated a positive effect of 659 million euro, offset by the distribution of 283 million euro in dividends.

Lastly, the net fair value loss of cash flow hedge derivatives and the IAS 19 reserves for a total of 30 million euro and the net decrease in minority interests for 6 million euro also affected shareholders’ equity.

3

Consolidated results and report on operations

3.1

Summary of results, assets and liabilities and financial position

3.2

Significant events during the year

3.3

Significant events after December 31, 2023

3.4

Climate change

3.5

Taxonomy

3.6

Outlook for operations

3.7

Proposal for

the allocation of net profit for the year ended December 31,

2023 and the distribution

of a dividend

46 A2A Report on Operations 2023 Consolidated results and report on operations

The “Consolidated Net Financial Position” at December 31, 2023 amounted to 4,683 million euro (4,258 million euro as at December 31, 2022). The gross debt amounted to 6,362 million euro, down by 527 million euro compared to December 31, 2022. Cash and cash equivalents amounted to 1,629 million euro, down by 955 million euro. The other net financial assets/liabilities showed a positive balance of 50 million euro with a net decrease of 3 million euro as compared to December 31, 2022.

The fixed rate portion of the gross debt amounted to 87%. The duration is 5.7 years.

Change Consolidated Net Financial Position

The following table summarizes the changes in the Net Financial Position.

millions of euro

12 31 2023

12 31 2022

EBITDA

1,971

1,498

Changes Net Working Capital

(62)

909

Changes in Other assets/liabilities

(218)

(607)

Utilization of provisions, net taxes and net financial charges

(458)

(312)

Operating cash flow

1,233

1,488

Investments

(1,376)

(1,240)

Property disposals

-

221

Cash flow before dividend payment

(143)

469

Dividends

(283)

(283)

Net free cash flow

(426)

186

Change in scope

1

(331)

Change in Net Financial Position

(425)

(145)

During the year, the change in the Net Financial Position was negative and equal to 425 million euro. Operating cash flow was positive at 1,233 million euro, capital expenditure absorbed cash of 1,376 million euro. These changes, taking into account the change in working capital, payment of financial expenses and taxes, generated a negative cash flow of 143 million euro before dividend payments of 283 million euro and changes in the scope of consolidation of 1 million euro.

The payment of net financial charges, taxes and provisions absorbed cash of 458 million euro.

Consolidated results and report on operations 2023 Report on Operations A2A 47

3.2

Significant events during the year

A2A joins the Nasdaq Sustainable Bond Network

On January 24, 2023, A2A joined the Nasdaq Sustainable Bond Network, a platform on Sustainable Finance that brings together investors, issuers, investment banks and specialist organizations. Membership will enable the Group to get in touch with a wide network of potential international investors attentive to sustainability issues.

500 Million Green Bond Issued

On January 27, 2023, A2A successfully placed a new 500 million euro Green Bond with a duration of 11 years, with the aim of financing projects in the field of energy transition and the circular economy eligible for the European Taxonomy and envisaged by the Business Plan. The bond, intended for institutional investors and issued under the Euro Medium Term Notes Program, is based on the Group’s Sustainable Finance Framework, the set of guidelines that reinforce the link between financial strategy and sustainable strategy.

The bond was placed at an issue price of 98.824% and has an annual yield of 4.513% and a coupon of 4.375%, with a spread of 167 basis points over the mid-swap reference rate.

The issue attracted a lot of interest, receiving orders for about 2.2 billion euro, more than about 4 times the amount offered.

Resolutions on the EMTN Program

The Board of Directors of A2A S.p.A., authorized the issuance, by April 30, 2026, of one or more non-subordinated, unsecured and non-convertible bonds up to a total maximum amount of 1.65 billion euro, based on its EMTN Program - established in 2012 - whose total maximum amount will be increased, upon Program renewal, from 6 billion euro to 7 billion euro.

The program provides for the possibility of issuing also green and sustainability-linked bonds.

The issue of bonds will be used, inter alia, to finance and/or refinance the Group’s

investments and/or to maintain adequate levels of liquidity, as well as to be used for one or more liability management operations.

The decision falls within the context of the A2A Group’s financial strategy also aimed at ensuring efficient management of the Group’s repayment profiles, extending the average life of the debt and supporting the credit rating.

2022 results approved

On March 16, 2023, the Board of Directors of A2A S.p.A. approved the drafts of the financial statements and of the consolidated annual financial report at December 31, 2022.

The ordinary Gross Operating Margin equaled 1,502 million euro, an increase of 8% compared to 2021.

Net profit amounted to 401 million euro, down by 20% compared to 2021, also due to the effect of extraordinary contributions under legislative measures. Net of extraordinary items, Net Ordinary Profit amounted to 380 million euro, an increase of 2% compared to 2021.

Capex equal to 1,240 million euro increased 15% from the previous year.

The Net Financial Position was 4,258 million euro (4,113 million euro at December 31, 2021) corresponding to 2.8x NFP/EBITDA, down from 2.9x in 2021.

The Board of Directors proposed to the Shareholders’ Meeting a dividend of 0.0904 euro per share (0.0849 euro as recurring component and 0.0055 euro as non-recurring component).

Ordinary Shareholders’ Meeting of A2A S.p.A.

On April 28, 2023, the Ordinary Shareholders’ Meeting of A2A S.p.A. approved the financial statements and the proposal formulated by the Board of Directors to distribute a dividend per ordinary share of 0.0904 euro. The dividend was paid in May 2023.

The Shareholders’ Meeting also voted in favor with a binding vote on the first section of the 2023 Report on Remuneration and with an advisory, non-binding vote on the second

3

Consolidated results and report on operations

3.1

Summary of results, assets and liabilities and financial position

3.2

Significant events during the year

3.3

Significant events after December 31, 2023

3.4

Climate change

3.5

Taxonomy

3.6

Outlook for operations

3.7

Proposal for

the allocation of net profit for the year ended December 31,

2023 and the distribution

of a dividend

48 A2A Report on Operations 2023 Consolidated results and report on operations

section of the 2023 Report on Remuneration.

The Shareholders’ Meeting authorized and defined the terms within which the Board of Directors may purchase and dispose of treasury shares.

Finally, the Shareholders’ Meeting resolved on the renewal of corporate offices as follows:

Board of Directors

The Board of Directors consisting of the following 12 members was appointed for three financial years, with the list voting mechanism: Marco Emilio Angelo Patuano - Chair; Giovanni Comboni - Vice Chair; Renato Mazzoncini; Maria Grazia Speranza; Maria Elisa D’Amico; Fabio Lavini; Roberto Tasca; Elisabetta Cristiana Bombana and Elisabetta Pistis (taken from the list presented jointly by the majority shareholders of the Municipality of Brescia and the Municipality of Milan, who together own a stake of approximately 50.000000112% of the share capital); Vincenzo Cariello, Alessandro Zunino and Susanna Dorigoni (taken from the list presented jointly by a group of minority shareholders made up of asset management companies and institutional investors, who together own a stake of approximately 1.07593% of the share capital). Maria Grazia Speranza, Maria Elisa D’Amico, Roberto Tasca, Elisabetta Cristiana Bombana, Elisabetta Pistis, Vincenzo Cariello, Alessandro Zunino and Susanna Dorigoni declared that they meet the independence requirements set forth in article 148, paragraph 3, of Legislative Decree 58/98 and the Corporate Governance Code. Giovanni Comboni and Fabio Lavini declared to meet the requisites of independence prescribed by article 148, paragraph 3 of Legislative Decree 58/98.

Board of Statutory Auditors

The Board of Statutory Auditors consisting of the following 3 standing members and 2 substitute members was appointed for three financial years, with the list voting mechanism: Maurizio Dallocchio - Standing Auditor; Chiara Segala - Standing Auditor and Patrizia Lucia Maria Riva - Substitute Auditor (taken from the list presented jointly by the majority shareholders of the Municipality of Brescia and the Municipality of Milan, who together own a stake of approximately 50.000000112% of the share capital); Silvia Muzi - Chair and Vieri Chimenti - Substitute Auditor (taken from the list presented jointly by a group of minority shareholders made up of asset management companies and institutional investors, who together own a stake of approximately 1.07593% of the share capital).

Statutory audit

The assignment for the statutory audit of the accounts for the years from 2025 to 2033 was conferred on the company KPMG S.p.A..

Board of Directors

The Board of Directors, which met for the first time on May 2, 2023, appointed General Manager Renato Mazzoncini as CEO of the Company.

During the same meeting, the Board also assessed, ascertaining the existence of the following: (i) the independence requirements established by art. 148 TUF and the Corporate Governance Code of the non-executive directors Elisabetta Cristiana Bombana, Vincenzo Cariello, Maria Elisa D’Amico, Susanna Dorigoni, Elisabetta Pistis, Maria Grazia Speranza, Roberto Tasca and Alessandro Zunino and; (ii) the independence requirements established by art. 148 TUF of the non-executive directors Giovanni Comboni – Vice Chair and Fabio Lavini.

All standing members of the Board of Statutory Auditors, Silvia Muzi - Chair, Maurizio Dallocchio and Chiara Segala, meet the independence requirements of art. 148 TUF and of the Corporate Governance Code.

On May 11, 2023, the Board of Directors appointed the four Committees, indicating their members:

• Audit and Risk Committee: Alessandro Zunino (Chair), Elisabetta Bombana, Maria Grazia Speranza and Roberto Tasca;

• Appointments and Remuneration Committee: Susanna Dorigoni (Chair), Giovanni Comboni and Roberto Tasca;

• ESG and Local Relations Committee: Marco Patuano (Chair), Vincenzo Cariello, Fabio Lavini and Elisabetta Pistis;

• Related Parties Committee: Vincenzo Cariello (Chair), Maria Elisa D’Amico and Maria Grazia Speranza.

The Board also established that the Internal Audit function report functionally to the Vice-Chair Giovanni Comboni.

Consolidated results and report on operations 2023 Report on Operations A2A 49

New Chair of the Board of Directors and new appointments

On July 28, 2023, Marco Emilio Angelo Patuano resigned. In his replacement, the A2A Board of Directors of October 11 appointed:

• director Roberto Tasca as chair of the company;

• Mario Motta as a non-executive director of the Company. The new director, whose curriculum vitae is available at www.gruppoa2a.it, will remain in office until the next Meeting.

During the same meeting, the board of directors also assessed, ascertaining the existence of the following: (i) the independence requirements of Article 148 of the TUF (Consolidated Law on Finance) and the Corporate Governance Code for the non-executive director Mario Motta and (ii) the executive status for the Chair Roberto Tasca.

Lastly, the Board of Directors resolved on the new composition of the following Board committees:

• Esg and Local Relations Committee: Roberto Tasca (Chair), Vincenzo Cariello, Fabio Lavini and Elisabetta Pistis;

• Audit and Risk Committee: Alessandro Zunino (Chair), Elisabetta Bombana, Mario Motta and Maria Grazia Speranza;

• Remuneration and Appointments Committee: Susanna Dorigoni (Chair), Giovanni Comboni and Elisabetta Pistis.

The composition of the Related Parties Committee remains confirmed as follows: Vincenzo Cariello (Chair), Maria Elisa D’Amico and Maria Grazia Speranza.

Standard & Poor’s confirmed the A2A long- and short-term rating at BBB/A-2, revising the outlook from “negative” to “stable”

On September 8, Standard & Poor’s confirmed the A2A long/short-term rating at BBB/A-2, revising the outlook from “negative” to “stable”. The change in outlook reflects the resilience of the A2A integrated and well-balanced business demonstrated during 2022 and early 2023, combined with careful financial discipline.

The revised outlook confirms the strong commitment of A2A to maintaining its current rating on its sustainable growth path.

Moody’s confirms the Baa2 long-term rating and revises the outlook from “negative” to “stable”

On November 22, 2023, Moody’s confirmed the A2A long-term rating at Baa2, revising the outlook from “negative” to “stable”.

The decision follows the revision of the outlook from “negative” to “stable” of Italy’s sovereign rating (Baa3) announced on November 17.

The rating confirmation reflects the resilience of the A2A integrated and well-balanced business, as well as the improvement in its operational and financial performance, thanks to a solid liquidity position combined with careful financial discipline.

This action confirms the strong commitment of A2A to maintaining its current rating on its sustainable growth path.

A2A is awarded six lots in the CONSIP tender for the supply of electricity to public bodies in seven Italian regions

A2A, through its subsidiary A2A Energia - a company active in the sale of electricity, gas and energy efficiency services - was awarded six lots in the CONSIP edition 21 tender for the supply of electricity to public bodies.

In October 2023, at the end of the tender procedure, CONSIP notified A2A Energia of the assignment of Lot 2 (Lombardy, provinces of Milan and Lodi), Lot 3 (Lombardy, excluding the provinces of Milan and Lodi), Lot 6 (Emilia Romagna), Lot 8 (Tuscany), Lot 9 (Umbria and Marche) and Lot 12 (Abruzzo and Molise). This is the seventh consecutive year that A2A Energia has been consistently and increasingly awarded lots in CONSIP tenders up to the 6 just awarded, and for the first time, it will provide coverage for the whole of Lombardy.

The allocation concerns a potential total volume of more than 3.8 TWh/year, of which up to 50% (1.9 TWh/year) is energy from renewable sources. The agreement will be activated, for those entities that request it, as of January 24, 2024 for the Emilia Romagna region, as of February 11, 2024 for Tuscany, Umbria and

3

Consolidated results and report on operations

3.1

Summary of results, assets and liabilities and financial position

3.2

Significant events during the year

3.3

Significant events after December 31, 2023

3.4

Climate change

3.5

Taxonomy

3.6

Outlook for operations

3.7

Proposal for

the allocation of net profit for the year ended December 31,

2023 and the distribution

of a dividend

50 A2A Report on Operations 2023 Consolidated results and report on operations

Marche, and as of March 2, 2024 for Lombardy, Abruzzo and Molise. Individual supplies will last for 12 months.

With this further award, A2A consolidates its role as a national player for the supply of electricity and gas in all markets and to customers in all segments.

Significant events related to energy transition and sustainability

Obtaining a 200 million euro loan from the EIB to promote energy transition in Lombardy

In December, A2A was granted by the EIB, the European Investment Bank, a loan of 200 million euro in line with the REPowerEU, for the “extension and modernization of electricity distribution infrastructure in Lombardy” with the aim of “contributing to the achievement of national and European decarbonization targets through electrification of consumption”. The financing is part of the additional 45 billion euro investments that the EIB has committed to support between 2022 and 2027 to promote the Italian objectives set out in the Integrated National Energy and Climate Plan and those of REPowerEU. The planned activities include the renewal and expansion of A2A electricity grids in order to allow the connection of new users (estimated at more than 40,000 by 2027) that are “strategic for the process of electrification of consumption and for a growing use of green energy produced from renewable sources that the Group wants to encourage”. In fact, the A2A plan of action related to the financing includes the upgrading of its medium-voltage network with more than 200 km of new lines and the renovation of 247 km of existing network, in addition to approximately 86 km of new low-voltage lines and the replacement of 152 km of existing low-voltage network. The Group also plans to build a new primary substation and 286 new secondary substations, to renovate and expand 12 primary substations already in operation, and to modernize 423 active secondary substations.

Obtaining a 4.3 million euro grant from ARERA for 4 pilot projects on gas infrastructure

In December, the companies Unareti, LD Reti and RetiPiù obtained a total contribution of 4.3 million euro from the Regulatory Authority for Energy, Networks and the Environment for four experimental projects under Resolution 404/2022/R/gas “Pilot projects to optimize the management and use of infrastructures in the natural gas sector”, in relation to the prospects for energy transition and decarbonization.

In particular, Unareti will implement a new management system based on artificial intelligence to reduce methane emissions from the network; it will also build new generators to recover the energy normally dissipated in the transition from the transport network to the distribution network.

LD Reti will test a system to maximize the production of a biomethane plant by feeding the excess into the grid.

RetiPiù will launch a project to reduce the impact of methane emissions from the distribution network through innovative monitoring tools that enable their early detection.

The admission of all proposals submitted to the Arera incentive mechanism confirms the validity of the Group’s projects for the development of systems and infrastructures for the country’s ecological transition, in line with its industrial strategy focused on two pillars: energy transition and circular economy.

Water, Arera rewards A2A Group’s service quality with 4 million euro

The A2A Group’s water service received an important quality award from ARERA in October. An economic award of more than 4 million euro that will be reinvested in the area to further improve water infrastructure and service management.

Alongside tariff regulation, ARERA, the Regulatory Authority for Energy, Networks and the Environment, has in fact also set up a technical and contractual quality measurement system for the management of the integrated water service, which provides for the monitoring of certain indicators (including water losses, hours of service interruption, water quality, etc.) associated with bonuses and penalties. With its recent Resolutions 477/2023 and 476/2023, ARERA implemented this mechanism with reference to the performance achieved in the two-year period 2020-2021.

The bonuses are paid from a specific fund set up at the Cassa per i Servizi Energetici e Ambientali (CSEA) and funded by a component (UI2) paid by citizens in their water bills: the amount of resources collected and distributed in the two-year period 2020-2021 is 130 million euro for technical quality and 21.6 million euro for contractual quality.

Consolidated results and report on operations 2023 Report on Operations A2A 51

In particular:

• A2A Ciclo Idrico received awards totaling 1.7 million euro, divided equally between technical quality and contractual quality; the company was ranked 17th in the general classification that assesses all macro-indicators, at least one of which is in class A, and was awarded half a million euro just for the containment of water losses, which were reduced by 4% compared to 2018 values.

• The performance of Lereti, a company of the Acinque Group, was also significant, with bonuses totaling 2 million euro, mainly due to the results achieved in Como.

Compared to the previous data collection, which assessed the two-year period 2018-2019, the A2A Group’s operators showed improved performance in all technical quality indicators.

This is an acknowledgement that testifies to the virtuous investment path implemented by A2A Ciclo Idrico, which has seen expenditure per inhabitant rise from 42 euro/inhabitant in 2017 to 104 euro/inhabitant in 2022, excluding grants received, which reached 117 euro/inhabitant, twice the national average.

New agreement for the construction of two 17.5 MWp photovoltaic plants in Veneto

In August, A2A and Juwi entered into a collaboration in the photovoltaic sector that provides for the purchase by A2A Rinnovabili - the Group’s company dedicated to the development and management of green plants - of 100% of Juwi Development 12 S.r.l. and Juwi Development 13 S.r.l., companies that have obtained authorizations for the construction and operation of two solar plants in the municipalities of Boara Pisani (Padua) and Porto Viro (Rovigo).

The plants will have an installed capacity of about 17.5 MWp and will produce more than 25 GWh per year to meet the electricity needs of about 9,000 households.

Thanks to the construction of this new infrastructure, it will be possible to reduce the consumption of natural gas by about 5 million cubic metres per year and avoid the emission into the atmosphere of about 10,500 tons of CO2.

A2A and Enfinity Global sign PPA for 97 MW of solar power in Italy

In October, the A2A Group and Enfinity Global Inc, a leader in the renewable energy sector, signed a Power Purchase Agreement (PPA) for three Enfinity plants in Lazio, totaling 97 MW.

The agreement, which will start in July 2025, foresees the take-back by A2A of about 160 GWh, equivalent to the annual electricity consumption of about 64,000 Italian households, avoiding the emission of more than 60,000 tons of CO2.

A2A and SIAD sign agreement for the construction of a photovoltaic plant for the production of renewable energy

The SIAD Group, as part of its objectives to support renewables and actively participate in reducing environmental impact, and A2A, through its subsidiary A2A Energia, signed a Power Purchase Agreement (PPA) on December 6, 2023.

The agreement provides for the purchase by SIAD of renewable energy produced by a photovoltaic plant built by A2A. The new installation will be able to generate 15,000 MWh of green energy per year, equivalent to the consumption of around 5,500 households, and will avoid the emission of around 7,000 tons of CO2eq/year. Thanks to this green energy, SIAD industrial gas production will be even more environmentally friendly.

For A2A, this initiative represents an opportunity to create value together with its partners, providing medium- to long-term offers and solutions capable of concretely supporting companies on the path to decarbonization. The new photovoltaic plant, thanks to the production of renewable energy, will also further contribute to the energy transition, one of the pillars of the Group’s Business Plan, which aims to foster the country’s sustainable development.

Alfa Heat Recovery, Alfa Acciai heat sold to A2A

With the start of the 2023-2024 heating season, Brescia District Heating takes a new step towards decarbonization thanks to the start-up of the new plant Alfa Heat Recovery. The heat transferred to the Brescia district heating network by the San Polo steel plant is growing significantly, covering the heating requirements of about 5 thousand households, in fact doubling the project’s initial forecast.

3

Consolidated results and report on operations

3.1

Summary of results, assets and liabilities and financial position

3.2

Significant events during the year

3.3

Significant events after December 31, 2023

3.4

Climate change

3.5

Taxonomy

3.6

Outlook for operations

3.7

Proposal for

the allocation of net profit for the year ended December 31,

2023 and the distribution

of a dividend

52 A2A Report on Operations 2023 Consolidated results and report on operations

A virtuous example of circularity that has important environmental benefits: heat recovery from thermal waste avoids the emission into the atmosphere of more than 10 thousand tons of CO2 per year.

The collaboration with Alfa Acciai is part of a path started long ago by A2A to reduce the use of fossil fuels as production sources for the district heating network. Brescia has in fact developed an integrated system, called Sistema Ambiente Energia, which combines electricity production, district heating/cooling and management of the urban waste cycle, eliminating the use of landfills. The waste-to-energy plant produces around 70% of the thermal energy distributed by the district heating network each year, (also producing electricity equal to the requirements of 200,000 households). In recent years, in addition to the abandonment of coal 5 years ahead of the national targets, industrial thermal waste (Alfa Acciai, Ori Martin) and storage tanks (at the North Plant and at the Lamarmora power plant) have been added to further reduce the remaining share of heat produced with gas. Today, the Brescia district heating network serves almost22 thousand users, equivalent to almost 180 thousand connected flats: in 2022, the heat transferred to the network amounted to 980 thermal GWh and, thanks to the use of non-fossil sources, the emission into the atmosphere was avoided of 138,525 tons of CO2.

Fri-El Geo and A2A launch a partnership for green district heating in Milan

On October 26, A2A, through its subsidiary A2A Calore e Servizi, Italy’s leading district heating company, and Fri-El Geo, a producer of geothermal energy, launched a partnership aimed at increasing the use of renewable sources for heating in the city of Milan, which will reduce CO2 emissions. The location of the plants within the Metropolitan City of Milan is currently being studied.

With the signed agreement, Fri-El Geo and A2A Calore e Servizi demonstrate their willingness to meet the challenge of energy transition and ecological neutrality by 2050. In fact, geothermal energy is one of the energy sources with the lowest environmental impact and is poised to play an important role in Italy’s sustainable future.

Thanks to district heating, the thermal energy produced by a geothermal plant can reach homes directly without the need for renovation work. Furthermore, homes would gain at least two energy classes with the replacement of methane gas, which in Italy today, is responsible for more than 50% of CO2 emissions from domestic heating systems.

Inauguration of Italy’s first underground, waterproof electricity substation

A2A, in collaboration with Schneider Electric, today inaugurated the Underground Compact Substation at the Unareti Smart Lab: the innovative prototype of a secondary substation, completely underground, to help make the city’s electricity grid increasingly resilient and which, thanks to its small size, meets the need to minimize land consumption in urban contexts and at the same time, enables the company to cope with the impacts of climate change, such as droughts and extreme water phenomena.

“Senergy Nets” European project. RSE and A2A alongside the EU for decarbonization

The A2A Group and Ricerca sul Sistema Energetico (RSE) are among the 19 members of the consortium that was awarded the European SENERGY NETS project in July as part of the Horizon Europe program.

SENERGY NETS, a continuation of the previous H2020 MAGNITUDE project that ended in May 2021, aims to demonstrate the benefits of integrating different energy carriers with a view to decarbonization: how best to integrate electricity, district heating and gas in order to pursue European emission reduction targets. To this end, through a strong interdisciplinary consortium involving 19 organizations in 8 European countries, the project will develop a set of tools and platforms to increase the synergy between district heating planning and electricity and gas distribution networks in the European countries involved.

These solutions will be implemented in three different experimentation sites located in Milan, Ljubljana and Paris, for a total period of 48 months until August 2026. The partners directly involved in the Italian pilot site will be Ricerca sul Sistema Energetico, A2A, A2A Calore e Servizi and Unareti - operator of the electricity and gas distribution system - supported in their work by the Italian Urban Heating Association (AIRU) and Federconsumatori Milano.

CO2 capture European project

In the context of activities to reduce its carbon footprint, our Group took part in the European project HERCCULES, an ambitious initiative with the aim of developing a technology to capture carbon dioxide through the Calcium Looping process.

Within the HERCCULES project, an experimental plant will be set up in Milan, at the Silla 2 waste-to-energy plant, with the aim of obtaining a highly concentrated carbon dioxide stream suitable for permanent storage in deep aquifers or for direct industrial use. The activities, which will involve a multidisciplinary team, will be coordinated by colleagues from R&D, the Group’s structure created with the aim of exploring the

Consolidated results and report on operations 2023 Report on Operations A2A 53

most advanced areas of technological and innovative research, ranging from sustainable mobility, advanced solutions for material and energy recovery, and carbon capture.

The initiative was selected by the European Union to receive funding from a Horizon fund, involving 23 other partners from various European companies, research centers and universities.

Launched in 2023, the research program has a five-year duration and is scheduled to end in 2026. Subsequently, the results will be analyzed, together with the preparation of technical and economic reports to be completed by 2027.

Memorandum of Understanding with Legambiente: Together for the energy transition and the circular economy

On December 14, 2023, the A2A Group and Legambiente signed a memorandum of understanding to promote energy transition and the circular economy, overcoming the Nimby syndrome that often blocks the development of strategic infrastructures for the sustainable growth of the country and territories. The objective of this agreement is to encourage the adoption of a “Please In My Backyard” (PIMBY) approach in the construction of plants and infrastructure for ecological transition.

A2A and Legambiente undertake to share their respective skills and resources to promote a broader and more aware vision of these issues, placing investments in water resource management, the development of material recovery plants capable of producing biomethane, energy efficiency, electrification of consumption and electric mobility at the center of the path defined by the Memorandum of Understanding. Indeed, both parties aim to synergistically raise awareness among administrations and citizens about the concrete benefits of a responsible transition, emphasizing the importance of investing in sustainable solutions for the common good.

The signing of the Memorandum will initiate a series of technical discussions to identify common positions, as well as joint initiatives for dialogue and listening to territories to accompany specific industrial projects, cooperating at local and national level.

Telepass and A2A: a partnership to promote electric mobility

On November 30, 2023, an agreement was signed with Telepass to enable motorists to access more than two thousand charging points of the A2A E-Mobility infrastructure directly from the Telepass App on their mobile phones to offer a simpler and more widespread electric driving experience.

A partnership that for A2A is in line with the objectives of its Strategic Plan - based on energy transition and circular economy - in which electric mobility constitutes a fundamental lever to support the path towards electrification of consumption and decarbonization.

For the development of this sector, the A2A Group has planned investments up to 2030 amounting to around 300 million euro and the construction of 22 thousand recharging points on a national scale entirely powered by certified 100% green energy.

3

Consolidated results and report on operations

3.1

Summary of results, assets and liabilities and financial position

3.2

Significant events during the year

3.3

Significant events after December 31, 2023

3.4

Climate change

3.5

Taxonomy

3.6

Outlook for operations

3.7

Proposal for

the allocation of net profit for the year ended December 31,

2023 and the distribution

of a dividend

54 A2A Report on Operations 2023 Consolidated results and report on operations

3.3

Significant events after December 31, 2023

Acinque finalizes acquisition of 70% of Agesp Energia

On January 3, 2024, the acquisition of 70% of Agesp Energia by Acinque, already historically active in the Varese area, was finalized with effective date January 1. The acquisition is consistent with the growth strategies of Acinque, which, based on territorial aggregations, with A2A as its industrial partner, has progressively consolidated its competitive capacity, expanding both the critical mass of its business and its reference perimeters. Agesp Energia operates in the sale of electricity and gas and has been the reference operator, for over 60 years, in the Busto Arsizio area for its 39,300 customers (of which 27,700 are gas customers and 11,600 electricity customers). The company also operates a district heating service and owns the dedicated network (about 18 km) as well as the cogeneration plant serving it. In 2022, approximately 32,100 MWh of thermal energy was sold and 21,400 MWh of electricity, net of self-consumption, was fed into the grid.

Tacit renewal of the Pact between A2A and the Public Authorities concerning Acinque

Pursuant to article 122 of the T.U.F. and articles 129 and 131 of the Issuers’ Regulation, Acinque announces that the shareholders’ agreement entered into on March 30, 2018 and renewed on June 30, 2021 between A2A, Lario Reti Holding, the Municipality of Monza, the Municipality of Como, the Municipality of Sondrio and the Municipality of Varese has been tacitly renewed for a further three-year period with effect from the expiry date of June 30, 2024. The total number of ordinary shares covered by the agreement and the percentages of contracting shareholders remain unchanged: A2A holds 41.34% of the share capital, Lario Reti Holding holds 23.93%, the Municipality of Monza holds 10.53%, the Municipality of Como holds 9.61%, the Municipality of Sondrio holds 3.30% and the Municipality of Varese holds 1.29%.

A2A agreement with Enel Group to reorganize electricity grids in Lombardy

On March 9, A2A S.p.A. and E-distribuzione, an Enel Group company active in the distribution of electricity, signed a sale and purchase agreement relating to the electricity network BU managed by E-distribuzione in certain areas of Lombardy in the provinces of Milan and Brescia. This agreement will allow the A2A Group to exploit territorial synergies and accelerate the investments required for the energy transition.

Specifically, the transaction provides for the A2A acquisition of 90% of a newly formed company to which E-distribuzione electricity distribution assets in the province of Milan (excluding a few municipalities in the northern belt) and, in the Brescia area, in Valtrompia will be contributed, for a total of about 800,000 POD, about 5,000 km of medium-voltage cables, more than 12,000 km of low-voltage cables, about 9,500 secondary substations and 60 primary substations. It is envisaged that, concurrently with the closing, the execution of which is subject to the fulfilment of certain conditions precedent, a shareholders’ agreement will be entered into between A2A and E-distribuzione - which will hold the remaining 10% of the company - which, among other things, will include a mechanism of cross purchase and sale option clauses concerning the 10% shareholding, exercisable as of the first anniversary of the closing.

Consolidated results and report on operations 2023 Report on Operations A2A 55

3.4

Climate change

The A2A Group is a Life Company, as it takes care of life, its most precious capital. It promotes the country’s sustainable growth through a long-term strategy, with investments dedicated to the development of the circular economy and energy transition: businesses that, more than others, are crucial to preserving everyone’s future. Sustainability is at the heart of our Group’s strategy, which focuses on a fair, ecological and shared transition, and is divided into the two pillars of circular economy and energy transition.

The A2A Group is also subject to the effects of climate change, and the risks associated with these are specifically analysed by the Group, which in this regard, has created a system for identifying, assessing and managing risks associated with climate change, integrating it into its Enterprise Risk Management process. The climate risks identified are the result of a materiality analysis carried out considering the risk categories outlined by the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD), the businesses models and the services offered by the Group. For physical climate risks, both chronic and acute, the A2A Group refers to the European Union’s Climate-related Hazards Framework issued as part of the EU Taxonomy of Green Investments

(Appendix A of the Delegated Regulation (EU) supplementing Regulation EU 2020/852 of the European Parliament and of the Council).

The actions implemented by the A2A Group to counter the risks associated with climate change are, therefore, an important part of the development strategy, whose pillars are the Circular Economy and Energy Transition. In this regard, the update of the 2024-2035 Business Plan provides for some actions aimed at mitigating these effects; the Group reiterated its commitment to decarbonization by confirming its objective of reducing the emission factor to 226 gCO 2/kWh by 2030 and a further reduction of 65% compared to the 2017 value, corresponding to a decrease in emissions in absolute value of 60% compared to 2022. It is important to reiterate that the A2A Group has already decided on the closure of the Monfalcone coal-fired plant, writing it off in its entirety in the 2018 Financial Statements. This plant is now undergoing a major reconversion.

Moreover, the Group also committed to the decarbonization of its value chain over the Plan horizon, setting a target on the reduction of emissions from the supply chain by 30% compared to 2022 and one on gas sold to its customers by 20% to 2035 compared to 2023.

3

Consolidated results and report on operations

3.1

Summary of results, assets and liabilities and financial position

3.2

Significant events during the year

3.3

Significant events after December 31, 2023

3.4

Climate change

3.5

Taxonomy

3.6

Outlook for operations

3.7

Proposal for

the allocation of net profit for the year ended December 31,

2023 and the distribution

of a dividend

56 A2A Report on Operations 2023 Consolidated results and report on operations

Significant risks for the Group related to climate change

From the analyzes carried out, the following risks relevant to the Group were identified, indicated in the following table. The estimated impact values are annual averages over the 2024-2035 Business Plan horizon:

Business

Event

Assumptions adopted to estimate impacts

Probability*

Range of impact on EBITDA

(M€/a)

Electricity grids

Resilience of electricity distribution grids

For the risk, the reputational impact is considered prevalent; therefore, the economic impact remains low and consists of the possible application of sanctions in the event of non-compliance with the service quality levels established by ARERA.

Possible

<5

Retail gas

Thermal energy demand

The lower thermal energy sales that could occur as a result of milder winter and fall temperature trends than those projected in the Business Plan scenario are considered. The impact is based on historical data on the change in Ebitda compared to the budget.

Furthermore, the impact on margins is considered in the event that an unplanned deviation occurs in the portfolio uses of the commodity gas due to the effect of very different final climatic conditions (exceptional/minimum temperature) from those used in the planning phase (normal temperature). The at-risk amount is estimated by applying the volatility of winter market prices to the daily consumption - calculated as a function of temperature (gradient).

Possible

<5

Heat

Thermal energy demand

The lower thermal energy sales that could occur as a result of milder winter and fall temperature trends than those projected in the Business Plan scenario are considered. Deviations of Degree Days (DD) from the Plan data are estimated on the basis of statistical evaluations performed on historical data (source: “Climate in Italy in 2022” published by Sistema Nazionale per la Protezione dell’Ambiente - Sistema Report SNPA/36 2023). See also section “Sensitivity analysis - changes in Degree Days”

Possible

<5

Electricity - Hydro and Renewables

Precipitation and water resource use

This takes into account the reduction in production for each of the Group’s hydroelectric auctions compared to the Business Plan forecasts - due to an unfavorable change in average rainfall. The estimate of production at risk is based on the difference between the average annual production forecast in the Business Plan and the worst case scenario consisting of production in 2022, which was a particularly unfavorable year. It is assumed that this worst case could occur twice in the time horizon of the 2024-2035 Business Plan. The lower production is valued with the energy PUN values (PUN peak for basin plants and PUN base load for run-of-river plants) provided by the energy scenario of the Business Plan.

Furthermore, the reduction in production for each of the Group’s hydroelectric auctions is considered compared to the Plan’s forecasts - due to a possible additional request for releases compared to as foreseen by the existing agreements - valued with the PUN values of the Business Plan energy scenario.

Possible

>20

Electricity - CCGT + Monfalcone + San Filippo del Mela

Plant cooling

The risk was qualitatively estimated on the basis of historical events.

Hardly Possible

<5

Waste

ETS Directive Revision

There is still a lot of uncertainty as to how this will apply to waste-to-energy plants in the new ETS. The estimate took into account the CO 2 emission forecasts of the waste-to-energy plants, the EUA price forecasts of the Plan Scenario and an assumption of the transfer of the cost of the allowances to the disposal tariff. Only emissions from the fossil carbon fraction in waste were considered.

Possible

>20

All

Extreme weather phenomena

The risk has been estimated starting from the damage scenarios described in the assessment reports drawn up by the insurance broker, the vulnerabilities of the plants and the deductibles for direct and indirect damages provided for by the insurance contract.

Possible

<5

*Hardly Possible: <10%; Possible: >=10%; =<50%; Probable: >50%

Low: <5M€/a; Medium: >=5M€/a; =<20M€/a; High: >20M€/a

Consolidated results and report on operations 2023 Report on Operations A2A 57

Based on the above, the climate risks with the most significant potential impact are related:

• to changes in the water resource available for hydroelectric production, as a result of both a potential overall reduction in annual precipitation volumes and potential changes in the distribution of precipitation throughout the year, as well as a potential reduction in the water reserve accumulated in the form of snow pack (Snow Water Equivalent) - due to rising average and maximum air temperatures;

• to the cost of CO 2 emission permits, in the event that the ETS also becomes mandatory for waste-to-energy plants;

• to a reduction in gas and heat sales due to a potential rise in average autumn and winter temperatures.

In particular, for electricity grids, the resilience of distribution networks is linked to three possible risks:

• interruption of service related to possible peaks in demand induced by increased temperatures;

• flooding of underground cabins caused by heavy rain;

• increased demand for energy related to the electrification of consumption.

The 2024-2035 Business Plan includes an investment plan aimed at the maintenance and development of the electricity grid, enabling both the adaptation to physical climate risks and the progressive electrification of energy services by improving their efficiency and reducing CO 2 emissions. In this regard, the plan includes interventions to upgrade and rationalize the networks, secondary substations, primary substations and an extension of the remote management of assets.

As electricity distribution is a regulated business, these investments are remunerated at a rate defined by ARERA and updated periodically. In addition, ARERA offers the possibility of joining a bonus mechanism to encourage the implementation of specific interventions to increase the resilience of electricity grids.

There are also remote operational controls, advanced technical safety tools, emergency intervention teams as well as specific safeguards for infrastructure, which are more exposed to risks of interruption in the delivery of services. The “Milan heat wave preparation” Working Group was set up, responsible for

coordinating the prevention and management of disruptions and the related communication activities.

The Retail Gas and Heat businesses could suffer an unfavorable trend resulting from:

• higher than expected winter temperatures;

• the occurrence of climatic conditions at the end of the year that are very different (exceptional/minimum temperature) from those used at the planning stage.

The business plan includes investments in the Heat business aimed at the development of district heating networks and strategies to increase the number of customers. Furthermore, there are projects for the recovery of “thermal waste” and the revamping of existing plants, to optimize energy costs and maintain the competitiveness of the assets. These capex, in addition to mitigating risk, are aimed at developing the district heating business.

To estimate the quantities of heat sold expected in the Plan, in order to take climate change into adequate consideration, the historical averages of the degree days observed in the last 5 years were considered, which capture the largest temperature increases. As better described in the note “Impairment”, for the purpose of the impairment test, additional sensitivity analyses were performed on this already conservative assumption.

Electricity production from renewable sources could be impacted by several exogenous phenomena:

• change in the precipitation regime;

• competition on water use;

• wind regime and insulation.

The change in the precipitation regime could lead to a change in the water availability for the Group’s main hydroelectric auctions. The Business Plan includes investments to optimize the use of the derived water resource for hydroelectric purposes (e.g., pumping). In addition, the Group is engaged in the development of tools to improve rainfall and run-off forecasts as well as in the development of engineering analyses and models to support the planning of hydroelectric plants in both the medium and short term. For the purposes of the plan, the estimate of the Group’s hydroelectric production is based on a 10-year historical average, including 2022, which was

3

Consolidated results and report on operations

3.1

Summary of results, assets and liabilities and financial position

3.2

Significant events during the year

3.3

Significant events after December 31, 2023

3.4

Climate change

3.5

Taxonomy

3.6

Outlook for operations

3.7

Proposal for

the allocation of net profit for the year ended December 31,

2023 and the distribution

of a dividend

58 A2A Report on Operations 2023 Consolidated results and report on operations

the worst in terms of hydraulicity over this observed period, for all of the Group’s hydroelectric cores. Also in this case, as better described in the note “Impairment”, for the purpose of the impairment test, additional sensitivity analyses were performed on this already conservative assumption.

Competition for the use of water resources could lead to an increase in the share of water that hydroelectric plants will be forced to release to make it available for irrigation and drinking.

Drought periods can also impact the availability of biomass for bioenergy plants.

Production from thermoelectric plants (“CCGT”) could be impacted both by the rise in temperatures and by drought, due to the risk relating to limitations on the operation of the plants due to difficulties in adequately cooling the thermoelectric cycle in the event of a rise in summer temperatures and/or lowering the levels of the waterways from which the cooling water is derived. To mitigate these risks, the Group constantly monitors the temperature of the cooling water, as well as, at some plants, the temperature of the watercourse downstream of the discharge. Furthermore, the Group has active all-risk insurance coverage, for all plants, which also covers direct and indirect damage caused by natural phenomena.

The Revision of the ETS Directive could impact the Waste Business Unit. In particular, waste-to-energy plants could be included in the Emissions Trading Scheme following the publication of the Directive (EU) 2023/959. The Group is constantly engaged in monitoring regulations, assessing possible impacts and participating in round tables with trade associations and/or competent bodies to represent any critical issues in the application of regulations in progress and make proposals. In addition, the Group is experimenting with new technologies for capturing and sequestering CO 2 emitted by waste-to-energy plants.

The A2A Group monitors any extreme weather phenomena (e.g. floods, landslides, water bombs, tornadoes, etc.), which could be a risk to the Group’s assets and business continuity. To cover against such events, the Group has active insurance contracts, for all contracts, with coverage extended to include damage caused by natural phenomena. In addition, there are procedures in place to manage any acute weather phenomena in an optimal and timely manner. Finally, with a view to prevention, the design and construction of installations (e.g. wind and photovoltaic) takes into account the characteristics of the territory and local climatology (e.g. slope stability, windiness, etc.).

Uncertainties surrounding the decarbonization plan

The achievement of decarbonization targets is however subject to the following main sources of uncertainty:

• possible geopolitical, market or climatic situations that could lead to an increase in the demand for energy from fossil sources, either to meet a possible higher domestic demand for energy or to compensate for any lower production from renewable sources (hydroelectric) and/or any lower imports;

• insufficient technological development, which may

not adequately support the replacement of fossil production and/or the removal of carbon (“carbon removal”) from processes that are inherently “carbon intensive” (hard-to-abate).

To mitigate these uncertainties, the Group is analyzing all possible investment initiatives with a view to the planned decarbonization pathway and carries out experiments and investments in CO 2 (carbon capture).

Sensitivity analysis - price changes of emission allowances (EU Allowances - EUA)

The estimated price of EUA (European Union Allowances) is included in the assumptions of the 2024-2035 Business Plan. The A2A Group also estimates the range of impact on EBITDA resulting from a possible trend in the value of EUA (European Union Allowances) that differs from the values taken as a reference in the preparation of the Business Plan. In particular, the change in the A2A Group’s EBITDA was estimated as a result of a deviation in EUA prices of +/-10 euro/t compared to the forecasts included in the Business Plan. Sensitivities are made with different assumptions about the correlation between the EUA price and the single national electricity price (PUN). Full correlation

(100%) means that the entire CO 2 cost is passed on in the energy price; vice versa, no correlation (0%) means that the CO 2 cost is not passed on in the price and it is entirely translated into increased costs of fossil fuel production. Intermediate degrees of correlation correspond to a partial transfer of cost to the PUN.

The histogram below shows the range of variability of the average annual impact on EBITDA calculated over the 12 years of the 2024-2035 Business Plan for each individual degree of correlation (0%; 25%; 50%; 75%; 100%). The values are normalized to the highest impact with 0% correlation. In green, possible favorable impacts, in red, possible unfavorable impacts. These

Consolidated results and report on operations 2023 Report on Operations A2A 59

Sensitivities of impacts on EBITDA for EUA price changes of +/- 10 euro

Range of average annual impacts over the period 2024-2035 with different correlation assumptions between EUA price and PUN (normalized values)

potential impacts are calculated with respect to the 2024-2035 Business Plan and do not directly relate to the impairment test, for which

the specific CGU considerations and analyses apply instead.

The graph shows that extreme degrees of correlation (0% and 100%) produce potential amplified impacts on the A2A Group’s EBITDA. In fact, if there is no correlation with the PUN, the impacts are “driven” by changes in the marginality of thermoelectric production, whereas if there is full correlation with the PUN (which means that the cost of CO 2 is passed on to the energy price), the impacts are “driven”

by changes in the marginality of hydroelectric production. On the other hand, intermediate correlation values tend to mitigate the impacts of EUA price volatility. The EBITDA impact assessments shown in the graph were carried out on the A2A Group’s power generation forecasts by source as defined in the Business Plan for the period 2024-2035.

Sensitivity analysis - changes in Degree Days 1

The A2A Group estimates the range of impact on EBITDA generated by district heating in correspondence with three different trend scenarios of changes in Degree Days, projected over the horizon of the 2024-2035 Business Plan. The Degree Days variation

scenarios were estimated from the autumn and winter average temperature variation trends (minimum, average and maximum variations) determined by ISPRA through statistical processing of historical data (source: SNPA System Report/36 2023).

1 The Degree Day (DD) of a location is the sum over all days in a conventional annual heating period of only the daily positive differences between the temperature (T 0), conventionally set for each country, and the daily average outdoor temperature of hourly data (T e). Presidential Decree No. 412 of August 26, 1993 conventionally sets the ambient temperature T 0 at 20 °C.

3

Consolidated results and report on operations

3.1

Summary of results, assets and liabilities and financial position

3.2

Significant events during the year

3.3

Significant events after December 31, 2023

3.4

Climate change

3.5

Taxonomy

3.6

Outlook for operations

3.7

Proposal for

the allocation of net profit for the year ended December 31,

2023 and the distribution

of a dividend

60 A2A Report on Operations 2023 Consolidated results and report on operations

Nella seguente tabella sono riportati i Gradi Giorno a rischio stimati (minimi, medi e massimi) rispetto alle previsioni dello scenario del Piano 2024-2035:

Year

DD at

minimal risk

DD at

medium risk

DD at

maximum risk

2024

3.9

5.5

7.1

2025

7.7

11.0

14.2

2026

11.6

16.5

21.3

2027

15.5

22.0

28.4

2028

19.4

27.5

35.6

2029

23.2

32.9

42.7

2030

27.1

38.4

49.8

2031

31.0

43.9

56.9

2032

34.8

49.4

64.0

2033

38.7

54.9

71.1

2034

42.6

60.4

78.2

2035

46.4

65.9

85.3

Total

301.9

428.2

554.6

Average value

25.2

35.7

46.2

As can be seen from the table, the worst-case scenario indicates an average of 46 degree days over the plan.

The corresponding estimated unfavorable impacts on EBITDA are between approximately 25 million euro and 50 million euro over the 2024-2035 Business Plan, corresponding to an average annual impact value between approximately 2 million euro and 4 million euro.

These potential impacts are differential with respect to the hypotheses that the 2024-2035 Business Plan already takes into consideration and are not directly related to the impairment test, for which instead the specific considerations and analyzes on the CGUs apply.

Transversal climate risk management actions

As stated above, the A2A Group has therefore adopted the following transversal response actions to climate physical and transition risks:

• Governance divided into a strategic level (Board of Directors, Risk Control Committee, ESG and Territorial Relations Committee, Sustainable Finance Committee) and a more operational level integrated into the Group’s Enterprise Risk Management process. Structured information flows between the committees and organizational structures involved to ensure alignment and synergy between the two levels of the process;

• Long-term business plan (twelve years) based on the pillars of energy transition and circular economy, including investments in climate change mitigation and increasing the resilience of assets and infrastructure;

• adoption of a CO 2 emission reduction target approved by the Science Based Targets initiative - SBTi;

• monitoring of weather and climate parameters to support short, medium and long-term production planning;

• research and testing of technologies for capturing and sequestering CO 2 emitted with flue gases;

• emergency procedures and plans;

• diversification of electricity generation sources and geographical location of assets;

• physical climate scenario analysis and transition to support strategic planning and climate risk assessment. Sensitivity analysis of the economic-financial impacts of the main risks monitored;

• monitoring of regulatory developments in the field of climate change and energy transition, and sharing the associated risks and opportunities through specific internal interdisciplinary working Groups;

• training and awareness-raising of employees with internal seminar cycles on climate change and environmental issues;

• insurance coverage that covers direct and indirect damages caused by natural events.

Consolidated results and report on operations 2023 Report on Operations A2A 61

Impact of scenario and climate change on items of the financial statements

Impairment test

Consistent with IAS 36, the Group periodically monitors CGUs for impairment indicators, including those related to risks associated with climate change (regulatory or consumption changes, changes in temperature and rainfall, etc.) and the energy scenario.

As described in the previous sections, the 2024-2035 Business Plan update and the related scenario updates, on which the impairment test is based, natively includes climate change-related effects not only in the capex projections but also in the economic projections in order to also reflect recent events in terms of, for example, temperature and hydraulicity.

In order to assess the possible impacts of scenario and climate change variables (hydraulicity and Degree Days) on financial statements assets, a sensitivity analysis was carried out for the most exposed CGU (CCGT Generation, Renewable Generation and Heat). These analyzes further stress the already conservative assumptions used for the purposes of the business plan, especially with regard to hydraulicity and rising temperatures. As far as the Renewable Generation CGU is concerned, for the atmospheric phenomenon related to hydraulicity, reference was made to observations of historical production, and the exceptional situation that occurred in 2022, which can be observed as the worst year of hydraulicity in the last decade, was considered as a stressed scenario. It has been assumed that this stressed scenario occurs twice over a plan (once more than the decade of observation), thus conservatively assuming a progressive reduction in hydraulicity.

As regards the energy scenario of the Renewable Generation, Thermoelectric Generation and Heat CGU, the analysis was based on Monte Carlo method simulations through the generation of 10,000 price scenarios on the commodities PUN BASE, PUN PEAK, PSV and EUA, and “stressed” forward curves were calculated by applying the rising and falling volatility values.

As regards the Heat CGU, for the sensitivity on Degree Days, the stressed scenario was elaborated on the basis of estimates provided by external providers (ISPRA): in particular, the

scenario with the greatest increase in degree days was considered among the possible scenarios observed (see previous section “Sensitivity Analysis - changes in Degree Days”).

For further details, see the section on Impairment Test in the Notes to the Consolidated Financial Statements.

Provisions, contingent liabilities and assets

The risk of climate change did not give rise to the need to recognize additional contingent liabilities as the A2A Group, as required by the standard, reviews risks annually, estimating the present value of the amounts required to meet future contingent obligations (e.g. decommissioning provisions on landfills or thermoelectric plants). This estimate is the result of the methodology used by the Group in previous years, which takes into account the macroeconomic scenario.

For further details, please refer to Section 18 “Provisions for risks, charges and liabilities for landfills” of the Notes to the Consolidated Financial Statements.

Revenues from contracts with customers

Among sales contracts, which are accounted for in accordance with the accounting standards, the A2A Group, consistently with what has been done in previous years, evaluates from time to time the possible estimation of a specific provision for contracts classifiable as onerous pursuant to IAS 37.

For further details, please refer to Section 24 “Revenues” of the Notes to the Consolidated Financial Statements.

3

Consolidated results and report on operations

3.1

Summary of results, assets and liabilities and financial position

3.2

Significant events during the year

3.3

Significant events after December 31, 2023

3.4

Climate change

3.5

Taxonomy

3.6

Outlook for operations

3.7

Proposal for

the allocation of net profit for the year ended December 31,

2023 and the distribution

of a dividend

62 A2A Report on Operations 2023 Consolidated results and report on operations

3.5

Taxonomy

With the adoption of the first Technical Delegated Act of the EU Regulation 2020/852 (the so-called Taxonomy), economic sectors and activities that can contribute to climate change mitigation and adaptation, two of the six objectives defined by EU legislation, were identified.

In 2022, the A2A Group, in order to guarantee compliance with the requests of EU Regulation 2020/852, therefore started a process of implementing analyzes aimed at recognizing “eligible” and “aligned” activities pursuant to of the Regulation itself.

In this context, analyzes were conducted on several levels. In a first step, the Group’s potentially environmentally sustainable activities were identified, i.e. those included in the Delegated Acts, which constituted the set of “eligible” activities.

Subsequently, on this set of activities, the actual eco-sustainability was assessed (so-called “alignment” to the Taxonomy). In fact, for an activity to be considered aligned, it must fulfil the following three requirements simultaneously:

a) contribute substantially to the achievement of one or more of the environmental objectives by meeting the technical screening criteria defined in the Climate Delegated Act;

b) do not cause significant harm to any of the other environmental objectives (so-called DNSH); and

c) Be carried out in compliance with minimum social safeguard guarantees 1.

This process therefore led to the identification of “eligible” and “aligned” activities for the Group under the Taxonomy, in accordance with the environmental objectives of climate change mitigation and adaptation. With reference to these activities, in 2022, A2A recorded revenues, capital expenditure and/or operating expenses, as reported in the Group’s Consolidated Non-Financial Statement (DNF) 2022.

From the first quarter of 2023, given the strategic nature of reporting, the Group has decided to implement such reporting on an intra-annual periodic basis, specifically on capitalized expenses.

In November 2023, the European Commission also gave its final approval to the remaining Delegated Acts, which aim to identify the technical criteria and further activities to achieve the other four objectives of EU

Regulation 2020/852: (a) sustainable use and protection of water and marine resources, (b) transition to a circular economy, (c) prevention and reduction of pollution and (d) protection and restoration of biodiversity and ecosystems. With regard to these objectives, the European Union, for FY 2023 reporting, requires an assessment of eligibility only.

Given the aforementioned regulatory changes, the analysis was therefore extended to all six taxonomic objectives for 2023. In particular, eligibility and alignment with the taxonomy was assessed for the first two environmental objectives of climate change mitigation and adaptation, and eligibility only for the remaining four objectives. With reference to these activities, A2A has reported revenues, capital expenditures and/or operating expenses in 2023, which are outlined in the Group’s Consolidated Non-Financial Statement (DNF) 2023.

For 2024, a further expansion is envisaged of the analysis to identify “eligible” but also “aligned” activities for the Group under the Taxonomy, in accordance with all six objectives of the Regulation.

1 According to article 18 of EU Regulation 2020/852, minimum safeguards are “procedures implemented by an enterprise engaged in an economic activity in order to ensure that it is in line with the OECD Guidelines for Multinational Enterprises and the United Nations Guiding Principles on Business and Human Rights, including the principles and rights set out in the eight core conventions identified in the International Labour Organization’s Declaration on Fundamental Principles and Rights at Work and the International Bill of Human Rights.”

Consolidated results and report on operations 2023 Report on Operations A2A 63

The forecasts for the 2024 financial year foresee an Ebitda of between 2.00 and 2.02 billion euro and a Group Net Profit, net of non-recurring items, of between 0.57-0.59 billion euro.

In 2024, the Group will continue to maintain a strong push on organic capex in order to generate balanced and sustainable growth over time, investing around 1.4 billion euro, in line with 2023.

3.6

Outlook for operations

3

Consolidated results and report on operations

3.1

Summary of results, assets and liabilities and financial position

3.2

Significant events during the year

3.3

Significant events after December 31, 2023

3.4

Climate change

3.5

Taxonomy

3.6

Outlook for operations

3.7

Proposal for

the allocation of net profit for the year ended December 31,

2023 and the distribution

of a dividend

Consolidated results and report on operations 2023 Report on Operations A2A 65

3.7

Proposal for the allocation of net profit for the year ended December 31, 2023 and the distribution of a dividend

The annual financial statements of A2A S.p.A. for the year ended December 31, 2023 show a net profit of 488,210,234.00 euro.

If you are in agreement with the criteria used to prepare the financial statements, with the accounting principles and methods used in those statements and with the measurement criteria adopted, we invite you to approve:

the allocation of the net profit for the year of 488,210,234.00 euro as follows:

• 24,410,512.00 euro to the legal reserve;

• 300,132,326.00 euro as an ordinary dividend payable to shareholders to ensure a remuneration of 0.0958 euro for each outstanding ordinary share;

• 163,667,396.00 euro to the extraordinary reserve.

By way of information, we bring to your attention that the number of shares currently outstanding is equal to 3,132,905,277 shares.

The dividend will be paid from May 22, 2024, with ex-dividend date May 20, 2024 and record date May 21, 2024.

The Board of Directors

3

Consolidated results and report on operations

3.1

Summary of results, assets and liabilities and financial position

3.2

Significant events during the year

3.3

Significant events after December 31, 2023

3.4

Climate change

3.5

Taxonomy

3.6

Outlook for operations

3.7

Proposal for

the allocation of net profit for the year ended December 31,

2023 and the distribution

of a dividend

4

Scenario and Market

Report on Operations

2023

68 A2A Report on Operations 2023 Scenario and Market

Overview

In the year 2023, the global economy grew at a moderate but steady pace, in a context characterized by strong private consumption and resilient labor markets. Global economic activity was supported by emerging economies, including China, and among advanced economies, by the United States. According to the World Bank’s preliminary estimate, world GDP growth is expected to reach +2.6% in 2023 compared to a growth of +3.0% in the previous year.

Regarding the advanced economies, the Federal Reserve estimates US GDP to grow by +2.6% in 2023, recovering from +1.9% the year before, despite a decline in private consumption in the latter part of the year. GDP accelerated sharply in Japan where it is expected at +1.7% in 2023 against +0.9% growth in 2022. China’s GDP increased by +5.2% in 2023 (slightly below analysts’ forecasts of +5.3%), exceeding the government’s target of +5.0% and consolidating the positive economic recovery trend.

According to preliminary estimates by ECB experts, published in December, Eurozone GDP will slow down from +3.4 % in 2022 to +0.6 % in 2023 due to the impact on the real economy of the tight monetary policy measures adopted and the tightening of credit supply conditions.

As far as Italy is concerned, growth remained almost nil in the last months of 2023, held back by monetary tightening, still high energy prices and weak foreign demand. According to Bank of Italy estimates, GDP is expected to increase by +0.7% in 2023 as a whole.

According to the estimate released by Eurostat, inflation in the Eurozone stood at +2.9% in December 2023, compared to +2.4% in November and +9.2% in the corresponding month of 2022. In December, the highest contribution to the annual inflation rate came from services (+1.74%), followed by food, alcohol and tobacco (+1.21%) and non-energy industrial goods (+0.66%). The average inflation for the year is equal to +5.5%.

In Italy, according to ISTAT estimates, in December 2023, inflation recorded an increase of +0.2% on a monthly basis and +0.6% on an annual basis, from +0.7% in the previous month and from +11.6% in December 2022. On average, consumer prices will grow by +5.7% in 2023, a sharp slowdown from +8.1% in 2022. This slowdown

was mostly due to the prices of regulated energy goods, which accentuated their decline (from -34.9% to -41.6%).

At its meetings in October and December, the Governing Council of the ECB decided to leave key interest rates unchanged, keeping the main refinancing operations rate at 4.5%. Previous interest rate hikes continue to have a strong effect on the economy. Financing conditions, which have become more restrictive, are dampening demand and contributing to the drop in inflation. In December, the Federal Reserve left key interest rates unchanged for the third consecutive meeting, in a range between 5.25 % and 5.50 %, at 22-year highs.

Since January 2023, the same monetary policy implemented in both the US and the Eurozone has favored the substantial stability of the euro-dollar exchange rate. On average for the year 2023, the EUR/USD exchange rate was 1.08 dollars, up 2.6% from the previous year.

Outlook

Between monetary tightening, credit crunch and stagnating trade and investment, the world economy is set to reach a dismal record by the end of 2024: the slowest GDP growth five-year period in 30 years. The geo-political context remains one of the main factors of instability and uncertainty, which may lead to new commodity price increases and a deterioration in the confidence of households, businesses and investors. There are also non-negligible risks associated with the development of global economic activity, which could be more affected by the difficulties of the Chinese economy. In detail, the World Bank predicts that global growth will slow down for the third year in a row: from +2.6 % in 2023 to +2.4 % in 2024, before returning to growth and reaching +2.7 % in 2025. Developing economies will only grow by +3.9% this year and +4.0% next year. In advanced economies, growth is set to slow to +1.2 % this year (from +1.5 % in 2023) and reach +1.6 % in 2025. For the United States, growth is expected at +1.6% in 2024 (+0.8% from the previous estimate) and +1.7% in 2025 (-0.6% from the previous estimate). The World Bank cut its forecast for China’s growth and warned that East Asian developing economies are set to grow at one of the lowest rates in fifty years, held back by US protectionism and rising debt levels. China will see GDP growth in the range of +4.5 % this year and +4.3 % in 2025 (-0.1 % for both years compared to the previous estimate). By contrast, expectations for Russia

4.1

Macroeconomic scenario

Scenario and Market 2023 Report on Operations A2A 69

are revised slightly upwards to +1.3% in 2024 and +0.9% in 2025.

According to ECB expert projections published in December, Eurozone GDP is expected to accelerate to +0.8% in 2024 and +1.5% in 2025-2026. Within the Eurozone, Germany will have modest growth of +0.6% this year and +1.2% the next, while France will do little better: +0.8% in 2024 and +1.2% in 2025.

As regards Italy, according to the most recent Bank of Italy estimates, GDP is expected to increase by +0.6% in 2024 (from +0.7% in 2023) and by +1.1% in both 2025 and 2026. After remaining broadly stable in the second half of 2023, economic activity is expected to gradually strengthen in the course of this year, supported by a recovery in disposable income and foreign demand. The unemployment rate is expected to decrease slowly but steadily to 7.4% in 2026.

The macroeconomic projections made in December 2023 by Eurosystem experts forecast that overall inflation will continue its downward path, averaging +2.7% in 2024, +2.1% in 2025 and +1.9% in 2026.

As far as Italy is concerned, the consumer price index is expected to average +1.9% this year and decrease to +1.8% in 2025 and +1.7% in 2026. The decline would mainly reflect the sharp fall in the prices of raw materials and intermediate goods, only partly offset by the acceleration in remuneration. Compared to previous forecasts, consumer inflation was revised downwards particularly sharply in 2024, reflecting a faster decline in energy prices.

The Governing Council of the European Central Bank (ECB) indicated that future decisions will ensure that key interest rates are set at levels sufficiently restrictive to achieve a timely return of inflation to the 2% target over the medium term and are kept at these levels as long as necessary. The Council also decided to gradually reduce during the second half of 2024, until they reach zero, the reinvestment of maturing securities purchased under the pandemic emergency public and private securities purchase program. The Federal Reserve has also announced that its monetary policy stance will remain restrictive until inflation has returned to levels compatible with its targets. Most members of the Federal Open Market Committee consider it appropriate, if conditions permit, to ease monetary tightening as early as 2024.

The projections made by ECB experts, against a backdrop of a narrowing interest rate differential with the US that has led to an appreciation of the euro against the dollar, see the EUR/USD exchange rate averaging 1.08 dollars in 2024 and for the two-year period 2025-2026.

4

Scenario

and Market

4.1

Macroeconomic scenario

4.2

Energy market trends

70 A2A Report on Operations 2023 Scenario and Market

Electricity

As far as the national electricity market is concerned, in Italy in 2023 there was a net requirement of 306,090 GWh, down -2.8% compared to the previous year requirement (source: Terna); in seasonally adjusted terms, and corrected for calendar and temperature, the change is equal to -2.1%. The above requirements were met 46.5% from non-renewable sources, 36.8% from renewable sources and the remainder from imports. In 2023, there was a change in the foreign balance, increasing by 19.2% compared to 2022.

Net energy production in 2023 was 257,023 GWh, down -6.4% compared to the previous year. Production from Renewable Energy Sources (RES) increased 15.4% year-on-year to 112,668 GWh. Specifically, photovoltaic (+10.6%) and wind power (+15.1%) increased compared to last year, while geothermal (-1.9%) decreased. The hydroelectric source shows an increase of 36.1% due to the higher water resources availability with a contribution to national production that is, however, significantly lower than in the period 2018-2021. With the increase in production from renewable sources, there is a concomitant drop in thermoelectric generation, which is down 17.4% to 157,934 GWh compared to 2022. National production, excluding pumping, accounted for 84.0% of the demand for electricity, while net imports satisfied the remainder.

The average value of the PUN (Single National Price) Base Load in 2023 stands at 127.4 euro/MWh, in line with the level of 2021 and recording a sharp decrease (-58.0%) compared to 2022, in line with a trend common to all major European electricity markets. The dynamic is mainly driven by a significant drop in gas costs to which the price of electricity is related. Starting from an average value of 174.5 euro/MWh in January 2023, the PUN progressively dropped to a low of 105.3 euro/MWh in June, then rose to 134.26 euro/MWh in October, as tensions in the Middle East began to rise, before retracing and settling at 115.5 euro/MWh in December. Average prices down also for the price in the hours of high load (PUN Peak Load) with a value that stood at 137.4 euro/MWh (-58.8% compared to 2022). The average price during off-peak hours (PUN Off-Peak) was 121.9 euro/MWh, down -57.4% compared to the previous year. For all of 2024, forward curves indicate Base Load PUN prices with average values close to 92.7 euro/MWh.

Natural Gas

The long wave of the Russia-Ukraine conflict, also fuelled by new tensions in the Middle East, shows its effects on the Italian and international gas systems also in 2023, the year in which low demand levels and the consolidation of a raw material supply structure substantially independent of Russian supplies are confirmed. In 2023, natural gas consumption in Italy will stand at 63,125 million cubic metres (-8.5%), at its lowest level since 2015, as a result of the restraining policies induced both by sharp price rises and the need to fill storage tanks that characterized 2022 and 2023; the milder temperatures recorded in 2023 also contributed to the reduction in consumption (source: Snam Rete Gas). Consumption in the industrial and civil sectors decreased, with volumes of 11,440 million cubic metres (-4.0%) and 26,596 million cubic metres (-7.4%) respectively. Consumption also decreased in the thermoelectric sector to 21,130 million cubic metres (-16.0%).

On the supply side, the settling of national production at increasingly marginal values was more than offset by lower demand, which led to a drop in natural gas imports to 60,640 million cubic metres (-3.9%) with a share of 95.6% of national requirements net of storage trends. Domestic production, which satisfied the remainder, fell by -1.1% to 2,806 million cubic metres. Stocks in storage systems remained at record levels at the end of December, as a result of a still positive balance between injections and disbursements within a legislative and regulatory framework aimed at maximizing stocks.

As regards prices, the average price of gas to the PSV in 2023 decreased compared to the record levels of the previous year and stands at 42.3 euro/MWh, down by -65.3% compared to 2022. The PSV, starting from a value of 68.4 euro/MWh in January 2023, shows a downward trend, reaching a low of 31.4 euro/MWh in July, then rising until October and retracing to 36.3 euro/MWh in December 2023. The price dynamics on the main European hubs were similar: the average price of gas to the TTF for 2023 amounted to 40.7 euro/MWh, down -66.2% compared to 2022.

The trend in the respective prices resulted in a PSV-TTF differential of 1.66 euro/MWh for the reporting period, a significant increase compared to the differential of 2022 (1.41 euro/MWh). Gas prices on the main European markets are expected to decrease in

4.2

Energy market trends

Scenario and Market 2023 Report on Operations A2A 71

2024, with an expected average price of gas to the TTF of 29.1 euro/MWh and to the PSV of 30.0 euro/MWh; the respective forward curves show a positive PSV-TTF differential around 0.83 euro/MWh.

Oil and coal

In 2023, oil prices had an average value of 82.2 dollars/bbl, down -16.8% compared to the previous year. Intra-annual dynamics show quotations in the first half of the year which, continuing a trend that started in the second half of 2022, tend to gradually decrease until the beginning of the summer, settling at a minimum value of 75.0 dollars/bbl in June. Prices rose again to reach annual highs between the end of September and October, coinciding with renewed geopolitical tensions in the Middle East. In 2023, the downward movement of quotations expressed in euro/bbl (-19.1%) is slightly pronounced, in the presence of an exchange rate that, with an increase of 2.6%, stands at 1.08 USD/EUR in 2023. For the year 2024, oil forward curves indicate prices with average values close to 76.3 dollars/bbl.

The Energy Information Administration (EIA) reported that global oil demand in 2023 averaged 101.1 million barrels per day, with an increasing trend within individual quarters. The EIA predicts that global oil demand will increase to 102.5 million barrels per day in 2024, and then grow further to 103.7 million barrels per day in 2025; most of the EIA demand growth forecasts are concentrated in China and India. In OECD countries, demand growth will be mostly stable in both 2024 and 2025. These forecasts are however subject to many uncertainties including future trends in global economic development and continuing geopolitical tensions.

OPEC crude production of member countries averaged 26.9 million barrels per day in 2023. The EIA expects average OPEC crude oil production to decrease to 26.6 million barrels per day in 2024, as a result of new production cuts, and increase to 27.4 million barrels per day in 2025. U.S. crude oil production averaged 12.9 million barrels per day in 2023, the highest US crude oil production ever recorded. EIA forecasts is for an increase that will average 13.2 million barrels per day in 2024 and rise further to 13.4 million barrels per day in 2025, driven by the increase in well efficiency.

The price of coal also highlights a downward trend which, starting from the January 2023 values of 165.2 dollars/ton, progressively contracts to settle in July at a minimum value of 110.4 dollars/ton. It then reversed the trend until October and settled at 117.5 dollars/ton in December. The average price for the year 2023 was 129.4 dollars/ton, down -55.8% compared to the previous year (292.8 dollars/ton). In 2023, the downward dynamic of quotations expressed in euro/ton (-56.9%) is slightly accentuated by the appreciation of the single currency. For 2024, forward curves indicate prices with average values close to 91.1 dollars/ton.

4

Scenario

and Market

4.1

Macroeconomic scenario

4.2

Energy market trends

5

Analisys of main

sectors of activities

Report on Operations

2023

74 A2A Report on Operations 2023 Analysis of main sectors of activities

5.1

Summary of results sector by sector

12 31 2023

millions of euro

Generation and Trading

Market

Waste

Smart Infrastructures

Corporate

Eliminations

Income statement

01 01 2023

12 31 2023

01 01 2023

12 31 2023

01 01 2023

12 31 2023

01 01 2023

12 31 2023

01 01 2023

12 31 2023

01 01 2023

12 31 2023

01 01 2023

12 31 2023

Revenues

10,920

7,140

1,458

1,552

337

(6,649)

14,758

- of which inter-sector

5,491

180

313

354

311

(6,649)

Operating expenses

(9,992)

(6,777)

(718)

(904)

(230)

6,649

(11,972)

- of which inter-sector

(417)

(5,624)

(126)

(413)

(69)

6,649

Labour costs

(99)

(64)

(365)

(114)

(173)

(815)

Gross operating income - EBITDA

829

299

375

534

(66)

1,971

% of Revenues

7.6%

4.2%

25.7%

34.4%

(19.1%)

13.4%

Depreciation of tangible assets and amortization of intangible assets

(225)

(68)

(160)

(282)

(66)

(801)

Net write-downs of fixed assets

-

-

(1)

(1)

-

(2)

Provisions for risks

(50)

5

(9)

(11)

(3)

(68)

Provisions for credit risks

-

(69)

1

(10)

(5)

(83)

Net operating income - EBIT

554

167

206

230

(140)

1,017

% of Revenues

5.1%

2.3%

14.1%

14.8%

(40.6%)

6.9%

Result from non-recurring transactions

2

Financial balance

(140)

Result before taxes

879

Income taxes

(199)

Result after taxes from operating activities

680

Net result from discontinued operations

3

Minorities

(24)

Group result of the year

659

Gross capex (1)

332

92

214

631

110

(3)

1,376

(1) See the items “Capex” in the schedules on tangible and intangible assets presented in Notes 1 and 2 to the balance sheet.

Analysis of main sectors of activities 2023 Report on Operations A2A 75

12 31 2022 Restated

millions of euro

Generation and Trading

Market

Waste

Smart Infrastructures

Corporate

Eliminations

Income statement

01 01 2022

12 31 2022

Restated

01 01 2022

12 31 2022

Restated

01 01 2022

12 31 2022

Restated

01 01 2022

12 31 2022

Restated

01 01 2022

12 31 2022

Restated

01 01 2022

12 31 2022

Restated

01 01 2022

12 31 2022

Restated

Revenues

19,605

8,798

1,422

1,529

320

(8,518)

23,156

- of which inter-sector

7,144

358

348

374

294

(8,518)

Operating expenses

(18,960)

(8,615)

(710)

(905)

(221)

8,518

(20,893)

- of which inter-sector

(558)

(7,320)

(113)

(473)

(54)

8,518

Labour costs

(91)

(58)

(353)

(112)

(151)

(765)

Gross operating income - EBITDA

554

125

359

512

(52)

1,498

% of Revenues

2.8%

1.4%

25.2%

33.5%

(16.3%)

6.5%

Depreciation of tangible assets and amortization of intangible assets

(206)

(53)

(149)

(258)

(56)

(722)

Net write-downs of fixed assets

(1)

-

-

(1)

-

(2)

Provisions for risks

(30)

1

32

(3)

(2)

(2)

Provisions for credit risks

-

(88)

1

(2)

(1)

(90)

Net operating income - EBIT

317

(15)

243

248

(111)

682

% of Revenues

1.6%

(0.2%)

17.1%

16.2%

(34.7%)

2.9%

Result from non-recurring transactions

157

Financial balance

(88)

Result before taxes

751

Income taxes

(344)

Result after taxes from operating activities

407

Net result from discontinued operations

41

Minorities

(47)

Group result of the year

401

Gross capex (1)

272

71

264

560

73

-

1,240

(1) See the items “Capex” in the schedules on tangible and intangible assets presented in Notes 1 and 2 to the balance sheet.It should be noted that the values at December 31, 2022 have been restated to make them homogeneous with the values at December 31, 2023 by reclassifying the revenues, operating costs and depreciation and amortization related to the Water BU sold in 2023 under the item “Net result from discontinued operations/held for sale”.

5.1

Summary of

results sector

by sector

5.2

Results sector

by sector

5.3

Generation

and Trading

Business Unit

5.4

Market

Business Unit

5.5

Waste

Business Unit

5.6

Smart

Infrastructures

Business Unit

5.7

Corporate

5

Analysis of main sectors

of activities

76 A2A Report on Operations 2023 Analysis of main sectors of activities

12 31 2023

millions of euro

Generation and Trading

Market

Waste

Smart Infrastructures

Corporate

Eliminations and adjustments

Total

Group

12 31 2023

12 31 2023

12 31 2023

12 31 2023

12 31 2023

12 31 2023

12 31 2023

Capital employed

Net fixed capital

2,758

237

1,650

4,584

4,237

(3,899)

9,567

- Tangible assets

2,499

57

1,356

2,510

261

(40)

6,643

- Intangible assets

423

388

608

2,105

106

-

3,630

- Shareholdings and other non-current financial assets

9

14

29

-

3,890

(3,859)

83

- Other non-current assets/liabilities

2

(209)

2

(31)

48

-

(188)

- Deferred tax assets/liabilities

236

15

35

100

78

-

464

- Provisions for risks, charges and liabilities for landfills

(391)

(20)

(334)

(57)

(26)

-

(828)

- Employee benefits

(20)

(8)

(46)

(43)

(120)

-

(237)

Net Working Capital and Other Current Assets/Liabilities

(574)

586

(30)

27

(85)

(6)

(82)

Net Working Capital

(852)

623

13

81

(85)

(26)

(246)

- Inventories

208

-

46

64

1

-

319

- Trade receivables

1,838

1,920

340

571

81

(1,210)

3,540

- Trade payables

(2,898)

(1,297)

(373)

(554)

(167)

1,184

(4,105)

Other current assets/liabilities

278

(37)

(43)

(54)

-

20

164

- Other current assets/liabilities

267

(31)

(33)

(66)

36

20

193

- Current tax assets/tax liabilities

11

(6)

(10)

12

(36)

-

(29)

Assets/Liabilities held for sale

-

-

-

-

-

-

-

Total capital employed

2,184

823

1,620

4,611

4,152

(3,905)

9,485

Analysis of main sectors of activities 2023 Report on Operations A2A 77

12 31 2022

millions of euro

Generation and Trading

Market

Waste

Smart Infrastructures

Corporate

Eliminations and adjustments

Total

Group

12 31 2022

12 31 2022

12 31 2022

12 31 2022

12 31 2022

12 31 2022

12 31 2022

Capital employed

Net fixed capital

2,549

108

1,582

4,354

4,125

(3,869)

8,849

- Tangible assets

2,369

49

1,257

2,294

217

(24)

6,162

- Intangible assets

379

368

620

2,049

99

-

3,515

- Shareholdings and other non-current financial assets

4

21

29

1

3,873

(3,846)

82

- Other non-current assets/liabilities

12

(306)

-

(15)

13

-

(296)

- Deferred tax assets/liabilities

133

9

36

117

67

1

363

- Provisions for risks, charges and liabilities for landfills

(325)

(25)

(312)

(46)

(21)

-

(729)

- Employee benefits

(23)

(8)

(48)

(46)

(123)

-

(248)

Net Working Capital and Other Current Assets/Liabilities

(668)

741

(113)

102

(180)

(6)

(124)

Net Working Capital

(917)

700

(66)

(28)

(65)

68

(308)

- Inventories

445

-

40

49

2

-

536

- Trade receivables

3,106

2,119

295

491

71

(1,402)

4,680

- Trade payables

(4,468)

(1,419)

(401)

(568)

(138)

1,470

(5,524)

Other current assets/liabilities

249

41

(47)

130

(115)

(74)

184

- Other current assets/liabilities

250

38

(47)

129

(13)

(74)

283

- Current tax assets/tax liabilities

(1)

3

-

1

(102)

-

(99)

Assets/Liabilities held for sale

-

-

-

-

-

-

-

Total capital employed

1,881

849

1,469

4,456

3,945

(3,875)

8,725

5.1

Summary of

results sector

by sector

5.2

Results sector

by sector

5.3

Generation

and Trading

Business Unit

5.4

Market

Business Unit

5.5

Waste

Business Unit

5.6

Smart

Infrastructures

Business Unit

5.7

Corporate

5

Analysis of main sectors

of activities

78 A2A Report on Operations 2023 Analysis of main sectors of activities

Generation and Trading Business Unit

The activity of the Generation and Trading Business Unit is related to the management of the generation plants portfolio 1 of the Group with the dual purpose of maximizing the availability and efficiency of the plants, minimizing operating and maintenance costs (O&M) and maximizing the profit deriving from the management of the energy portfolio through the purchase and sale of electricity and fuels (gaseous and non-gaseous) and environmental certificated on domestic and international wholesale markets. This Business Unit also includes the activity of trading on domestic and foreign markets of all energy commodities (gas, electricity, environmental certificates).

Market Business Unit

The activity of the Market Business Unit is aimed at the retail sale of electricity and natural gas and is responsible for providing energy efficiency and electric mobility services.

Waste Business Unit

The activities of the Waste Business Unit relate to the management of the integrated waste cycle, which ranges from collection and street sweeping to the treatment, disposal and recovery of materials and energy.

In particular, collection and street sweeping mainly refers to street cleaning and the collection of waste for transportation to its destination.

Instead, waste treatment is an activity that is carried out in dedicated centers to convert waste in order to make it suitable for the recovery of materials.

Disposal of urban and special waste in combustion plants or landfills ensures the possible recovery of energy through waste-to-energy or the use of biogas.

Smart Infrastructures Business Unit

The Smart Infrastructures Business Unit develops and manages the infrastructures functional to the wide range of services provided by the Group, focusing on technology and innovation.

In particular, the Business Unit’s activity mainly concerns the development and technical-operational management of electricity distribution networks, natural gas transport and distribution networks and the related metering service, characterized by important technological evolutions thanks to the use of smart meters. It manages the entire integrated water cycle (water collection, aqueduct management, water distribution, sewerage management, purification). The activity is also aimed at the sale of heat and electricity produced by cogeneration plants (mostly owned by the Group), through district heating networks and ensures the operation and maintenance of cogeneration plants and district heating networks. Also included are the activities related to the management services for heating plants owned by third parties (heat management services).

In addition, the Smart Infrastructures Business Unit develops infrastructures in the field of telecommunications, designs solutions and applications aimed at creating new models of cities and territories and improving the quality of life of citizens; it develops and manages public lighting and traffic regulation systems; and, finally, it builds and manages a network of recharging infrastructures functional to the electrification of transport.

Corporate

Corporate services include the activities of guidance, strategic direction, coordination and control of industrial operations, as well as services to support the business and operating activities (e.g. administrative and accounting services, legal services, procurement, personnel management, information technology, communications, landline and mobile telephone service etc.) whose costs, net of amounts recovered from accrual to individual Business Units based on services rendered, remain the responsibility of the Corporate.

1 Total installed capacity of 9.7 GW.

5.2

Results sector by sector

Analysis of main sectors of activities 2023 Report on Operations A2A 79

The following is a summary of the main economic data by sector:

Results by sector 2023

millions of euro

Generation

and Trading

Market

Waste

Smart

Infrastructures

Corporate

Eliminations and adjustments

Total

Revenues from the sale of goods and services

10,807

7,090

1,410

1,496

305

(6,616)

14,492

Other revenue and income

113

50

48

56

32

(33)

266

Total revenues

10,920

7,140

1,458

1,552

337

(6,649)

14,758

Operating expenses

9,992

6,777

718

904

230

(6,649)

11,972

Labour costs

99

64

365

114

173

-

815

Gross Operating Margin - EBITDA

829

299

375

534

(66)

-

1,971

Depreciation, amortization and write-downs

275

132

169

304

74

-

954

Net Operating Income - EBIT

554

167

206

230

(140)

-

1,017

Capex

332

92

214

631

110

(3)

1,376

Results by sector 2022

millions of euro

Generation

and Trading

Market

Waste

Smart

Infrastructures

Corporate

Eliminations and adjustments

Total

Revenues from the sale of goods and services

19,544

8,758

1,378

1,457

291

(8,490)

22,938

Other revenue and income

61

40

44

72

29

(28)

218

Total revenues

19,605

8,798

1,422

1,529

320

(8,518)

23,156

Operating expenses

18,960

8,615

710

905

221

(8,518)

20,893

Labour costs

91

58

353

112

151

-

765

Gross Operating Margin - EBITDA

554

125

359

512

(52)

-

1,498

Depreciation, amortization and write-downs

237

140

116

264

59

-

816

Net Operating Income - EBIT

317

(15)

243

248

(111)

-

682

Capex

272

71

264

560

73

-

1,240

5.1

Summary of

results sector

by sector

5.2

Results sector

by sector

5.3

Generation

and Trading

Business Unit

5.4

Market

Business Unit

5.5

Waste

Business Unit

5.6

Smart

Infrastructures

Business Unit

5.7

Corporate

5

Analysis of main sectors

of activities

5.3

Generation and Trading Business Unit

829

mln €

Ebidta

+49.6% compared to 2022

332

mln €

Capex

272 mln € in 2022 (+22.1%)

127

€/MWh

Single National Price

(-58% vs 2022)

-6.9

€/MWh

Clean spark spread

(1.9 €/MWh in 2022)

312

GWh

Production of

coal-fired plants

(-52.9% vs 2022)

8,822

GWh

Thermoelectric production

from other facilities

(-41.1% vs 2022)

306,090

GWh

Energy demand in Italy

(-2.8 % vs 2022)

806

GWh

Photovoltaic and

wind power production

(+26.3% vs 2022)

3,743

GWh

Hydroelectric

production

(+37.2% vs 2022)

The following is a summary of the main quantitative and economic data relating to the Generation and Trading Business Unit:

80 A2A Report on Operations 2023 Analysis of main sectors of activities

Analysis of main sectors of activities 2023 Report on Operations A2A 81

Operating figures

Net electricity production

GWh

12 31 2023

12 31 2022

Change

% 2023/2022

Net thermoelectric production

9,134

15,636

(6,502)

(41.6%)

- CCGT

7,601

12,836

(5,235)

(40.8%)

- Oil

1,221

2,137

(916)

(42.9%)

- Coal

312

663

(351)

(52.9%)

Net production from Renewable Sources

4,549

3,367

1,182

35.1%

- Hydroelectric

3,743

2,729

1,014

37.2%

- Photovoltaic

378

387

(9)

(2.3%)

- Wind

428

251

177

70.5%

Total net production

13,683

19,003

(5,320)

(28.0%)

The volumes produced in 2023, at 13,683 GWh, decreased by 28%. In particular, thermoelectric production for the year under review stood at 9,134 GWh, down by 41.6% compared to the previous year (15,636 GWh as at December 31, 2022). The contraction affected both combined cycle plants, as a result of lower contestable demand for electricity in 2023 compared to last year’s requirements (-2.8% - source: Terna), and higher net imports (+19.2%). The San Filippo del Mela power plant and the Monfalcone coal-fired power plant also decreased due to the conclusion of the emergency measure, started in 2022, of maximizing the production of power plants fueled by sources other than natural gas.

Production from renewable sources, on the other hand, amounted to 4.5TWh, up 35.1% from the previous year due to higher hydroelectric volumes as a result of the higher rainfall in 2023 compared to the previous year, which was affected by a persistent drought, and to the contribution of the plants of the companies acquired in 2022 and the Matarocco wind farm in operation since September 2023.

Economic figures

millions of euro

01 01 2023

12 31 2023

01 01 2022

12 31 2022

Change

% 2023/2022

Revenues

10,920

19,605

(8,685)

(44.3%)

Operating expenses

(9,992)

(18,960)

8,968

(47.3%)

Labour costs

(99)

(91)

(8)

8.8%

Gross Operating Margin - EBITDA

829

554

275

49.6%

% of Revenues

7.6%

2.8%

Depreciation, amortization, provisions

and write-downs

(275)

(237)

(38)

16.0%

Net Operating Result

554

317

237

74.8%

% of Revenues

5.1%

1.6%

Capex

332

272

60

22.1%

FTE

1,107

1,071

36

3.4%

Revenues in 2023 amounted to 10,920 million euro, a decrease of 8,685 million euro (-44.3%) compared to the previous year. The decrease is mainly attributable to lower electricity and gas prices and, to a lesser extent, sold and brokered volumes of electricity.

Operating costs for the year amounted to 9,992 million euro, a decrease of 47.3% compared to 2022, following the reduction in the costs of supplying energy raw materials. Maintenance and operating costs, on the other hand, increased by about 10 million euro for work on the plants, particularly wind and solar power plants of the companies acquired in 2022.

5.1

Summary of

results sector

by sector

5.2

Results sector

by sector

5.3

Generation

and Trading

Business Unit

5.4

Market

Business Unit

5.5

Waste

Business Unit

5.6

Smart

Infrastructures

Business Unit

5.7

Corporate

5

Analysis of main sectors

of activities

82 A2A Report on Operations 2023 Analysis of main sectors of activities

Labour costs amounted to 99 million euro, up 8 million euro compared to the previous year (+8.8%). This change was determined partly (almost 40%) by the increase in FTE (+36 FTE) for the management of turnover and the strengthening of the structures for the development of renewable energy and partly by the increase in unit cost for salary increases (collective contracts, increases and indemnities and remuneration policy actions) and for ancillary costs (mainly payments aimed at encouraging early retirement).

The Gross Operating Margin of the Generation and Trading Business Unit amounted to 829 million euro, an increase of 49.6%, +275 million euro compared to 2022. Net of the non-recurring components recorded in the year in question (+37 million euro) and in the previous year (-9 million euro), the Ordinary EBITDA increased by 229 million euro.

The positive change is mainly attributable to:

• positive effects resulting from the increased hydraulicity that the year under review benefited from compared to the previous year, which was penalized by a severe drought that had led to a significant drop in hydroelectric production and consequently, where necessary, a very costly recourse to the spot market in a context of rising prices;

• the contribution of production from other renewable sources, in particular wind power plants;

• effective hedging strategies, which, at the same time as the conclusion of the measure of the support decree ter (two-way compensation mechanism on the price of electricity fed in for RES plants), made it possible to offset the reduction in the price of energy commodities in the year under review.

The positive impacts were partly offset by a contraction in margins on the ancillary services markets (MSD) both due to fewer requests from Terna and a lower valorization of quantities, the lower contribution of combined cycle thermoelectric production and higher costs of structure (Labour and costs for maintenance and operation).

Depreciation, amortization, provisions and write-downs totaled 275 million euro (237 million euro at December 31, 2022). The change is linked for 18 million euro to higher depreciation and amortization mainly attributable to the consolidation of the newly acquired companies in the renewables sector and for 20 million euro to the increased allocations to the risk provision net of releases.

As a result of the above changes, net operating income amounted to 554 million euro (317 million euro at December 31, 2022).

Capital expenditure in the year under review amounted to 332 million euro and included extraordinary maintenance work of approximately 87 million euro, of which 62 million euro at thermoelectric plants and 20 million euro at the Group’s hydroelectric plants.

Development interventions for a total of 240 million euro were carried out, of which 54 million euro related to photovoltaic and wind power plants aimed at accelerating the growth of the Group’s renewable sources and 177 million euro for interventions on combined cycle thermoelectric plants (new CCGT Monfalcone, endothermic engines in Cassano and gas turbine upgrades in Piacenza) aimed at ensuring flexibility and coverage of peak demand and balancing the energy needs of the electricity grid.

Finally, work was carried out to meet standards amounting to approximately 5 million euro.

5.4

Market Business Unit

299

mln €

Ebidta

125 mln € in 2022

22,964

GWh

Electricity Sales

(+10.7% vs 2022)

1,935

(#/1000) POD

Retail market ele customers

free market: 1,307 POD

(+15.9% vs 2022)

92

mln €

Capex

71 mln € in 2022

3,032

Mcm

Gas Sales

(+13.3% vs 2022)

1,555

(#/1000) PDR

Retail market gas customers

free market: 1,178 PDR

(+12.9% vs 2022)

The following is a summary of the main quantitative and economic data relating to the Market Business Unit:

Analysis of main sectors of activities 2023 Report on Operations A2A 83

84 A2A Report on Operations 2023 Analysis of main sectors of activities

Operating figures

Electricity

12 31 2023

12 31 2022

Change

% 2023/2022

Electricity Sales

Electricity Sales Free Market (GWh)

18,543

18,423

120

0.7%

Electricity Sales under Greater Protection Scheme (GWh)

517

732

(215)

(29.4%)

Electricity Sales Gradual Protection (GWh)

2,600

714

1,886

n.s.

Electricity Sales Safeguard Market (GWh)

1,304

868

436

50.2%

Total Electricity Sales (GWh)

22,964

20,737

2,227

10.7%

POD Electricity

POD Electricity Free Market (#/1000)

1,307

1,128

179

15.9%

POD Electricity Gradual Protection (#/1000)

379

40

339

n.s.

POD Electricity under Greater Protection Scheme (#/1000)

249

323

(74)

(22.8%)

Total POD Electricity (#/1000)

1,935

1,491

444

29.8%

Gas

12 31 2023

12 31 2022

Change

% 2023/2022

Gas Sales

Gas Sales Free Market (Mcm)

2,743

2,282

461

20.2%

Gas Sales under Protection Scheme (Mcm)

289

395

(106)

(26.8%)

Total Gas Sales (Mcm)

3,032

2,677

355

13.3%

PDR Gas

PDR Gas Free Market (#/1000)

1,178

1,043

135

12.9%

PDR Gas under Greater Protection Scheme (#/1000)

377

536

(159)

(29.7%)

Total PDR Gas (#/1000)

1,555

1,579

(24)

(1.5%)

The quantities are stated gross of losses.

The POD and PDR figures relate to the mass market.

In 2023, the Market Business Unit recorded 22,964 GWh of electricity sales, up 10.7% on the previous year. The increase is related to the higher contribution of the Gradual Protection Service and the acquisition, by auction, of customers subject to the safeguard regime.

Gas sales, equal to 3,032 million cubic meters, increased by +13.3% compared to 2022, attributable to the key accounts segment.

With reference to supply points, there was a 30% increase in the number of POD related to the electricity market, thanks to the award of the Gradual Protection Service for micro-enterprises from April 2023.

In general, thanks also to the effective commercial development actions undertaken, the Business Unit consolidated its customer base by increasing its electricity and gas supply points by 420,000 units compared to December 31, 2022 and reaching a total of 3.5 million points (+14% compared to 2022), of which 1.9 million related to the electricity market and 1.6 million to the gas market.

Analysis of main sectors of activities 2023 Report on Operations A2A 85

Economic figures

millions of euro

01 01 2023

12 31 2023

01 01 2022

12 31 2022

Change

% 2023/2022

Revenues

7,140

8,798

(1,658)

(18.8%)

Operating expenses

(6,777)

(8,615)

1,838

(21.3%)

Labour costs

(64)

(58)

(6)

10.3%

Gross Operating Margin - EBITDA

299

125

174

n.s.

% of Revenues

4.2%

1.4%

Depreciation, amortization, provisions

and write-downs

(132)

(140)

8

(5.7%)

Net Operating Result

167

(15)

182

n.s.

% of Revenues

2.3%

(0.2%)

Capex

92

71

21

29.6%

FTE

1,034

973

61

6.3%

Revenues amounted to 7,140 million euro (8,798 million euro at December 31, 2022). The change is attributable to the decrease in both electricity and gas unit prices, partly offset by the increase in quantities sold.

Operating costs for the year under review amounted to 6,777 million euro, a decrease of 1,838 million euro compared to 2022 following the contraction in commodity procurement costs. On the other hand, there were cost increases in support for customer development and management (in particular ICT costs, indirect channels, marketing and communication) in excess of 20 million euro.

Labour costs amounted to 64 million euro (58 million euro in 2022), mainly as a result of the increase in FTE to 61. The change is mainly linked (around 70%) to the greater hiring made for the strengthening, in line with the business development objectives, of the organizational structures (in particular the Customer Service area) and for the remainder to the greater unit costs following salary increases.

EBITDA of the Market Business Unit equaled 299 million euro (125 million euro at December 31, 2022).

Net of non-recurring items (-18 million euro in 2023 and +2 million euro in 2022), Ordinary EBITDA increased by 194 million euro.

The growth in margins for 2023 compared to the previous year was attributable to:

• higher volumes of electricity sold in the safeguarded market;

• growth in volumes sold to the large customer segment, particularly gas;

• increase in the customer base of the mass market segment;

• increase in unit margins, also thanks to the full recovery of the contraction recorded in 2022 due to the different temporal distribution of the margins of fixed price sales, which confirmed the overall contractual margin on an annual or biennial basis.

These positive effects made it possible to absorb higher charges related to retention actions, activated by the Group during 2023 on its customer base, and the increase in operating costs for customer acquisition and management activities.

In general, the comparison with the previous year benefits from a progressive return to normality of the energy markets compared to the exceptional nature recorded in 2022, with a recovery in profitability that exceeds the levels achieved in previous years.

Depreciation, amortization, provisions and write-downs totaled 132 million euro (140 million euro in 2022): compared to lower provisions for bad debts of 19 million euro and greater releases relating to the risk provision, there were greater depreciation and amortization for investments made during 2023.

5.1

Summary of

results sector

by sector

5.2

Results sector

by sector

5.3

Generation

and Trading

Business Unit

5.4

Market

Business Unit

5.5

Waste

Business Unit

5.6

Smart

Infrastructures

Business Unit

5.7

Corporate

5

Analysis of main sectors

of activities

86 A2A Report on Operations 2023 Analysis of main sectors of activities

As a result of the above changes, net operating income amounted to 167 million euro (negative 15 million euro at December 31, 2022).

Investments in 2023 amounted to 92 million euro. These investments concerned:

• the energy retail sector with 84 million euro for capitalized charges for the acquisition of new customers, for evolutionary maintenance and development of the Hardware and Software platforms, aimed at supporting billing and customer management activities and for digital innovation projects relating to the full-digital Group company NEN;

• the Energy Solutions segment with 8 million euro for energy efficiency projects.

5.5

Waste Business Unit

The following is a summary of the main quantitative and economic data relating to the Waste Business Unit:

375

mln €

Ebidta

+4.5% compared to 2022

1,544

GWht

Heat sold

(+3.8% vs 2022)

1,145

Kton

Material recovery

disposals

(+15.2% vs 2022)

3,640

Kton

Waste disposed of

(+8.1% vs 2022)

of which:

214

mln €

Capex

264 mln € in 2022

2,071

GWh

Electricity sold

(-2.4% vs 2022)

1,397

Kton

Energy recovery

disposals

(-2.7% vs 2022)

Analysis of main sectors of activities 2023 Report on Operations A2A 87

88 A2A Report on Operations 2023 Analysis of main sectors of activities

Operating figures

12 31 2023

12 31 2022

Change

% 2023/2022

Waste collected (Kton)

1,787

1,785

2

0.1%

Residents served (#/1000)

3,928

3,965

(37)

(0.9%)

Electricity sold (GWh)

2,071

2,121

(50)

(2.4%)

Heat sold (GWht)

1,544

1,487

57

3.8%

Waste disposed of (Kton)

12 31 2023

12 31 2022

Change

% 2023/2022

Energy recovery

1,397

1,436

(39)

(2.7%)

Material recovery

1,145

994

151

15.2%

Other

1,098

938

160

17.1%

Total

3,640

3,368

272

8.1%

The quantities reported are net of intra-group disposals.

The quantities of electricity produced were down 2.4% year-on-year due to the reduced availability of the Acerra and Brescia waste-to-energy plants as a result of increased maintenance shutdowns, partly offset by the increased productivity of the Parona plant. In addition, the volumes of heat sold increased by 3.8% in the year under review as a result of higher demand in the district heating sector.

Net waste disposed of amounted to 3,640 thousand tons (+8.1% compared to the previous year), recording an increase in disposals of material recovery plants due to the contribution of the new OFMSW Lacchiarella and Cavaglià plants and the higher quantities of paper disposed of.

Economic figures

millions of euro

01 01 2023

12 31 2023

01 01 2022

12 31 2022

Change

% 2023/2022

Revenues

1,458

1,422

36

2.5%

Operating expenses

(718)

(710)

(8)

1.1%

Labour costs

(365)

(353)

(12)

3.4%

Gross Operating Margin - EBITDA

375

359

16

4.5%

% of Revenues

25.7%

25.2%

Depreciation, amortization, provisions

and write-downs

(169)

(116)

(53)

45.7%

Net Operating Result

206

243

(37)

(15.2%)

% of Revenues

14.1%

17.1%

Capex

214

264

(50)

(18.9%)

FTE

6,703

6,571

132

2.0%

In 2023, the Waste Business Unit recorded revenues of 1,458 million euro, an increase of 2.5% compared to the previous year (1,422 million euro at December 31, 2022): the increase in revenues from the sale of electricity from waste-to-energy plants more than compensated for the decrease in revenues from paper disposal resulting from the drop in prices recorded in 2023 compared to the previous year.

Operating costs amounted to 718 million euro (710 million euro at December 31, 2022). In 2023, higher costs were recorded, in particular for the supply of biomass, costs for the disposal of dust from waste-to-energy plants, costs for the maintenance of treatment plants and costs for the expansion of material recovery activities (FORSU Lacchiarella and Cavaglià). These increases were partially offset by lower expenses for paper purchases, organic waste disposal and vehicle fuel.

Analysis of main sectors of activities 2023 Report on Operations A2A 89

Labour costs stood at 365 million euro, up 12 million euro compared to 2022 (+3.4%). Of this change, more than 50% was due to an increase in FTE (6,703 FTE in 2023 compared to 6,571 FTE in the previous year) both as a result of changes in perimeter and of hires to strengthen certain services in the Collection and Treatment segment. The further change of nearly 6 million euro was substantially determined by the effects of the application of the national urban hygiene Labour contract and other remuneration increases.

The EBITDA of the Waste Business Unit equaled 375 million euro (359 million euro at December 31, 2022).

Net of non-recurring components recorded in the two comparison periods (+3 million euro in 2023 and +9 million euro in 2022), the Ordinary Gross Operating Margin stood at 372 million euro, an increase of 22 million euro compared to the previous year (+6%).

This result was determined by:

• +8 million euro related to the Collection segment mainly due to lower costs for the disposal of the organic fraction of waste and lower expenses for vehicle maintenance and fuel, which more than offset the increase in personnel costs;

• +14 million euro related to Municipal Waste Treatment Plants mainly due to the increase in electricity revenues from waste-to-energy plants and the higher margins of biomass plants (Sant’Agata di Puglia), despite the increase in raw material costs.

Depreciation, amortization, provisions and write-downs amounted to 169 million euro (116 million euro in 2022). The change was due to higher depreciation and amortization (11 million euro) related to investments made in 2023 and an increase in provisions for risks net of releases (+42 million euro) mainly due to lower releases compared to the previous year of excess landfill and reclamation provisions in the amount of 32 million euro related to the change in discount rates.

As a result of these changes, Net Operating Income totaled 206 million euro (243 million euro at December 31, 2022).

Capex for the reporting year stood at 214 million euro and regarded:

• development interventions for 112 million euro, of which 64 million euro relating to waste-to-energy plants (including line 3 of the Parona waste-to-energy plant and the fume purification line of the Brescia waste-to-energy plant), 9 million euro for material recovery plants, 9 million euro for OFMSW plants (Lacchiarella, Cavaglià and Castelleone), 8 million euro for biomass plants, 18 million euro for other treatment plants and 4 million for the collection sector;

• 102 million in maintenance work on waste-to-energy plants (44 million euro), treatment plants (22 million euro) and the collection sector (36 million euro).

5.1

Summary of

results sector

by sector

5.2

Results sector

by sector

5.3

Generation

and Trading

Business Unit

5.4

Market

Business Unit

5.5

Waste

Business Unit

5.6

Smart

Infrastructures

Business Unit

5.7

Corporate

5

Analysis of main sectors

of activities

5.6

Smart Infrastructures Business Unit

534

mln €

Ebidta

+4.3% compared to 2022

1,599

mln €

RAB Gas

(+6.7% vs 2022)

457

mln €

RAB Water Services

(+14.5% vs 2022)

631

mln €

Capex

560 mln € in 2022 (+12.7%)

953

mln €

RAB Electricity

(+15.2% vs 2022)

2,898

GWht

Heat and cold sales

(+0.1% vs 2022)

The following is a summary of the main quantitative and economic data relating to the Smart Infrastructures Business Unit:

90 A2A Report on Operations 2023 Analysis of main sectors of activities

Analysis of main sectors of activities 2023 Report on Operations A2A 91

Operating figures

Networks

12 31 2023

12 31 2022

Change

% 2023/2022

Electricity distributed (GWh)

10,882

11,238

(356)

(3.2%)

Gas distributed (Mcm)

2,503

2,726

(223)

(8.2%)

Water distributed (Mcm)

69

75

(6)

(8.0%)

RAB Electricity (M€) (*)

953

827

126

15.2%

RAB Gas (M€) (*)

1,599

1,498

101

6.7%

RAB Water (M€) (*)(**)

457

399

58

14.5%

(*) Provisional figures, underlying the calculation of allowed revenues for the period.

(**) The value in 2022 does not include the municipalities of ASVT transferred in 2023.

In 2023, the RAB for electricity, gas and water services were up by 15.2%, 6.7% and 14.5%, respectively, thanks to increased investments.

Heat

GWht

12 31 2023

12 31 2022

Change

% 2023/2022

SOURCES

Plants in:

1,281

1,363

(82)

(6.0%)

- Lamarmora

179

330

(151)

(45.8%)

- Famagosta

44

61

(17)

(27.9%)

- Tecnocity

62

59

3

5.1%

- Canavese

114

142

(28)

(19.7%)

- Linate and Malpensa

228

96

132

n.s.

- Other plants

654

675

(21)

(3.1%)

Purchases from:

2,001

1,932

69

3.6%

- third parties

412

373

39

10.5%

- other Business Units

1,589

1,559

30

1.9%

Total Sources

3,282

3,295

(13)

(0.4%)

USES

Heat sales to end customers

2,757

2,816

(59)

(2.1%)

Distribution losses

525

479

46

9.6%

Total Uses

3,282

3,295

(13)

(0.4%)

Cold sales

141

78

63

80.8%

Electricity from cogeneration

726

421

305

72.4%

Notes:

- The figures only refer to district heating and include cold sales.

- Purchases include the quantities of heat purchased from the Waste Business Unit.

The Business Unit’s 2023 heat and cooling sales stood at 2,757GWhtc (-2.1%) and 141GWhtf (+80.8%) respectively. The year under review benefited from the contribution of A2A Airport, a company consolidated from the fourth quarter of 2022, thanks to which the lower heat sales of the other companies in the segment were partly offset and cold sales increased by 80.8%.

A2A Airport’s contribution is also evident in relation to electricity production, which increased by 305GWh.

5.1

Summary of

results sector

by sector

5.2

Results sector

by sector

5.3

Generation

and Trading

Business Unit

5.4

Market

Business Unit

5.5

Waste

Business Unit

5.6

Smart

Infrastructures

Business Unit

5.7

Corporate

5

Analysis of main sectors

of activities

92 A2A Report on Operations 2023 Analysis of main sectors of activities

Economic figures

millions of euro

01 01 2023

12 31 2023

01 01 2022

12 31 2022

Change

% 2023/2022

Revenues

1,552

1,529

23

1.5%

Operating expenses

(904)

(905)

1

(0.1%)

Labour costs

(114)

(112)

(2)

1.8%

Gross Operating Margin - EBITDA

534

512

22

4.3%

% of Revenues

34.4%

33.5%

Depreciation, amortization, provisions and write-downs

(304)

(264)

(40)

15.2%

Net Operating Result

230

248

(18)

(7.3%)

% of Revenues

14.8%

16.2%

Capex

631

560

71

12.7%

FTE

3,147

3,075

72

2.3%

The Smart Infrastructures Business Unit’s revenue for 2023 amounted to 1,552 million euro (1,529 million euro at December 31, 2022). The higher revenues from gas and electricity distribution due to the increase in investments and inflation, the contribution of A2A Airport Energy acquired in September 2022 and the increases related to the activities aimed at obtaining energy savings (Superbonus) were partially offset by lower revenues from the heat segment due to lower volumes sold on a like-for-like basis and the dynamics of unit prices, as well as the decrease related to the Public Lighting segment.

Operating costs stood at 904 million euro, in line with the previous year (905 million euro in 2022). The increase in costs following the consolidation of A2A Airport for approximately 50 million euro and the increased activities relating to the superbonus were offset by the decrease in the costs of supplying raw materials (gas and heat) and in energy costs in general.

Labour costs amounted to 114 million euro (112 million euro in the previous year). The change is attributable to higher costs related to the increase in resources (+72 FTE) as a result of hiring in 2022 and 2023 and the consolidation of A2A Airport and salary increases partly offset by higher capitalization.

The Gross Operating Margin of the Smart Infrastructures Business Unit in 2023 was 534 million euro (512 million euro at December 31, 2022).

Net of non-recurring items (+19 million euro in 2023; +17 million euro in the previous year), the Business Unit’s ordinary Gross Operating Margin was 515 million euro, up 20 million euro compared to 2022.

The change in margins is distributed as follows:

• +17 million euro related to the electricity distribution network due to an increase in revenue allowed for regulatory purposes as a result of increased investments and inflation, and higher connection contributions;

• +11 million euro relating to the gas distribution network due to an increase in the restriction on revenues admitted for regulatory purposes due to an increase in investments and inflation;

• +15 million euro related to the water cycle attributable to the decrease in electricity costs and the increase in regulated revenues;

• -17 million euro relating to heat due to lower volumes of district heating sold by companies in the sector with the same perimeter and higher operating costs. This contraction in margins was partially offset by the contribution of the new company A2A Airport and the marginality of heat management related to the superbonus business;

• -6 million euro related to the public lighting segment due to the adjustment of fees to changes in energy costs.

Depreciation, amortization, provisions and write-downs equaled 304 million euro (264 million euro as at December 31, 2022). The change is attributable for 24 million to higher depreciation and amortization (for investments made in 2023, for the change in the scope of consolidation and for the replacement of gas meters with consequent change in useful life) and for the remainder to higher provisions for risks and bad debts.

Analysis of main sectors of activities 2023 Report on Operations A2A 93

As a result of the above changes, Net Operating Income amounted to 230 million euro (248 million euro at December 31, 2022).

Investments in the period in question amounted to 631 million euro and regarded:

• 249 million euro in the electricity distribution segment, development and maintenance work on plants and in particular the connection of new users, maintenance work on secondary cabins, the extension of remote control, the refurbishment of the medium and low voltage network, the maintenance and upgrading of primary plants and capex in the launch of the 2G smart meter project;

• 147 million euro in the gas distribution subsector, development and maintenance work on plants relating to the connection of new users and the replacement of medium and low pressure piping and smart gas meters;

• 101 million euro in the integrated water cycle sector, maintenance and development work carried out on the water transportation and distribution network and work and refurbishment of the sewerage networks and purification plants;

• 107 million euro in the district heating and heat management segment: development and maintenance of plants and networks;

• 13 million euro in public lighting for new projects;

• 8 million euro in the e-mobility sector for the installation of new recharging stations;

• 6 million euro in the Smart City segment, mainly laying fiber optics, radio frequencies and data centers.

5.1

Summary of

results sector

by sector

5.2

Results sector

by sector

5.3

Generation

and Trading

Business Unit

5.4

Market

Business Unit

5.5

Waste

Business Unit

5.6

Smart

Infrastructures

Business Unit

5.7

Corporate

5

Analysis of main sectors

of activities

94 A2A Report on Operations 2023 Analysis of main sectors of activities

5.7

Corporate

Economic figures

millions of euro

01 01 2023

12 31 2023

01 01 2022

12 31 2022

Change

% 2023/2022

Revenues

337

320

17

5.3%

Operating expenses

(230)

(221)

(9)

4.1%

Labour costs

(173)

(151)

(22)

14.6%

Gross Operating Margin - EBITDA

(66)

(52)

(14)

26.9%

% of Revenues

(19.6%)

(16.3%)

Depreciation, amortization, provisions and write-downs

(74)

(59)

(15)

25.4%

Net Operating Result

(140)

(111)

(29)

26.1%

% of Revenues

(41.5%)

(34.7%)

Capex

110

73

37

50.7%

FTE

1,730

1,628

102

6.3%

Operating costs increased 9 million euro mainly due to higher expenses for digitalization, IT security and innovation of the Group and higher external communication costs.

Labour costs increased by 22 million euro, about 40% of which is attributable to a higher number of FTE (+102 units compared to the previous year, +6.3%) due to the additions made in 2022 and 2023 to strengthen certain business areas, in line with the Group’s development needs and objectives. The remainder of the change is related to higher unit costs (+3.6%) for salary increases (contractual renewals, bonuses and salary policy actions) and higher charges for mobility and redundancy incentives.

The Gross Operating Margin, corresponding to the Corporate structure costs not charged back to the various Group companies in the year under review, amounted to -66 million euro (-52 million in 2022).

Net of non-recurring items (-9 million euro in 2022), the Corporate ordinary Gross Operating Margin was down -23 million euro compared to 2022.

The negative change in margins is attributable to higher costs not charged back compared to the previous year.

Depreciation, amortization, provisions and write-downs equaled 74 million euro (59 million euro as at December 31, 2022). The change is attributable to higher depreciation and amortization of 10 million euro and higher provisions for risks of 5 million euro.

After depreciation, amortization, provisions and write-downs there was a Net operating loss of 140 million euro (a net operating loss of 111 million euro at December 31, 2022).

Capex in 2023 totaled 110 million euro and mainly refer to work on IT systems (54 million euro) and buildings (49 million euro).

Report on Operations

2023

6

Evolution

of the regulation

and impacts on the

Business Units

of the A2A Group

98 A2A Report on Operations 2023 Evolution of the regulation and impacts on the Business Units of the A2A Group

The second half of 2021 saw a situation of high tension and volatility in the energy markets, which escalated in February 2022 following the outbreak of the Russian-Ukrainian conflict and then gradually normalized during 2023, albeit at significantly higher price levels than pre-2021. To contain the impact of prices on end customers, the government has intervened with a series of initiatives, including: the cancellation of general system charges on electricity and gas bills; the reduction of VAT to 5% both for gas consumption for civil and industrial uses and subsequently, also for the supply of district heating services; the increase in the ISEE thresholds to access the facilities provided for economically disadvantaged customers and those in physical discomfort, together with the provision of additional compensation (CCI) for the social bonus; the introduction of tax credits for high-consumption customers, even those who are not energy-intensive/gas-intensive, against the increase in their energy costs beyond a predefined threshold; the payment in instalments of bills also with the intervention of SACE to support the liquidity needs of those involved; the withdrawal of ‘extra-profits’ accrued by certain operators, with amounts allocated to cover measures in favor of customers.

Only the regulatory provisions with an impact on 2023 are listed below.

Measures in the bill to support end customers to cope with the energy crisis

With subsequent regulatory provisions 1, the following measures were taken to support end customers, both domestic and industrial:

• tax credit for industrial customers: limited to the first and second quarters of 2023, relief in the form of a tax credit (albeit reduced compared to 2022) has been provided for both energy-intensive companies with meters with an available power of 4.5 kW or more and gas-intensive companies, as well as for those other than the latter;

• electricity: zeroing of general system charges limited to Q1 2023;

• natural gas: elimination of general system charges and application of VAT reduced to 5% for the consumption of natural gas intended for civil and industrial uses and for the supply of district heating services for the entire year. Until April 2023, the negative UG2 discount component also applied;

• social bonus: strengthening of the instrument, including by revising the scope of application (broadening the ISEE threshold to 15,000 euro, 30,000 euro for large families) and introduction, for Q4 2023 only, of an extraordinary contribution.

Law Decree no. 4 of January 27, 2022, converted into Law no. 25 of March 28, 2022 (“Sostegni ter” LD)

Art. 15 bis of “Sostegni ter” LD, as amended by art. 11 of LD 9 August 2022, no. 115 (“Aiuti bis” LD converted into Law no. 142 of 21 September 2022), introduced a two-way compensation mechanism on the price of electricity fed into the grid for plants fueled by renewable sources incentivized through the energy account and for all plants fueled by renewable sources that are not incentivized and that entered into operation by January 2010. The mechanism established the

economic regulation with the GSE of the differences, in the period from February 1, 2022 to June 30, 2023, between a reference price and the market price in the manner provided for in the LD. Energy subject to supply contracts concluded before certain dates, at prices not exceeding a reference threshold and not indexed, is excluded from the refund; in addition, for vertically integrated groups such as A2A, only contracts concluded between group companies, including non-producers, and other natural/legal persons outside the corporate group are relevant. ARERA Resolution 266/2022/R/eel established the modalities for implementing the mechanism.

The economic adjustment took place for the period February-August 2022. Subsequently, billing by the GSE was suspended as a result of the Lombardy Regional Administrative Court’s Sentence no. 02675 of December 1, 2022 annulling Resolution 266/2022/R/eel. On January 18, 2023, the Council of State, accepting the precautionary petition promoted by ARERA, reinstated the aforementioned Resolution, pending the judgment on the merits. Lastly, Resolution 143/2023/R/eel established the management of economic balancing items at the end of the period of application of the mechanism. The impact of the measure was 93 million euro.

Law Decree no. 14 of February 25, 2022, converted into Law no. 28 of April 5, 2022 (“Ukraine” LD)

In order to reduce gas consumption, the “Ukraine” LD established the possibility of maximizing the use of coal and oil thermoelectric plants. Terna S.p.A. published the list of plants affected by the maximization, while Resolution 430/2022/R/eel established the criteria for the formulation of offers on the electricity market and the remuneration of plants. The maximization program ran from September 19, 2022 to September 30, 2023.

1 For Q1 2023, see Budget Law 2023; for Q2, see LD March 30, 2023, no. 34; for Q3, see LD June 8, 2023, no. 79; for Q4, see LD September 29, 2023, no. 131.

Evolution of the regulation and impacts on the Business Units of the A2A Group 2023 Report on Operations A2A 99

Law Decree no. 21 of March 21, 2022, converted into Law no. 51 of May 20, 2022 (“Taglia Prezzi” LD)

The combined provisions of article 37 of “Taglia Prezzi” LD and article 55 of LD no. 50 of May 17, 2022 (“Aiuti” LD converted into Law no. 91 of July 15, 2022), provides for an extraordinary contribution on the alleged extra-profits of energy companies (payable, to the extent of the Group’s interest, by entities carrying out the activity of electricity production), equal to 25% of the increase (if greater than 10% and greater than 5 million euro) of the difference between the asset and liability transactions of the period October 1, 2021 - April 30, 2022 compared to those of the corresponding period October 1, 2020 - April 30, 2021.

The Budget Law 2023 restricted the imposition of the contribution to companies whose turnover in 2021 was at least 75% derived from the activities covered by the measure, excluding transactions involving the sale and purchase of shares, bonds or other securities not representing goods and shares in the company between the entities subject to the withdrawal. If, due to the subsequent innovations, the amount already paid is higher than the amount due, the higher amount is recognized as compensation for the unit payments of taxes, contributions due to INPS and other sums in favor of the State, the Regions and social security institutions starting from March 31, 2023. Since for the A2A Group, the amount already paid in 2022 was higher than the amount due (the amounts not due are 10.7 million euro), 2.6 million euro was offset in 2023, while the remaining 8.1 million euro will be offset at a later date. In addition, as a result of the Revenue Agency’s acceptance of the request for appeal filed by A2A Energiefuture S.p.A., the contribution already paid in 2022 and amounting to approximately 36 million euro is no longer due and the company will file a supplementary tax return requesting a refund of the amount, subject to further assessment as to whether the credit can be offset.

Law Decree no. 115 of August 9, 2022, converted into Law no. 142 of September 21, 2022 (“Aiuti bis” LD)

Article 3 suspended until April 30, 2023 (term then extended to June 30, 2023) the effectiveness of any contractual clause

that allows electricity and gas suppliers to unilaterally modify the general contract conditions relating to the definition of the price even if the right of withdrawal is contractually recognized to the counterparty. Consequently, the ineffectiveness of notices given for the aforementioned purposes before August 10, 2022 (date of entry into force of the Law Decree) has also been provided for, unless the contractual amendments had already been finalized. Subsequently, art. 11, paragraph 8, of the “Milleproroghe” Decree has clarified that the case of updating the economic conditions upon expiry (or upon renewal) is excluded from the scope of application of the law

Law Decree no. 176 of November 18, 2022, converted into Law no. 6 of January 13, 2023 (“Aiuti quarter” LD)

The term for the termination of the protection service for domestic gas customers and condominiums was extended from January 1, 2023 to January 10, 2024.

Law no. 197 of December 29, 2022 (Budget Law 2023)

In implementation of EU Regulation 2022/1854, the Budget Law 2023 provided for:

• a market revenue cap of 180 €/MWh, for the period from December 1, 2022 to June 30, 2023, applied to renewable source plants not affected by the mechanism under article 15 bis of “Sostegni ter” LD. The measure had no impact on the A2A Group in 2023;

• a new solidarity contribution equal to 50% of the amount of the share of income determined for income tax purposes for 2022, which exceeds the average income determined for income tax purposes in the period by at least 10% 2018-2021 (with a ceiling of 25% of the net asset value at the end of the 2021 financial year). The contribution is applied to the same activities identified by “Taglia Prezzi” LD plus the sale of electricity, and is due if at least 75% of the revenues of the 2022 tax period derive from these activities. The contribution, accruing in 2022, was paid in H1 2023 and amounts to approximately 117 million euro (non-deductible contribution).

6

Evolution of

the regulation and impacts on the Business Units of the A2A Group

6.1

Generation

and Trading

Business Unit

6.2

Market

Business Unit

6.3

Waste

Business Unit

6.4

Smart

Infrastructures

Business Unit

100 A2A Report on Operations 2023 Evolution of the regulation and impacts on the Business Units of the A2A Group

6.1

Generation and Trading Business Unit

Remuneration of the availability of production capacity: start of capacity market from 2022

The capacity remuneration mechanism (so-called capacity market) aims to ensure the adequacy of the electricity system in the face of sudden peaks in demand or supply shortages. The instrument is configured as a contract for differences entered into with Terna S.p.A. and awarded following a tender in which producers acquire the right to receive a bonus (in €/MW/year) with respect to the obligation to offer all the capacity committed in the MGP and the capacity not accepted as a result of the energy markets on MSD, returning to Terna S.p.A. the difference - if positive - between the market benchmark prices and a strike price (in €/MWh).

In 2019, tenders were held for the delivery years 2022 and 2023 where A2A S.p.A. was awarded about 5 GW/year (of which about 0.12 GW for 2022 and 0.24 GW for 2023 related to new capacity). The award price in both tenders was 33,000 €/MW/year for existing capacity and 75,000 €/MW/year for new capacity (15 years).

The tender for the 2024 delivery was held in 2022, where A2A S.p.A. was awarded approximately 5.4 GW/year, of which 1.3 GW of new construction (including CCGT, photovoltaic, electrochemical storage) and in particular: 4,096 MW of existing CDP 2 (33,000 euro/MW/year), 20 MW of new authorized CDP (70,000 euro/MW/year), 1,311 MW of new unauthorized CDP (48,110 euro/MW/

year). With reference to the new unauthorized CDP, the failure to obtain the certificates for the Cassano CCGT by the deadline of June 30, 2023 led to the termination of the contract (541 MW) and the withholding of the guarantee and the non-interest-bearing security deposit for an amount of about 1.9 million euro. In contrast, for the Monfalcone CCGT (770 MW), the construction process is underway. With regard to the new CDP for the repowering of the Cassano and Chivasso plants, A2A S.p.A. paid a penalty of about 860 thousand euro for failing to comply with the obligation to appoint 50% of the new CDP on relevant plants with new CDP for the period July 2022-June 2023.

The mechanism has been the subject of appeals both at national level and at the EU Court of Justice. In the EU, the Ruling of September 7, 2022 dismissed the appeals with the conclusion of the litigation; the hearing on the merits of the Lombardy TAR is expected in 2024.

With reference to the deliveries for 2025, 2026 and 2027, Terna S.p.A. published a consultation regarding amendments to the Regulations, aimed at overcoming certain critical aspects of the provisions currently in force. New tenders could be held during 2024.

San Filippo del Mela and Monfalcone: essentiality regime and maximization of non-gas thermoelectric production

In 2023, the San Filippo del Mela fuel oil plant of A2A Energiefuture S.p.A. was included in the list of essential plants and admitted to the cost reintegration regime pursuant to Resolution 741/2022/R/eel. As a continuation, also for 2024, the plant is subject to the same regime pursuant to Resolution 502/2023/R/eel.

With reference to the technical-economic parameters, Resolution 223/2023/R/eel accepted the company’s request, formulated in light of the change in fuel used in the power plant with effect from August 18, 2021, to modify the standard efficiency proposed by Terna S.p.A. for the period from August 18, 2021 until 2022. In

addition, the same resolution approved the request for a change in the standard methodology for calculating specific fuel consumption.

San Filippo del Mela and the Monfalcone coal-fired plant were included in the non-gas thermoelectric production maximization program pursuant to “Ukraine” Legislative Decree: until March 31, 2023, the program envisaged the continuous operation of both plants, while from April 1, 2023 until September 30, 2023, only their continuous availability was envisaged.

2 CDP: Capacity Available in Probability.

Evolution of the regulation and impacts on the Business Units of the A2A Group 2023 Report on Operations A2A 101

Brindisi: forward procurement of resources for voltage regulation

In 2019, the Brindisi plant of A2A Energiefuture S.p.A., pursuant to Resolution 675/2018/R/eel and the subsequent tender procedure announced by Terna S.p.A., was awarded a ten-year contract for the supply of reactive energy

amounting to 286 MVAr at a weighted average price of 28,098 euro/MVAr/year. The total for 2023 amount is 11.06 million euro.

Gas Storage and Regasification

The MASE Ministerial Decree of March 31, 2023 and Resolution 150/2023/R/gas defined the criteria for conducting procedures for the allocation of storage capacity for the year 2023-2024. In light of the new market context and the level of filling of the storages, the provision of non-zero reserve prices was reinstated, confirming instead the indication for ARERA to establish modalities to favor the maintenance of gas in storage and the possibility to allow counter-flow injections during the supply period.

In the tenders called by Stogit S.p.A. at the beginning of April, A2A S.p.A. conferred 480

million Smc of storage capacity (of which 455 million Smc of peak modulation and 25 million Smc of uniform modulation) in addition to the 40 million Smc in storage at March 31, 2023.

In the context of the renewed importance of regasification infrastructures to ensure the security of the gas system, in H1 2023, A2A S.p.A. was awarded two long-term contracts for regasification capacity amounting to 200 million Smc/year for 10 years (OLT) and 210 million Smc/year for three years (FSRU Piombino).

Incentives for production from renewable sources: state of the art

In 2023, the tenders for the allocation of incentive tariffs for renewable electricity production under the Ministerial Decree of July 4, 2019 (now the only support mechanism in force) continued, the duration of which was extended until the incentive power quotas were exhausted. In November 2023 was the conclusion of the 13th tender, where VGE 06 S.r.l. participated with a 29.4 MW wind power project located in the Municipality of Banzi. The publication of the results is expected at the beginning of 2024.

In 2024, a new MASE Ministerial Decree is expected to be adopted to incentivize renewable sources that will introduce some changes to the methods of recognition of

incentives as well as the MASE Ministerial Decree that will identify the criteria for the identification, by the Regions, of the so-called areas suitable for the construction of renewable energy plants.

At December 31, 2023, the incentives paid by the GSE to the A2A Group›s plants powered by renewable sources amounted to 41 million euro.

GSE incentive type

millions of euro

Feed in tariff

-

TO and RID

8

Energy account (FV)

33

Total

41

6

Evolution of

the regulation and impacts on the Business Units of the A2A Group

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Generation

and Trading

Business Unit

6.2

Market

Business Unit

6.3

Waste

Business Unit

6.4

Smart

Infrastructures

Business Unit

102 A2A Report on Operations 2023 Evolution of the regulation and impacts on the Business Units of the A2A Group

Removal of the greater protection service for electricity micro-companies

Similarly to what has already been provided by Resolution 491/2020/R/eel for electricity micro-companies, Resolution 208/2022/R/eel defined the rules for the assignment through tender of the Gradual Protection Service (STG) of micro-companies with power up to 15 kW without a supplier on the free market (about 2 million POD for 5 TWh/year of consumption). The tender procedures organized by Acquirente Unico S.p.A. assigned 12 customer lots for the period from April 1, 2023 to March 31, 2027, which were awarded on the basis of the lowest price offered, expressed in

€/POD/year, to cover the marketing and imbalance costs not already recognized by ARERA.

A2A Energia S.p.A. was awarded 4 lots, the upper limit of the 35% antitrust threshold, i.e. about 500,000 PODs for 1.2 TWh/year of consumption. At the end of the STG supply period, customers who have not yet chosen an offer on the free market may be re-supplied by A2A Energia S.p.A. with the application of the most convenient offer.

Removal of the electricity greater protection service for non-vulnerable domestic customers

Resolution 362/2023/R/eel, as amended by Resolution 600/2023/R/eel, set July 1, 2024 as the end date of the greater protection service for non-vulnerable domestic customers 3. Those who will not have chosen an offer on the free market by that date will be served within the STG (gradual protection service) by operators selected through a tender held on January 10, the results of which will be made final on February 6. The tender, organized on January 10 by Acquirente Unico S.p.A., assigned 26 lots for a total of approximately 4.9 million PODs for

the period July 1, 2024 – March 31, 2027; the lots were awarded based on the lowest price offered, expressed in euro/POD/year, to cover marketing and imbalance costs not already recognized by ARERA.

Vulnerable domestic customers will continue, even after July 1, 2024, to be supplied in the greater protection service by the current operators.

Removal of the gas protection service for non-vulnerable domestic customers and condominiums

Resolutions 100/2023/R/com and 102/2023/R/gas defined the accompanying path for customers still under gas protection until the termination of the service scheduled for January 1, 2024, as well as identified vulnerable customers 4 who will maintain the right to regulated supply conditions.

Customers still served under gas protection regime received in September 2023 a communication from their seller, differentiated based on whether or not they meet the vulnerability requirement, informing them that the

service is no longer provided and that they can switch to the free market by signing a new offer. In the absence of a choice, at the end of the service, the vulnerable customer will be supplied by the current seller at a tariff defined by ARERA (former protection) while the non-vulnerable customer will be charged a variable PLACET offer, where the seller could only define the annual fixed component (sales charge).

3 Legislative Decree 210/2021 defined as vulnerable domestic customers with one of the following conditions:

are in an economically disadvantaged condition or have a serious health condition requiring the use of electricity-powered medical/therapeutic equipment (or where persons in such a condition are present);

are at least 75 years old;

are persons with disabilities within the meaning of Article 3 of Law 104/1992;

have utilities in an emergency housing facility following calamitous events;

have utilities on a smaller, non-interconnected island.

4 LD no. 115 of August 9, 2022 (“Aiuti bis” LD) defined gas vulnerable customers as civil customers:

who are economically disadvantaged within the meaning of Article 1(75) of Law 124/2017;

who are among the disabled within the meaning of Article 3 of Law 104/1992;

whose utilities are located in the non-interconnected smaller islands;

whose utilities are located in emergency housing facilities following calamitous events;

over 75 years of age.

6.2

Market Business Unit

Evolution of the regulation and impacts on the Business Units of the A2A Group 2023 Report on Operations A2A 103

Vendor list in the electrical sector

Ministerial Decree MiTE no. 164 of August 25, 2022 established the Vendors List in the electricity sector, defining the requirements (technical, financial and honorableness) for registration, permanence and exclusion from the List. Temporarily, all companies registered as commercial counterparties of

end customers in the Integrated Information System were automatically accredited in the List, except for the need to formalize the registration by submitting a self-declaration by April 16, 2023. All authorized Group companies have completed the registration process.

Components to cover marketing costs on the electricity protected market, on the free electricity market and on gas protection

Resolutions no. 136/2023/R/eel and no. 137/2023/R/gas reduced the RCV/PCV and QVD components, respectively, for the period from April 1, 2023 to March 31, 2024.

PCV euro/POD/year

APRIL 1, 2022

MARCH 31, 2023

APRIL 1, 2023

MARCH 31, 2024

Single national

Single national

Domestic POD

69.88

69.17

Other uses POD*

113.09

-

(*) From April 1, 2023, these types of end customers are no longer entitled to the greater protection service

RCV euro/POD/year

APRIL 1, 2022

MARCH 31, 2023

APRIL 1, 2023

MARCH 31, 2024

C-North

C-South

C-North

C-South

RCV

Domestic POD

30.14

34.06

27.04

30.71

Other uses POD

48.74

71.40

-

-

RCVsm*

Domestic POD

44.73

48.31

39.63

42.92

Other uses POD

69.72

129.29

-

-

RCVi

Domestic POD

24.11

27.25

21.63

24.57

Other uses POD

38.99

57.12

-

-

(*) remuneration for marketing the sale of minor separate companies (≤ 10 MIO POD)

QVD euro/PDR/year

APRIL 1, 2022

MARCH 31, 2023

APRIL 1, 2023

MARCH 31, 2024

€/PDR/year

c€/mc

€/PDR/year

c€/mc

Domestic PDR

67.32

0.7946

63.36

0.7946

PDR condominium home use <200,000

88.41

0.7946

83.2

0.7946

6

Evolution of

the regulation and impacts on the Business Units of the A2A Group

6.1

Generation

and Trading

Business Unit

6.2

Market

Business Unit

6.3

Waste

Business Unit

6.4

Smart

Infrastructures

Business Unit

104 A2A Report on Operations 2023 Evolution of the regulation and impacts on the Business Units of the A2A Group

Additional mechanisms to cover efficient costs on the protected market

With reference to the additional cost compensation mechanisms for the electricity greater protection service, the following is noted:

• in May 2023, A2A Energia S.p.A. submitted a request for access to the mechanism regarding the exit of customers from the greater protection service, aimed at recognizing the additional fixed cost connected to a customer exit rate towards the free market greater than that implicitly already recognized by the RCV component, for an amount equal to 430,000 euro, which was paid in the 2nd half of 2023 (PUC 2022);

• in April 2023, A2A Energia S.p.A. submitted a request for access to the mechanism to compensate for arrears of end customers, aimed at recognizing any charges

related to arrears exceeding the unpaid ratio already considered by the RCV component (COMP 2022), for an amount equal to about 1.255 million euro, which was paid in the 2nd half of 2023;

• in July 2023, A2A Energia S.p.A. filed an application for access to the incentive mechanism for greater dissemination of bills in dematerialized format, aimed at recognizing the costs incurred for the recognition of the discount on bills to customers who jointly activate automatic debit and the dematerialized sending of bills. In the 2nd half of 2023, CSEA recognized and paid A2A Energia S.p.A. an amount of about 163,000 euro.

Interventions to support flooded areas

Resolution no. 267/2023/R/com implemented the provisions of LD no. 61 of June 1, 2023 (“Alluvione” LD) in favor of the populations affected by the exceptional weather events that occurred in some areas of central and northern Italy. The measure suspends, from May 1 to August 31, 2023, with subsequent extension until October 31, 2023, for customers who have suffered the greatest damage, the payments of bills issued or to be issued for the supply of electricity, gas, including gas other than natural gas distributed through canalized networks, as well as for users of the integrated water service and the integrated municipal waste management service located in the municipalities or fractions of municipalities listed in Annex 1 to “Alluvione” LD.

For beneficiaries, until the end of the suspension, the arrears regulations do not apply, even in the case of arrears occurring before May 1, 2023. From the end of the suspension and no later than March 31, 2024, the seller will be obliged to issue a settlement invoice accounting for the suspended amounts, which must be paid in instalments for 12 months.

Similarly, Resolution 519/2023/R/com ordered the suspension of payment terms for water, electricity and gas bills issued or to be issued to protect users and supplies located in the provinces of Florence, Livorno, Pisa, Pistoia and Prato affected by the exceptional weather events of November.

Award of the safeguard service for the two-year period 2023-2024

A2A Energia S.p.A. was also awarded the safeguard service for the two-year period 2023-2024, and was awarded the following lots: lot 1 (Liguria, Piedmont, Valle d’Aosta, Trentino-Alto Adige), lot 2 (Lombardy), lot 3 (Veneto, Emilia-Romagna, Friuli-Venezia-Giulia) and lot 4

(Marche, Tuscany and Sardinia) for approximately 33,700 POD and 2.15 TWh. The award value (parameter Ω) was equal to: 29.97 €/MWh for lot 1, 15.90 €/MWh for lot 2, 24.97 €/MWh for lot 3 and 21.95 €/MWh for lot 4.

Closure of preliminary investigation proceedings by the AGCM (Competition and Market Authority) with respect to A2A Energia S.p.A. as to the implementation of the provisions of article 3 of “Aiuti bis” LD (PS12470)

On July 25, AGCM closed the preliminary investigation procedure (PS12470) started on December 13, 2022 against A2A Energia S.p.A. for alleged changes in the price of electricity and gas supply in violation of the provisions of Article 3 of “Aiuti bis” Law Decree.

The proceedings were closed without finding an infringement and making mandatory the commitments

presented by A2A Energia S.p.A. aimed at increasing the degree of information transparency towards customers. On September 28, the company sent a report on compliance with the commitments made binding.

Evolution of the regulation and impacts on the Business Units of the A2A Group 2023 Report on Operations A2A 105

Waste Pricing Method for the second regulatory period 2022-2025 (MTR-2)

Resolution 389/2023/R/idr updated the criteria for recognition of the efficient operating costs for the regulatory period 2024-2025 (MTR-2), confirming the general approach and establishing the rules for defining the access tariffs to the mixed waste and OFMSW treatment plants. Resolution 68/2022/R/rif updated the WACC for the period 2022-2025, setting it at 5.6% for the municipal hygiene

service and 6% for the treatment service (only to “minimum plants”).

With reference to the urban hygiene service, in H2 2023, the process continued for the A2A Group companies to finalize the 2022-2025 “raw PEF”, which were subsequently submitted for approval by the entities territorially competent (ETC) and validation of the Authority.

PEF tariff revenue (values in millions of euro)

ARERA Resolution

Municipality

Operator

2022

2023

2024

2025

544/2022/R/rif

Milan

Amsa S.p.A.

303.3

306.1

306.1

306.1

731/2022/R/rif

Brescia

Aprica S.p.A.

35.3

35.9

36.7

37.2

61/2023/R/rif

Bergamo

Aprica S.p.A.

20.1

20.5

20.1

20.3

116/2023/R/rif

Cremona

Linea Gestioni S.r.l.

10.6

10.7

10.9

11.1

131/2023/R/rif

Como

Aprica S.p.A.

14.2

14.4

14.7

14.9

610/2023/R/rif

Lodi

Linea Gestioni S.r.l.

7.8

7.8

7.8

7.8

In most cases, in continuity with 2020-2021 and in the presence of assignments obtained after tenders, ETC availed itself of the option of preserving any efficiencies already achieved, applying the value envisaged by the previous contracts (if lower than the maximum value of the MTR-2) subject to compliance with the economic-financial balance of operations. In addition, the ETC will have to adjust their existing contracts in accordance with the service contract scheme defined in Resolution 385/2023/R/idr within 30 days of the adoption of the relevant 2024-2025 biennial tariff update determinations.

With reference to treatment, ARERA has introduced asymmetrical tariff regulation, to be determined by the individual entities territorially competent (ETC), i.e.in Lombardy by the Region. The Authority has established, as a criterion for the identification of regulated tariff plants (“minimum” plants) the presence of a rigid market with a strong and stable excess of demand, in addition to the following alternative conditions: i) having committed capacity for flows guaranteed by sector scheduling; ii) having been identified as “minimum” during scheduling by the competent parties.

Region

Resolution deed

Decision

Lombardy

Resolution of the Council

no. 5777/2021

Treatment plants for mixed waste and OFMSW were declared “additional”. Publication of the “main criteria underlying the identification of fees” on the operator’s website is required

Piedmont

Executive Decree

no. 649/2022

The Villafalletto landfill and mechanical biological treatment plant (TMB) were declared “minimum” for the years 2022 and 2023. Subsequently, the ETC approved the PEF 2022-2025 for the Villafalletto plant

Campania

Resolution of the Council

no. 190/2022

The Caivano TMB and the Acerra waste-to-energy plant (TMV) were declared “minimum” for the years 2022 and 2023. With Executive Decree no. 235/2022, the ETC approved the 2022-2025 PEF for the Acerra plant

6.3

Waste Business Unit

6

Evolution of

the regulation and impacts on the Business Units of the A2A Group

6.1

Generation

and Trading

Business Unit

6.2

Market

Business Unit

6.3

Waste

Business Unit

6.4

Smart

Infrastructures

Business Unit

106 A2A Report on Operations 2023 Evolution of the regulation and impacts on the Business Units of the A2A Group

Recent administrative rulings on “minimum” plants: OFMSW and Mixed

In Ruling no. 17/2023, the Emilia-Romagna Regional Administrative Court (TAR) declared the following unlawful:

• the Emilia-Romagna resolution (no. 801 of May 23, 2022) that identified the “minimum” plants for composting/anaerobic digestion;

• the subsequent award of the flows to these plants by a negotiated procedure without a call for tenders.

The main reason for this is that the treatment of the organic fraction is included in the Consolidated Environmental Act as a market activity, with no territorial restrictions on its movement, and that therefore the awarding of treatment activities for this fraction must take place through tender procedures.

The Lombardy Regional Administrative Court, with Rulings nos. 486/2023, 501/2023 and 578/2023, annulled Resolution 363/2021/R/rif (MTR-2) in the part relating to the definition of gate tariffs as well as the consequent acts of the Apulia Region and AGER Apulia. For the administrative court, the regulator would

have gone beyond the competences attributed to it by the state legislator, defining organic fraction treatment plants, incinerators with/without energy recovery and landfills as “minimum” plants and asking the regions to identify them in their territory.

ARERA appealed the aforementioned Rulings to the Council of State, pointing out that the identification of “minimum” plants is expressly provided for by the National Waste Management Plan (PNGR) among the criteria of regional planning, according to a coordinated action between institutions. In Rulings no. 10548 and no. 10550 of December 6, 2023, the Council of State rejected ARERA’s appeal, considering that the regulator’s action would have gone beyond the scope of tariffs, as it would have carried out planning activities that were not within its competence. A possible ministerial intervention is expected, also through possible regulatory changes related to the PNGR, which could lead to a different regulatory framework between mixed waste and OFMSW.

Quality regulation of the municipal waste management service (2023-2025)

Resolution 15/2022/R/rif approved the “Consolidated act for the regulation of the quality of the municipal waste management service” (TQRIF), providing from January 1, 2023 for a set of minimum and homogeneous contractual and technical quality obligations for all managements (regardless of how the service is entrusted), alongside quality indicators and related general standards differentiated by regulatory schemes, identified in relation to the actual starting quality level, determined by the ETC on the basis of the services provided for in the Service Contract and/or in the Quality Charter.

When approving the 2022-2025 multi-annual PEF, ETCs are required to identify the positioning of the individual management in the “Matrix of reference schemes”, determining the regulatory scheme and the related obligations applicable to the management, to be valued in the definition of the forecast costs associated with compliance with the quality obligations provided in the PEF 2022-2025. Furthermore, ETCs may, on the basis of a justified proposal by the operators, define any qualitative standards that improve or go beyond those laid down in the TQRIF.

Provision of obligations and control instruments for technical quality (continuity, regularity and security of the service)

Technical quality = NO

Technical quality = YES

Provision of contract quality obligations

Quality contractual = NO

SCHEME I

Minimum quality level

SCHEME III

Intermediate quality level

Quality contractual = YES

SCHEME II

Intermediate quality level

SCHEME IV

Advanced quality level

As regards 2022, the Municipality of Milan, as ETC, has positioned AMSA S.p.A. within Scheme I. It must be said that the ETC, from a prudential point of view, have placed most of the Municipalities managed by Group companies within Scheme I.

Resolution 15/2022/R/rif also introduces the obligation to adopt a single “Quality Charter of the integrated

urban waste management service” in compliance with the provisions of the TQRIF: to date, most of the urban hygiene companies have finalized with their ETC the approval process for the new Service Charter, after sharing it with the Consumer Associations.

Finally, operators are required to report, through the preparation of an electronic performance register, and

Evolution of the regulation and impacts on the Business Units of the A2A Group 2023 Report on Operations A2A 107

to communicate data on quality indicators to the Authority and the ETC (obligation valid for assignments falling under Schemes II-III-IV), as well as to publish on their website a series of information (including the positioning of

management in the matrix and the quality standards within their competence) that the Authority will consider publishing, with a view to sunshine regulation.

Monitoring and transparency obligations on the efficiency of separate collection and municipal waste treatment plants

Resolution 387/2023/R/rif introduced a first set of indicators on the efficiency and quality of separate collection as well as the

reliability of treatment plants. The monitoring of these indicators starts in 2024, with the first transmission to ARERA in 2025.

Establishment of equalization systems also in the municipal waste sector

Resolution 386/2023/R/rif introduced equalization systems in the waste sector, providing for two components applied to the TARI to be paid by users from January 1, 2024:

• UR1 to cover the costs of managing waste accidentally fished out of the sea and waste

voluntarily collected, amounting to 0.10 euro/user;

• UR2 to cover the benefits recognized for exceptional and calamitous events, amounting to 1.50 euro/user.

Biomethane production incentive framework

The MiTE Decree of September 15, 2022 introduced a new incentive mechanism for the production of biomethane to be used not only in transport but also in other uses and which will cover the period 2022-2024. The new instrument is characterized by incentivizable quotas and competitive procedures, and the subject is a contract for two-way differences that considers the difference between the tariff resulting as outcome of tender procedures and the average monthly price of methane (including the guarantee of origin). Projects will also receive a capital grant of up to 40% of the costs, using PNRR funds.

Starting with the third competitive procedure, opened on December 22, 2023, the tariffs and maximum eligible costs have been adjusted for inflation, as provided for by LD 57/2023 (“Rigassificatori” LD).

A2A Ambiente S.p.A. obtained the pre-qualification from the GSE for 4 biomethane production plants from organic waste that will be incentivized with the CIC mechanism provided for by the previous MiSE MD March 2, 2018. The plants of Lacchiarella and Cavaglià came into operation in 2022, while those of Corteolona and Castelleone benefiting from the extension of the Ministerial Decree of August 5, 2022, came into operation during 2023.

Resolution 220/2023/R/gas introduced a number of changes to the procedure for connecting biomethane plants to the natural gas grid, with the aim of simplifying and accelerating the connection process and, at the same time, optimizing the cost for the system by entrusting Snam S.p.A. with the task of evaluating the different connection solutions.

Maximizing non-gas thermoelectric production

Agripower S.p.A.’s biomass plant in Sant’Agata di Puglia was included in the program to maximize non-gas thermoelectric production pursuant to Ukraine LD. This plant was scheduled for continuous operation from April 1, 2023 to September 30, 2023.

The regime applied is that of ordinary essentiality with some exceptions and exemptions (if the fixed costs incurred during

the maximization period are not covered by market revenues, the operator may submit an application to ARERA for the reimbursement - net of the remuneration and amortization of the capital invested in the plant prior to the start of the maximization procedure). The company applied for the standard valuation methodology for the fuel used and is awaiting approval by the Authority.

6

Evolution of

the regulation and impacts on the Business Units of the A2A Group

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and Trading

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6.2

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Business Unit

6.3

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Business Unit

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Infrastructures

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108 A2A Report on Operations 2023 Evolution of the regulation and impacts on the Business Units of the A2A Group

Legislative Decree no. 36 of March 31, 2023 - Public Contracts Code in implementation of article 1 of Law no. 78 of June 21, 2022, delegating the Government in the field of public contracts

Legislative Decree, in force since April 1, 2023 and effective from July 1, 2023, introduces the new procurement code by replacing the current Legislative Decree 50/2016. The new code:

• is characterized by the push for digitalization of the procurement contracts lifecycle;

• stipulates that the EU thresholds, i.e. the value above which Community attention and the related “Europeanisation” of calls for tenders are triggered, are periodically re-determined by a measure of the EU Commission;

• for tenders below the “Community threshold” the procedures available to contracting authorities are direct awarding and the negotiated procedure after consultation of economic operators;

• defines the contents of the two design levels, namely the technical-economic feasibility project and the executive project;

• states that minimum environmental criteria, among other things, must be indicated in calls for tenders.

Directive (EU) 2023/959 of the European Parliament and of the Council of May 10, 2023 amending Directive 2003/87/EC establishing a scheme for greenhouse gas emission allowance trading within the Union and Decision (EU) 2015/1814 on the establishment and operation of a market stabilization reserve in the Union system for greenhouse gas emission allowance trading

The Directive amends Directive 2003/87 by providing:

• an increase in greenhouse gas emission reductions;

• the reporting and monitoring of emissions, as of January 1, 2024, of municipal waste incineration plants with a total rated thermal input exceeding 20 MW;

• the lowering of the hydrogen and synthesis gas capacity limit for the application of the ETS, now 5 tons per day (previously 25t);

• a new chapter regulating further activities, including

the release of fuels for consumption in the residential, commercial and transport sectors.

The deed sets two deadlines for transposition: December 31, 2023 and June 30, 2024 only for the regulation of Chapter IV-bis with the exception of the reporting of historical emissions by 2025 (art. 30-septies, paragraph 4), which must be transposed by the earliest indicated deadline.

MD no. 59 of April 4, 2023 - Regulations for the waste traceability system and the national electronic waste traceability register pursuant to article 188-bis of Legislative Decree no. 152 of April 3, 2006

The MD introduces the new waste traceability system (so-called RENTRI), regulating in particular:

• the models and formats of the chronological waste register and the identification form, also indicating how they are to be filled in, stamped and kept;

• the modalities of registration with RENTRI and related fulfilments, by those who are obliged or those who voluntarily join it;

• the operation of RENTRI including the way in which data is transmitted;

• how RENTRI data will be shared with the Higher Institute for Environmental Research (Ispra) for inclusion in the Waste Register;

• the modalities of coordination between Mud and the fulfilments transmitted to RENTRI.

The date of registration depends on the activity carried out and the number of employees of each individual company. In the most restrictive case, registration will be required from December 15, 2024 and within 60 days thereafter. Also from the same date, the new C/S and FIR register models will come into force.

Evolution of the regulation and impacts on the Business Units of the A2A Group 2023 Report on Operations A2A 109

In relation to the operational modalities of RENTRI, future decrees are planned to regulate:

• the operational modalities to ensure the transmission of data to RENTRI and its functioning;

• instructions for operators to access and register with RENTRI;

• IT requirements to ensure the interoperability of RENTRI with the systems adopted by operators;

• how to fill in the FIR and the C/S Register;

• the requirements for consultation services by the administrations concerned;

• manuals and concise guides to support operators and users;

• how the support tools work.

6

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110 A2A Report on Operations 2023 Evolution of the regulation and impacts on the Business Units of the A2A Group

2023 provisional reference tariffs for the distribution and metering of natural gas

Resolution 207/2023/R/gas approved the 2023 provisional reference tariffs for natural gas distribution and metering activities.

Value of RAB GAS underlying provisional reference tariffs 2023

millions of euro

Unareti

ASVT

LD Reti

Reti Più

Acinque

Group

(1)

Total

Centralized cap.

46

1

10

12

11

80

RAB Distribution

835

12

162

140

146

1,295

RAB Metering

113

2

22

35

27

199

Total

994

15

194

187

184

1,574

(1) Includes Lereti S.p.A. and Reti Valtellina Valchiavenna S.r.l.. The RAB values of Lereti S.p.A. are expressed net of the 4 locations (Varese, Brizio, Casciago and Lozza) where the assets are owned by the municipalities.

Unareti S.p.A.’s provisional 2023 admissible revenues are affected by the transition to the management on an ATEM basis of the Area Milan 1 5 with application of the specific tariff criteria provided.Tariff regulation for the natural gas distribution and metering service 2020-2025

Resolution 570/2019/R/gas (approving the 2020-2025 RTDG) was challenged by Unareti S.p.A.: a number of rulings have already been published on appeals filed by various operators of different sizes, which have partially upheld their grievances, highlighting, among other things, the presence of a material error in the calculations made to define the starting level of the operating costs recognized for distribution activities and the relative annual reduction (so-called X-Factor). The Authority, faced with this, on the one hand appealed against the rulings to the Council of State and, on the other hand, with Resolution 409/2023/R/gas corrected the material error, redefining, as a result, both the X-Factor for the 2020-2025 period and the 2020-2022 definitive and 2023 provisional reference tariffs, with an

impact, at A2A Group level, of about 1.7 million euro.

Resolution no. 737/2022/R/gas provided for the infra-period update 2023-2025, limiting itself to operationally outlining certain measures already envisaged. The main novelty is the introduction of a mitigation mechanism of the negative impacts on the parametric allowed revenues to cover distribution operating costs resulting from the closure of gas Points of Redelivery (PoR) as a consequence of the increasing electrification. This mechanism, based on trigger logics to be activated upon the occurrence of certain conditions 6, will be managed within the scope of equalization from 2023 revenues with an estimated impact of about 0.9 million euro.

Reform of the regulation of the natural gas metering service

Resolution 269/2022/R/gas reformed the regulation of the natural gas metering service by providing: (i) a fixed time limit (90 days) beyond which the gas smart meter installed is considered to be in service (i.e. remotely-read and remote-controlled) and, therefore, (ii) the applicability to these smart meters of the monthly reading obligations, (iii) the sending of measurement data to the SII by the 7th day of the month (iv) an articulated system of indemnifications in favor of both end customers and distribution users and (v)

mechanisms for mitigating the burden on distributors for the recognition of such indemnifications aimed at taking into account the actual technical limitations of the remote reading and management systems used.

The provisions came into force partly in October 2022 (new compensation mechanisms for distribution users) and partly in April 2023 (commissioning, frequency of metering data collection, making them available to the SII and compensation to end customers).

5 The main differences with respect to the tariff rules applicable to locations managed on a municipal basis are (i) the increase in the useful life of distribution assets and (ii) the reduction to zero of the X-Factor for 2 annual updates of the parametric unit fee to cover operating costs.

6 See Resolution 737/2022/R/Gas, Annex A (RTDG), art. 45.2.

6.4

Smart Infrastructures Business Unit

Evolution of the regulation and impacts on the Business Units of the A2A Group 2023 Report on Operations A2A 111

Reorganization of gas metering activities at entry and exit points of the natural gas transport network (RMTG)

Resolution 512/2021/R/gas approved the “Regulation of the metering service on the natural gas transportation network (RMTG)”, which defines, with reference to the metering plants pertaining to the perimeter of the natural gas transportation network, the responsibilities and scope of metering and meter reading activities, the minimum and optimal plant requirements, performance and maintenance requirements, and commercial quality levels of the metering activity.

The new regulation places greater responsibility on the owners of the metering plant and those responsible for the reading activity through an articulated system of penalties

and compensation aimed at providing an adequate price signal for non-compliance with the required service quality levels and thus stimulate interventions aimed at upgrading the metering plants, resulting in an improvement in their performance. This system will run from 2024, after the coordination (2022) and first performance monitoring (2023) phases.

Snam Rete Gas S.p.A., as a major transportation company, consulted on specific amendments to the Transport Network Code to incorporate these provisions and identify the operating procedures for their application in relations with various subjects, then approved with Resolution 600/2022/R/gas.

Mechanism for empowering natural gas distribution companies in delta in-out management (Delta IO)

Resolution 386/2022/R/gas defined a mechanism for making distribution companies responsible for managing the so-called Delta IO (i.e. the difference between the gas injected into the distribution network measured at the Re.Mi (citygate) cabin and the gas withdrawn at the end-customer’s PoR/interconnection points with other networks) aimed at intercepting the most manifest and macroscopic inefficiency situations.

The mechanism is based on the comparison, for each citygate, between the minimum and maximum admissible reference values of the Delta IO calculated for homogeneous groups of plants and the actual Delta IO

value of the specific citygate and on the consequent valorization of the result by means of a reference unit price of gas should the actual value fall outside the “exemption band” determined by the minimum and maximum admissible values; the calculation excludes gas quantities relating to localized losses and fraudulent withdrawals detected and appropriately quantified by the distributors.

The first application will be made in the second part of 2024 with reference to the three-year period 2020-2022 using the outcomes of the multi-year adjustment session of the gas settlement process.

Revenues allowed for the natural gas transport and metering service 2023-2024

Resolution no. 234/2023/R/gas approved the tariff fees for natural gas transportation and metering activities for 2024 and the reference revenues for calculating them, while Resolution no. 233/2022/R/gas approved the allowed revenues for 2023.

Under the RTTG 2024-2027 approved by Resolution 139/2023/R/gas, the allowed

revenues may differ from the reference revenues for the calculation of tariff fees as a result of the application of the ROSS (Regulation by Objectives of Spending and Service) regulatory criteria specific to the activity under consideration, defined by Resolution 497/2023/R/com.

Value of the RAB of Retragas S.r.l. underlying the final 2023 tariffs and the reference revenues for the calculation of the 2024 tariff fees

millions of euro

2024 Tariffs

2023 Tariffs

RAB Transport

54.3

52.4

RAB Metering

1.7

1.6

Total RAB

56.0

54.0

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112 A2A Report on Operations 2023 Evolution of the regulation and impacts on the Business Units of the A2A Group

The 2024 reference revenues already approved:

• will change due to the effect of the update of the WACC 2024 (from 5.1% to 5.9%) and due to the ex-post application of the new ROSS tariff logic;

• are affected, as the final 2023 allowed revenues, by the exclusion from the recognized capital of the network segment “S05 - ValStaffora” reclassified as a

distribution network from January 1, 2023 by means of the MASE Directorial Decree of May 25, 2023 as well as by the comparison process with Gasdotti Alpini S.r.l. and the Autonomous Province of Trento aimed at coordinating the infrastructural developments proposed by the parties in the Trentino area in partial overlap.

Pilot projects in the natural gas sector

Resolution 590/2023/R/gas approved the ranking of pilot projects eligible for the incentive provided for by Resolution 404/2022/R/gas, which had allocated a ceiling of 35 million euro to finance experiments in the gas distribution sector lasting up to three years and falling within the following project areas:

• methods and tools for optimized network management (green gas development, reduction of fugitive emissions);

• innovative uses of existing infrastructure (green gas development);

• innovation interventions on the regulated infrastructures of the natural gas supply chain (increasing energy efficiency, digitalizing networks).

The table shows the 4 pilot projects approved by ARERA for gas distributors of the A2A Group: the total financing obtained exceeds 4.3 million euro.

Project

Company

Project description

Tariff contribution allowed

Smart Grid project: Dynamic pressure management

Unareti

Reduction of fugitive methane emissions by varying the operating pressure of the network according to demand trends, optimizing characteristic parameters

925,328 €

Energy recovery:

Macconago turboexpanders

Unareti

Integration with turboexpanders with the rolling lines of the Remi di Macconago cabin, to recover the energy dissipated during gas decompression

1,031,182 €

Reverse flow plant pilot project

LD Reti

The project proposes the construction and operation of a plant for the compression of BioCH4 volumes fed into the distribution network and exceeding the consumption of end customers, into the transmission network by exploiting the DSO PoR

621,345 €

RetiPiù Smart Less CO2

RetiPiù

Reduction of fugitive emissions from underground pipelines of methane gas distribution systems by their preventive detection using cathodic protection and vibro-acoustic analysis (for PE sections)

1,776,519 €

2023 provisional reference tariffs for the distribution and metering of electricity

Resolution 206/2023/R/eel approved the 2023 provisional reference tariffs for distributors with more than 25,000 POD.

RAB ELECTRICITY value underlying 2023 provisional tariffs

millions of euro

Unareti

LD Reti

RetiPiù

Reti Valtellina Valchiavenna

Total

RAB Distribution

813

57

25

17

912

RAB Metering

103

2

1

2

108

Total

916

59

26

19

1,020

Resolution 472/2023/R/eel approved the final 2018 reference tariffs for distributors with less than 25,000 POD, including Camuna Energia S.r.l., while Determination 2/2023 DINE provided provisions on

equalization, also on account, for the period 2018-2023, the settlement of which took place, for the year 2018, in December 2023.

Electricity quality: resilience plans for the electricity grid

Title 10 of the TIQE defined, for major distribution companies, the obligations regarding the resilience of the electricity grid, the content and timing of the implementation and periodic publication of the plan of interventions as well as the incentive mechanisms

(rewards/penalties), the outcomes of which are determined by December 31, of each year from 2020 to 2025.

Resolution 614/2023/R/eel updates the current regulation on resilience by providing for: the application

Evolution of the regulation and impacts on the Business Units of the A2A Group 2023 Report on Operations A2A 113

of the incentive mechanism to distribution companies with at least 100,000 end customers, the evolution of the mechanism from a bonus-only perspective (no penalties foreseen for interventions admitted from 2024), a change in the formula for calculating the bonus, as well as the completion of the final balance extended to the year 2027. The measure also introduced a partial revision as of 2024 regarding both the admission of new investments and the exclusion of those interventions, previously admitted, that meet certain characteristics 7.

Resolution 617/2023/R/eel 8 introduced a new incentive mechanism for development interventions on distribution networks carried out by operators with more than 100,000 POD and subject to the preparation of the development plan (former Resolution 296/2023/R/eel). The new mechanism incorporates the previous incentive system for

increasing resilience. There is a first application phase, which includes investments started as of January 1, 2024 with application by February 28, 2024, and a full application phase that covers investments started between January 1, 2025 and December 31, 2027 with application by June 30, 2026. In both phases, however, investments already included in the incentive mechanism defined in the TIQE 2020-2023 will be excluded and a cap system will be applicable 9.

Therefore, by June 30, 2023, Unareti S.p.A. sent the final statement of the progress of the interventions already admitted to the incentive mechanism for increasing resilience 10, for both the interventions concluded in 2022 and for those being realized. LD Reti S.r.l. and RetiPiù S.r.l. opted for deferred adhesion to the bonus/penalty mechanism, which therefore took effect from 2022.

Remediation of the old riser columns of the electricity distribution network in condominiums

Resolution 467/2019/R/eel defined an experimental regulation for the period January 1, 2020 - June 30, 2023 concerning the census and modernization, with possible centralization of meters, of obsolete risers of the electricity distribution network in condominiums.

Unareti S.p.A., following the completion of the census with on-site inspections of 11,268 condominiums, was notified by ARERA in June 2023 of the recognition of an amount of 225,360 euro.

2G Smart Metering Systems for the metering of low voltage electrical energy and approval of PMS2 by Unareti S.p.A.

The Authority, within the regulatory framework applicable to larger distributors, with Resolution 278/2020/R/eel approved Unareti S.p.A.’s 2G smart metering system (PMS2) commissioning plan. This Plan provides for the replacement of around 1.3 million meters with a massive phase planned for the period 2020-2024 (the Brescia area was completed in 2021 and installation is now concerning the Milan area). The progress of the plan is substantially in line with the forecasts, despite the difficulties

caused, in recent years, by the so-called semiconductor crisis and the consequent impact on the procurement of meters.

Following the last reporting of the investments made (year 2022), which amounted to approximately 21 million euro, it is estimated that the application of the planned regulatory mechanisms (IQI Matrix) will generate a net penalty of modest amount.

7 Interventions characterized by an investment cost progress as at December 31, 2022 of less than 10% of the planned investment cost and a discounted B/C ratio of less than 1.5.

8 Resolution approving the output-based and commercial quality regulations for electricity distribution and metering services, effective January 1, 2024, contained in the new TIQD (technical/technical quality) and TIQC (commercial quality), respectively.

9 The cap is set at 13% of the minimum between the expected and actual investment value.

10 Resolution 69/2023/R/eel released the list of new interventions for increasing network resilience for the 2022-2024 Plans eligible for the bonus and/or penalty mechanism. Unareti S.p.A. included 4 new interventions for the first time in the Plan with an expected total cost of 0.58 million euro.

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114 A2A Report on Operations 2023 Evolution of the regulation and impacts on the Business Units of the A2A Group

Tariff regulation of withdrawals and injections of reactive energy

Resolution 568/2019/R/eel modified the regulation of reactive energy flows on the grids, defining in particular, minimum levels of the power factor have been defined for both withdrawals and reactive inputs, in excess of which penalties calculated on the basis of specific unit fees must be paid, to be applied to both HV and HHV end customers and to distribution companies directly connected to the National Transmission Grid, and to MV end customers and LV non-domestic customers with available power greater than 16.5 kW, and to exchange points between MV and LV distribution networks.

Resolution 232/2022/R/eel postponed to April 1, 2023 of the application of the tariff fees for reactive energy fed into F3 for non-domestic LV end customers with power greater than 16.5 kW and for non-domestic MV end customers, as well as for interconnections between MV and LV networks. The subsequent Resolution 712/2022/R/eel introduced reactive energy feed-in tariffs

for end customers and interconnection points between HV and HHV networks as of April 1, 2023. Finally, provision has been made for temporary derogations.

Resolution 630/2023/R/eel introduced a simplification of the fee structure, establishing a single fee bracket for excessive withdrawals (over 33% of the active) and for all reactive energy injections for end-customer points and MV and LV interconnections, maintaining the existing differentiations between the F1, F2 and F3 bands. In addition, Resolution 615/2023/R/eel, in relation to reactive energy exchanges in HHV and HV, confirmed the existing logic based on the increase of fees compared to the “base” level for reactive energy inputs 11 in nodes belonging to homogeneous areas that are characterized by a greater impact of reactive energy exchanges on grid voltages and voltage control costs.

Instruments to protect distributors’ credit: general system charges and network charges

Resolution 119/2022/R/eel established a mechanism in favor of electricity distributors aimed at guaranteeing, under certain conditions, the reinstatement of credits not otherwise recoverable relating to general system charges and network charges. This mechanism also admits credits relating to transport contracts that were not terminated due to the regulatory provisions applicable in cases of corporate crisis and, with reference to network charges, an exemption and a

minimum threshold to the recognizable amounts is provided for.

Some distributors of the A2A Group participated in the 2023 session of the mechanism and will have to return to CSEA a total of approximately 300,000 euro, equal to the net balance of new eligible credits and the amounts already collected from defaulting distribution users and previously recognized under the mechanism.

Decision of the complaint Unareti S.p.A. - Eni Plenitude S.p.A. Benefit Company

Resolution 254/2023/R/eel has decided on the complaint filed by Eni Plenitude S.p.A. Benefit Company against Unareti S.p.A. with which the complainant complained about the application of the fixed-rate contribution pursuant to art. 28 of the Testo Integrato Connessioni (Connections Integrated Act - TIC) in the event of a change in the end customer’s residence data.

Unareti S.p.A. has always considered this contribution to be part of the “other contractual variations” referred to in the aforementioned article and for which it is applicable.

The Authority in its decision upheld the complaint, ordering Unareti S.p.A. to reverse from the invoices issued the contributions charged (about 250,000 euro). The company appealed the measure.

Energy efficiency certificates and tariff contribution recognized to distributors

ARERA Resolution 340/2023/R/efr defined the tariff contribution to cover the costs incurred by distributors for the purchase of energy efficiency certificates for the compulsory year 2022 as 250.68 euro/TEE (250 euro tariff contribution + 0.68 euro additional fee).

In order to contain the financial exposure of obligated parties, Resolution 454/2023/R/efr revised the cancellation discipline in the account session:

• The tariff contribution on account was increased to 250.68 euro/TEE (for the November 2023 cancellation) up to 50% of the annual specific target and to 240 euro/TEE for excess titles;

• potentially cancellable volumes in the account session were increased to 50% of the specific target of the current year of obligation and 100% of the residues of the two previous years.

11 1.44 euro/Mvarh as “basic” fee and 2.00 euro/Mvarh for homogeneous areas.

Evolution of the regulation and impacts on the Business Units of the A2A Group 2023 Report on Operations A2A 115

Activities of ARERA in the regulation and control of the Integrated Water Service (SII)

Approval of the Water Tariff Method for the two-year period 2022-2023 (MTI-3 updated)

Resolution 580/2019/R/idr approved the Water Tariff Method (MTI-3) for the third regulatory period (2020-2023), defining the rules for calculating the costs eligible for recognition, as well as the limits to the applicable tariff increases. In particular, the component covering the cost of financial and tax charges drops to 4.8% (vs. 5.24% previously). Below is the summary of the 2022-2023 tariff updates:

• A2A Ciclo Idrico S.p.A.: for the Brescia area, a tariff change of 0.0% for 2022 and +1.02% for 2023 was approved (EGA Board Resolution no. 11/2023);

• Azienda Servizi Valtrompia S.p.A. (ASVT S.p.A.): the recognized costs will be included in the 2022-2023 tariff proposal of Acque Bresciane S.r.l., single Area operator;

• Lereti S.p.A.: as resolved by the competent EGAs, will apply the following tariff increases:

• Varese Area: +5.5% for 2022 and +4.93% for 2023 (Res. EGA BoD 78/2022);

• Como Area: 8.45% for 2022 and 8.45% for 2023 (Res. EGA BoD 3/2023).

By Resolution 52 of December 21, 2021, the Como EGA resolved in favor of Lereti S.p.A. 15.3 million euro for past items relating to the 2010-2011 period to cover the non-recognition of tariffs for part of the infrastructures built by the company prior to 2012, not accepting the same request for recognition for the 2001-2009 period. The company appealed to the Regional Administrative Court, which, with Ruling no. 1708/2023 affirmed the right of Lereti S.p.A. to:

• recognition of inflation and default interest on past items 2010-2011;

• economic-financial rebalancing of the cost/revenue differential for the period 2001-2009 upon application to be submitted to the EGA pursuant to ARERA Resolution 656/2015/R/idr.

With a subsequent resolution of July 5, 2022, the EGA Board of Directors adopted the Guidelines outlining the billing methods for the past items relating to the period 2010-2011 that will be charged over 5 years, starting from 2022, in order to graduate their impact on users (to be concluded by 2026, the date

of expiry of the service concession with the Municipality of Como).

ARERA Resolution 6394/2023/R/idr approved the new water tariff method for the period 2024-2029 (MTI-4) and confirmed the average sector cost for electricity for 2022 equal to 0.2855 euro/kWh, guaranteeing, upon request, full cost recovery also in cases where this benchmark is exceeded. Moreover, the component covering the cost of financial and tax charges rises to 6.13% (vs. 4.8% previously).

Sale of the aggregated and expired managements of A2A Ciclo Idrico S.p.A. and ASVT S.p.A. to Acque Bresciane S.r.l., a totally public company created to manage the SII in the Province of Brescia

With Resolutions no. 11/2023 for A2A Ciclo Idrico S.p.A. and no. 17/2022 for ASVT S.p.A., the Brescia EGA concluded the preliminary investigation process concerning the determinations of the residual values (RV) as of December 31, 2021 of a group of municipalities of the so-called aggregated managements of A2A Ciclo Idrico S.p.A. and the expired managements of ASVT S.p.A., and forwarded them to ARERA for final approval.

COMPANY

NO. MUNICIPALITIES

RV

(millions of euro)

A2A Ciclo Idrico S.p.A.

12 Aggregate Management*

28.1

ASVT S.p.A.

15 Expired Management**

42.2

* EGA Resolution no. 4 of December 21, 2007 had approved the guidelines that allowed municipalities with economic management to aggregate the SII to the operator operating in the sub-area of reference, i.e. A2A Ciclo Idrico S.p.A..

** Concessions also expired after December 31, 2021.

Pursuant to the agreements signed between the parties on April 27, 2023, Acque Bresciane S.r.l. took over ASVT S.p.A. as from June 1, 2023 even if the actual cessation of activities by ASVT S.p.A. will occur on December 31, 2025. On March 31, 2023, ASVT S.p.A. collected 33.8 million euro equal to 80% of the RV plus 4.5 million euro equal to the value of the other components (payables/receivables) as emerging from the balance sheet as at 31 December 2022.

Contrary to the agreements signed between the parties on April 27, 2023, according to which Acque Bresciane S.r.l. was to take over

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Business Unit

116 A2A Report on Operations 2023 Evolution of the regulation and impacts on the Business Units of the A2A Group

from A2A Ciclo Idrico S.p.A. from October 1, 2023 with A2A Ciclo Idrico S.p.A. effectively ceasing operations on December 31, 2023, as of today, the date for the transfer of these managements is being updated.

Sale of the management of the Municipality of Cernobbio by Lereti S.p.A. to Como Acqua S.r.l., a totally public company created to manage the SII in the Province of Como

With Resolution no. 73 of December 20, 2022, the Como EGA concluded the preliminary investigation process concerning the determination of the RV of Cernobbio, quantifying it at 2.4 million euro as of December 31, 2021 and sending it to ARERA for final approval. Pursuant to the agreement signed between the parties, Como Acqua S.r.l. took over from Lereti S.p.A. in the management of the Cernobbio aqueduct service as from January 1, 2023. Lereti S.p.A. collected the RV on February 28, 2023. The quantification of adjustments related to upgradable costs is currently being finalized. Following the final approval of the RV by ARERA, Como Acqua S.r.l. shall settle said amount.

Public financing of investments in the SII: Budget Law 2018 and PNRR Funds

Article 1, paragraph 516, of Budget Law 2018 requires, for the purpose of implementing the measures necessary

to mitigate the damage related to the drought and to promote the strengthening and adaptation of water infrastructures, with a specific Prime Ministerial Decree adoption of the “National Plan of Action in the Water Sector”, divided into two sections: “aqueducts” section and “reservoirs” section. The measures are reported by the EGA to ARERA and are financed with public resources.

The PMD of August 1, 2019 bearing the following title “Adoption of the first draft of the National Plan of interventions in the water sector - aqueducts section” approved, among others, also the intervention relating to the construction of the aqueduct, sewerage and purification network for the Municipality of Calvisano (BS) managed by A2A Ciclo Idrico S.p.A. for an amount equal to 7.6 million euro. In May 2023, the company collected the last tranche of the loan of 1.1 million euro.

MIMS Ministerial Decree no. 517 of 2021 allocated PNRR resources to enhance, complete, and carry out extraordinary maintenance of water derivation, storage, and primary water supply infrastructures throughout the country, so as to improve water quality and ensure continuity of supply. ASVT S.p.A. was awarded 27 million euro for the construction of the Alta and Media Valle Trompia district aqueduct.

Incentive mechanism for technical and contractual quality

Resolutions 476/2023/R/idr and 477/2023/R/idr approved the results of the “bonuses and penalties” incentive mechanism of the technical and contractual

quality regulation for the two-year period 2020-2021. The A2A Group companies received a total of about 3.9 million euro.

Contractual quality - RQSII

Technical quality - RQTI

Operator

Bonuses (€) -

Penalties (€) -

Bonuses (€) -

Penalties (€) -

A2A Ciclo Idrico

769,087

-

870,579

2,685

Azienda Servizi Valtrompia

359,962

-

-

4,840

Lereti Como

359,962

-

1,062,712

-

Lereti Varese

359,962

-

248,756

81,931

Activities of ARERA in the regulation and control of the district heating/cooling sector

During the conversion into law of LD PNRR 12, an amendment was inserted that modified art. 10, paragraph 17, letter e), of Legislative Decree no. 102/2014, extending ARERA’s competences over the district heating sector with the introduction of a cost-reflective regulation of tariffs.

Resolution 638/2023/R/tlr approved the TLR Tariff Methodology, which defines a transitional economic

regulation for calendar year 2024, based on a revenue constraint calculated using the avoided cost methodology (gas) for the end customer, while from 2025, the adoption of a full regime method (which should remain RAB-based) is envisaged.

Below is a brief summary of the current regulatory framework of the sector:

• Resolution 313/2019/R/tlr defined, for the period

12 LD February 24, 2023, no. 13.

Evolution of the regulation and impacts on the Business Units of the A2A Group 2023 Report on Operations A2A 117

January 1, 2020 - December 31, 2023, the transparency provisions (TITT) with regard to the minimum contents of supply contracts and billing documents, the manner of publication of prices and other information on service quality and environmental performance. Resolution 344/2023/R/tlr updated these provisions from January 1, 2024, confirming most of the previous provisions and introducing the obligation to provide more information on environmental performance.

• Resolution 548/2019/R/tlr defined, for the period January 1, 2021 - December 31, 2023, the regulation of the technical quality (RQTT) with reference to the safety and continuity of the service, introducing obligations on emergency response, the management of interruptions (with a specific general quality standard) and dispersions as well as obligations to record information relating to safety and quality for annual communications to ARERA. Resolution 346/2023/R/tlr updated these provisions from January 1, 2024, confirming most of the previous provisions.

• Resolution 478/2020/R/tlr defined the regulation of metering (TIMT) for the period January 1, 2022 - December 31, 2024, introducing service obligations and quality standards for the metering of energy supplied to users by defining minimum reading frequencies, obligations for the communication of readings by Operators, obligation to self-read, the definition of calculation methods for estimating and reconstructing consumption and rules for archiving data.

• Resolution 537/2020/R/tlr extended, from July 1, 2021, also to the district heating sector the system of protections for the handling of complaints and the out-of-court settlement of disputes with end users already in place in the other regulated sectors.

• Annex A of Resolution 463/2021/R/tlr updated for the period January 1, 2022 - December 31, 2025 the regulation regarding connection fees and procedures for exercising the right of withdrawal

(TUAR). Annex B to the same Resolution approved the Consolidated Act for the size classification of service operators for the period January 1, 2022 - December 31, 2025 (TUD), defining different obligations based on the size thresholds, which remain unchanged but are determined only by conventional power.

• Resolution 526/2021/R/tlr updated the provisions on commercial quality (RQCT) for the period January 1, 2022 - December 31, 2025, defining standard levels of services provided by Operators (including timeframes for simple and complex work estimates/execution, reactivation of the supply in the event of suspension due to arrears, deactivation of the supply requested by the user, reasoned responses to complaints and requests for information, etc.).

• Resolution 710/2022/R/tlr establishes the minimum requirements for meters and modifies the perimeter of the reading obligations by including remote meters with proximity reading (so-called walk-by) but postpones the completion of the regulation on the minimum requirements for meters on the basis of a cost-benefit analysis. As part of said analyses, further proposals for action will be considered, including the replacement of existing meters and the introduction of mandatory remote management of utility substations.

• GSE Procedures for the qualification of efficient district heating and cooling systems under Legislative Decree 199/2021 in order to define rules and procedures to qualify efficient district heating networks under the provisions of Legislative Decree no. 102/2014.

The MiTE Ministerial Decree of June 30, 2022 defined the criteria for the allocation of PNRR resources for the development of efficient district heating and cooling networks (200 million euro). A2A Calore & Servizi S.r.l. was awarded a project relating to the district heating network in Bergamo (3.8 million euro), while Acinque Energy Greenway S.r.l. was awarded resources for the development of the Lecco network (11.9 million euro)13.

13 Law Decree 181/2023 (Law Decree on Energy Security - currently being converted into law) provided for the allocation of 96.7 million euro from the state budget to finance the winning projects of the PNRR call for proposals that were challenged by the EU Commission (due to the use of gas in thermal production). Only 14 of the 30 winning projects were deemed eligible by the Commission, while the remaining 16 (including the project of Acinque Energy Greenway S.r.l.) will be financed with this new budget. This led to a scrolling of the initial ranking list with the entry of two more projects by A2A Calore & Servizi S.r.l. (Politecnico di Milano-Bovisa and Santa Giulia).

6

Evolution of

the regulation and impacts on the Business Units of the A2A Group

6.1

Generation

and Trading

Business Unit

6.2

Market

Business Unit

6.3

Waste

Business Unit

6.4

Smart

Infrastructures

Business Unit

118 A2A Report on Operations 2023 Evolution of the regulation and impacts on the Business Units of the A2A Group

Opening of an investigation by the AGCM against A2A S.p.A., Comocalor S.p.A. and Acinque Ambiente S.r.l. for alleged abuse of dominant position in the district heating sector (A565)

On June 13, 2023, the AGCM resolved to initiate an investigation procedure against A2A S.p.A. (in its capacity as holding company), Comocalor S.p.A. and Acinque Ambiente S.r.l. for alleged breach of art. 3, par. 1 letter a) of Law 287/90, with particular regard to the abuse of a dominant position in the direct or indirect imposition of particularly onerous heat sale prices in the district heating sector (and above all not related to costs). Concurrently with the start of the investigation, AGCM officials carried out inspections on June 21 at the offices of A2A S.p.A. and Comocalor S.p.A. with the assistance of the Finance Police.

With a measure of November 28, AGCM resolved to subjectively extend the proceedings and the objections that had arisen also to Acinque S.p.A., as it is responsible for the management and coordination of Comocalor S.p.A. and Acinque Ambiente S.r.l..

Report on Operations

2023

7

Risks and

uncertainties

120 A2A Report on Operations 2023 Risks and uncertainties

The A2A Group has a risk assessment and reporting process which is based on the Enterprise Risk Management method of the Committee of Sponsoring Organizations of the Treadway Commission (CoSO report) and best risk management practice and is in compliance with the Corporate Governance Code by Consob, which states: “…Each issuer shall adopt an internal control and risk management system consisting of policies, procedures and organizational structures aimed at identifying, measuring, managing and monitoring the main risks.... ”.

The Group has also adopted a specific procedure that defines in detail the roles, responsibilities and methodologies for the Enterprise Risk Management (ERM) process.

This process requires a risk model to be set up that takes account of the Group’s characteristics, its multi-business vocation and the sector to which it belongs. This model is subject to periodic revision consistent with the evolution of the Group, and the context in which it operates. The methodology adopted is characterized by the regular identification of the risks to which the Group is exposed. In this context, an assessment process is carried out which, through the involvement of all its structures, allows the Group to identify the most important risks and establish the relative controls and mitigation plans. At this stage, the involvement of risk owners is essential as responsible for the identification, assessment and update of risk scenarios (specific events in which risk can materialize) related to activities of its competence and Focal Points that facilitate the continuous monitoring of risks, guaranteeing a timely flow of information to Risk Management. This phase is carried out with the support and coordination of the Group Risk Management organizational structure through operating methods that allow clearly identifying risks, the related causes and management methods.

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

The ERM process also supports the ISO 9001 certification on Quality, ISO 14001 on Environment and

ISO 45001 on Occupational Health and Safety of Group companies.

Set out below is a description of the main risks and uncertainties to which the Group is exposed.

The consequences of the geo-political tensions linked to the crises between Russia and Ukraine and in the Middle East, having possible repercussions on more than one type of risk, are discussed in this opening section.

Achievement of the objectives defined in the business plan

Reference is made to the risks connected with failure to achieve or partial achievement of the development and profitability objectives outlined in the Business Plan, which could have both an economic and financial impact as a result of lower growth in the Group’s margins and a reputational impact as a result of failing to meet the expectations of stakeholders with regard to sustainability commitments.

The company Business Plan confirms the ambitious growth targets set in previous years, mainly in terms of the circular economy (e.g. recovery of materials and energy, exploitation of heat otherwise dispersed, etc.) and energy transition (support for growth in renewable energy sources, exploitation of the electricity generation of combined cycle plants, increase in the customer base, support for the electrification of consumption). The main risk factors affecting the various areas of development include: possible critical issues related to authorizations and adverse territorial contexts, the presence of major competitors capable of hindering the achievement of market shares in domestic and foreign markets, uncertainties on the legislative and regulatory evolution related to the deregulation of domestic energy markets, and commercial risks related to the targets defined in the Plan adopted to increase the customer base.

In addition, ongoing geopolitical tensions, with particular reference to the effects on ship traffic in the Suez Canal, could lead to both difficulties in the procurement of certain materials used in the ordinary operation/maintenance of plants and at the construction sites of development initiatives, and a potential increase in prices linked to the increase in ship transport costs (increase in insurance costs and lengthening of trade routes) with an impact on materials, equipment, machinery and services.

Lastly, it is noted that part of the expired concessions for the integrated water service in the territorial area of the

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Province of Brescia was transferred to Acque Bresciane; A2A Ciclo Idrico S.p.A. will continue to manage the service for the concessions that have not been transferred, even though they have already expired. It cannot be ruled out that, in the future, Acque Bresciane may take over further expired concessions, with the consequent loss of the company’s margins.

To support the realization of development initiatives, mainly organizational measures are highlighted, with corporate structures focused on the analysis of the markets and development areas covered by the Plan, on the management of technical and engineering aspects, on the maintenance of relations based on transparency and collaboration with the territories, bodies and institutions involved, as well as commercial development initiatives that also envisage the use of innovative communication channels and methods. Of note is the ongoing recruitment of professionals with strong scientific-technological (STEM) skills. To support the path of sustainable growth, training activities are underway and focal points have been identified to support the process of increasing integration of sustainability principles in business processes, contribute to the definition of the objectives of the Sustainability Plan, promote and enhance new sustainability projects and encourage the circulation of information on these issues. On the procurement front, we operate through careful planning of requirements that takes into account the lengthening of acquisition lead times, the contracting of backup suppliers, the increase of inventories of strategic materials when possible and, for certain product categories, an automatic updating of price lists to ISTAT indices.

Legislative and regulatory risks

The A2A Group operates in sectors that are strongly regulated by the provisions of independent administrative authorities, as well as having to deal with a multiplicity of stakeholders at various institutional levels. Regulation impacts not only on traditional natural monopoly sectors (such as transport energy infrastructure and the integrated water cycle) but also on free market sectors (in terms of market design and continuous enforcement of consumer protection). Since 2018, the Regulatory Authority for Energy Networks and Environment (ARERA) has taken over the regulation and control competences over the integrated waste cycle and in 2023, also over the setting of heat transfer prices in district heating 1.

Considering the significant contribution of regulated activities to overall margins, the Group has adopted a policy of monitoring and managing regulatory risk in order to mitigate, as far as possible, its effects through a multi-layered control, which primarily involves collaborative dialogue with institutions (including the most important: ARERA, Autorità Garante della Concorrenza e del Mercato or AGCM, Autorità per le Garanzie nelle Comunicazioni, Autorità di Regolazione dei Trasporti, Ministero dell’Ambiente e della Sicurezza Energetica) and with the sector’s technical bodies/entities (Gestore dei Servizi Energetici S.p.A., Gestore dei Mercati Energetici S.p.A., Terna S.p.A. and Snam S.p.A.) as well as active participation in trade associations.

To this end, the specific Regulatory Affairs and Competition organizational structure was set up, which works in close liaison with the Business Units and implemented constantly updated monitoring and control tools (including the Regulatory Review produced every six months or the Regulatory Agenda drawn up at the time of the Budget/Plan), in order to consider the potential impacts of the regulation on various companies. The organizational structure also oversees regulatory risk for the Acinque and AEB Groups in order to manage its impact in a coordinated manner.

1 During the conversion into law of the LD February 24, 2023, no. 13 (PNRR LD), an amendment was inserted that modified art. 10, paragraph 17, letter e), of Legislative Decree no. 102/2014, extending ARERA competences over the district heating sector with the introduction of a cost-reflective regulation of service tariffs: Resolution 638/2023/R/tlr approved the TLR Tariff Methodology, which defines a transitional economic regulation for calendar year 2024, based on a revenue constraint calculated using the avoided cost methodology (gas) for the end customer, while from 2025, the adoption of a full regime method (which should be RAB-based) is envisaged.

7.1

Risks and uncertainties

7

Risks and uncertainties

122 A2A Report on Operations 2023 Risks and uncertainties

The main topics involved in current changes in regulations and legislation, with major potential effects on the Group, are as follows:

• the rules governing reallocations of large-scale hydroelectric concessions following Law no. 12/2019 which, in article 11-quater, provided for an overall reorganization of the subject, giving the Regions an increasingly important role (for the Lombardy Region, reference is made to the Regional Law no. 5/2020 as amended by subsequent Regional Law no. 19/2021)2;

• the outcome of the appeals filed by some operators and a trade association for the annulment of the Ministerial Decree MiSE of June 28, 2019 and all related acts of ARERA and Terna S.p.A. that implemented the capacity market regulations. These appeals were rejected at the European level and a ruling by the Lombardy Regional Administrative Court is expected in 2024;

• the annual renewal of the essentiality regime with reinstatement of costs for the San Filippo del Mela fuel oil power plant, which does not allow a medium-term vision of the site’s future;

• the effects of potential delays related to the entry into operation of the new Monfalcone CCGT selected by Terna S.p.A. in the capacity market auctions with delivery in 2024, even though, with respect to this term, the power plant already benefits from a series of extensions also due to the coal maximization regime to which it has been subjected until September 30, 2023;

• tenders concerning the granting of concessions for the gas distribution service;

• the termination of the water service concessions and their transfer for consideration to the Single Area Operator (with particular reference in the immediate term to the municipalities that have expired and/or are being managed on a transitional basis by A2A Ciclo Idrico S.p.A. and to the concessions of Azienda Servizi Valtrompia S.p.A. in the province of Brescia);

• the certification of energy savings and the consequent issue of White Certificates by Gestore dei Servizi Energetici S.p.A.;

• the impacts on the development of district heating following the recent start of the regulation by ARERA;

• the impacts of possible tenders for the allocation of the protection service to vulnerable electricity customers;

• the preliminary investigation procedure A565 initiated by the AGCM on June 13, 2023 against A2A S.p.A. (in its capacity as holding company), Comocalor S.p.A. and Acinque Ambiente S.r.l. for alleged breach of art. 3, par. 1 letter a) of Law 287/90, with particular regard to the abuse of a dominant position in the direct or

indirect imposition of particularly onerous heat sale prices in the district heating sector.

Finally, with regard to the mechanisms for extracting the alleged ‘extra profits’ to be borne by energy operators activated by the Government in the course of 2022 in order to find resources to cover the measures introduced to protect end customers in order to tackle the ‘high energy price’, it should be noted that with reference to the interventions on the wholesale electricity market on June 30, 2023, the effects of the following provisions have ceased:

• art. 15 bis of LD no. 4 of January 27, 2022, converted into Law no. 25 of March 28, 2022 (LD Sostegni ter), which had provided for a two-way restitution mechanism on the price of electricity fed in by certain types of renewable plants (including also existing hydroelectric);

• Budget Law 2023 which, implementing EU Regulation 2022/1854, had provided for the application of a cap of 180 €/MWh on market revenues obtained from the production of electricity from renewable energy sources not falling within the scope of Article 15-bis of LD Sostegni ter and from additional plants fueled by non-renewable sources (including waste treatment plants).

Given the decline in energy commodity prices as well as the filling levels of gas storages, the introduction of any taxes and/or solidarity contributions on extra profits is not expected for 2024 either.

Finally, it should be noted that in view of the numerous interventions of the AGCM on the sectors in which the A2A Group operates (in terms of initiating investigations for abuse of a dominant position and agreements, as well as fact-finding investigations, requests for information and moral suasion, particularly on the consumer protection side for alleged unfair commercial practices in the retail sale of electricity and gas, also in view of the completion of deregulation) the Board of Directors of A2A S.p.A. approved in 2019 the adoption of the Antitrust Compliance Program with the consequent appointment of a Person Responsible for its implementation. In 2020, the Antitrust Code of Conduct and an Antitrust Guideline were adopted, which regulates the rules of conduct that Group employees must observe in order to avoid antitrust violations (document available on the company Intranet). In the meantime, training sessions continued for the personnel of the various Business Units, and a specific training tool was activated and disseminated to all Group personnel on an e-learning platform.

For a more detailed discussion of these risks, reference

2 With reference to the Resio (BS) concession, owned by Linea Green S.p.A. (a wholly-owned subsidiary of A2A S.p.A.), the Lombardy Region announced with R.C.R. 1602 of December 18, 2023 the start of the tender procedure, defining the essential elements of the notice to be issued in the following 120 days.

Risks and uncertainties 2023 Report on Operations A2A 123

should be made to the section “Regulatory developments and impacts on the Business Units of the A2A Group”.

Financial risks

Liquidity risks

Liquidity risk is the risk that the Group is unable to meet its obligations in a timely manner or that it is able to do so under unfavorable economic conditions due to situations of tension or systemic crisis or to the changed perception of its riskiness by the market. To manage this risk, the Group guarantees the maintenance of adequate financial resources, understood as liquid assets and committed and uncommitted credit lines, sufficient to meet unexpected commitments over a given time horizon. At December 31, 2023, the Group had cash resources equivalents totaling 1,629 million euro, as well as committed and unused credit lines totaling 1,930 million euro.

Liquidity risk management is also pursued by the Group through a Bond Issue Program (Euro Medium Term Note Program) whose size, large enough to allow the Group timely recourse to the capital market, was increased in July 2023 to 7 billion euro. As at December 31, 2023, 1,950 million euro was available.

The Group’s ability to obtain loans in the banking or financial markets depends, among other things, on prevailing market conditions and the Group’s rating at the time of the need for financing.

Risks associated with compliance with debt covenants

This risk exists if the loan agreements provide for the option by the lender, upon the occurrence of certain events, to request early repayment of the loan, thus entailing a potential liquidity risk for the Group. The section “Other Information/Covenants Non-Compliance Risk” of the Consolidated financial statements illustrates in detail these risks related to the A2A Group. The same section also lists the loans that contain financial covenants.

Interest rate risks

Interest rate risk is related to the uncertainty associated with the trend in interest rates, changes in which can result in, given a certain amount and composition of debt, an increase in net financial expenses. The exposure to interest rate risk arises mainly from the

variability of financing conditions, in the event of taking out new debt, and from the variability of cash flows related to the interest produced by the variable-rate portion of debt. The volatility of financial expenses associated to the performance of interest rates is therefore monitored and mitigated through a policy of interest rate risk management aimed at identifying a balanced mix of fixed-rate and floating rate loans and the valuation of the use of derivatives (hedging and pre-hedging) that limit the effects of fluctuations in interest rates.

To provide a better understanding of the risks of interest rate fluctuations to which the Group is subjected every six month at December 31 and June 30, a sensitivity analysis was conducted of net financial expenses and valuation items of derivative financial contracts as a result of interest rate fluctuations. The section “Other Information/Interest Rate Risk” of the Consolidated financial statements illustrates the effects on the change in financial charges and in the fair value of derivatives resulting from a change in the forward curve of interest rates of +/- 50 bps.

Risks associated with industrial and business activities

Macroeconomic context risks

The Group’s activities are sensitive to economic cycles and general economic conditions in the countries in which it operates. A slowing economy could determine, for example, a drop in consumption and/or of industrial production, having as a result a negative effect on the demand for electricity and of other carriers offered by the Group, thereby affecting the results and prospects and preventing the implementation of planned development strategies.

The year 2023 saw the confirmation of the critical issues and uncertainties associated with the current complex geopolitical and economic framework: the main economies of the Eurozone are slowing down and restrictive monetary policies are being confirmed, even though we are witnessing, in the European markets, a constant reduction in energy commodity prices as a result of the effectiveness of policies to diversify natural gas supply sources. The global economy continues to be characterized by a climate of uncertainty, which affects both the volatility of commodity prices and supplies in general, and

7.1

Risks and uncertainties

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124 A2A Report on Operations 2023 Risks and uncertainties

the timing of procurement of materials and equipment, with possible impacts on manufacturing activities and international trade.

For the years to come, the continuation of tensions related to a possible reduction in gas and oil supplies from countries that have replaced Russia as suppliers, as well as the persistent difficulties in shipping traffic with the potential exacerbation of tensions in the Red Sea, may adversely affect the recovery path of economies, with a particular impact on western economies. The more or less pronounced effects will depend on the intensity and duration of the crisis.

Risks related to commodity and energy prices

Given the features of the sectors in which it operates, the Group is exposed to energy scenario risk, namely the risk linked to changes in the price of energy raw materials (electricity, natural gas), and the prices of CO 2 emissions allowances (EUA). Significant, unexpected and/or structural changes in commodity prices, especially in the medium term, may result in a reduction in the Group’s operating margins and cash flows.

To mitigate these risks, the Group has approved an Energy Risk Policy that regulates the procedures by which commodity risk is monitored and managed, or the highest level of variability to which the result is exposed with reference to the trend of prices of energy commodities. Consistent with the provisions of the Policy, the commodity risk limits of the Group are defined and approved annually by the Board of Directors.

Market risk is mitigated by constantly monitoring the total net exposure of the Group’s portfolio and addressing the main factors affecting the trend. Appropriate hedging strategies are defined, where necessary, designed to maintain this risk within the established limits, typically through hedging at 12 and 24 months.

The objective of stabilizing the cash flows generated by the asset portfolio and outstanding contracts is thus pursued through the management of physical contracts and derivative financial instruments, limiting to the extent possible, the volatility of the Group’s economic and financial results following changes in commodity prices.

Social-environmental context risk

Possible opposition (the so-called “Not In My Back Yard” phenomenon) to the presence of plants promoted by certain stakeholders and amplified through the use of social networks, due to a negative perception of certain activities (such as waste recovery and disposal or the installation of photovoltaic and wind farms) in the areas served, could hinder the regular operation of existing plants as well as the authorization process for new plants and therefore, the growth planned by the Group in some business areas.

To mitigate this risk, the Group has set up organizational structures dedicated to monitoring institutional relations, with local communities and the territory, in order to establish and maintain collaborative dialogue with the various stakeholders. Within this framework, the Group, in order to build consensus around its initiatives, participates in technical round tables with institutional counterparts, especially at local level, as well as through the organization of multi-Stakeholder forums designed to promote dialogue with the local community. The forum was established with the aim of identifying solutions that can respond in a targeted and effective manner to the needs and expectations of stakeholders and that allow promoting the environmental, economic and social sustainability activities carried out by the Company and the Group and services provided in the territory.

For the management of this risk, the Group has also adopted an IT platform for stakeholder and relationship mapping, which is useful for carrying out a gap analysis and supporting the planning of Stakeholder Engagement and improvement activities.

Risks related to climate change

The A2A Group has a system in place for identifying, assessing and managing climate change risks that is integrated into the Group’s Enterprise Risk Management process.

Climate risks and opportunities are identified on the basis of three time horizons: short-term, up to one year (corresponding to the budget year), medium-term, from 2 to 5 years, and long-term, from the sixth year of the Plan until 2035. The choice of these horizons was based on the analysis of the climatic, economic, energy and regulatory reference context.

The climate risks identified for the A2A Group are the result of a materiality analysis carried out considering the risk categories outlined by the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD), and the businesses operated and the services offered by the Group. The Disclosure in accordance with the Recommendations of the TCFD, including the economic-financial assessment, is published in detail in the Integrated Financial Statements. A qualitative summary of the main risks is presented below.

For physical climate risks (both chronic and acute), the A2A Group refers to the European Union’s Climate-related Hazards Framework issued as part of the EU Taxonomy of Green Investments (Appendix A of the Delegated Regulation (EU) supplementing Regulation EU 2020/852 of the European Parliament and of the Council). Hazards related to temperature regimes, wind, precipitation and solid masses can generate impacts for Group companies in connection with the reduction or suspension of services and damage to company assets and/or persons.

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Chronic climatic risks

The Group’s hydroelectric and thermoelectric power production, the continuity of drinking water distribution services provided by the Group, as well as sales of gas and heat for heating may be affected by unfavorable variations in the rainfall and temperature regime.

With reference to the hydroelectric sector, reductions in the availability of water resources may occur due to both a possible reduction in the total annual amount of rainfall and a change in its distribution throughout the year, possibly resulting in lower electricity production. Unfavorable winter rainfall patterns and rising temperatures can also impact the availability of high-altitude water resources. Reduced availability of water in hydroelectric can also lead to conflicts between various stakeholders as well as restrictions on the operation of plants.

With regard to the thermoelectric sector, in the event of rising summer temperatures of waterways, canals or the sea, plant operation may be restricted due to difficulties in adequately cooling the thermoelectric cycle.

With reference to the integrated water cycle, prolonged periods of drought can lead to shortages of water resources for drinking water use, resulting in possible interruptions to the drinking water distribution service in the municipalities served, particularly in mountainous municipalities whose supply sources are most affected by fluctuations in rainfall.

Sales of gas and heat for heating can be affected by particularly mild temperatures in the autumn and winter seasons.

All these factors can have an unfavorable impact on the Group’s production, sales and reputation and, consequently, have negative economic-financial impacts.

Several actions are underway to mitigate these risks:

• to ensure optimum exploitation of water resources available for energy, the Group has established organizational structure dedicated to the development of analyses and engineering models to support the planning, both medium and short-term, of hydroelectric plants; production planning also makes use of the support of weather forecasts and the presence of expert people within the Group; moreover, investments are planned both to optimize the use of

the available and derived water resources for hydroelectric purposes (pumping) and to energetically exploit the waters made available to other stakeholders before their release;

• with reference to the reduction of thermal energy demand by end users compared to what was planned, the Group, through the Business Plan, implements the following risk reduction strategies: a) development of district heating networks and increase in the number of customers; b) optimization of energy costs with thermal waste recovery projects and revamping of existing plants. In addition, the Group monitors investment support policies for the development and extension of TLR networks, including in the area of efficient district heating, carries out studies on technological alternatives for heating, and participates in round tables with local authorities on environmental objectives;

• to guarantee the continuous supply of drinking water, even in the long term, the A2A Group monitors and maps losses from the water network and intervenes with investments to reduce them; the Group also has an investment program underway for the interconnection of aqueducts and the search for new sources of water supply also through the use of innovative technologies.

Acute climatic risks

As part of the operating activities of the electricity grids, the issue of continuity of service during periods of violent and concentrated heat waves and/or precipitation, affecting the areas served, generating reputational risks as a result of prolonged interruptions in the provision of the service.

In order to mitigate this risk, in addition to the usual maintenance activities, the Group planned and launched the strengthening of the interventions to rationalize the meshing of the grids, the construction and commissioning of new primary and secondary substations, a three-year plan to increase the resilience of the grid in agreement with ARERA as well as the expansion of remote asset management systems. There are also remote operational controls, advanced technical safety tools, emergency intervention teams as well as specific safeguards for infrastructure, which are more exposed to risks of interruption in the delivery of services. The “Milan heat wave preparation” Working Group was set up, responsible for coordinating the prevention

7.1

Risks and uncertainties

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Risks and uncertainties

126 A2A Report on Operations 2023 Risks and uncertainties

and management of disruptions and the related communication activities.

Periods of drought, such as the one that occurred in 2022, especially if in conjunction with heat waves, can lead to limitations in the operation of thermal power plants due to the possible lack of sufficient or sufficiently cool water to cool production cycles. Heat waves can lead to a drop in production efficiency for air-cooled plants.

Extreme weather phenomena such as floods and landslides can have a negative impact on the Group’s assets (such as canals, distribution networks, dams, plants) as well as on third-party infrastructures necessary for the continuity of the Group’s activities (e.g. electricity transmission lines). These factors can result in direct damage to assets and/or indirect damage due to the interruption of production activities. To mitigate this risk, the Group implemented emergency management plans and procedures.

In addition, insurance policies are in place to cover all physical weather risks in the presence of material damage to assets. These policies are extended to all assets of the A2A Group.

Climate change and health, safety and environment

The Group also takes into account the possible effects of climate change on people as well as the environment and land. Collection and urban hygiene activities, those for network services and at plants and construction sites involve workers being outdoors, who are particularly exposed to heat waves. The Group has identified this risk, which can affect both individual well-being and the risk of injury, and has put in place mitigation measures, such as the choice of light-weight fabrics in tenders for the supply of clothing, and awareness-raising and information to its employees, including through the activation of an alert system in the event of expected sharp rises in temperature.

Acute phenomena such as heavy rainfall and ‘water bombs’ can lead to flooding in plants and/or overflowing of containment tanks placed to protect any spills, with the risk of potential pollution of the soil or water bodies in the vicinity. To mitigate this risk, the Group modified the capacity of the containment systems in the most critical situations.

Transition risks

Finally, the Group is exposed to the risks associated with the transition to a low-carbon economy, which is expressed through regulatory amendments, technological innovation, changes in consumption styles and stakeholder expectations. If these factors were not sufficiently taken into account in the definition of the Group’s strategic choices, they could lead to economic and financial impacts due, for example, to the

depreciation of industrial assets and possible reputation impacts.

Changes in the regulatory framework of the Emission Trading Scheme (EUAs) and the possible inclusion of activities currently excluded in the mechanism could have an unfavorable impact on the Group.

Uncertainties in the prices of CO 2 emission allowances (EUA) may give rise to unfavorable or favorable impacts on the profitability of power plants.

The Group has reaffirmed its commitment to decarbonization also in the 2024-2035 Plan, confirming its emission factor reduction target to 226 gCO 2/kWh by 2030 and a further 65% reduction compared to the 2017 value, corresponding to a 60% decrease in absolute emissions compared to 2022. Not only that: with the 2024-2035 Plan, the Group also committed to the decarbonization of its value chain over the Plan horizon, setting a target on the reduction of emissions from the supply chain by 30% compared to 2022 and one on gas sold to its customers by 20% to 2035 compared to 2023.

The achievement of decarbonization targets is subject to the following main sources of uncertainty:

• possible geopolitical, market or climatic situations that could lead to an increase in the demand for energy from fossil sources, either to meet a possible higher domestic demand for energy or to compensate for any lower production from renewable sources (hydroelectric) and/or any lower imports;

• insufficient technological development, which may not adequately support the replacement of fossil production and/or the removal of carbon (“carbon removal”) from processes that are inherently “carbon intensive” (hard-to-abate).

To mitigate these uncertainties, the Group analyzes and evaluates possible investment initiatives in line with the planned decarbonization pathway and carries out experiments and investments in carbon capture.

Operating risks due to the ownership and operation of electricity generation, cogeneration, waste treatment and recovery plants and distribution networks and plants

The Group manages production sites, infrastructure and services that are operationally and technologically complex (power plants, dams, waste recovery and disposal plants, cogeneration plants, electricity, gas and heat distribution networks, waste collection and urban hygiene services, integrated drinking water supply service, etc.). Accidental mechanical and/or electrical failures, structural failures, fires, terrorist attacks, and labor unrest could result in damage to assets and, in the worst cases, compromise the Group’s production capacity, as well as the possibility of guaranteeing the continuity of services provided. Added to this, with

Risks and uncertainties 2023 Report on Operations A2A 127

specific reference to the current context, is the potential difficulty in procuring materials and supplies for routine maintenance of plants and infrastructure. To cope with this difficulty, a management of material stocks and supplier fleets is implemented to ensure the availability of the necessary supplies.

All these factors can also lead to cost increases, damage to third parties, as well as penalties imposed by the competent authorities.

In order to mitigate these risks, the Group realizes preventive management strategies aimed at reducing the probability of their occurrence and/or mitigating their impact. In addition, the Group has investments in place to ensure constant technological updating and adequate levels of plant maintenance, emergency management plans and procedures and a Crisis Plan that provides for the establishment of interdisciplinary management committees, organized at both Group and Business Unit level and coordinated among them.

The Group takes out insurance cover against any direct and indirect damage which may arise from other types of risk. As part of the insurance contract, inspections are carried out periodically on the plants and measures to improve the safety of assets and loss prevention are recommended/verified.

Information technology and operational technology risks

The A2A Group’s activities are managed through IT (Information Technology) and OT (Operational Technology) systems and networks that support the main business processes, whether operational, administrative or commercial. In particular, the Group uses IT systems to record, process and summarize financial information and results of operations for internal reporting purposes and to comply with regulatory, legal and tax requirements. In addition, the Group collects and stores at Data Centers, sensitive data, including intellectual property, business information and personal information of customers, service providers and employees. The functioning of these information and technology systems and networks, as well as the processing and storage capacity of this data in a secure manner, are fundamental to the Group’s activities.

The increase in threats to the security of the IT infrastructure, due on the one hand, to the

increasingly pervasive use of personal tools following the remoteness of work and on the other, to the increase in the probability of cyber attacks, including “state sponsored” ones, as well as forms of increasingly sophisticated cyber crime, represent a risk to the security of the Group’s systems and networks and to the confidentiality, availability and integrity of its data. A security breach could expose the Group, its customers, service providers and employees to risks of misuse of information or systems, compromise and fraudulent use of confidential information, loss of financial resources, data manipulation and destruction as well as operational disruption. All of these factors could adversely affect the Group’s reputation, competitive position, business and results; security violations of information systems could also result in litigation, fines and disqualification penalties, as well as operational and other costs.

To mitigate this risk, numerous actions are in place in the Group: outline of internal policies and procedures, tools for segregating access to information, progressive adoption of measures aimed at increasing security by requiring additional factors to verify the user (Multi Factor Authentication), specific policies relating to the use of mobile devices, assessments concerning the vulnerability of systems and applications, specific software for malware research, specific training activities and tests to increase employee awareness (e.g. phishing e-mail simulations), periodic IT Security risk assessment activities to identify the most critical applications, internal audits focused on the resilience of the systems and effectiveness of the measures taken. In this regard, it is noted that a unified IT/OT treatment program has been defined and agreed upon among the organizational structures in charge of risk management, which monitors ongoing activities together with the mitigation initiatives identified during the year 2023 and which will be implemented in the coming years: thus, the Group’s roadmap on cyber resilience has been organically divided into different sites, which in turn accommodate numerous initiatives per area of intervention.

In addition, corporate reorganizations were implemented to ensure, among other things, integrated and holistic management of corporate security for all assets, both physical and digital; continuous enhancement of the Security Operations center to increase

7.1

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7

Risks and uncertainties

128 A2A Report on Operations 2023 Risks and uncertainties

the effectiveness of threat monitoring; and specific interventions to mitigate emerging risks, also as a result of the substantial use of remote working modes. Lastly, it is noted that in 2022, the Company achieved ISO 27001 certification, the international information security standard.

Any inadequacies, fragmentations, unavailability and/or malfunctioning of the applications could compromise the Group’s ability to operate within the set times and methods. These factors could result in a loss of reputation with customers as well as economic and financial impacts. In order to mitigate this risk, activities are underway to renew and/or replace existing platforms or to rationalize the application systems in use, particularly as regards the Customer Relationship Management and billing platforms supporting commercial activities. The initiatives listed above are aimed at achieving a gradual de-obsolescence of the Group’s IT architecture with a view to streamlining operational activities as well as increasing the robustness of processed data against external threats.

There is also the risk of possible relevant and prolonged interruptions to information systems and company infrastructures as a result of potential events (natural or otherwise) affecting them, with potentially even critical consequences on the Group’s ability to maintain the continuity of its systems. To mitigate this risk, the Group has finalized its Disaster Recovery (DR) plan, which provides for the recovery of the most critical applications and related enablers within specific time frames, back-up and duplication of data. The DR plan can now count on the presence of two Data Centers, equipped with high levels of security in terms of service continuity, and a Group cloud strategy is being implemented to make the company’s information systems more usable and resilient.

With reference to the Business Continuity Plan, critical processes were identified on the basis of evidence from the Business Impact Analysis and a Business Continuity Management System - SGCO was arranged. Thanks also to the presence of the Disaster Recovery Plan mentioned above, the companies A2A S.p.A., Unareti S.p.A. and LD Reti S.r.l. obtained the ISO 22301 (Business Continuity Management) certification. In the coming years, the certification scope will be extended to other Group subsidiaries.

Lastly, there is growing attention to the possible impacts arising from the application of generative artificial intelligence systems on the businesses operated by the Group; by 2024, the AI Act is expected to be issued, an initial regulation of the matter at European Union level which, starting from 2026 in all European nations, will impose a series of obligations and constraints on companies and institutions that make use of artificial

intelligence in their information systems, in accordance with the degree of risk estimated: the A2A Group has already carried out an initial recognition and mapping activity of AI applications by risk class and, in addition, the first mitigating actions have been planned and started, both of an organizational and procedural nature, aimed at the Group’s full compliance with the entire regulatory framework.

Health and safety risks

The occurrence of such risks may occur both in the event of accidents or serious or very serious injuries affecting employees and workers of contractors and/or third parties and in the event of occupational illnesses. These risks are related to the Group’s activities such as, for example, those related to operational services in the territory and the performance of operating and maintenance processes at the plants.

The occurrence of such risks may lead to the loss of reputation, as well as criminal, civil and/or administrative proceedings for violations of regulations, and/or sanctions, costs for compensation and/or increase in insurance premiums and, in the worst cases, interruption of plant operations, with consequent negative economic and financial impacts for the Group.

In order to mitigate these risks, the Group has set up organizational structures dedicated to the management of Health and Safety aspects at the parent company as well as at the Business Units, the individual companies and the main plants. The Group also maintains Health and Safety Management Systems certified in accordance with ISO 45001 for the parent company A2A and most of its Subsidiaries. The group’s main companies operating in the municipal collection and hygiene sector, which are particularly exposed to the risk of road accidents, are certified according to the ISO 39001 standard on road safety. In addition to specific compulsory training plans for each role and company assignment, Leadership in Health and Safety – LiHS training programs have been implemented and progressively extended also to all Business Units, which envisage at all levels emotional involvement on the issue of security and the dissemination of security culture through leaders identified within the operating areas.

For some Group companies, certification according to the SA8000 Standard has been obtained, which allows the organization to correctly manage and constantly monitor all activities and processes relating to workers’ conditions (human rights, development, valorization, training and professional growth of people, health and safety of workers, non-discrimination, employment of minors and young people), with the requirements also extended to suppliers and subcontractors.

Risks and uncertainties 2023 Report on Operations A2A 129

Environmental risks

The emergence of such risks may occur as a result of accidents in production processes and of the particular characteristics of the business carried out by the Group, which may lead to reactions by the public opinion about presumed repercussions on the environment and/or on the health of resident populations. These risks are related, for example, to the disposal of production residues, emissions from production processes, the management of waste collection, storage, treatment and disposal activities, water purification, the management of the emptying and maintenance of water reservoirs for electricity production, etc. All these factors can potentially lead to loss of reputation, criminal, civil and administrative proceedings, penalties, environmental reclamation and restoration costs and, in the worst cases, interruption of plant operations with consequent negative economic and financial impacts for the Group.

It is also noted that any amendments to the existing legislation could entail costs and investments to ensure compliance with the new requirements as well as operational and/or profitability impacts on certain industrial activities.

In order to mitigate these risks, the Group, in addition to implementing technical and technological systems for the prevention and reduction of pollution at the various industrial sites in compliance with sector regulations and in accordance with the best available techniques, has set up organizational structures dedicated to the management of environmental aspects at the parent company as well as at the Business Units, individual companies and the main plants. The Group also keeps the Environmental Management Systems certified according to the ISO 14001 standard active for the parent company A2A and for the main companies. For some sites, there are also registrations under the European EMAS Regulation.

With specific reference to the management of the Group’s landfills, including those under post-operational management, it should be noted that monitoring of the values of pollutants in the water table is carried out on a regular basis and summary reports are sent to the relevant bodies. There are frequent checks carried out by as well as the execution of internal audits and by external certifiers for the maintenance, among others, of compliance with the UNI EN ISO 14001 standard.

The A2A Group has taken out insurance cover against damage arising from both accidental and gradual pollution in order to cover any residual environmental risk, i.e. against events caused by a sudden and unpredictable fact, and against the environmental damage inherent in continuing operations.

The Group is also active in monitoring the regulations in progress (in particular, a working group has been set up to monitor the regulatory provisions relating to the European Green Deal) and is also present on the technical panels set up by the associations in order to highlight any critical issues related to regulatory developments.

7.1

Risks and uncertainties

7

Risks and uncertainties

Report on Operations

2023

8

Other

information

132 A2A Report on Operations 2023 Other information

8.1

Other information

Audit of the financial statements and disclosures pursuant to article 149-duodecies of the Consob Issuers’ Regulations

The annual financial statements of A2A S.p.A. have been subject to a full audit by EY S.p.A. on the basis of their appointment for financial years 2016 to 2024 by the general shareholders’ meeting.

The following table provides a summary of the fees paid for audit work performed within the Group during 2023, analyzed between the leading auditor EY S.p.A. and other auditors.

Description

thousands of euro

Leading

Auditor

Other

auditors

A2A S.p.A.

Audit of annual financial statements

197

Audit of consolidated financial statements

45

Periodic tests of accounting

24

Review of half-yearly report

89

Audit of the separate annual accounts for ARERA

21

Total

376

-

Subsidiaries

Audit of annual financial statements

1,435

-

Periodic tests of accounting

280

Review of half-yearly report

231

Audit of the separate annual accounts for ARERA

106

Other consolidated groups (Acinque, AEB)

435

Total

2,487

-

Associates and joint ventures

Audit of the information sent to shareholders for the consolidation

52

Total

52

-

Total A2A Group

2,915

-

In addition to the above audit work, companies belonging to the EY network also performed other engagements in 2023 for fees amounting in total to

221 thousand euro, which mainly related to activities as the Company’s legal auditor as specified by current legislation.

Treasury shares

“Treasury shares” had no value at December 31, 2023.

Secondary locations

The company does not have secondary offices.

Related parties and tax consolidation

Details of related party transactions are provided in note 37 to the consolidated financial statements and note 35 to the separate financial statements.

Other information 2023 Report on Operations A2A 133

* * *

The information on corporate governance and ownership structures required by article 123-bis of Legislative Decree no. 58/1998, as amended, is contained in a separate document “Report on Corporate Governance and Ownership Structures for the year ended December 31, 2023”, which forms an integral part of the financial statements documentation.

In compliance with the requirements of the “Regulation on provisions relating to related party transactions” adopted by Consob with Resolution no. 17221 of March 12, 2010 and subsequently amended by Resolution no. 17389 of June 23, 2010, by way of a resolution of November 11, 2010 the Management Board approved, following the favorable opinion of the Internal Control Committee, the prescribed procedure for identifying the rules and controls designed to ensure the transparency and substantial and procedural correctness of the related party transactions carried out by A2A S.p.A. directly or through its subsidiaries. The aforementioned Procedure was applied effective January 1, 2011 and subsequently amended on August 1, 2012, November 7 and December 18, 2013 and June 22, 2015.

Following a periodic review, the Procedure was subsequently amended/supplemented and approved by the Board of Directors on June 20, 2016, subject to the favorable opinion of the Audit and Risks Committee and then updated

on June 22, 2017, in view of Consob Resolution no. 19925 of March 22, 2017 and on December 16, 2019, in view of the amendments to art. 192-quinquies of Legislative Decree no. 58 of February 24, 1998 (“TUF”) (art. 4 of Legislative Decree no. 49 of May 10, 2019).

Lastly, by resolution of the Board of Directors on June 25, 2021, subject to the favorable opinion of the Related Parties Committee established by board resolution of May 13, 2021, the Procedure was amended - effective as of July 1, 2021 - to comply with the Related Parties Regulation, as amended by Consob Resolution no. 21624 of December 10, 2020, in implementation of the so-called “Shareholders’ Rights II” Directive. The aforementioned Procedure can be found on www.gruppoa2a.it.

The company has availed itself of the possibility permitted by article 70, paragraph 8 and article 71, paragraph 1-bis of the Issuers’ Regulations, and hence of derogating from the requirement to make an information document available to public in the event of significant mergers, spin-offs, share capital increases by means of the contribution of assets in kind, acquisitions and disposals.

8.1

Other information

8

Other

information

2023

Consolidated Financial Statements

Consolidated financial statements

2023

these Financial Statements are available at the website

gruppoa2a.it

2 A2A Consolidated financial statements 2023 Attachments to the notes to the Consolidated annual report

Consolidated balance sheet 6

Consolidated income statement 8

Consolidated statement of comprehensive income 9

Consolidated cash-flow statement 10

Statement of changes in Group equity 11

Consolidated balance sheet pursuant to Consob Resolution no. 17221 of March 12, 2010 12

Consolidated income statement pursuant to Consob Resolution no. 17221 of March 12, 2010 14

1

Accounting statements

of the consolidated financial statements

2

Notes to the Consolidated annual report

General information 16

Consolidated annual report 17

Financial statements 18

Basis of preparation 19

Changes in international accounting standards 20

Scope of consolidation 22

Consolidation policies and procedures 25

Accounting standards and policies 27

Business Units 43

Results sector by sector 44

Notes to the balance sheet 48

Net debt 77

Notes to the income statement 79

Earnings per share 90

Note on related party transactions 91

Significant non-recurring events and transactions, pursuant to Consob Communication No. DEM/6064293 of July 28, 2006 95

Guarantees and commitments with third parties 97

Other information 98

2 A2A Consolidated financial statements 2023

Contents

Attachments to the notes to the Consolidated annual report 2023 Consolidated financial statements A2A 3

143

4

Independent Auditors’

Report

3

Attachments to the notes to the Consolidated annual report

1. List of companies included in the consolidated annual report 136

2. List of shareholdings in companies carried at equity 140

3. List of holdings in other companies 141

Certification of the consolidated financial statements pursuant to article 154-bis, paragraph 5 of Legislative Decree no. 58/98 142

2023 Consolidated financial statements A2A 3

This is a translation of the Italian original “Relazione finanziaria annuale consolidata 2023” and has been prepared solely

for the convenience of international readers. In the event of any ambiguity the Italian text will prevail.

The Italian original is available at the website gruppoa2a.it

1

Accounting

statements of

the consolidated

financial

statements

millions of euro

Note

12 31 2023

12 31 2022

Non-current assets

Tangible assets

1

6,643

6,162

Intangible assets

2

3,630

3,515

Shareholdings carried according to equity method

3

30

33

Other non-current financial assets

3

67

70

Deferred tax assets

4

464

363

Other non-current assets

5

138

86

Total non-current assets

10,972

10,229

Current assets

Inventories

6

319

536

Trade receivables

7

3,540

4,680

Other current assets

8

2,264

3,289

Current financial assets

9

33

14

Current tax assets

10

41

35

Cash and cash equivalents

11

1,629

2,584

Total current assets

7,826

11,138

Non-current assets held for sale

-

-

Total assets

18,798

21,367

(1) As required by Consob Resolution no. 17221 of March 12, 2010, the effects of related party transactions on the consolidated financial statements are provided in the statements and discussed in Note 37.Significant non-recurring events and transactions in the consolidated financial statements are provided in Note 38 as required by Consob Communication DEM/6064293 of July 28, 2006.

6 A2A Consolidated financial statements 2023 Accounting statements of the consolidated financial statements

Accounting statements of the consolidated financial statements 2023 Consolidated financial statements A2A 7

1.1

Consolidated balance sheet (1)

Assets

millions of euro

Note

12 31 2023

12 31 2022

Equity

Share capital

12

1,629

1,629

(Treasury shares)

-

-

Reserves

13

1,952

1,869

Result of the year

14

659

401

Equity pertaining to the Group

4,240

3,899

Minority interests

15

562

568

Total Equity

4,802

4,467

Liabilities

Non-current liabilities

Non-current financial liabilities

16

5,576

5,867

Employee benefits

17

237

248

Provisions for risks, charges and liabilities for landfills

18

828

729

Other non-current liabilities

19

335

370

Total non-current liabilities

6,976

7,214

Current liabilities

Trade payables

20

4,105

5,524

Other current liabilities

20

2,070

3,006

Current financial liabilities

21

775

1,022

Tax liabilities

22

70

134

Total current liabilities

7,020

9,686

Total liabilities

13,996

16,900

Liabilities directly associated with non-current assets

held for sale

-

-

Total equity and liabilities

18,798

21,367

6 A2A Consolidated financial statements 2023 Accounting statements of the consolidated financial statements

Accounting statements of the consolidated financial statements 2023 Consolidated financial statements A2A 7

Equity and liabilities

1

Accounting statements of the consolidated financial statements

1.1

Consolidated balance sheet

1.2

Consolidated income statement

1.3

Consolidated statement of comprehensive income

1.4

Consolidated

cash-flow statement

1.5

Statement

of changes in Group equity

1.6

Consolidated balance sheet pursuant to Consob Resolution no. 17221 of

March 12, 2010

1.7

Consolidated income statement pursuant to Consob Resolution no. 17221 of

March 12, 2010

1.2

Consolidated income statement (1)

millions of euro

Note

12 31 2023

12 31 2022

Restated

(*)

Revenues

Revenues from the sale of goods and services

14,492

22,938

Other operating income

266

218

Total Revenues

24

14,758

23,156

Operating expenses

Expenses for raw materials and services

11,591

20,500

Other operating expenses

381

393

Total Operating expenses

25

11,972

20,893

Labour costs

26

815

765

Gross operating income - EBITDA

27

1,971

1,498

Depreciation, amortization, provisions and write-downs

28

954

816

Net operating income - EBIT

29

1,017

682

Result from non-recurring transactions

30

2

157

Financial balance

Financial income

83

35

Financial expenses

222

125

Affiliates

-

2

Result from disposal of other shareholdings

(1)

-

Total financial balance

31

(140)

(88)

Result before taxes

879

751

Income taxes

32

199

344

Result after taxes from operating activities

680

407

Net result from discontinued operations

33

3

41

Net result

683

448

Minorities

34

(24)

(47)

Group result of the year

35

659

401

Result per share (in euro): |  |
- basic | 0.2101 | 0.1281
- basic from continuing operations | 0.2092 | 0.1150
- basic from assets held for sale | 0.0009 | 0.0131
- diluted | 0.2101 | 0.1281
- diluted from continuing operations | 0.2092 | 0.1150
- diluted from assets held for sale | 0.0009 | 0.0131

(1) As required by Consob Resolution no. 17221 of March 12, 2010, the effects of related party transactions on the consolidated financial statements are provided in the statements and discussed in Note 37.Significant non-recurring events and transactions in the consolidated financial statements are provided in Note 38 as required by Consob Communication DEM/6064293 of July 28, 2006.

(*) The values at December 31, 2022 were restated to make them homogeneous with the values at December 31, 2023 by reclassifying the revenues, operating costs and depreciation and amortization related to the Water BU sold in 2023 under the item “Net result from discontinued operations/held for sale”.

8 A2A Consolidated financial statements 2023 Accounting statements of the consolidated financial statements

Accounting statements of the consolidated financial statements 2023 Consolidated financial statements A2A 9

1.3

Consolidated statement of comprehensive income

millions of euro | 12 31 2023 | 12 31 2022
Net result of the year (A) | 683 | 448
Actuarial gains/(losses) on Employee’s Benefits booked in the Net equity | 3 | 31
Tax effect of other actuarial gains/(losses) | (1) | (9)
Total actuarial gains/(losses) net of the tax effect (B) | 2 | 22
Effective part of gains/(losses) on cash flow hedge | (43) | (1)
Tax effect of other gains/(losses) | 11 | -
Total other gains/(losses) net of the tax effect of companies consolidated on a line-by-line basis (C) | (32) | (1)
Other gains/(losses) of companies valued at equity net of the tax effect (D) | - | -
Total comprehensive result (A)+(B)+(C)+(D) | 653 | 469
Total comprehensive result attributable to: |  |
Shareholders of the parent company | 629 | 422
Minority interests | (24) | (47)

With the exception of the actuarial effects on employee benefits recognized in equity, the other effects stated above will be reclassified to the Income Statement in subsequent years.

8 A2A Consolidated financial statements 2023 Accounting statements of the consolidated financial statements

Accounting statements of the consolidated financial statements 2023 Consolidated financial statements A2A 9

1

Accounting statements of the consolidated financial statements

1.1

Consolidated balance sheet

1.2

Consolidated income statement

1.3

Consolidated statement of comprehensive income

1.4

Consolidated

cash-flow statement

1.5

Statement

of changes in Group equity

1.6

Consolidated balance sheet pursuant to Consob Resolution no. 17221 of

March 12, 2010

1.7

Consolidated income statement pursuant to Consob Resolution no. 17221 of

March 12, 2010

1.4

Consolidated cash-flow statement

millions of euro | 12 31 2023 | 12 31 2022
Cash and cash equivalents at the beginning of the year | 2,584 | 964
Operating activities |  |
Net Result | 683 | 448
Net income taxes | 199 | 344
Net financial interests | 139 | 90
Capital gains/expenses | (3) | (191)
Tangible assets depreciation | 523 | 491
Intangible assets amortization | 278 | 233
Fixed assets write-downs/disposals | 17 | 10
Net provisions | 151 | 92
Result from affiliates | 1 | (2)
Net financial interests paid | (101) | (75)
Net taxes paid | (317) | (201)
Dividends paid | (302) | (302)
Change in trade receivables | 1,057 | (1,420)
Change in trade payable | (1,420) | 2,587
Change in inventories | 217 | (332)
Other changes | (82) | (512)
Cash flow from operating activities | 1,040 | 1,260
Investment activities |  |
Investments in tangible assets | (947) | (856)
Investments in intangible assets and goodwill | (429) | (384)
Investments in shareholdings and securities (*) | (45) | (497)
Cash and cash equivalents from first consolidations asset | 8 | 180
Disposal of fixed assets and shareholdings | 48 | 413
Dividends paid by equity investments and other investments | - | 2
Cash flow from investment activities | (1,365) | (1,142)
Free Cash Flow | (325) | 118
Financing activities |  |
Changes in financial assets |  |
Issuance of loans | - | -
Proceeds from loans | 6 | (3)
Other changes | (19) | 2
Total changes in financial assets (*) | (13) | (1)
Changes in financial liabilities |  |
Borrowings/bonds issued | 943 | 4,339
Repayment of borrowings/bond | (1,505) | (2,779)
Other changes | (55) | (57)
Total changes in financial liabilities (*) | (617) | 1,503
Cash flow from financing activities | (630) | 1,502
Change in cash and cash equivalents | (955) | 1,620
Cash and cash equivalents at the end of the year | 1,629 | 2,584
(*) Cleared of balances in return of shareholders’ equity and other balance sheet items. |  |

10 A2A Consolidated financial statements 2023 Accounting statements of the consolidated financial statements

Accounting statements of the consolidated financial statements 2023 Consolidated financial statements A2A 11

1.5

Statement of changes in Group equity

Changes from January 1, 2022 to December 31, 2022 millions of euro | Share capital | Treasury shares | Cash Flow Hedge | Other Reserves and retained earnings | Result of the year | Total Equity pertaining to the Group | Minority interests | Total Net shareholders equity
Net equity at December 31, 2021 | 1,629 | - | 28 | 1,599 | 504 | 3,760 | 543 | 4,303
Result allocation |  |  |  | 504 | (504) | - |  | -
Distribution of dividends |  |  |  | (283) |  | (283) | (19) | (302)
IAS 19 reserves (*) |  |  |  | 22 |  | 22 |  | 22
Cash flow hedge reserves (*) |  |  | (1) |  |  | (1) |  | (1)
Other changes |  |  | 3 | (3) |  | - | (3) | (3)
Group and minorities result of the year |  |  |  |  | 401 | 401 | 47 | 448
Net equity at December 31, 2022 | 1,629 | - | 30 | 1,839 | 401 | 3,899 | 568 | 4,467
(*) These form part of the | statement of | comprehensive | income. |  |  |  |  |

Changes from January 1, 2023 to December 31, 2023 millions of euro | Share capital | Treasury shares | Cash Flow Hedge | Other Reserves and retained earnings | Result of the year | Total Equity pertaining to the Group | Minority interests | Total Net shareholders equity
Net equity at December 31, 2022 | 1,629 | - | 30 | 1,839 | 401 | 3,899 | 568 | 4,467
Result allocation |  |  |  | 401 | (401) | - |  | -
Distribution of dividends |  |  |  | (283) |  | (283) | (19) | (302)
IAS 19 reserves (*) |  |  |  | 2 |  | 2 |  | 2
Cash flow hedge reserves (*) |  |  | (32) |  |  | (32) |  | (32)
Other changes |  |  |  | (5) |  | (5) | (11) | (16)
Group and minorities result of the year |  |  |  |  | 659 | 659 | 24 | 683
Net equity at December 31, 2023 | 1,629 | - | (2) | 1,954 | 659 | 4,240 | 562 | 4,802

(*) These form part of the statement of comprehensive income.

10 A2A Consolidated financial statements 2023 Accounting statements of the consolidated financial statements

Accounting statements of the consolidated financial statements 2023 Consolidated financial statements A2A 11

1

Accounting statements of the consolidated financial statements

1.1

Consolidated balance sheet

1.2

Consolidated income statement

1.3

Consolidated statement of comprehensive income

1.4

Consolidated

cash-flow statement

1.5

Statement

of changes in Group equity

1.6

Consolidated balance sheet pursuant to Consob Resolution no. 17221 of

March 12, 2010

1.7

Consolidated income statement pursuant to Consob Resolution no. 17221 of

March 12, 2010

millions of euro

12 31 2023

of which

Related

Parties

(note 37)

12 31 2022

of which

Related

Parties

(note 37)

Non-current assets

Tangible assets

6,643

6,162

Intangible assets

3,630

3,515

Shareholdings carried according to equity method

30

30

33

33

Other non-current financial assets

67

6

70

14

Deferred tax assets

464

363

Other non-current assets

138

24

86

Total non-current assets

10,972

10,229

Current assets

Inventories

319

536

Trade receivables

3,540

158

4,680

157

Other current assets

2,264

1

3,289

Current financial assets

33

7

14

10

Current tax assets

41

35

Cash and cash equivalents

1,629

2,584

Total current assets

7,826

11,138

Non-current assets held for sale

-

-

Total assets

18,798

21,367

1.6

Consolidated balance sheet

pursuant to Consob Resolution no. 17221 of March 12, 2010

Assets

12 A2A Consolidated financial statements 2023 Accounting statements of the consolidated financial statements

Accounting statements of the consolidated financial statements 2023 Consolidated financial statements A2A 13

millions of euro

12 31 2023

of which

Related

Parties

(note 37)

12 31 2022

of which

Related

Parties

(note 37)

Equity

Share capital

1,629

1,629

(Treasury shares)

-

-

Reserves

1,952

1,869

Result of the year

659

401

Equity pertaining to the Group

4,240

3,899

Minority interests

562

568

Total Equity

4,802

4,467

Liabilities

Non-current liabilities

Non-current financial liabilities

5,576

5,867

Employee benefits

237

248

Provisions for risks, charges and liabilities for landfills

828

729

Other non-current liabilities

335

370

Total non-current liabilities

6,976

7,214

Current liabilities

Trade payables

4,105

81

5,524

79

Other current liabilities

2,070

6

3,006

6

Current financial liabilities

775

1,022

Tax liabilities

70

134

Total current liabilities

7,020

9,686

Total liabilities

13,996

16,900

Liabilities directly associated with

non-current assets held for sale

-

-

Total equity and liabilities

18,798

21,367

Equity and liabilities

12 A2A Consolidated financial statements 2023 Accounting statements of the consolidated financial statements

Accounting statements of the consolidated financial statements 2023 Consolidated financial statements A2A 13

1

Accounting statements of the consolidated financial statements

1.1

Consolidated balance sheet

1.2

Consolidated income statement

1.3

Consolidated statement of comprehensive income

1.4

Consolidated

cash-flow statement

1.5

Statement

of changes in Group equity

1.6

Consolidated balance sheet pursuant to Consob Resolution no. 17221 of

March 12, 2010

1.7

Consolidated income statement pursuant to Consob Resolution no. 17221 of

March 12, 2010

millions of euro

12 31 2023

of which

Related

Parties

(note 37)

12 31 2022

Restated

(*)

of which

Related

Parties

(note 37)

Revenues

Revenues from the sale of goods and services

14,492

563

22,938

597

Other operating income

266

218

Total Revenues

14,758

23,156

Operating expenses

Expenses for raw materials and services

11,591

23

20,500

16

Other operating expenses

381

85

393

82

Total Operating expenses

11,972

20,893

Labour costs

815

1

765

2

Gross operating income - EBITDA

1,971

1,498

Depreciation, amortization, provisions and write-downs

954

816

Net operating income - EBIT

1,017

682

Result from non-recurring transactions

2

2

157

Financial balance

Financial income

83

5

35

11

Financial expenses

222

125

Affiliates

-

2

2

Result from disposal of other shareholdings

(1)

-

Total financial balance

(140)

(88)

Result before taxes

879

751

Income taxes

199

344

Result after taxes from operating activities

680

407

Net result from discontinued operations

3

41

Net result

683

448

Minorities

(24)

(47)

Group result of the year

659

401

(*) The values at December 31, 2022 were restated to make them homogeneous with the values at December 31, 2023 by reclassifying the revenues, operating costs and depreciation and amortization related to the Water BU sold in 2023 under the item “Net result from discontinued operations/held for sale”.

1.7

Consolidated income statement

pursuant to Consob Resolution no. 17221 of March 12, 2010

14 A2A Consolidated financial statements 2023 Accounting statements of the consolidated financial statements

2

Notes to the Consolidated

annual report

16 A2A Consolidated financial statements 2023 Notes to the Consolidated annual report

A2A S.p.A. is a company with legal personality organized under the laws of the Italian Republic which operates, also through its subsidiaries (“Group”), both in Italy and abroad.

The A2A Group mainly operates in the following sectors:

• the production, sale and distribution of electricity even from renewable resources;

• 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;

• technical consultancy relating to energy efficiency certificates.

2.1

General information

Notes to the Consolidated annual report 2023 Consolidated financial statements A2A 17

The consolidated annual report (hereafter referred to as the “Annual report”) of the A2A Group at December 31, 2023, is presented in millions of euro; the euro is also the functional currency of the economies in which the Group operates.

The Annual report of the A2A Group at December 31, 2023 has been prepared:

• in compliance with Legislative Decree 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 International Accounting Standard Board (IASB) and approved by the European Union. 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 Annual report, the same principles used in the preparation of the consolidated annual financial report at December 31, 2022 were applied, other than the principles and interpretations described in detail in the paragraph below “Changes in accounting principles” adopted for the first time on January 1, 2023.

In this file, use has been made of some Alternative Performance Measures (APM) that are different from the financial indicators expressly provided for by the IAS/IFRS international accounting standards adopted by the Group; for details of these indicators, please see the specific paragraph Alternative Performance Measures (APM) in the file of the Report on Operations.

This Annual report at December 31, 2023 was approved on March 11, 2023 by the Board of Directors, which authorized publication, and has been audited by EY S.p.A. in accordance with their appointment by the Meeting Resolution of June 11, 2015 for the nine years from 2016 to 2024.

2.2

Consolidated annual report

2

Notes

to the Consolidated annual report

2.1

General

information

2.2

Consolidated annual report

2.3

Financial statements

2.4

Basis of preparation

2.5

Changes in international accounting standards

2.6

Scope of consolidation

2.7

Consolidation policies and procedures

2.8

Accounting standards

and policies

2.9

Business Units

2.10

Results

sector by sector

2.11

Notes to the balance sheet

2.12

Net debt

2.13

Notes to the income statement

2.14

Earnings per share

2.15

Note on related party transactions

2.16

Significant

non-recurring events and transactions, pursuant to Consob Communication No. DEM/6064293 of July 28, 2006

2.17

Guarantees

and commitments with third parties

2.18

Other information

18 A2A Consolidated financial statements 2023 Notes to the Consolidated annual report

The Group has adopted a format for the balance sheet which presents current and non-current assets and current and non-current liabilities as separate classifications, as required by paragraphs 60 and following of IAS 1.

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.

The specific line items “Result from non-recurring transactions” and “Result from disposal of other shareholdings” are in the format of the income statement in order to provide clear and immediate identification of the results arising from non-recurring transactions forming part of continuing operations, separating these from the results from discontinued operations. In particular, it should be noted that the item “Result from non-recurring transactions” is intended to include the results from the sale of investments in subsidiaries and associates and other non-operating expenses/income. This item is presented between net operating income and the financial balance. In this way net operating income is not affected by non-recurring operations, making it easier to measure the effective performance of the Group’s ordinary operating activities.

The Cash Flow Statement is prepared using the indirect method, as permitted by “IAS 7” and includes the disclosure amendments introduced by the integration to “IAS 7” approved on November 9, 2017.

The statement of changes in equity has been prepared in accordance with IAS 1.

The formats adopted for the financial statements are the same as those used to prepare the Consolidated Annual Financial Report at December 31, 2022.

2.3

Financial statements

Notes to the Consolidated annual report 2023 Consolidated financial statements A2A 19

The consolidated annual financial report at December 31, 2023 has been prepared on a historical cost basis, with the exception of those items which under IFRS must or can be measured at fair value.

The consolidation principles, the accounting standards, the accounting policies and the methods of measurement used in the preparation of the Annual financial report are consistent with those used to prepare the consolidated annual financial report at December 31, 2022, except as specified below regarding newly enacted standards.

2.4

Basis of preparation

2

Notes

to the Consolidated annual report

2.1

General

information

2.2

Consolidated annual report

2.3

Financial statements

2.4

Basis of preparation

2.5

Changes in international accounting standards

2.6

Scope of consolidation

2.7

Consolidation policies and procedures

2.8

Accounting standards

and policies

2.9

Business Units

2.10

Results

sector by sector

2.11

Notes to the balance sheet

2.12

Net debt

2.13

Notes to the income statement

2.14

Earnings per share

2.15

Note on related party transactions

2.16

Significant

non-recurring events and transactions, pursuant to Consob Communication No. DEM/6064293 of July 28, 2006

2.17

Guarantees

and commitments with third parties

2.18

Other information

20 A2A Consolidated financial statements 2023 Notes to the Consolidated annual report

Pursuant to IAS 8, the subsequent paragraph “Accounting standards, amendments and interpretations applicable by the company as of the current year” indicates and briefly illustrates the amendments in force as of January 1, 2023.

The following paragraph, “Accounting standards, amendments and interpretations approved by the European Union” instead detail the accounting standards and interpretations already issued, not yet approved by the European Union and therefore not applicable for the preparation of the financial statements at December 31, 2023, any impacts of which will then be transposed as of the financial statements of the following years.

Accounting standards, amendments and interpretations applicable as of the current year

As from January 1, 2023, applicable to the Group are the following additions to specific paragraphs of the international accounting standards already adopted by the Group companies in previous years:

• IAS 1 “Presentation of the Financial Statements”: issued by the IASB on February 12, 2021 and endorsed on March 2, 2022, which provides guidance and examples to help entities apply materiality judgements to disclosures on accounting standards. The amendments are intended to help entities provide more useful accounting standard disclosures by replacing the requirement for entities to provide their “significant” accounting standards with a requirement to provide disclosures about their “material” accounting standards; in addition, guidance is added on how entities apply the concept of materiality in making accounting standard disclosure decisions. The Group updated its disclosures on the basis of the new materiality concept, without noting any significant impact on the disclosure of accounting policies;

• IAS 8 “Accounting policies, changes in accounting estimates and errors”: issued by the IASB on February 12, 2021 and endorsed on March 2, 2022. The amendments clarify the distinction between changes in accounting estimates and changes in accounting standards and error correction. They also clarify how entities use measurement techniques and inputs to develop accounting estimates. The amendments had no impact on the Group’s consolidated financial statements;

• IAS 12 “Income Taxes”: issued by the IASB on May 7, 2021 and endorsed on August 11, 2022 in which it clarifies how to account for deferred taxes on transactions such as leases and decommissioning provisions. In particular, the option, previously provided for, not to calculate deferred taxation upon initial recognition of assets and liabilities deriving from lease contracts and/or decommissioning provisions is eliminated. This addition clarifies, therefore, that all companies are required to recognize deferred taxation on the transactions in question. The amendments had no impact on the Group’s consolidated financial statements;

• IFRS 17 “Insurance contracts”: issued by the IASB on May 18, 2017 and endorsed on November 19, 2021, applicable to companies that issue insurance contracts. The amendments had no impact on the Group’s consolidated financial statements;

• IFRS 17 “Insurance Contracts”: issued by the IASB on December 9, 2021 and endorsed on September 8, 2022 in which it adds a transition option relating to comparative information presented on first-time application of IFRS 17 and IFRS 9. The amendment aims to help entities avoid temporary accounting mismatches between financial assets and liabilities of insurance contracts, and therefore at improving the usefulness of comparative information of the financial statements. The amendments had no impact on the Group’s consolidated financial statements;

• IAS 12 “Income Taxes” entitled “International tax reform: rules for the application of the second pillar”: issued on May 23, 2023 and endorsed on November 9, 2023. The amendments clarify that IAS 12 applies to income taxes arising from the tax law enacted or promulgated to implement the rules established by the OECD ‘second pillar’, which establishes a coordinated system to ensure that multinational enterprises with revenues in excess of 750 million euro pay a tax of at least 15% on income derived in each of the jurisdictions in which they operate and which is expected to come into force in 2024.The amendments introduce a temporary mandatory exception to the accounting for deferred taxes arising from the jurisdictional implementation of rules and disclosure requirements to help users of financial statements better understand the company’s exposure to income taxes arising from such legislation, prior to its effective date.The Group has provided information in the relevant section on taxation to which reference should be made.

2.5

Changes in international accounting standards

Notes to the Consolidated annual report 2023 Consolidated financial statements A2A 21

Accounting standards, amendments and interpretations approved this year and applicable as of subsequent years

• On January 23, 2020, July 15, 2020 and October 31, 2022, the IASB issued three additions to IAS 1 “Presentation of Financial Statements” that aim to better define the concept of liabilities and the related classification between short and medium/long-term. The additions were approved on December 20, 2023.Specifically, emphasis is placed on the temporal concept of transferring money or other resources to the counterparty to settle the liability. The following aspects are also clarified: what is meant by a subordination right; that the subordination right must exist at the end of the reporting period; classification is not impacted by the probability that the entity will exercise its subordination right; only if a derivative embedded in a convertible liability is itself an equity instrument does the maturity of the liability not impact its classification.Furthermore, the latest amendment specifies that only covenants that an entity must meet by the reporting date will affect the classification of a liability as current or non-current.These additions will be applicable to financial statements closed on or after January 1, 2024. The Group is currently assessing the impacts of these amendments;

• on September 22, 2022, the IASB issued a supplement to IFRS 16 “Leases” clarifying how to account for a sale and leaseback transaction that provides for variable payments based on the performance or use of the asset subject to the transaction.The integration was approved on November 21, 2023 and will be applicable to the financial statements as of January 1, 2024. No impacts are expected on the Group’s economic and financial situation.

Accounting standards, amendments and interpretations not yet approved by the European Union

• On May 25, 2023, the IASB issued a supplement to IAS 7 “Statement of Cash Flows” and IFRS 7 “Financial Instruments: Disclosures”.The amendments clarify the characteristics of supplier financing arrangements (e.g. reverse factoring instruments) and define the information to be provided on the impact of these arrangements on the company’s liabilities and cash flows (e.g. terms and conditions, book value and balance sheet item in which financial debts are recorded, with an indication of those for which the financial supplier has already settled the corresponding portion of trade debt, maturity bands of financial debts and comparable trade debts, but not included in arrangements).These additions will be applicable to financial statements closed on or after January 1, 2024. The Group is currently assessing the impacts of these amendments;

• on August 15, 2023, the IASB issued a supplement to IAS 21 “The effects of changes in foreign exchange rates” to regulate the procedures to be followed in the event of currency non-convertibility. The amendments introduce requirements to determine when a currency is convertible into another currency and when it is not and require an entity to estimate the spot exchange rate when it determines that a currency is not convertible into another currency. These additions will be applicable to financial statements closed on or after January 1, 2025. The Group is currently assessing the impacts of these amendments.

2

Notes

to the Consolidated annual report

2.1

General

information

2.2

Consolidated annual report

2.3

Financial statements

2.4

Basis of preparation

2.5

Changes in international accounting standards

2.6

Scope of consolidation

2.7

Consolidation policies and procedures

2.8

Accounting standards

and policies

2.9

Business Units

2.10

Results

sector by sector

2.11

Notes to the balance sheet

2.12

Net debt

2.13

Notes to the income statement

2.14

Earnings per share

2.15

Note on related party transactions

2.16

Significant

non-recurring events and transactions, pursuant to Consob Communication No. DEM/6064293 of July 28, 2006

2.17

Guarantees

and commitments with third parties

2.18

Other information

22 A2A Consolidated financial statements 2023 Notes to the Consolidated annual report

The Consolidated annual report of the A2A Group at December 31, 2023 includes the figures of the parent A2A S.p.A. and those of the subsidiaries over which A2A S.p.A. exercises either direct or indirect control. In addition, companies in which the parent exercises joint control with other entities (joint ventures) and those over which it has a significant influence are consolidated using the equity method.

The following changes to the scope of consolidation of the A2A Group are reported:

• the acquisition by AEB S.p.A. of 90% of VGE 05 S.r.l., a company operating in the photovoltaic sector, with the consequent line-by-line consolidation;

• the acquisition by A2A Calore & Servizi S.r.l. of 100% of Termica Cologno S.r.l. with the consequent line-by-line consolidation;

• the incorporation on April 11, 2023 by A2A S.p.A. of A2A Services & Real Estate S.p.A. (formerly A2A Servizi S.r.l.), which is consolidated on a line-by-line basis, and contribution on October 1, 2023 by A2A S.p.A. (81.33%), Acinque S.p.A. (10.29%) and Ambiente Energia Brianza S.p.A. (8.38%), of a BU relating to employee, customer, supplier and building services;

• the acquisition by A2A Rinnovabili S.p.A. of 100% of Juwi Development 12 S.r.l. and Juwi Development 13 S.r.l. with consequent line-by-line consolidation;

• incorporation of the companies R2R 01 S.r.l., R2R 02 S.r.l., R2R 03 S.r.l. and R2R 04 S.r.l., by R2R S.r.l., which owns 100% of it, consolidated on a line-by-line basis;

• the incorporation of the company Mogorella S.r.l. by A2A Rinnovabili S.p.A., which owns 100% of it, consolidated on a line-by-line basis;

• the sale by A2A Ambiente of 80% of Bioenergia Gualdo S.r.l., 55% of Energia Anagni S.r.l. and its 100% owned subsidiary Bionergia Roccasecca S.r.l., with the resulting exit from the scope of consolidation.

For further details on the activities of the Purchase Price Allocation required by IFRS 3, reference is made to the paragraph “Other information” of this report.

2.6

Scope of consolidation

Notes to the Consolidated annual report 2023 Consolidated financial statements A2A 23

millions of euro

Note

Consolidated at

12 31 2022

A2A Rinnovabili

Group

Termica

Cologno

VGE5

Total

effect first consolidation acquisitions 2023

Changes

Consolidated at

12 31 2023

Assets

Non-current assets

Tangible assets

1

6,162

-

-

-

-

481

6,643

Intangible assets

2

3,515

6

2

14

22

93

3,630

Shareholdings carried according to equity method

3

33

-

-

-

-

(3)

30

Other non-current financial assets

3

70

-

-

-

-

(3)

67

Deferred tax assets

4

363

-

-

-

-

101

464

Other non-current assets

5

86

-

-

-

-

52

138

Total non-current assets

10,229

6

2

14

22

721

10,972

Current assets

Inventories

6

536

-

-

-

-

(217)

319

Trade receivables

7

4,680

-

-

-

-

(1,140)

3,540

Other current assets

8

3,289

-

-

-

-

(1,025)

2,264

Current financial assets

9

14

-

-

-

-

19

33

Current tax assets

10

35

-

-

-

-

6

41

Cash and cash equivalents

11

2,584

-

8

-

8

(963)

1,629

Total current assets

11,138

-

8

-

8

(3,320)

7,826

Non-current assets held for sale

-

-

-

-

-

-

-

Total assets

21,367

6

10

14

30

(2,599)

18,798

Liabilities

Non-current liabilities

Non-current financial liabilities

16

5,867

1

-

1

2

(293)

5,576

Employee benefits

17

248

-

-

-

-

(11)

237

Provisions for risks, charges and liabilities for landfills

18

729

-

1

-

1

98

828

Other non-current liabilities

19

370

-

-

-

-

(35)

335

Total non-current liabilities

7,214

1

1

1

3

(241)

6,976

Current liabilities

Trade payables

20

5,524

1

-

-

1

(1,420)

4,105

Other current liabilities

20

3,006

-

-

-

-

(936)

2,070

Current financial liabilities

21

1,022

-

-

-

-

(247)

775

Tax liabilities

22

134

-

-

-

-

(64)

70

Total current liabilities

9,686

1

-

-

1

(2,667)

7,020

Total liabilities

16,900

2

1

1

4

(2,908)

13,996

Liabilities directly associated with non-current assets held for sale

-

-

-

-

-

-

-

Total liabilities

16,900

2

1

1

4

(2,908)

13,996

It should be noted that the economic effect of the new acquisitions in 2023 is not significant.

Breakdown of the balance sheet with evidence of the effect of the first consolidation of the 2023 acquisitions

2

Notes

to the Consolidated annual report

2.1

General

information

2.2

Consolidated annual report

2.3

Financial statements

2.4

Basis of preparation

2.5

Changes in international accounting standards

2.6

Scope of consolidation

2.7

Consolidation policies and procedures

2.8

Accounting standards

and policies

2.9

Business Units

2.10

Results

sector by sector

2.11

Notes to the balance sheet

2.12

Net debt

2.13

Notes to the income statement

2.14

Earnings per share

2.15

Note on related party transactions

2.16

Significant

non-recurring events and transactions, pursuant to Consob Communication No. DEM/6064293 of July 28, 2006

2.17

Guarantees

and commitments with third parties

2.18

Other information

24 A2A Consolidated financial statements 2023 Notes to the Consolidated annual report

Notes to the Consolidated annual report 2023 Consolidated financial statements A2A 25

Consolidation criteria

Subsidiaries

Subsidiaries are those companies over which the parent company, A2A S.p.A., exercises control, also by virtue of shareholders’ agreements, and has the power, as defined by IFRS 10, to determine financial and operating policy, either directly or indirectly, in order to obtain returns from their activities. Subsidiaries are consolidated from the date on which the Group effectively acquires control and cease to be consolidated on a line-by-line basis from the date on which control is lost.

Associates, joint ventures and joint operations

Shareholdings in associates, namely those in which the A2A Group has a considerable interest and is able to exercise significant influence are accounted for using the equity method. Gains and losses attributable to the Group are recognized in the financial statements from the date on which significant influence or joint control commences.

In the event that the loss attributable to the Group exceeds the carrying amount of an investment, the carrying amount is reduced to zero and any excess loss is provided for to the extent that the Group has legal or constructive obligations to make good the associate’s losses or in any case to make payments on its behalf.

With the adoption of IFRS 11, the Group must now classify investments in joint arrangements as either joint ventures (if the Group has rights to the net assets of the arrangement) or joint operations (if the Group has rights to the assets, and obligations for the liabilities, relating to the arrangement).

Potential voting rights

If the A2A Group holds call options on shares or other equity instruments that represent capital (warrants) that are convertible into ordinary shares or similar instruments having 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 are taken into consideration when assessing whether or not the Group has the power to govern or influence another company’s financial and operating policies.

Treatment of put options on the shares of subsidiaries

In general, paragraph 23 of IAS 32 states that a contract that contains an obligation for an entity to purchase shares for cash or another financial asset gives rise to a financial liability for the present value of the exercise price of the option.

As a result, therefore, if the Group does not have the unconditional right to avoid the delivery of cash or other financial instruments when a put option on the shares of subsidiaries is exercised, it must recognize a liability.

In the absence of specific instructions in the related accounting standards, the A2A Group: (i) considers the shares involving put options to have already been purchased, including in cases in which the risks and rewards connected with ownership of the shares remain with the minority shareholders and they remain exposed to equity risk; (ii) records a corresponding entry among equity reserves for the liability resulting from the obligation and any subsequent changes that are not related to the mere unwinding of the present value of the strike price; (iii) and recognizes such changes through the Income Statement.

2.7

Consolidation policies and procedures

2

Notes

to the Consolidated annual report

2.1

General

information

2.2

Consolidated annual report

2.3

Financial statements

2.4

Basis of preparation

2.5

Changes in international accounting standards

2.6

Scope of consolidation

2.7

Consolidation policies and procedures

2.8

Accounting standards

and policies

2.9

Business Units

2.10

Results

sector by sector

2.11

Notes to the balance sheet

2.12

Net debt

2.13

Notes to the income statement

2.14

Earnings per share

2.15

Note on related party transactions

2.16

Significant

non-recurring events and transactions, pursuant to Consob Communication No. DEM/6064293 of July 28, 2006

2.17

Guarantees

and commitments with third parties

2.18

Other information

26 A2A Consolidated financial statements 2023 Notes to the Consolidated annual report

Effect on the consolidation procedures of certain agreements involving the shares or quotas of Group companies

a) Earn-out on the purchase of the equity investments made by A2A Rinnovabili S.p.A.

With reference to the acquisitions of equity investments made by A2A Rinnovabili S.p.A. between 2017 and 2023, by contract, there are price and earn-out adjustments of non-significant amounts both in favor of the seller and in favor of the buyer upon the occurrence of certain conditions. Given the uncertainty and insignificance of the amounts, the Group has not recorded these values.

b) Options on the shares of Suncity Group S.r.l.

During the year, the Group, based on new considerations, deemed that the conditions for exercising the option to purchase 74% of Newco’s share capital had ceased to exist, and therefore eliminated the value of the debt recognized in previous years. In the second half of the year, the Group sold its shareholding (26%).

c) Options on the shares of Electrometal S.r.l.

On December 20, 2019, A2A Ambiente S.p.A. acquired 90% of Electrometal S.r.l..

Subsequently, pursuant to and as a result of the provisions of Article 9.3 of the sale and purchase agreement, on July 7, 2023, A2A Ambiente S.p.A. exercised its option to purchase the remaining 10% for a total consideration of 2 million euro. As a result of this transaction, the Group holds 100% of the company.

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. Any items recognized by using different accounting standards are adjusted during the consolidation process to bring them into line with Group accounting policies. All intra-group balances and transactions, including any unrealized profits arising from transactions between Group companies, are fully eliminated.

In preparing the Report the assets, liabilities, income and expenses of the companies being consolidated are included in their entirety on a line-by-line basis, with the portion of equity and net income for the period attributable to minority interests being stated separately in the balance sheet and income statement.

The carrying amount of the investment in each subsidiary is eliminated against the corresponding share of its net equity, including any adjustments to fair value at the acquisition date; any differences arising are accounted for in accordance with IFRS 3.

Transactions with minority interests which do not lead to the loss of control in consolidated companies are accounted for using the economic entity view approach.

Procedure for the consolidation of assets and liabilities held for sale (IFRS 5)

In the case of particularly large amounts and in connection with non-current assets and liabilities held for sale, and only in this case, in accordance with IFRS 5 the relative intra-group financial receivables and payables are eliminated.

Notes to the Consolidated annual report 2023 Consolidated financial statements A2A 27

Translation of foreign currency items

The consolidated financial statements of the A2A Group are presented in euro; this is also the functional currency of the economies in which the Group operates.

Transactions in other currencies are initially recognized at the exchange rates at the date of the transaction. Monetary assets and liabilities denominated in foreign currency are translated into euro at the exchange rates at the balance sheet date.

Non-monetary items measured at historical cost in foreign currency are translated at the exchange rates at the date of the transaction. Non-monetary items measured at fair value are translated at the exchange rates at the date when the fair value was determined.

Tangible assets

Assets for business use are classified as tangible assets, while non-business assets are classified in the eventuality as investment property.

Tangible assets are measured at cost, including any additional charges directly attributable to bringing the asset into an operating condition (e.g. transport, customs duty, installation and testing costs, notary and land registry fees and any non-deductible VAT), increased when material and where there are obligations by the present value of the estimated cost of restoring the location from an environmental point of view or dismantling the asset. Borrowing costs, where directly attributable to the purchase or construction of an asset, are capitalized as part of the cost of the asset if the type of asset so warrants.

If important components of tangible assets have different useful lives, they are accounted for separately using the “component approach”, assigning to each component its own useful life for the purpose of calculating depreciation (the component approach).

Land, whether occupied by residential or industrial buildings or devoid of construction, is not depreciated as it has an unlimited useful life, except for land used in production activities that is subject to deterioration over time (e.g. landfills, quarries).

Ordinary maintenance costs are fully expensed to the income statement in the year they are incurred. Costs for maintenance carried out at regular intervals are attributed to the assets to which they refer and are depreciated over the specific residual possibility of use of such.

Tangible assets are stated net of accumulated depreciation and any write-downs. Depreciation is charged from the year in which the individual asset enters service on a straight-line basis over the estimated useful life of the asset for the business. The estimated realizable value which is deemed to be recoverable at the end of an asset’s useful life is not depreciated. The useful life of each asset is reviewed annually and any changes, if needed, are made with a view to showing the correct value of the asset.

Landfills are depreciated on the basis of the percentage filled, which is calculated as the ratio between the volume occupied at the end of the period and the total volume authorized.

2.8

Accounting standards and policies

2

Notes

to the Consolidated annual report

2.1

General

information

2.2

Consolidated annual report

2.3

Financial statements

2.4

Basis of preparation

2.5

Changes in international accounting standards

2.6

Scope of consolidation

2.7

Consolidation policies and procedures

2.8

Accounting standards

and policies

2.9

Business Units

2.10

Results

sector by sector

2.11

Notes to the balance sheet

2.12

Net debt

2.13

Notes to the income statement

2.14

Earnings per share

2.15

Note on related party transactions

2.16

Significant

non-recurring events and transactions, pursuant to Consob Communication No. DEM/6064293 of July 28, 2006

2.17

Guarantees

and commitments with third parties

2.18

Other information

28 A2A Consolidated financial statements 2023 Notes to the Consolidated annual report

The main depreciation rates used, which are based on technical and economic considerations, are as follows:

- building ..................................................................................................................................................................................................................14.1% - 32.4%

- land ...........................................................................................................................................................................................................................0.0% - 10.0%

- production plants .............................................................................................................................................................................................0.1% - 63.16%

- transport lines .......................................................................................................................................................................................................2.2% - 4.3%

- transformation stations .................................................................................................................................................................................2.5% - 20.2%

- distribution networks .........................................................................................................................................................................................0.1% - 77.4%

- fiber-optic networks ..........................................................................................................................................................................................4.2%-20.0%

- miscellaneous equipment ............................................................................................................................................................................0.6% - 41.8%

- furniture and fittings .......................................................................................................................................................................................0.6% - 32.4%

- electric and electronic office machines .................................................................................................................................................4.2% - 46.1%

- vehicles.................................................................................................................................................................................................................. 2.8% - 27.3%

- e-moving .................................................................................................................................................................................................................5.3% - 16.7%

- capital goods of less than 516 euro .......................................................................................................................................................................100%

- leasehold improvements .............................................................................................................................................................................. 1.6% - 54.6%

- leased assets ....................................................................................................................................................................................................... 1.7% - 23.2%

Tangible assets are subjected to impairment testing if there is any indication that an asset may be impaired in accordance with the paragraph below “Impairment of assets”; write-downs may be reversed in subsequent periods if the reasons for which they were recognized no longer apply.

When an asset is disposed of or if future economic benefits are no longer expected from using an asset, it is removed from the balance sheet and any gain or loss (being the difference between the disposal proceeds and the carrying amount) is recognized in the income statement in the year of the derecognition.

Leasing

Assets for rights of use are recognized on the start date of the lease, i.e. the date on which the underlying asset is available for use.

Rights to use assets are measured at cost, net of accumulated depreciation and impairment losses, and adjusted for any restatement of lease liabilities. The cost of assets for rights of use includes the amount of lease liabilities recognized and lease payments made on or before the commencement of the lease. Assets for right of use are depreciated on a straight-line basis from the effective date to the end of the useful life of the asset consisting of the right of use or at the end of the lease term, whichever is earlier.

If the lease transfers ownership of the underlying asset to the lessee at the end of the term of the contract or if the cost of the asset consisting of the right of use reflects the fact that the lessee will exercise the purchase option, the asset consisting of the right of use is depreciated from the effective date until the end of the useful life of the underlying asset.

Lease liabilities are recognized at the present value of lease payments not yet paid at the reporting date. Lease payments also include the exercise price of a purchase option if it is reasonably certain that the option will be exercised.

Intangible assets

Intangible assets are identifiable non-monetary assets without physical substance which are controlled by the enterprise and able to produce future economic benefits, and include goodwill when acquired for consideration.

The fact of being identifiable distinguishes an intangible asset that has been acquired from goodwill; this requirement is normally met when: (i) the intangible asset is attributable to a legal or contractual right, or (ii) the asset is separable, in other words it can be sold, transferred, rented or exchanged individually or as an integral part of other assets.

Control by the enterprise consists of the right to enjoy the future economic benefits flowing from the asset and to restrict the access of others to those benefits.

Intangible assets are stated at purchase or production cost, including ancillary charges, determined in the same way as

Notes to the Consolidated annual report 2023 Consolidated financial statements A2A 29

for tangible assets. Intangible fixed assets produced internally are not capitalized but recognized in the income statement in the year in which the costs are incurred.

Intangible assets with a definite useful life are reported in the financial statements net of the related accumulated amortization and impairments in the same way as for tangible assets. Changes in the expected useful life or in the ways in which the future economic benefits of an intangible asset are achieved by the Company are accounted for by suitably adjusting the period or method of amortization, treating them as changes in accounting estimates. The amortization of intangible fixed assets with a definite useful life is charged to income statement in the cost category that reflects the function of the intangible asset concerned.

Intangible assets are subjected to impairment testing if there are specific indications that they may be impaired, in accordance with the paragraph below “Impairment of assets”; impairment losses may be reversed in subsequent periods if the reasons for which they were recognized no longer apply.

Intangible assets with an indefinite useful life and those that are not yet available for use are subjected to impairment testing on an annual basis, whether or not there are any specific indications that they may be impaired, in accordance with the paragraph below “Impairment of assets”. Impairment losses recognized for goodwill are not reversed.

Gains or losses on the disposal of an intangible asset are calculated as the difference between the disposal proceeds and the carrying amount of the asset and recognized in the Income Statement at the time of the disposal.

The following amortization rates are applied to intangible assets with a definite useful life:

- industrial patents and intellectual property rights .................................................................................14.3% - 33.5%

- concessions, licenses, trademarks and similar rights.............................................................................0.1% - 33.3%

- other intangible assets ............................................................................................................................................1.7% - 63.2%

Service concession arrangements

IFRIC 12 states that, based on the characteristics of the concession arrangement, the infrastructures used in the provision of public services under concession are to be recognized as intangible assets if the operator has the right to receive a payment from the customer for the service provided, and/or as a financial asset if the operator has the right to receive payment from the public sector entity.

In order to assess the applicability of these provisions for the Group as a concessionaire, management conducted a careful analysis of existing concessions.

Based on these analyses, the service concessions relevant under IFRIC 12 for the Group were as follows:

• gas distribution network → intangible asset;

• water cycle - water distribution, purification and sewerage services → intangible asset

• management of votive lamps → financial asset;

• public lighting → financial asset;

• district heating network → intangible asset.

2

Notes

to the Consolidated annual report

2.1

General

information

2.2

Consolidated annual report

2.3

Financial statements

2.4

Basis of preparation

2.5

Changes in international accounting standards

2.6

Scope of consolidation

2.7

Consolidation policies and procedures

2.8

Accounting standards

and policies

2.9

Business Units

2.10

Results

sector by sector

2.11

Notes to the balance sheet

2.12

Net debt

2.13

Notes to the income statement

2.14

Earnings per share

2.15

Note on related party transactions

2.16

Significant

non-recurring events and transactions, pursuant to Consob Communication No. DEM/6064293 of July 28, 2006

2.17

Guarantees

and commitments with third parties

2.18

Other information

30 A2A Consolidated financial statements 2023 Notes to the Consolidated annual report

Impairment/Reversal of tangible and intangible fixed assets

Tangible and intangible assets are subjected to impairment testing if there is any specific indication that there may be an impairment loss.

Goodwill, other intangible assets with an indefinite useful life and assets not available for use are tested for impairment at least annually or more frequently if there is any specific indication that they may be impaired.

Impairment testing consists of comparing the carrying amount of an asset with its recoverable amount.

The recoverable amount of an asset is the higher of its fair value less costs to sell and its value in use. To determine an asset’s value in use, the entity calculates the present value of the estimated future cash flows on the basis of business plans prepared by management, before tax, applying a pre-tax discount rate which reflects current market assessments of the time value of money and the risks specific to the asset. If the recoverable amount of an asset is lower than its carrying amount, a loss is recognized in the Income Statement. If a loss recognized for an asset other than goodwill no longer exists or is reduced, the carrying amount of the asset or cash-generating unit is increased to the new estimate of recoverable value, which may not exceed the carrying amount that would have been determined had no impairment loss been recognized for the asset. Reversals of impairment losses are immediately recognized in the income statement.

When the recoverable amount of the individual asset cannot be estimated, it is based on the cash generating unit (CGU) or group of CGUs that the asset belongs to and/or to which it may be reasonably allocated.

CGUs are identified on the basis of the company’s organizational and business structure as homogeneous aggregations that generate independent cash inflows deriving from the continuous use of the assets allocated to them.

Environmental certificates: emission quotas and White Certificates

Different accounting policies are applied to quotas or certificates held for own use in the “Industrial Portfolio” and those held for trading purposes in the “Trading Portfolio”.

Surplus quotas or certificates held for own use in the “Industrial Portfolio” which are in excess of the Group’s requirements in relation to the obligations accruing at year end are recognized as other intangible assets at the actual cost incurred. Quotas or certificates assigned free of charge are recognized at a zero carrying amount. Given that they are assets for instant use, they are not amortized but subjected to impairment testing. The recoverable amount is the higher of value in use and market value. If, on the other hand, there is a deficit because the requirement exceeds the quotas or certificates in portfolio at the balance sheet date, a provision is recognized for the amount needed to meet the residual obligation, estimated on the basis of any purchase contracts, spot or forward, already signed at the balance sheet date; otherwise on the basis of market prices.

Quotas or certificates held for trading in the “Trading Portfolio” are recognized in inventories and measured at the lower of purchase cost and estimated realizable value based on market trends. Quotas or certificates assigned free of charge are recognized at a zero carrying amount. Market value is established on the basis of any sales contracts, spot or forward, already signed at the balance sheet date; otherwise on the basis of market prices.

Shareholdings in subsidiaries, associates and joint ventures

Subsidiaries are companies in which the parent company “is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee”, as defined by IFRS 10. Control is generally assumed to exist when a company holds either directly or indirectly more than half of the exercisable voting rights at an ordinary shareholders’ meeting, also considering potential voting rights, meaning voting rights deriving from convertible financial instruments.

Subsidiaries are consolidated on a line-by-line basis.

Associates are companies in which the parent has a significant influence over strategic decisions, despite not having control, also considering potential voting rights, meaning voting rights deriving from convertible financial instruments; significant influence is assumed to exist when A2A S.p.A. holds, either directly or indirectly, more than 20% of voting rights exercisable at an ordinary shareholders’ meeting.

In order to determine the existence of significant influence, management’s judgement is required to evaluate all facts and circumstances.

The Group reviews the existence of significant influence when facts and circumstances indicate that there has been a change in one or more of the elements considered for the test of the existence of significant influence.

Notes to the Consolidated annual report 2023 Consolidated financial statements A2A 31

Shareholdings in associates and joint ventures are accounted for in the consolidated financial statements using the equity method.

Shareholdings in joint ventures (IFRS 11)

IFRS 11 identifies two types of arrangement, joint operations and joint ventures, on the basis of the rights and obligations of the parties, and governs the resulting accounting treatment to be adopted for the recognition of these arrangements in the financial statements.

The accounting treatment for this type of joint arrangement requires the assets/liabilities and revenue/expenses connected with the arrangement to be recognized on the basis of the rights/obligations due to/assumed by A2A, regardless of the interest held.

In order to determine the existence of joint control and the type of jointly controlled arrangement, management’s judgment is required to assess the rights and obligations under the arrangement. To this end, management considers the structure and legal form of the arrangement, the terms agreed between the parties in the contractual agreement and, when relevant, other facts and circumstances.

The Group reassesses the existence of joint control when facts and circumstances indicate that there has been a change in one or more of the elements considered for the verification of the existence of joint control and the type of jointly controlled arrangement.

In the particular case of its shareholdings in two joint arrangements operating in the Generation and Trading Business Unit, Ergosud S.p.A. and PremiumGas S.p.A., the A2A Group considers that these fall under the category joint ventures as far as their legal form and the nature of the contractual agreements are concerned.

In particular, as regards the shareholding in PremiumGas S.p.A., the Group has rights exclusively linked to the results achieved by the company.

On September 26, 2018, PremiumGas S.p.A. was placed in voluntary liquidation.

For the shareholding in Ergosud S.p.A., despite the existence of a tolling agreement the investee could dispatch energy autonomously, thereby ensuring business continuity also at the end of the agreement. In addition, the A2A Group does not appoint any of the company’s key management.

On the basis of the above considerations, the A2A Group has accounted for the shareholdings using the equity method, continuing the treatment used in previous years.

2

Notes

to the Consolidated annual report

2.1

General

information

2.2

Consolidated annual report

2.3

Financial statements

2.4

Basis of preparation

2.5

Changes in international accounting standards

2.6

Scope of consolidation

2.7

Consolidation policies and procedures

2.8

Accounting standards

and policies

2.9

Business Units

2.10

Results

sector by sector

2.11

Notes to the balance sheet

2.12

Net debt

2.13

Notes to the income statement

2.14

Earnings per share

2.15

Note on related party transactions

2.16

Significant

non-recurring events and transactions, pursuant to Consob Communication No. DEM/6064293 of July 28, 2006

2.17

Guarantees

and commitments with third parties

2.18

Other information

32 A2A Consolidated financial statements 2023 Notes to the Consolidated annual report

Latest available summarized figures for joint ventures (consolidated at equity)

Key figures at December 31, 2022 millions of euro | Bergamo Pulita 50% | PremiumGas 50% | Metamer 50% | Ergosud 50%
Income statement |  |  |  |
Revenues from the sale of goods | 0.05 | 0.00 | 44.6 | 43.3
Gross Operating Income | (0.25) | (0.03) | 1.3 | 12.4
% of net revenues | n.s. | n.s. | 2.9% | 28.7%
Depreciation, amortization and write-downs | 0.00 | 0.00 | 0.4 | 9.4
Net Operating Income | (0.25) | (0.03) | 0.9 | 3.0
Result of the year | (0.25) | 0.00 | 0.6 | 0.9
Balance sheet |  |  |  |
Total assets | 2.40 | 2.4 | 16.0 | 145.2
Net equity | (0.2) | 2.3 | 3.1 | 69.4
Net (debt) | 2.13 | 1.8 | (2.0) | (29.9)

Figures of the last financial statements available.

Key figures at December 31, 2021 millions of euro | Bergamo Pulita 50% | PremiumGas 50% | Metamer 50% | Ergosud 50%
Income statement |  |  |  |
Revenues from the sale of goods | 0.04 | 0.06 | 24.4 | 40.9
Gross Operating Income | 0.00 | 0.02 | 1.1 | 7.7
% of net revenues | n.s. | n.s. | 4.5% | 18.8%
Depreciation, amortization and write-downs | 0.00 | 0.00 | 0.3 | 10.3
Net Operating Income | 0.00 | 0.02 | 0.8 | (2.6)
Result of the year | 0.00 | 0.03 | 0.5 | (2.5)
Balance sheet |  |  |  |
Total assets | 2.55 | 4.2 | 10.4 | 155.0
Net equity | 0.09 | 1.5 | 2.8 | 68.5
Net (debt) | 1.20 | 0.7 | 2.3 | 39.7

Notes to the Consolidated annual report 2023 Consolidated financial statements A2A 33

Long term construction contracts in progress

Construction contracts with durations exceeding one year in progress are valued in accordance with IFRS 15. In particular, over-the-time revenues are recognized if it can be demonstrated that: a) the customer simultaneously receives and consumes the benefits of the contract in force at the same time as the service is provided b) the service provided improves.

Construction contracts currently in progress are measured on the basis of the contractual fees that have accrued with reasonable certainty on the basis of the stage of completion, using the “cost to cost” method, so as to allocate the revenues and net result of the contract to the individual periods to which they belong in proportion to the progress being made on the project. Any difference, positive or negative, between the value of the contracts and advances received is recognized as an asset or a liability respectively.

In addition to the contractual fees, contract revenues include variants, price revisions and incentive awards to the extent that it is probable that they represent actual revenues that can be reliably determined. Ascertained losses are recognized independently of the stage of completion of contracts.

Inventories

Inventories of materials and fuel are measured at the lower of weighted average cost and market value at the balance sheet date. Weighted average cost is determined for the period of reference for each inventory code. Weighted average cost includes any additional costs (such as sea freight, customers charges, insurance and lay or demurrage days in the purchase of fuel). Inventories are constantly monitored and, where necessary, obsolete stocks are written down with a charge to the Income Statement.

Inventories of gas held for trading purposes, in storage at separate facilities as opposed to gas used for industrial purposes, are measured at fair value at the reporting date as required by IAS 2 par. 3 letter b.

Power Purchase Agreement

Power Purchase Agreements (PPA) that provide for the physical delivery of energy and that do not meet the requirements of IFRS 10 for the existence of control or joint control over a company or asset and IFRS 16 for the recognition of a lease, but that meet the definition of a derivative in IFRS 9, are accounted for under the rules of the own use exemption when the relevant conditions are met.

Financial instruments

They include shareholdings (excluding shareholdings in subsidiaries, joint ventures and associates) held for trading (so-called trading shareholdings) or available for sale, non-current receivables and loans and other non-current financial assets, trade and other receivables deriving from company operations and other current financial assets such as cash and cash equivalents. The latter consist of bank and postal deposits, readily negotiable securities used as temporary investments of surplus cash and financial receivables due within three months. Financial instruments also include financial payables (bank loans and bonds), trade payables, other payables and other financial liabilities and derivatives.

Financial assets and liabilities are recognized at the time that the contractual rights and obligations forming part of the instrument arise.

Financial assets and liabilities are accounted for in accordance with IFRS 9 “Financial Instruments”.

2

Notes

to the Consolidated annual report

2.1

General

information

2.2

Consolidated annual report

2.3

Financial statements

2.4

Basis of preparation

2.5

Changes in international accounting standards

2.6

Scope of consolidation

2.7

Consolidation policies and procedures

2.8

Accounting standards

and policies

2.9

Business Units

2.10

Results

sector by sector

2.11

Notes to the balance sheet

2.12

Net debt

2.13

Notes to the income statement

2.14

Earnings per share

2.15

Note on related party transactions

2.16

Significant

non-recurring events and transactions, pursuant to Consob Communication No. DEM/6064293 of July 28, 2006

2.17

Guarantees

and commitments with third parties

2.18

Other information

34 A2A Consolidated financial statements 2023 Notes to the Consolidated annual report

Financial assets

Initial recognition

Financial assets are classified into two categories alone - “at fair value” or “at amortized cost”. Classification within the two categories is carried out on the basis of an entity’s business model and the contractual cash flow characteristics of the financial asset. A financial asset is measured at amortized cost if both of the following requirements are met: the objective of the entity’s business model is to hold assets to collect contractual cash flows (and therefore in substance not to earn trading profits) and the characteristics of the cash flows of the asset are solely payments of principal and interest. A financial asset is measured at fair value if it is not measured at amortized cost.

Debt instruments may be recorded at fair value through profit or loss upon initial recognition if this results in the elimination or significant reduction of an accounting mismatch.

All equity instruments - both listed and unlisted - are measured at fair value.

The Group did not refer to the option of presenting changes in the fair value of equity instruments that are not held for trading in equity; that option is not permitted for equity instruments that are held for trading. This designation is permitted on initial recognition, may be adopted for each individual instrument and is irrevocable.

Subsequent valuation

Measurement subsequent to initial recognition depends on which of the following categories the financial instrument falls into:

• Financial assets at amortized cost (debt instruments);

• Financial assets at fair value in the Income Statement with reclassification of cumulative gains and losses (debt instruments);

• Financial assets at fair value in the Income Statement without reversal of cumulative gains and losses at the time of derecognition (equity instruments);

• Financial assets at fair value in the Income Statement.

Financial assets at amortized cost

These are valued using the effective interest method and are subject to impairment.

Gains and losses are recognized in the income statement when the asset is derecognized, modified or revalued.

Investments in equity instruments

Gains and losses on these financial assets are never reclassified to the income statement. Dividends are recognized as other income in the income statement when the right to payment has been approved, except when the Group benefits from such income as a recovery of part of the cost of the financial asset, in which case such profits are recognized in OCI. Equity instruments recognized at fair value through OCI are not subject to impairment testing.

Financial assets measured at fair value through the income statement

This category includes assets held for trading, assets designated at the time of initial recognition as financial assets at fair value with changes recognized in the Income Statement, or financial assets that must be measured at fair value.

Assets held for trading are all those assets acquired for sale or repurchase in the short term. Derivatives, including those separated, are classified as financial instruments held for trading unless they are designated as effective hedging instruments. Financial assets with cash flows that are not represented solely by principal and interest payments are classified and measured at fair value in the Income Statement, regardless of the business model.

Financial instruments at fair value with changes recognized in the Income Statement are recognized in the statement of financial position at fair value and net changes in fair value are recognized in profit/(loss) for the year.

Dividends on listed equity investments are also recognized as other income in the statement of profit/(loss) for the year when the right to payment is established.

The embedded derivative contained in a non-derivative hybrid contract, in a financial liability or in a principal non-financial contract, is separated from the principal contract and accounted for as a separate derivative, if: its economic characteristics and the risks associated with it are not closely correlated with those of the principal contract; a separate

Notes to the Consolidated annual report 2023 Consolidated financial statements A2A 35

instrument with the same terms as the embedded derivative would meet the definition of a derivative; and the hybrid contract is not measured at fair value in the Income Statement. Embedded derivatives are measured at fair value, with changes in fair value recognized in the Income Statement. A restatement occurs only when there is a change in the terms of the contract that significantly changes the cash flows otherwise expected or a reclassification of a financial asset to a category other than fair value in the Income Statement.

An embedded derivative included in a hybrid contract that contains a financial asset is not separated from the host contract. The financial asset together with the embedded derivative is classified entirely as a financial asset at fair value in the Income Statement.

Derecognition

A financial asset is derecognized when:

• the rights to receive cash flows from the asset no longer apply;

• the company has transferred to a third party the right to receive cash flows from the asset or has assumed a contractual obligation to transfer them. In substance, the transfer is completed when: the company has transferred all the risks and rewards of ownership of the asset or has transferred control of the asset while maintaining the related risks and rewards.

In cases where the company has transferred the rights to receive cash flows from an asset or signed an agreement under which it retains the contractual rights to receive the cash flows from the financial asset but assumes a contractual obligation to pay the cash flows to one or more beneficiaries (pass-through), it assesses whether and to what extent it has retained the risks and rewards of ownership. In the cases in which it has neither transferred nor retained substantially all of the risks and rewards or has not lost control of the asset, it continues to be recognized in the financial statements of the Group to the extent of its continuing involvement in the asset. In this case, the Group also recognizes an associated liability. The transferred asset and the associated liability are valued to reflect the rights and obligations that remain with the Group.

When the entity’s continuing involvement is a guarantee of the transferred asset, involvement is measured on the basis of the lower of the amount of the asset and the maximum amount of consideration received that the entity might have to repay.

Financial liabilities

Financial liabilities are classified, at the time of initial recognition, at fair value in the Income Statement, as mortgages and loans or as derivatives designated as hedges.

Directly attributable transaction costs are added to the valuation.

The Group’s financial liabilities include trade payables and other payables, mortgages and loans, including current account overdrafts and derivative financial instruments.

The subsequent evaluation depends on the classification of the main instrument:

• financial liabilities at fair value in the Income Statement, typically of a trading nature (settlement and transfer in the short term). This category includes financial derivatives held for trading (speculative);

• loans and receivables: valued at amortized cost using the effective interest method. Gains and losses are recognized in the Income Statement when the liability is settled, as well as through amortization.

A financial liability is derecognized when the obligation underlying the liability is settled or cancelled.

Derivative financial instruments and hedge accounting

These are initially recognized at fair value on the date the contract is signed and the subsequent measurement is also at fair value.

To classify a derivative as a hedge, the company formally designates and documents the hedging relationship, its risk management objectives and the strategy pursued.

2

Notes

to the Consolidated annual report

2.1

General

information

2.2

Consolidated annual report

2.3

Financial statements

2.4

Basis of preparation

2.5

Changes in international accounting standards

2.6

Scope of consolidation

2.7

Consolidation policies and procedures

2.8

Accounting standards

and policies

2.9

Business Units

2.10

Results

sector by sector

2.11

Notes to the balance sheet

2.12

Net debt

2.13

Notes to the income statement

2.14

Earnings per share

2.15

Note on related party transactions

2.16

Significant

non-recurring events and transactions, pursuant to Consob Communication No. DEM/6064293 of July 28, 2006

2.17

Guarantees

and commitments with third parties

2.18

Other information

36 A2A Consolidated financial statements 2023 Notes to the Consolidated annual report

From January 1, 2018, the following must be identified: a) the hedging instrument b) the nature of the risk being hedged c) the way in which the company will assess the effectiveness of the hedge.

The hedging relationship is effective if:

• there is an economic relationship between the hedged item and the hedging instrument;

• the effect of the credit risk does not prevail over the changes in value resulting from the aforementioned economic relationship;

• the hedging ratio of the hedging relationship is the same as that resulting from the quantity of the hedged item that the Group actually hedges and the quantity of the hedging instrument that the Group actually uses to hedge this quantity of hedged item.

Transactions that meet the above criteria are accounted for as follows:

Fair value hedging

If a derivative financial instrument is designated as a hedge against exposure to changes in the fair value of an asset or liability attributable to a specific risk, the gain or loss resulting from subsequent changes in fair value of the hedging instrument is recognized in the Income Statement. The profit or loss deriving from the adjustment to fair value of the item hedged, for the part attributable to the hedged risk, changes the book value of this item and is recognized in the Income Statement. Cash flow hedge - If a derivative financial instrument is designated to hedge the exposure to the variability of the cash flows of an asset or a liability recognized in the Financial Statements or of a highly probable transaction, the effective portion of the resulting profits or losses deriving from the fair value adjustment of the derivative instrument is recognized in a specific equity reserve. The cumulative profit or loss is reversed from the equity reserve and recorded in the Income Statement in the same years in which the effects of the hedged transaction are recognized in the Income Statement. The gain or loss associated with that part of the ineffective hedge is recognized in the Income Statement immediately. If the hedged transaction is no longer considered probable, the unrealized gains or losses recognized in the equity reserve are immediately recognized in the Income Statement.

Cash flow hedges

The portion of gain or loss on the hedged instrument relating to the effective portion of the hedge is recognized in other comprehensive income in the cash flow hedge reserve, while the ineffective portion is recognized directly in the Income Statement. The cash flow hedge reserve is adjusted to the lower of the cumulative gain or loss on the hedging instrument and the cumulative change in the fair value of the hedged item.

Amounts accumulated under other components of the comprehensive income statement are recorded, depending on the nature of the underlying hedged transaction. If the hedged transaction subsequently results in the recognition of a non-financial component, the accumulated amount in equity is removed from the separate component of equity and included in the cost or other carrying amount of the asset or liability hedged. This is not considered a reclassification of the items recognized in OCI for the period. This also applies in the case of a hedged forecast transaction of a non-financial asset or a non-financial liability that subsequently becomes an irrevocable commitment to which fair value hedge accounting is applied.

For any other cash flow hedge, the amount accumulated in OCI is reclassified in the Income Statement as a reclassification adjustment in the same period or periods during which the hedged cash flows impact profit or loss.

If the cash flow hedge accounting is discontinued, the accumulated amount in OCI must remain so if the hedged future cash flows are expected to occur. Otherwise, the amount shall be immediately reclassified to profit or loss for the period as a reclassification adjustment. After suspension, once the hedged cash flow occurs, any accumulated amount remaining in OCI must be accounted for depending on the nature of the underlying transaction as described above.

Non-current assets held for sale, disposal groups and discontinued operations – IFRS 5

Non-current assets held for sale, disposal groups and discontinued operations whose carrying amount will be recovered principally through sale rather than continuous use are measured at the lower of their carrying amount and fair value less costs to sell. A disposal group is a group of assets to be disposed of together as a group in a single transaction together with the liabilities directly associated with those assets that will be transferred in that transaction. Discontinued operations on the other hand consist of a significant component of the Group such as a separate major line of business or a geographical area of operations or a subsidiary acquired exclusively with a view to resale.

In accordance with IFRSs, the figures for non-current assets held for sale, disposal groups and discontinued operations are shown on two specific lines in the balance sheet: non-current assets held for sale and liabilities directly associated with non-current assets held for sale.

Notes to the Consolidated annual report 2023 Consolidated financial statements A2A 37

Non-current assets held for sale are not depreciated or amortized and are measured at the lower of carrying amount and fair value less costs to sell; any difference between carrying amount and fair value less costs to sell is recognized in the income statement as a write-down.

The net economic results arising from discontinued operations, and only discontinued operations, pending the disposal process, any gains or losses on disposal and the corresponding comparative figures for the previous year or period are recognized in a specific line of the Income Statement: “Net result from discontinued operations”. On the other hand any gains or losses recognized as the result of measuring non-current assets (or disposal groups), classified as held for sale within the meaning of IFRS 5, at fair value less costs to sell are presented in a specific line item of the income statement “Result from non-recurring transactions”, as discussed further in the previous section “Format of financial statements (2.3)”.

Employee benefits

The employees’ leaving entitlement (TFR) and pension provisions are determined using actuarial methods; the rights accrued by employees during the year are recognized in the Income Statement as “labor costs”, whereas the figurative financial cost that the company would have to bear if it were to ask the market for a loan of the same amount as the TFR is recognized as part of the “financial balance”. Actuarial gains and losses arising from changes in actuarial assumptions are recognized in income statement taking into account the residual average working life of the employees.

Following the introduction of Finance Law no. 296 of December 27, 2006, only the portion of accrued employees’ leaving entitlement that remained in the company has been measured in accordance with IAS 19, as amounts are now paid over to a separate entity as they accrue (either to a supplementary pension scheme or to funds held by INPS). As a result of these payments the company no longer has any obligations in connection with the services employees may render in the future.

Guaranteed employee benefits paid on or after the termination of employment through defined benefit plans (energy discount, health care or other benefits) or long-term benefits (loyalty bonuses) are recognized in the period when the right vests.

The liability for defined benefit plans, net of any plan assets, is determined by independent actuaries on the basis of actuarial assumptions and recognized on an accrual basis in line with the work performed to obtain the benefits.

Gains and losses arising from actuarial calculations are recognized in a specific equity reserve.

Provisions for risks, charges and liabilities for landfills

Provisions for risks and charges regard costs of a determinate nature and of certain or probable existence which at year-end are uncertain in terms of timing or amount. Provisions are recognized when there is a legal or constructive present obligation arising from past events, the settlement of which is expected to result in an outflow of resources embodying economic benefits, and it is possible to make a reasonable estimate of the obligation.

Provisions are recognized at the best estimate of the amount that the company would have to pay to settle the liability or to transfer it to third parties at the balance sheet date. If the effect of discounting is significant, provisions are calculated by discounting expected future cash flows at a pre-tax discount rate that reflects the current market assessment of the time value of money. If discounting is used the increase in the provision due to the passage of time is recognized as financial expense.

If the liability relates to tangible assets (such as the dismantling and reclamation of industrial sites), the initial provision is recognized as a counter-entry to the assets to which it refers; expense is then charged to income statement as the asset in question is depreciated.

2

Notes

to the Consolidated annual report

2.1

General

information

2.2

Consolidated annual report

2.3

Financial statements

2.4

Basis of preparation

2.5

Changes in international accounting standards

2.6

Scope of consolidation

2.7

Consolidation policies and procedures

2.8

Accounting standards

and policies

2.9

Business Units

2.10

Results

sector by sector

2.11

Notes to the balance sheet

2.12

Net debt

2.13

Notes to the income statement

2.14

Earnings per share

2.15

Note on related party transactions

2.16

Significant

non-recurring events and transactions, pursuant to Consob Communication No. DEM/6064293 of July 28, 2006

2.17

Guarantees

and commitments with third parties

2.18

Other information

38 A2A Consolidated financial statements 2023 Notes to the Consolidated annual report

Treasury shares

Treasury shares are accounted for as a deduction from equity. In particular, treasury shares are recognized as a negative equity reserve.

Grants

Grants, both from public entities and from third party private entities, are measured at fair value when there is the reasonable certainty that they will be received and that the Group will be able to comply with the terms and conditions for obtaining them.

Grants received to provide support for the cost of specific assets are recognized as a direct deduction from the assets concerned and credited to the income statement over the life of the depreciable asset to which they refer.

Revenue grants (given to provide the company with immediate financial support or as compensation for expenses or losses incurred in a previous accounting period) are recognized in their entirety in the income statement as soon as the conditions for recognizing the grants are met.

Revenues and costs

The recognition of revenues is based on the following five steps: (i) identification of the contract with the customer; (ii) identification of the performance obligations, represented by the contractual promises to transfer goods and/or services to a customer; (iii) determination of the transaction price; (iv) allocation of the transaction price to the performance obligations identified on the basis of the stand-alone sale price of each good or service; (v) recognition of the revenue when the relative performance obligation is satisfied, i.e. when the promised good or service is transferred to the customer; the transfer is considered completed when the customer obtains control of the good or service, which can occur continuously over time diluted and extended or at a point in time. Depending on the type of transaction, revenues are recognized on the basis of the following specific criteria:

• revenues for the sale and transport of electricity and gas are recognized at the time that the energy is supplied or the service rendered, even if invoicing has not yet taken place, and are determined by adding estimates of consumption to amounts resulting from pre- established meter-reading schedules. Where applicable, these revenues are based on the tariffs and related tariff restrictions in force during the year prescribed by the law and the Regulatory Authority for Energy, Networks and the Environment and similar foreign bodies;

• connection contributions paid by users, if not for costs incurred to extend the network, are recognized in the income statement on collection and presented as “revenues from services”;

• the revenues billed to users for an extension of the gas network are accounted for as a reduction in the carrying amount of tangible assets and are recognized in the income statement as a reduction in the depreciation charged over the useful life of the cost capitalized to extend the network;

• the revenues and costs involved in withdrawing quantities that are higher or lower than the Group’s share are measured at the prices envisaged in the related purchase or sale contract;

• revenues from the provision of services are recognized according to the stage of completion based on the same criteria as for contract work in progress. If it is impossible to calculate revenues on a reliable basis they are recognized up to the amount of the costs incurred providing they are expected to be recovered;

• revenues from the sale of certificates are recognized at the time of sale.

Revenues are stated net of returns, discounts, allowances and rebates, as well as directly related taxes.

Expenses relate to goods or services sold or consumed during the year or as a result of systematic allocation; if no future use is envisaged they are recognized directly in the income statement.

Result from non-recurring transactions

The item “Result from non-recurring transactions” is intended to include the results from the sale of investments in subsidiaries and associates and other non-operating expenses/income.

Notes to the Consolidated annual report 2023 Consolidated financial statements A2A 39

Financial income and expenses

Financial income is recognized when interest income arises using the effective interest method, i.e. at the rate that exactly discounts expected future cash flows over the expected life of the financial instrument.

Financial expense is recognized in the Income Statement on an accrual basis on the basis of the effective interest.

Dividends

Dividend income is recognized when it is established that the shareholders have a right to receive payment, and is recognized as financial income in the Income Statement.

Income taxes

Current taxes

Current income taxes are based on an estimate of taxable income in compliance with tax regulations in force or substantially approved at the balance sheet date, bearing in mind any exemptions or tax credits due. Account is also taken of the fact that the Group now files for tax on a consolidated basis.

Deferred tax assets and liabilities

Deferred tax assets and liabilities are calculated on the temporary differences between the carrying amount of assets and liabilities in the balance sheet and their tax bases, with the exception of goodwill which is not deductible for tax purposes and any differences resulting from investments in subsidiaries which are not expected to reverse in the foreseeable future. The tax rates used are those expected to apply to the period when the temporary differences reverse. Deferred tax assets are recognized to the extent that it is probable that taxable profit will be available against which the deductible temporary differences can be utilized. Deferred tax assets are reduced to the extent that it is no longer probable that the tax benefit will be realized. The measurement of deferred tax assets takes account of the period for which business plans are available.

When transactions are recognized directly in equity, any related current or deferred tax effects are also recognized directly in equity. Deferred taxes on the undistributed profits of Group companies are only provided for if there is the real intention to distribute such profits and, in any case, if the taxation is not offset as the result of filing a Group tax return.

Deferred tax assets and liabilities are classified as non-current assets and liabilities.

Taxes are only offset when they are levied by the same tax authority, when there is the legal right of set-off and when settlement of the net balance is expected.

Use of estimates

Preparing the financial statements and notes requires the use of estimates and assumptions in determining certain assets and liabilities and measuring contingent assets and liabilities. The actual results after the event could differ from such estimates.

Estimates have been used in assessing the recoverability of assets, to determine certain sales revenues, in provisions for risks and charges, in provisions for receivables and other write-downs, amortization and depreciation, the valuation of derivatives, employee benefits and taxes. The underlying estimates and assumptions are regularly reviewed and the effect of any change is immediately recognized in the income statement.

With reference to climate change risks, the Group believes that they are an implicit element in the application of the methodologies and models used to make estimates, evaluations and measurements of certain items in the financial statements. Management believes that the main areas of the financial statements at December 31, 2023, the valuation of which is subject to the use of estimates and judgement by management, also with reference to climate change risks, are those subject to impairment tests (tangible and intangible assets, including goodwill) and the provisions

2

Notes

to the Consolidated annual report

2.1

General

information

2.2

Consolidated annual report

2.3

Financial statements

2.4

Basis of preparation

2.5

Changes in international accounting standards

2.6

Scope of consolidation

2.7

Consolidation policies and procedures

2.8

Accounting standards

and policies

2.9

Business Units

2.10

Results

sector by sector

2.11

Notes to the balance sheet

2.12

Net debt

2.13

Notes to the income statement

2.14

Earnings per share

2.15

Note on related party transactions

2.16

Significant

non-recurring events and transactions, pursuant to Consob Communication No. DEM/6064293 of July 28, 2006

2.17

Guarantees

and commitments with third parties

2.18

Other information

40 A2A Consolidated financial statements 2023 Notes to the Consolidated annual report

for risks, with specific reference to decommissioning provisions, and contingent liabilities. For further details, reference is made to the specific section “Climate change” in the Report on operations.

The following are the key assumptions made by management as part of the process of making these accounting estimates. The inherently critical element of such estimates comes from using assumptions or professional opinions on matters that are by their very nature uncertain. Changes in the conditions underlying the assumptions and opinions used could have a material impact on subsequent results.

Impairment Test

The carrying amount of non-current assets (including goodwill and other intangible assets) is reviewed periodically and whenever circumstances or events require a more frequent assessment. If it is considered that the book value of a group of fixed assets or an equity investment has had an impairment loss, it is subject to the application of professional judgement by management and is based on assumptions that include: the identification of the Cash Generating Units, the estimate of the future operating cash flows associated with these CGUs during the reference period of the 2023-2035 business plan, updated with the estimate of the cash flows subsequent to this time horizon, the cash flow deriving from the disposal at the end of useful life of the assets, discount rates used (“Wacc”). These assumptions are complex due to their nature and imply recourse to the opinion of the directors, who are also sensitive to future trends in energy markets, macroeconomic scenarios, and the resolutions of ARERA.

For the purpose of preparing the impairment test, the company avails itself of the support of an independent expert, external to the A2A Group.

In the hypothesis in which the recoverable value is lower than the carrying amount, the latter is written down to the extent applicable. Management is of the opinion that the estimates of such recoverable amounts are reasonable, albeit subject to changes in the factors underlying the estimates on which these recoverable amounts have been calculated could produce different measurements. For further details on the way in which impairment testing was carried out and the results of such testing, reference is made to the specific paragraph.

Revenue recognition

Revenues from sales include the estimate of accrued revenues related to gas and electricity consumed by customers and not yet subject to periodic reading at December 31, 2023 and the estimate of revenues accrued for gas and electricity consumed by customers and not yet billed at December 31, 2023, in addition to the revenues already billed to customers based on the periodic consumption readings made during the year. The processes and methods for evaluating and determining these estimates are based on sometimes complex assumptions that by their nature imply recourse to the opinion of the directors, in particular with regard to recognition of accrued revenues, as the methods used by the A2A Group to estimate the quantities of consumption between the date of the last reading and December 31, and therefore to value the revenues accrued during the year, are based on assumptions and complex calculation algorithms that concern various information systems. Furthermore, the estimate of consumption not subject to periodic reading is made by taking as reference the historical profile of each user, adjusted on the basis of climatic correction factors provided by the Regulatory Authority for Energy, Networks and the Environment (also “ARERA”), to incorporate other variables that can have an impact on consumption.

Provisions for risks and charges

In certain circumstances it is not easy to identify whether a legal or constructive present obligation exists. The directors assess these situations case by case, together with an estimate of the economic resources required to settle the obligation. Estimating such provisions is the result of a complex process that involves subjective judgements on the part of company management. When the directors are of the opinion that it is only possible that a liability could arise, the risks are disclosed in the section on commitments and contingent liabilities without making any provision.

Liabilities for landfills

The liabilities for landfills provision represents the amount set aside to meet the costs which will be incurred for the management of the period of closure and post-closure of landfills currently in use. The future outlays, calculated for each landfill by a specific appraisal updated annually, were discounted in accordance with the provisions of IAS 37.

Notes to the Consolidated annual report 2023 Consolidated financial statements A2A 41

Bad debts provision

The entry into force of IFRS 9 on January 1, 2018 has led to a change in the recognition of credit losses for the Group. The approach adopted is a forward-looking one, focusing on the probability of future losses on receivables, even in the absence of events that would suggest the need to write-down a credit position (Expected Losses).

The Company applies the IFRS 9 approach to the valuation of the bad debts provision, adopting different criteria depending on the characteristics of the receivables being analyzed. In particular, it is envisaged that receivables that are individually significant are subject to a specific analysis aimed at assessing their recoverability. The impairment of receivables not subject to specific valuation is instead determined by applying the business-specific unpaid ratio.

Amortization

Depreciation and amortization charges are a significant cost for the company. Non-current assets are depreciated or amortized on a straight-line basis over the useful lives of the assets. The useful lives of the company’s non-current assets are established by the directors, with the assistance of expert appraisers, when they are purchased. The company periodically reviews technological and sector changes, dismantling/closure charges and the recovery amount of assets to update their residual useful lives. This periodic update could lead to a change in the period of depreciation or amortization and hence also in the depreciation or amortization charge in future years.

Measurement of derivative instruments

The derivatives used are measured at fair value based on the forward market curve at the balance sheet date, if the underlying of the derivative is traded on markets that provide official, liquid forward prices. If the market does not provide forward prices, forecast price curves are used based on simulation models developed by Group companies internally. However, the actual results of derivatives could differ from the measurements made.

Serious turbulence on markets for the energy commodities traded by the company, as well fluctuations in exchange and interest rates, could lead to greater volatility in cash flows and in expected results.

Employee benefits

The calculations of expenses and the related liabilities, estimated by independent experts, are based on actuarial assumptions. The full effects of any changes in these actuarial assumptions are recognized in a specific equity reserve.

Business combinations

Accounting for business combinations entails allocating the difference between purchase cost and net carrying amount to the assets and liabilities of the acquired business. For the majority of assets and liabilities this difference is allocated by recognizing the assets and liabilities at fair value. If positive, the unallocated portion is recognized as goodwill. If negative, it is recognized in the income statement. A2A S.p.A. bases its allocations on available information and, for the more significant business combinations, on external appraisals.

Current taxes and future recovery of deferred tax assets

The uncertainties that exist regarding the way of applying certain tax regulations have led the company to taking an interpretative stance when providing for current taxes in the financial statements; such interpretations could be overturned by official clarifications on the part of the tax authorities.

Deferred tax assets are accounted for on the basis of the taxable profit expected to be available in future years. Assessing the expected taxable profit for the purpose of accounting for deferred taxation depends on factors that can vary over time, and may lead to significant effects on the measurement of deferred tax assets.

2

Notes

to the Consolidated annual report

2.1

General

information

2.2

Consolidated annual report

2.3

Financial statements

2.4

Basis of preparation

2.5

Changes in international accounting standards

2.6

Scope of consolidation

2.7

Consolidation policies and procedures

2.8

Accounting standards

and policies

2.9

Business Units

2.10

Results

sector by sector

2.11

Notes to the balance sheet

2.12

Net debt

2.13

Notes to the income statement

2.14

Earnings per share

2.15

Note on related party transactions

2.16

Significant

non-recurring events and transactions, pursuant to Consob Communication No. DEM/6064293 of July 28, 2006

2.17

Guarantees

and commitments with third parties

2.18

Other information

Notes to the Consolidated annual report 2023 Consolidated financial statements A2A 43

2.9

Business Units

The A2A Group operates in the production, sale and distribution of gas and electricity, district heating, environmental services and the integrated water cycle.

These sectors are in turn attributable to the “Business Units” specified in the following scheme identified following the reorganization made by management:

Generation and Trading

• Thermoelectric, hydroelectric and other renewable plants

• Energy Management

Market

• Sale of Electricity and Gas

• Energy efficiency

• Electric mobility

Waste

• Waste collection and street sweeping

• Treatment

• Disposal and energy recovery

Smart Infrastructures

• Electricity networks

• Gas networks

• Integrated water cycle

• District Heating services

• Heat management services

• Development and management of technological infrastructures for integrated digital services

• Public lighting

Corporate

• Corporate services

This breakdown into Business Units 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.

2

Notes

to the Consolidated annual report

2.1

General

information

2.2

Consolidated annual report

2.3

Financial statements

2.4

Basis of preparation

2.5

Changes in international accounting standards

2.6

Scope of consolidation

2.7

Consolidation policies and procedures

2.8

Accounting standards

and policies

2.9

Business Units

2.10

Results

sector by sector

2.11

Notes to the balance sheet

2.12

Net debt

2.13

Notes to the income statement

2.14

Earnings per share

2.15

Note on related party transactions

2.16

Significant

non-recurring events and transactions, pursuant to Consob Communication No. DEM/6064293 of July 28, 2006

2.17

Guarantees

and commitments with third parties

2.18

Other information

44 A2A Consolidated financial statements 2023 Notes to the Consolidated annual report

12 31 2023

millions of euro | Generation and Trading | Market | Waste | Smart Infrastructures | Corporate | Eliminations | Income statement
| 01 01 2023 12 31 2023 | 01 01 2023 12 31 2023 | 01 01 2023 12 31 2023 | 01 01 2023 12 31 2023 | 01 01 2023 12 31 2023 | 01 01 2023 12 31 2023 | 01 01 2023 12 31 2023
Revenues | 10,920 | 7,140 | 1,458 | 1,552 | 337 | (6,649) | 14,758
- of which inter-sector | 5,491 | 180 | 313 | 354 | 311 | (6,649) |
Operating expenses | (9,992) | (6,777) | (718) | (904) | (230) | 6,649 | (11,972)
- of which inter-sector | (417) | (5,624) | (126) | (413) | (69) | 6,649 |
Labour costs | (99) | (64) | (365) | (114) | (173) |  | (815)
Gross operating income - EBITDA | 829 | 299 | 375 | 534 | (66) |  | 1,971
% of Revenues | 7.6% | 4.2% | 25.7% | 34.4% | (19.1%) |  | 13.4%
Depreciation of tangible assets and amortization of intangible assets | (225) | (68) | (160) | (282) | (66) |  | (801)
Net write-downs of fixed assets | - | - | (1) | (1) | - |  | (2)
Provisions for risks | (50) | 5 | (9) | (11) | (3) |  | (68)
Provisions for credit risks | - | (69) | 1 | (10) | (5) |  | (83)
Net operating income - EBIT | 554 | 167 | 206 | 230 | (140) |  | 1,017
% of Revenues | 5.1% | 2.3% | 14.1% | 14.8% | (40.6%) |  | 6.9%
Result from non-recurring transactions |  |  |  |  |  |  | 2
Financial balance |  |  |  |  |  |  | (140)
Result before taxes |  |  |  |  |  |  | 879
Income taxes |  |  |  |  |  |  | (199)
Result after taxes from operating activities |  |  |  |  |  |  | 680
Net result from discontinued operations |  |  |  |  |  |  | 3
Minorities |  |  |  |  |  |  | (24)
Group result of the year |  |  |  |  |  |  | 659
Gross capex (1) | 332 | 92 | 214 | 631 | 110 | (3) | 1,376

(1) See the items “Capex” in the schedules on tangible and intangible assets presented in Notes 1 and 2 to the balance sheet.

2.10

Results sector by sector

Notes to the Consolidated annual report 2023 Consolidated financial statements A2A 45

12 31 2022 Restated

millions of euro

Generation and Trading

Market

Waste

Smart Infrastructures

Corporate

Eliminations

Income statement

01 01 2022

12 31 2022

Restated

01 01 2022

12 31 2022

Restated

01 01 2022

12 31 2022

Restated

01 01 2022

12 31 2022

Restated

01 01 2022

12 31 2022

Restated

01 01 2022

12 31 2022

Restated

01 01 2022

12 31 2022

Restated

Revenues

19,605

8,798

1,422

1,529

320

(8,518)

23,156

- of which inter-sector

7,144

358

348

374

294

(8,518)

Operating expenses

(18,960)

(8,615)

(710)

(905)

(221)

8,518

(20,893)

- of which inter-sector

(558)

(7,320)

(113)

(473)

(54)

8,518

Labour costs

(91)

(58)

(353)

(112)

(151)

(765)

Gross operating income - EBITDA

554

125

359

512

(52)

1,498

% of Revenues

2.8%

1.4%

25.2%

33.5%

(16.3%)

6.5%

Depreciation of tangible assets and amortization of intangible assets

(206)

(53)

(149)

(258)

(56)

(722)

Net write-downs of fixed assets

(1)

-

-

(1)

-

(2)

Provisions for risks

(30)

1

32

(3)

(2)

(2)

Provisions for credit risks

-

(88)

1

(2)

(1)

(90)

Net operating income - EBIT

317

(15)

243

248

(111)

682

% of Revenues

1.6%

(0.2%)

17.1%

16.2%

(34.7%)

2.9%

Result from non-recurring transactions

157

Financial balance

(88)

Result before taxes

751

Income taxes

(344)

Result after taxes from operating activities

407

Net result from discontinued operations

41

Minorities

(47)

Group result of the year

401

Gross capex (1)

272

71

264

560

73

-

1,240

(1) See the items “Capex” in the schedules on tangible and intangible assets presented in Notes 1 and 2 to the balance sheet.It should be noted that the values at December 31, 2022 have been restated to make them homogeneous with the values at December 31, 2023 by reclassifying the revenues, operating costs and depreciation and amortization related to the Water BU sold in 2023 under the item “Net result from discontinued operations/held for sale”.

2

Notes

to the Consolidated annual report

2.1

General

information

2.2

Consolidated annual report

2.3

Financial statements

2.4

Basis of preparation

2.5

Changes in international accounting standards

2.6

Scope of consolidation

2.7

Consolidation policies and procedures

2.8

Accounting standards

and policies

2.9

Business Units

2.10

Results

sector by sector

2.11

Notes to the balance sheet

2.12

Net debt

2.13

Notes to the income statement

2.14

Earnings per share

2.15

Note on related party transactions

2.16

Significant

non-recurring events and transactions, pursuant to Consob Communication No. DEM/6064293 of July 28, 2006

2.17

Guarantees

and commitments with third parties

2.18

Other information

46 A2A Consolidated financial statements 2023 Notes to the Consolidated annual report

12 31 2023

millions of euro | Generation and Trading | Market | Waste | Smart Infrastructures | Corporate | Eliminations and adjustments | Total Group
| 12 31 2023 | 12 31 2023 | 12 31 2023 | 12 31 2023 | 12 31 2023 | 12 31 2023 | 12 31 2023
Capital employed |  |  |  |  |  |  |
Net fixed capital | 2,758 | 237 | 1,650 | 4,584 | 4,237 | (3,899) | 9,567
- Tangible assets | 2,499 | 57 | 1,356 | 2,510 | 261 | (40) | 6,643
- Intangible assets | 423 | 388 | 608 | 2,105 | 106 | - | 3,630
- Shareholdings and other non-current financial assets | 9 | 14 | 29 | - | 3,890 | (3,859) | 83
- Other non-current assets/liabilities | 2 | (209) | 2 | (31) | 48 | - | (188)
- Deferred tax assets/liabilities | 236 | 15 | 35 | 100 | 78 | - | 464
- Provisions for risks, charges and liabilities for landfills | (391) | (20) | (334) | (57) | (26) | - | (828)
- Employee benefits | (20) | (8) | (46) | (43) | (120) | - | (237)
Net Working Capital and Other Current Assets/Liabilities | (574) | 586 | (30) | 27 | (85) | (6) | (82)
Net Working Capital | (852) | 623 | 13 | 81 | (85) | (26) | (246)
- Inventories | 208 | - | 46 | 64 | 1 | - | 319
- Trade receivables | 1,838 | 1,920 | 340 | 571 | 81 | (1,210) | 3,540
- Trade payables | (2,898) | (1,297) | (373) | (554) | (167) | 1,184 | (4,105)
Other current assets/liabilities | 278 | (37) | (43) | (54) | - | 20 | 164
- Other current assets/liabilities | 267 | (31) | (33) | (66) | 36 | 20 | 193
- Current tax assets/tax liabilities | 11 | (6) | (10) | 12 | (36) | - | (29)
Assets/Liabilities held for sale | - | - | - | - | - | - | -
Total capital employed | 2,184 | 823 | 1,620 | 4,611 | 4,152 | (3,905) | 9,485

Notes to the Consolidated annual report 2023 Consolidated financial statements A2A 47

12 31 2022

millions of euro | Generation and Trading | Market | Waste | Smart Infrastructures | Corporate | Eliminations and adjustments | Total Group
| 12 31 2022 12 | 31 2022 | 12 31 2022 | 12 31 2022 | 12 31 2022 | 12 31 2022 | 12 31 2022
Capital employed |  |  |  |  |  |  |
Net fixed capital | 2,549 | 108 | 1,582 | 4,354 | 4,125 | (3,869) | 8,849
- Tangible assets | 2,369 | 49 | 1,257 | 2,294 | 217 | (24) | 6,162
- Intangible assets | 379 | 368 | 620 | 2,049 | 99 | - | 3,515
- Shareholdings and other non-current financial assets | 4 | 21 | 29 | 1 | 3,873 | (3,846) | 82
- Other non-current assets/liabilities | 12 | (306) | - | (15) | 13 | - | (296)
- Deferred tax assets/liabilities | 133 | 9 | 36 | 117 | 67 | 1 | 363
- Provisions for risks, charges and liabilities for landfills | (325) | (25) | (312) | (46) | (21) | - | (729)
- Employee benefits | (23) | (8) | (48) | (46) | (123) | - | (248)
Net Working Capital and Other Current Assets/Liabilities | (668) | 741 | (113) | 102 | (180) | (6) | (124)
Net Working Capital | (917) | 700 | (66) | (28) | (65) | 68 | (308)
- Inventories | 445 | - | 40 | 49 | 2 | - | 536
- Trade receivables | 3,106 | 2,119 | 295 | 491 | 71 | (1,402) | 4,680
- Trade payables | (4,468) | (1,419) | (401) | (568) | (138) | 1,470 | (5,524)
Other current assets/liabilities | 249 | 41 | (47) | 130 | (115) | (74) | 184
- Other current assets/liabilities | 250 | 38 | (47) | 129 | (13) | (74) | 283
- Current tax assets/tax liabilities | (1) | 3 | - | 1 | (102) | - | (99)
Assets/Liabilities held for sale | - | - | - | - | - | - | -
Total capital employed | 1,881 | 849 | 1,469 | 4,456 | 3,945 | (3,875) | 8,725

2

Notes

to the Consolidated annual report

2.1

General

information

2.2

Consolidated annual report

2.3

Financial statements

2.4

Basis of preparation

2.5

Changes in international accounting standards

2.6

Scope of consolidation

2.7

Consolidation policies and procedures

2.8

Accounting standards

and policies

2.9

Business Units

2.10

Results

sector by sector

2.11

Notes to the balance sheet

2.12

Net debt

2.13

Notes to the income statement

2.14

Earnings per share

2.15

Note on related party transactions

2.16

Significant

non-recurring events and transactions, pursuant to Consob Communication No. DEM/6064293 of July 28, 2006

2.17

Guarantees

and commitments with third parties

2.18

Other information

48 A2A Consolidated financial statements 2023 Notes to the Consolidated annual report

2.11

Notes to the balance sheet

It is noted that the consolidation scope as at December 31, 2023 changed compared to December 31, 2022 for to the following operations:

• the acquisition by AEB S.p.A. of 90% of VGE 05 S.r.l., a company operating in the photovoltaic sector, with the consequent line-by-line consolidation;

• the acquisition by A2A Calore & Servizi S.r.l. of 100% of Termica Cologno S.r.l. with the consequent line-by-line consolidation;

• the incorporation on April 11, 2023 by A2A S.p.A. of A2A Services & Real Estate S.p.A. (formerly A2A Servizi S.r.l.), which is consolidated on a line-by-line basis, and contribution on October 1, 2023 by A2A S.p.A. (81.33%), Acinque S.p.A. (10.29%) and Ambiente Energia Brianza S.p.A. (8.38%), of a BU relating to employee, customer, supplier and building services;

• the acquisition by A2A Rinnovabili S.p.A. of 100% of Juwi Development 12 S.r.l. and Juwi Development 13 S.r.l. with consequent line-by-line consolidation;

• the incorporation of the companies R2R 01 S.r.l., R2R 02 S.r.l., R2R 03 S.r.l. and R2R 04 S.r.l., by R2R S.r.l., which owns 100% of it, consolidated on a line-by-line basis;

• the incorporation of the company Mogorella S.r.l. by A2A Rinnovabili S.p.A., which owns 100% of it, consolidated on a line-by-line basis;

• the sale by A2A Ambiente of 80% of Bioenergia Gualdo S.r.l., 55% of Energia Anagni S.r.l. and its 100% owned subsidiary Bionergia Roccasecca S.r.l., with the resulting exit from the scope of consolidation.

Notes to the Consolidated annual report 2023 Consolidated financial statements A2A 49

Assets

Non-current assets

1) Tangible assets

millions of euro

Balance at

12 31 2022

First-time consolid. effect

Changes

Balance at

12 31 2023

Capex

Other

changes

Disposals and sales

Write-downs/Reversal

Amort.

Total

changes

Land

153

8

(2)

(5)

(1)

153

Buildings

574

14

53

(4)

(34)

29

603

Plant and machinery

4,125

284

619

(4)

(378)

521

4,646

Industrial and commercial equipment

57

18

(2)

(11)

5

62

Other assets

142

27

21

(2)

(34)

12

154

Landfills

14

2

(2)

(2)

(2)

12

Construction in progress and advances

800

556

(665)

(2)

(111)

689

Leasehold improvements

142

40

(29)

11

153

Assets for rights of use

155

50

(34)

16

171

Total

6,162

-

947

76

(17)

(2)

(523)

481

6,643

of which:

Historical cost

14,112

947

114

(78)

983

15,095

Accumulated amortisation

(7,115)

(38)

61

(523)

(500)

(7,615)

Write-downs

(835)

(2)

(2)

(837)

“Tangible assets” amounted to 6,643 million euro at December 31, 2023 (6,162 million euro at December 31, 2022).

The changes in the year recorded an increase of 481 million euro as follows:

• increase of 947 million euro for capex in the year as further described below;

• decrease of 523 million euro for the depreciation charge for the year;

• net increase for other changes of 76 million due to the increase in rights of use in application of the IFRS16 accounting standard for 50 million euro, to the increase in the decommissioning provision and landfill closure and post-closure expenses for 45 million euro, to the decrease of 6 million euro following reclassifications to other financial statements items, the decrease of 6 million euro for tax credits for investments in new capital goods provided for by Law no. 178/2020, art.1 paragraph 1051, to decrease of 5 million euro due to the registration of contributions on investments from previous years, the decrease of 2 million euro following the reclassification among assets intended for the sale of some renewable assets;

• decrease of 17 million euro arising from disposals in the year, net of accumulated depreciation;

• decrease of 1 million euro as a result of write-downs made during the year on assets no longer considered functional to the A2A Group’s business.

2

Notes

to the Consolidated annual report

2.1

General

information

2.2

Consolidated annual report

2.3

Financial statements

2.4

Basis of preparation

2.5

Changes in international accounting standards

2.6

Scope of consolidation

2.7

Consolidation policies and procedures

2.8

Accounting standards

and policies

2.9

Business Units

2.10

Results

sector by sector

2.11

Notes to the balance sheet

2.12

Net debt

2.13

Notes to the income statement

2.14

Earnings per share

2.15

Note on related party transactions

2.16

Significant

non-recurring events and transactions, pursuant to Consob Communication No. DEM/6064293 of July 28, 2006

2.17

Guarantees

and commitments with third parties

2.18

Other information

50 A2A Consolidated financial statements 2023 Notes to the Consolidated annual report

Capex may be analyzed as follows

• for the Smart Infrastructures Business Unit, capex amounted to 355 million euro and concerned: for 221 million euro the development and maintenance of electricity distribution systems, the expansion and renovation of the medium and low voltage network, as well as the installation of new electronic meters; for 102 million euro the development of district heating networks; for 13 million euro the Efficiency plan with new LED technology light sources, for 8 million euro interventions on the electric vehicle charging network, for 5 million euro interventions on the gas transport network, for 4 million euro interventions on the network and fiber optic equipment, as well as for 2 million euro the purchase of specific equipment for the gas network;

• for the Generation and Trading Business Unit, the increase was 316 million euro and concerned: 246 million euro for investments in thermoelectric plants, 47 million euro for investments in renewable energy plants, as well as 23 million euro for investments in hydroelectric plants;

• for the Waste Business Unit, capex amounted to 211 million euro and refer to: 174 million euro for work on the Group’s waste treatment and disposal plants; 25 million euro for the acquisition and set-up of mobile means for waste collection and 12 million euro for the acquisition of collection facilities;

• for the Corporate Business Unit, investments, amounting to 57 million euro, mainly concerned, for 53 million euro, interventions on buildings in the areas of Milan, Brescia, Como, Monza Brianza, Lecco, Cremona and Rome, as well as for 4 million euro the implementation of telecommunications equipment;

• for the Market Business Unit, the increase was 8 million euro, mainly due to the energy efficiency plan at customers.

The Group is continuing to analyze the impact of regulatory amendments and confirms, to date, that the amounts recognized in the financial statements for dry and wet works related to hydroelectric concessions are prudent and recoverable also in accordance with the new regulations.

Tangible assets include “Assets for rights of use” totaling 171 million euro (155 million euro at December 31, 2022), recognized in accordance with IFRS16 and for which the outstanding payable to lessors at December 31, 2023 amounted to 177 million euro (152 million euro at December 31, 2022). Below is a breakdown of “Assets for rights of use” deriving from operating and financial leases at December 31, 2023:

Assets consisting of rights of use

millions of euro

Balance at

12 31 2022

First-time consolid.

effect

2023

Changes

Balance at

12 31 2023

Other changes

Amort.

Tot. Changes

Land

31

5

(6)

(1)

30

Buildings

50

21

(12)

9

59

Plant and machinery

3

2

(1)

1

4

Industrial, commercial equipment and other goods

35

3

(4)

(1)

34

Vehicles

36

19

(11)

8

44

Total

155

-

50

(34)

16

171

It is specified that the Group has made use of the option provided for in paragraph 6 of the standard not to apply the provisions of paragraphs 22 to 49 of the standard to the following categories:

a) Short-term leases;

b) Leases whose underlying assets are of low value.

Notes to the Consolidated annual report 2023 Consolidated financial statements A2A 51

2) Intangible assets

millions of euro

Balance at

12 31 2022

First-time consolid. effect

Changes

Balance at

12 31 2023

Capex

Recl./Other changes

Disp./ Sales

Write-downs

Amort.

Total

changes

Industrial patents and intellectual property rights

51

17

8

(27)

(2)

49

Concessions, licences, trademarks and similar rights

2,009

17

296

29

(41)

(187)

97

2,123

Goodwill

844

2

846

Assets in progress

155

2

67

(41)

(44)

(18)

139

Other intangible assets

456

1

49

31

(64)

16

473

Total

3,515

22

429

27

(85)

-

(278)

93

3,630

“Intangible assets” as at December 31, 2023 amounted to 3,630 million euro (3,515 million euro as at December 31, 2022) and included the effect of first-time consolidation of 22 million euro for the acquisition of VGE 05 S.r.l., Juwi Development 12 S.r.l., Juwi Development 13 S.r.l. and Termica Cologno S.r.l..

Through the application of IFRIC 12, from financial year 2010 intangible assets also include assets in concession, which relate to gas distribution.

The changes for the year, net of the above effect, recorded an overall increase of 93 million euro as follows:

• increase of 429 million euro for capex in the year as further described below;

• decrease of 278 million euro for the depreciation charge for the year;

• decrease of 85 million euro due to disposals for the year, net of the related accumulated depreciation, of which 81 million euro due to the sale of assets related to the integrated water service of ASVT S.p.A. to Acque Bresciane;

• net increase of 27 million euro for other changes, due to the 21 million euro increase in environmental certificates of the industrial portfolio and the 6 million euro increase for reclassifications from other financial statements items.

Capex of “Intangible assets” relate to the following:

• for the Smart Infrastructures Business Unit, investments amounting to 273 million euro are due to: development and maintenance of gas distribution systems and the replacement of underground medium and low pressure pipes for 146 million euro; works on the water transport and distribution network, sewerage networks and purification plants for 96 million euro, implementation of information systems for 30 million euro, as well as design, research and development costs for the heat plants of the areas of Milan, Brescia and Bergamo for 1 million euro;

• for the Market Business Unit, the increase is equal to 84 million euro due for 43 million euro to the capitalization of costs incurred for the management of contracts with customers following the application of the IAS IFRS15 standard and for 41 million euro to the implementation of information systems;

• for the Corporate Business Unit, the increase was 53 million euro mainly due to the implementation of information systems;

• for the Generation and Trading Business Unit, the increase was 16 million euro mainly due to the implementation of information systems;

• for the Waste Business Unit, capex amounted to 3 million euro mainly due to the implementation of information systems.

2

Notes

to the Consolidated annual report

2.1

General

information

2.2

Consolidated annual report

2.3

Financial statements

2.4

Basis of preparation

2.5

Changes in international accounting standards

2.6

Scope of consolidation

2.7

Consolidation policies and procedures

2.8

Accounting standards

and policies

2.9

Business Units

2.10

Results

sector by sector

2.11

Notes to the balance sheet

2.12

Net debt

2.13

Notes to the income statement

2.14

Earnings per share

2.15

Note on related party transactions

2.16

Significant

non-recurring events and transactions, pursuant to Consob Communication No. DEM/6064293 of July 28, 2006

2.17

Guarantees

and commitments with third parties

2.18

Other information

52 A2A Consolidated financial statements 2023 Notes to the Consolidated annual report

The item “Other intangible assets” amounted to 473 million euro at December 31, 2023 (456 million euro at December 31, 2022) and includes:

• 299 million euro for Customer lists related to the acquisition of customer portfolios by Group companies. These values are amortized based on an estimate of the benefits that will arise in future years, taking into account indicators such as the retention rate and churn rate relating to specific types of customers. In particular, the amount present in the financial statements is attributable for 99 million euro to the company A2A Ambiente S.p.A., for 82 million euro to the Acinque Group, for 67 million euro to the company A2A Energia S.p.A., for 34 million euro to the AEB Group, for 8 million euro to Asm Energia S.p.A., for 7 million euro to the company Yada Energia S.r.l. and for 2 million euro to A2A S.p.A., Aprica S.p.A. and LumEnergia S.p.A.;

• 88 million euro for PPA Società Rinnovabili: the increase in value is linked to the existing agreement with the Energy Services Manager, which allows the affiliated companies to benefit from incentive tariffs for a period of 20 years, which are considerably higher than those existing on the market;

• 44 million euro relating mainly to deferred charges and costs and surface rights and/or easements;

• 8 million euro for PPA of the Agripower Group: the increase in value is linked to the existing agreement with the Energy Services Manager, which allows the affiliated companies to benefit from incentive tariffs, which are considerably higher than those existing on the market;

• 34 million euro for Environmental Certificates: emission quotas and White Certificates (Industrial portfolio).

Impairment testing in accordance with IAS 36 on the carrying amount of goodwill and tangible and intangible assets

The objective of the impairment test required by IAS 36 is to ensure that the carrying amount of assets does not exceed their recoverable value.

Impairment testing is carried out whenever there is an indication that an asset may be impaired, while goodwill, which is not amortized on a systematic basis, must be tested for impairment at least on an annual basis, regardless of whether there is any indication of impairment.

A Cash Generating Unit (CGU) is defined as the smallest identifiable group of assets that generates cash inflows that are largely independent of the cash inflows from other assets or groups of assets. The definition of a CGU depends essentially on the type of activity carried out by the CGU, the business sector in which it operates and a company’s organizational structure.

The impairment test consists of comparing the carrying amount with an estimate of the recoverable value of that Cash Generating Unit. The recoverable value of Cash Generating Unit is the higher of its fair value less costs to sell and its value in use.

The fair value, net of selling costs, of a Cash Generating Unit is the amount, based on the best information available, that would be obtainable from the sale of the unit in a bargained transaction between knowledgeable, willing parties.

For “value in use” of a Cash Generating Unit, account was taken, for non-regulated businesses, of the current value of the estimated future cash flows, which are supposed to derive from the continuous use of the Cash Generating Unit and its disposal at the end of its useful life. For regulated businesses, in the specific case for the “A2a Reti Gas” CGU on the other hand, the value in use was defined on the basis of the estimated VIR (Residual Industrial Value).

The projection of the cash flows relating to each Cash Generating Unit was carried out by the company management based on reasonable and sustainable assumptions, such as to reflect the value of the Cash Generating Unit in its current conditions and with a view to maintaining normal company operating conditions.

On March 11, 2024, the A2A Board of Directors approved a long-term plan, 2024-2035.

In particular, the Plan is based on two main trends, Circular Economy and Energy Transition, to which all the Group’s Business Units contribute: in the coming years, objectives will be pursued mainly aimed at recovering waste heat, closing the waste cycle, decarbonization and electrification of consumption.

Notes to the Consolidated annual report 2023 Consolidated financial statements A2A 53

The main targets identified in the 2024-2035 Strategic Plan are:

• 22 billion euro of investments, of which:

6 billion euro for the Circular Economy

16 billion euro for Energy Transition

• CAPEX permissible with respect to the European Taxonomy: 78% average over the Plan period

• EBITDA: 2.2 billion euro by 2026 and more than 3.2 billion euro at the end of the Plan period

• Ordinary net profit equal to 0.6 billion euro in 2026 and greater than 1 billion euro by 2035

• increased installed capacity from renewable sources

• NFP/EBITDA less than 2.8x over plan

• the Group’s commitment to maintain its current rating is confirmed.

For the sole purpose of the impairment test, the 2024-2035 Strategic Plan, in line with the provisions of IAS 36 paragraph 33 1, has been appropriately amended to exclude the impact of future improvements and optimizations, as described in more detail below. In particular, the calculation of value in use excluded EBITDA and CAPEX amounts related to extraordinary transactions/M&A and developments in the pipeline.

The Energy Scenario (PUN, PSV and EUA and other quantities relating to energy markets) and the assumptions relating to Climate Change (hydraulicity and degree days) underlying the business plan already reflect the scenarios that Management considers most probable. Consistent with the need to assess possible impacts from Climate Change and the Energy Scenario, it was decided to adopt a sensitivity analysis for the CGUs most exposed to the macroeconomic variables related to Hydraulics, Degree Days and the Energy Scenario (CCGT Generation, Renewable Generation and Heat).

It is important to state at the outset that the sensitivity analyses were carried out considering all other underlying assumptions of the Plan unchanged. The A2A Group, however, has a mix of alternative production sources that can be variously and alternatively used to better adapt to external conditions, including price conditions, as they arise. It is therefore easy to see that, for example, in the event of particularly low prices, one might decide to only activate CCGT plants during peak hours of particularly favorable prices, or, activate hydroelectric plants offering higher margins. Therefore, through such appropriate production “switches” that the Group pursues, potential negative scenario effects can be mitigated, and in some cases avoided.

For more information, see Climate Change.

The technical support for the impairment test was entrusted to an independent expert who, among other things, analyzed the relevant components and hypotheses of the economic-financial projections drawn up by the Group’s management, carried out comparisons and checks regarding the correctness of the sources and hypotheses used, developed the hypotheses regarding the growth rate beyond the Plan horizon for the determination of the normalized flows up to the end of the useful life of the plants.

Finally, the independent expert estimated the discount rate consistent with the cash flows considered, i.e. post-tax weighted average cost of capital (WACC). In detail, the WACC rate used was estimated according to the criteria widely used in valuation practice and in line with last year’s impairment exercise in order to reflect current market valuations with reference to the current value of money, country risk and the specific risks associated with the activity.

1 which requires “b) basing cash flow projections on the most recent budget/forecast approved by management, however excluding any future cash inflows or outflows estimated to arise from future restructuring or improvements or optimizations in business performance. Projections based on these budgets/forecasts must cover a maximum period of five years, unless a longer time frame can be justified”.

2

Notes

to the Consolidated annual report

2.1

General

information

2.2

Consolidated annual report

2.3

Financial statements

2.4

Basis of preparation

2.5

Changes in international accounting standards

2.6

Scope of consolidation

2.7

Consolidation policies and procedures

2.8

Accounting standards

and policies

2.9

Business Units

2.10

Results

sector by sector

2.11

Notes to the balance sheet

2.12

Net debt

2.13

Notes to the income statement

2.14

Earnings per share

2.15

Note on related party transactions

2.16

Significant

non-recurring events and transactions, pursuant to Consob Communication No. DEM/6064293 of July 28, 2006

2.17

Guarantees

and commitments with third parties

2.18

Other information

54 A2A Consolidated financial statements 2023 Notes to the Consolidated annual report

Goodwill

At December 31, 2023, goodwill amounted to 846 million euro:

millions of euro

Balance at

12 31 2022

Changes

Balance at

12 31 2023

First-time consolid.acquisitions

2023

PPA Effect

Reclass./ Other changes

Write-downs

Total

changes

CGU:

A2A Reti Elettriche

A2A Ambiente

473

-

473

A2A Reti Gas

41

-

41

A2A Gas

74

-

74

A2A Calore

22

2

2

24

A2A Vendita Energia Elettrica

7

-

7

A2A Generazione Rinnovabili

227

-

227

Total

844

-

-

2

-

2

846

First-time consolidation effect

Termica Cologno S.r.l.

2

(2)

-

-

Total

-

2

-

(2)

-

-

-

Total Goodwill

844

2

-

-

-

2

846

During the year 2023, the A2A Group completed the following transaction:

• the acquisition by A2A Calore & Servizi S.r.l. of 100% of Termica Cologno S.r.l. company that owns a cogeneration thermoelectric power plant, which resulted in the recognition of goodwill in the amount of 2 million euro. The acquisition falls within the scope of application of IFRS3 and at December 31, 2023, goodwill was allocated to the Calore CGU.

Since goodwill does not generate independent cash flows and cannot be sold separately, the impairment testing of recognized goodwill is carried out in a residual manner by referring to the Cash Generating Unit to which it may be reasonably allocated.

CGU with Goodwill

Value in millions

of euro at

12 31 2023

Recoverable Value

WACC 2023

post-tax

(1)

Growth

rate g

2023

Balance scenario (2)

WACC of reference (3)

Growth

rate g

A2A Ambiente

473

Use value

7.1%

0.0%

9.7%

0.0%

A2A Reti Gas

41

Use value

n.a.

0.0%

n.a.

n.a.

A2A Gas

74

Use value

7.0%

0.0%

34.6%

0.0%

A2A Generazione Rinnovabili

227

Use value

6.5%

0.0%

19.8%

0.0%

A2A Calore

24

Use value

5.7%

0.0%

5.9%

0.0%

A2A Vendita Energia Elettrica

7

Use value

7.0%

0.0%

16.9%

0.0%

Total

846

(1) Nominal post-tax discount rate applied to future cash flows.

(2) Rates resulting from the sensitivity assessment made by the expert in order to achieve balance between the use values and carrying amounts subjected to impairment testing.

(3) The simulation was performed on the WACC rate of reference, with the simultaneous adjustment of the terminal flow rate (if applicable).

Notes to the Consolidated annual report 2023 Consolidated financial statements A2A 55

CGU with Goodwill

Value in millions

of euro at

12 31 2022

Recoverable Value

WACC 2022

post-tax

(1)

Growth

rate g

2022

Balance scenario (2)

WACC of reference (3)

Growth

rate g

A2A Ambiente

473

Use value

6.8%

0.0%

10.1%

0.0%

A2A Reti gas

41

Use value

5.2%

0.0%

6.6%

0.0%

A2A Gas

74

Use value

6.7%

0.0%

8.6%

0.0%

A2A Generazione Rinnovabili

66

Use value

6.7%

0.0%

12.9%

0.0%

A2A Calore

22

Use value

6.2%

0.0%

6.3%

0.0%

A2A Vendita Energia Elettrica

7

Use value

6.7%

0.0%

8.2%

0.0%

Total

683

(1) Nominal post-tax discount rate applied to future cash flows.

(2) Rates resulting from the sensitivity assessment made by the expert in order to achieve balance between the use values and carrying amounts subjected to impairment testing.

(3) The simulation was performed on the WACC rate of reference, with the simultaneous adjustment of the terminal flow rate (if applicable).

With reference to the above CGUs, the impairment test was performed as follows:

• for the “A2A Ambiente” CGUs, it was conducted by comparing the recoverable value determined as fair-weighted average of the values in use of the definite useful life scenario and the indefinite useful life scenario;

• for the “A2A Reti Gas” CGU, the analysis was conducted by comparing the recoverable value determined on the basis of the VIR estimate;

• for the “A2A Calore” CGU, “A2A Gas” CGU, “Generazione Rinnovabili” CGU and the “Vendita Energia Elettrica” CGU, the analysis was conducted by comparing the recoverable value determined on the basis of the indefinite useful life scenario.

“A2A Ambiente” Cash Generating Unit

The “A2A Ambiente” Cash Generating Unit operates in the solid urban waste segment and in the special and hazardous waste segment, performs collection and street sweeping activities in the municipalities of Milan, Brescia, Bergamo, Lodi and Como and in a number of municipalities of the relative provinces, is the owner of waste-to-energy and industrial plants (in the municipalities of Milan, Brescia, Bergamo, Filago, Corteolona, Cremona, Parona and Como) and manages the Acerra waste-to-energy plant. It also has several waste treatment plants and a number of landfills.

The A2A Group’s Consolidated Financial Statements at December 31, 2023 include goodwill of 473 million euro associated with this CGU. Of this goodwill, 227 million euro arises from the acquisition of the Ecodeco Group between 2005 and 2008 (the former Ecodeco Cash Generating Unit), 5 million euro from the merger between ASM Brescia S.p.A. (subsequently incorporated into AEM S.p.A., with simultaneous change of its name into A2A S.p.A.) and BAS S.p.A., 30 million euro as the residual value of the goodwill of the former LGH Group at the end of the PPA process for the then acquisition of 51% of the Group, 2 million euro to the allocation to the CGU in 2019 of a residual portion of the goodwill recorded following the consolidation of the Acinque Group and 5 million euro as residual goodwill at the conclusion of the PPA activity for the acquisition of the company Electrometal S.r.l. (merged by incorporation at December 31, 2023 into A2A Ambiente S.p.A.) and 204 million euro as goodwill recognized upon completion of the PPA process for the acquisition of TecnoA (merged by incorporation at December 31, 2023 into A2A Ambiente S.p.A.).

In determining the value in use, an average of an indefinite-life and a definite-life scenario was considered, also prudentially, in line with previous years.

No impairment loss was noted during the impairment testing as the recoverable value significantly exceeds the net capital employed including the value of goodwill recorded.

2

Notes

to the Consolidated annual report

2.1

General

information

2.2

Consolidated annual report

2.3

Financial statements

2.4

Basis of preparation

2.5

Changes in international accounting standards

2.6

Scope of consolidation

2.7

Consolidation policies and procedures

2.8

Accounting standards

and policies

2.9

Business Units

2.10

Results

sector by sector

2.11

Notes to the balance sheet

2.12

Net debt

2.13

Notes to the income statement

2.14

Earnings per share

2.15

Note on related party transactions

2.16

Significant

non-recurring events and transactions, pursuant to Consob Communication No. DEM/6064293 of July 28, 2006

2.17

Guarantees

and commitments with third parties

2.18

Other information

56 A2A Consolidated financial statements 2023 Notes to the Consolidated annual report

Finally, in addition to the sensitivity analyses on the equilibrium scenarios, highlighted in the tables above, sensitivity analyses were carried out which showed, holding all other factors constant, a 0.25% increase/decrease in WACC confirms recoverable values significantly higher than book values.

“A2A Reti Gas” Cash Generating Unit

The “A2A Reti Gas” CGU includes the Group’s gas distribution and metering activities. In particular, it deals with the design and construction of gas networks, their operation and maintenance, as well as the management of requests for connection and quality control and continuity of service.

The goodwill of 41 million euro associated to the “A2A Reti Gas” CGU arises mainly from various acquisitions made by A2A Reti Gas S.p.A. (now Unareti S.p.A.) over the last few years, relating to companies operating as gas distributors in about 200 Italian municipalities (the activity is mainly concentrated in Lombardy and Piedmont) for 38 million euro as well as 3 million euro from the allocation to the CGU in 2019 of a portion of the goodwill recorded following the consolidation of the Acinque Group.

The recoverable value of the goodwill attributed to the “A2A Reti Gas” Cash Generating Unit was determined on the basis of the VIR estimate, considering the value of the RAB (Regulatory Asset Base) as the starting point.

No impairment loss was noted during the impairment testing as the recoverable value exceeds the net capital employed including the value of goodwill recorded.

“A2A Gas” Cash Generating Unit

The goodwill arising from the consolidation of the “A2A Gas” Business Unit, amounting to 74 million euro, refers to the area involved in selling gas to end customers (residential and business) and wholesalers and was impairment tested. It should be noted that the “A2A Gas” Cash Generating Unit consists of the portion of goodwill arising from the merger between BAS S.p.A. and A2A S.p.A. for 7 million euro, for 24 million euro of the allocation to the CGU in 2019 of a portion of the goodwill recorded following the consolidation of the Acinque Group, and for 43 million euro of a portion of goodwill allocated to the CGU following the consolidation of the AEB Group.

The recoverable value of the goodwill attributed to the CGU during the impairment test, was determined by considering an indefinite useful life scenario.

No impairment loss was noted during the impairment testing as the recoverable value exceeds the net capital employed including the value of goodwill recorded.

Finally, in addition to the sensitivity analyses on the equilibrium scenarios, highlighted in the tables above, sensitivity analyses were carried out which showed, holding all other factors constant, a 0.25% increase/decrease in WACC confirms recoverable values significantly higher than book values.

“A2A Calore” Cash Generating Unit

The goodwill arising from the consolidation of the “A2A Calore” Business Unit, amounting to 24 million euro, is held by a number of companies of the A2A Group active in the production, distribution and sale of district heating. In particular, the goodwill of the Cash Generating Unit in question is mainly composed of 18 million euro of a part of the goodwill

arising from the merger between BAS S.p.A. and A2A S.p.A., 1 million euro for the allocation to the CGU in 2019 of a portion of the goodwill recorded following the consolidation of the Acinque Group and 2 million euro to the allocation to the CGU of the goodwill generated for the acquisition during the financial year of the company Termica Cologno S.r.l..

The recoverable value of goodwill attributed to the “A2A Calore” CGU during the impairment test, was determined on the basis of an indefinite useful life scenario.

No impairment loss was noted during the impairment testing as the recoverable value exceeds the net capital employed including the value of goodwill recorded.

Two sensitivity analyses were performed for said CGU: the one related to the energy scenario and the one on average temperature (Degree Days 2).

2 The Degree Day (DD) of a location is the sum over all days in a conventional annual heating period of only the daily positive differences between the temperature (T0), conventionally set for each country, and the daily average outdoor temperature of hourly data (Te). Presidential Decree No. 412 of August 26, 1993 conventionally sets the ambient temperature T0 at 20 °C.

Notes to the Consolidated annual report 2023 Consolidated financial statements A2A 57

With regard to the energy scenario, the analysis was based on volatility simulations from historical data. Specifically, volatilities were calculated by simulating - for each commodity and for each month in the period between 2024 and 2035 - 10,000 price scenarios using a Monte Carlo generator and a stochastic process known as Geometric Brownian Motion (GBM). These volatilities formed the basis for determining the macroeconomic price scenario used for sensitivity purposes.

The sensitivity results are within a range of -45 million euro and +86 million euro.

In relation to the Degree Days, as already described in the report on operations, the effects were estimated starting from the variation trends in the average temperatures of the autumn and winter periods (minimum, average and maximum variations) determined by ISPRA through statistical processing on historical data ( source: SNPA System Report/36 2023).

For the purposes of the analysis, the Group therefore positioned itself on the worst-case scenario (reduction of 46 average Degree Days over the Plan period). This assumption of a progressive increase in the average temperature of the reference areas, which are particularly ‘stressed’, would lead to a write-down of -28 million euro.

Finally, in addition to the sensitivity analyses on the equilibrium scenarios, highlighted in the tables above, sensitivity analyses were carried out, which showed, holding all other factors constant, a 0.25% increase/decrease in WACC leads to values ranging from -26 million euro to +70 million euro.

“Generazione Rinnovabili” Cash Generating Unit

The activity of the “Generazione Rinnovabili”’ Cash Generating Unit relates to the management of the Group’s hydroelectric, photovoltaic and wind power plants and the consequent production of electricity. The total installed capacity is about 2.2 GW.

The goodwill arising from the consolidation of the “Generazione Rinnovabili’’ Cash Generating Unit, amounting to 227 million euro, refers for 65 million euro to the allocation of goodwill generated from the acquisition of the Octopus Renewables portfolio, for 17 million euro to the allocation of goodwill, upon completion of the PPA process, for the acquisition of the Rovere portfolio, for 144 million euro to the goodwill allocated for the acquisition of the Ellisse portfolio, and for the remaining part to the allocation to the CGU of a portion of the goodwill recognized as a result of the consolidation of the Acinque Group, carried out in 2019.

The recoverable value of the goodwill attributed to the CGU during the impairment test, was determined by considering an indefinite useful life scenario.

No impairment loss was noted during the impairment testing as the recoverable value exceeds the net capital employed including the value of goodwill recorded.

Two sensitivity analyses were performed for the CGU: energy scenario and hydraulicity.

Regarding the energy scenario, as mentioned above. The sensitivity results confirm the full recoverability of the assets recorded in the financial statements.

With regard to hydroelectricity, the impacts on hydroelectricity generation were calculated from analyses of the Group’s historical data, per individual hydroelectric core. Said analyses identified the year 2022 as the worst in terms of production. For the purposes of sensitivity, it was also assumed that such a worst-case scenario could occur twice during the plan period: this lower hydraulicity was reflected equally over all plan years.

Finally, in addition to the sensitivity analyses on the equilibrium scenarios, highlighted in the tables above, sensitivity analyses were carried out which showed, holding all other factors constant, a 0.25% increase/decrease in WACC confirms recoverable values higher than book values.

2

Notes

to the Consolidated annual report

2.1

General

information

2.2

Consolidated annual report

2.3

Financial statements

2.4

Basis of preparation

2.5

Changes in international accounting standards

2.6

Scope of consolidation

2.7

Consolidation policies and procedures

2.8

Accounting standards

and policies

2.9

Business Units

2.10

Results

sector by sector

2.11

Notes to the balance sheet

2.12

Net debt

2.13

Notes to the income statement

2.14

Earnings per share

2.15

Note on related party transactions

2.16

Significant

non-recurring events and transactions, pursuant to Consob Communication No. DEM/6064293 of July 28, 2006

2.17

Guarantees

and commitments with third parties

2.18

Other information

58 A2A Consolidated financial statements 2023 Notes to the Consolidated annual report

“Vendita Energia Elettrica” Cash Generating Unit

The “Vendita Energia Elettrica” Cash Generating Unit is active in the retail sale of electricity to customers in the free market and does not include the activities of the Greater Protection service 3.

The goodwill arising from the consolidation of the “Vendita Energia Elettrica” Cash Generating Unit, amounting to 7 million euro, refers to the allocation to the CGU of a portion of the goodwill recorded following the consolidation of the AEB Group, the results of which were consolidated in 2020.

The recoverable value of the goodwill attributed to the CGU during the impairment test, was determined by considering an indefinite useful life scenario.

No impairment loss was noted during the impairment testing as the recoverable value exceeds the net capital employed including the value of goodwill recorded.

Finally, in addition to the sensitivity analyses on the equilibrium scenarios, highlighted in the tables above, sensitivity analyses were carried out which showed, holding all other factors constant, a 0.25% increase/decrease in WACC confirms recoverable values higher than book values.

CGU

CGU

12 31 2023

Recoverable Value

WACC 2023

post-tax

(1)

Balance scenario (2)

WACC of reference (3)

Generazione Termoelettrica CGU

Use value

7.3%

8.1%

CGU

12 31 2022

Recoverable Value

WACC 2022

post-tax

(1)

Balance scenario (2)

WACC of reference (3)

Generazione Termoelettrica CGU

Use value

7.1%

7.1%

(1) Nominal post-tax discount rate applied to future cash flows.

(2) Rates resulting from the sensitivity assessment made by the expert in order to achieve balance between the use values and carrying amounts subjected to impairment testing.

(3) The simulation was performed on the WACC rate of reference, with the simultaneous adjustment of the terminal flow rate (if applicable).

“Generazione Termoelettrica” Cash Generating Unit

Although the Cash Generating Unit “Thermoelectric Generation” does not include any goodwill, it was subjected to an impairment test because its headroom at December 31, 2022 was small.

The activity of the “Generazione Termoelettrica” Cash Generating Unit is aimed at the production of electricity from gas-fired thermoelectric power plants (CCGT). The A2A Group operates CCGT plants with a total installed capacity of 5.9 MW. This CGU had been impaired in previous years.

The value in use of this CGU was determined from a single indefinite useful life scenario.

For the purposes of the impairment test on the carrying amount of tangible assets relating to the Generazione Termoelettrica CGU, the Enterprise Value of the assets (Value in Use) was compared with the relative Carrying Amount at December 31, 2023.

No impairment loss was identified during the impairment test as the recoverable value is higher than the net capital employed.

3 The Greater Protection service applies to customers with low-voltage domestic utilities, utilities for other non-domestic uses and public lighting (in other words, small businesses connected to a low voltage supply, with less than 50 employees and annual turnover < 10 million euro). This category includes all users who selected the so-called Free Market and ended up without a supplier. The Greater Protection service guarantees the supply of electricity at prices established by ARERA (Regulation Authority for Energy Networks and Environment).

Notes to the Consolidated annual report 2023 Consolidated financial statements A2A 59

An energy scenario sensitivity analysis was carried out: the analysis was based on Monte Carlo method simulations through the generation of 10,000 price scenarios on the three commodities (PUN, PSV, EUA) that influence the margins of gas-fired combined cycle plants. The sensitivity results are within a range of -81 million euro and +322 million euro.

Specifically, volatilities were calculated by simulating - for each commodity and for each month in the period between 2024 and 2035 - 10,000 price scenarios using a Monte Carlo generator and a stochastic process known as Geometric Brownian Motion (GBM). These volatilities formed the basis for determining the macroeconomic price scenario used for sensitivity purposes.

Finally, in addition to the sensitivity analyses on the equilibrium scenarios, highlighted in the tables above, sensitivity analyses were carried out which showed, holding all other factors constant, a 0.25% increase/decrease in WACC confirms recoverable values higher than book values.

3) Shareholdings and other non-current financial assets

millions of euro

Balance at

12 31 2022

First-time consolidation effect

acquisitions 2023

Changes

Balance at

12 31 2023

of which included in the NFP

12 31 2022

12 31 2023

Shareholdings carried according to equity method

33

(3)

30

-

-

Other non-current financial assets

70

(3)

67

21

14

Total shareholdings and other non-current financial assets

103

-

(6)

97

21

14

The following table provides details of the changes in the value of “Shareholdings carried according to equity method”:

Shareholdings carried according to equity method

millions of euro

Total

Balance at December 31, 2022

33

First-time consolidation effect acquisitions 2023

Changes:

- acquisitions and capital increases

- valuations at equity

2

- write-downs

(2)

- reversals

- dividends received from shareholdings in companies carried at equity

(1)

- sales and decreases

(2)

- other changes

- reclassifications

Total changes

(3)

Balance at December 31, 2023

30

The value of “Shareholdings carried according to equity method” amounted to 30 million euro, down 3 million euro from the previous year as a result of the sale of 26% of the shareholding in Suncity Group for 2 million euro and the collection of dividends of 1 million euro.

The details of the shareholdings are provided in annex no. 2 “List of shareholdings carried according to equity method”.

2

Notes

to the Consolidated annual report

2.1

General

information

2.2

Consolidated annual report

2.3

Financial statements

2.4

Basis of preparation

2.5

Changes in international accounting standards

2.6

Scope of consolidation

2.7

Consolidation policies and procedures

2.8

Accounting standards

and policies

2.9

Business Units

2.10

Results

sector by sector

2.11

Notes to the balance sheet

2.12

Net debt

2.13

Notes to the income statement

2.14

Earnings per share

2.15

Note on related party transactions

2.16

Significant

non-recurring events and transactions, pursuant to Consob Communication No. DEM/6064293 of July 28, 2006

2.17

Guarantees

and commitments with third parties

2.18

Other information

60 A2A Consolidated financial statements 2023 Notes to the Consolidated annual report

“Other non-current financial assets” showed a balance of 67 million euro at December 31, 2023, a decrease of 3 million euro compared to the figure at December 31, 2022, of which 7 million euro related to the repayment of loans to third parties, a decrease of 4 million euro in equity investments in other companies following reclassifications made during the year, the increase of 4 million euro for investments made in innovative start-up companies through Corporate Venture Capital projects and, residually, the increase of 4 million euro for advances paid on investments for future projects for the development of plants for the production of electricity from renewable sources.

At December 31, 2023, “Other non-current financial assets” refer, in addition to the aforementioned case, to medium/long-term financial receivables for 14 million euro, of which 9 million euro relating to loans to third parties which include, for 6 million euro, receivables for the management of the Cedrasco biocube plant by the subsidiary Bioase in application of IFRIC 12 and for 5 million euro receivables from the Municipality of Brescia concerning the management of public lighting in application of IFRIC 12. The item also includes 15 million euro for the deposit request in a specific current account, of the sums seized by the Court of Taranto as part of the ongoing proceeding against the subsidiary Linea Ambiente S.r.l. for 24 million euro investments made in innovative start-ups through Corporate Venture Capital projects and for 2 million euro investments in other companies, for details of which see annex no. 3 “List of equity investments in other companies”.

4) Deferred tax assets

millions of euro

Balance at

12 31 2022

First-time consolidation effect

acquisitions 2023

Net changes

of the year

Balance at

12 31 2023

Deferred tax assets

363

-

101

464

“Deferred tax assets” amounted to 464 million euro (363 million euro at December 31, 2022) and showed an increase of 101 million euro due mainly to the recognition of net deferred tax assets as described below.

It should be noted that in the year under review, the possibility was exercised, pursuant to Article 15, paragraphs 10 et seq. of Legislative Decree No. 185/2008, to revalue, or recognise, the higher tax values of controlling interests arising from the Purchase Price Allocation (PPA) process and recognized in the consolidated financial statements as goodwill and other intangible assets.

Against the payment of the substitute tax of 33 million euro, the derogatory revaluation resulted in the recognition of net deferred tax assets of 55 million euro, relating to off-balance-sheet deductions of the higher revalued values. These deferred tax assets will be released pro rata in connection with off-balance-sheet deductions starting in 2025.

The item includes the net effect, as detailed in the table below to which reference is made, of deferred tax liabilities and deferred tax assets for IRES and IRAP on changes and provisions made solely for tax purposes. The recoverability of “Deferred tax assets” recorded in the financial statements is considered likely, as the future plans envisage taxable income sufficient to use the deferred tax assets.

At December 31, 2023, the amounts relative to deferred tax assets/deferred tax liabilities have been expressed as net (“offsetting”) as per IAS 12 standards.

Notes to the Consolidated annual report 2023 Consolidated financial statements A2A 61

The following table sets out the main deferred tax assets and liabilities.

Detail of deferred tax assets and liabilities

Consolid.

financial statements

12 31 2022

First-time consolid.

effect

Provisions

(A)

Uses

(B)

Exemption

DL 185/2008

(C)

Other

(D)

TOTAL

(A+B+C+D)

IFRS 9

to Equity

IAS 19 Revised

to

Equity

Consolid.

financial statements

12 31 2023

Deferred tax liabilities

Value differences of tangible assets

324

1

(29)

(28)

296

Application of the finance lease standard (IFRS 16)

-

-

Application of the financial instrument standard (IFRS 9)

-

-

Value differences of intangible assets

98

(7)

(3)

(14)

(24)

74

Deferred capital gains

-

-

Employee leaving entitlement (TFR)

2

-

2

Goodwill

6

-

6

Other deferred tax liabilities

18

(1)

(10)

(11)

7

Total deferred tax liabilities (A)

448

-

(6)

(33)

(14)

(10)

(63)

-

-

385

Deferred tax assets

Taxed risk provisions

133

30

(6)

24

157

Value differences of tangible assets

438

12

(36)

9

(15)

423

Application of the financial instrument standard (IFRS 9)

(22)

-

4

(18)

Bad debts provision

37

18

(11)

7

44

Value differences of intangible assets

8

-

8

Grants

16

-

16

Goodwill

160

(14)

(14)

146

Other deferred tax assets

41

5

(21)

41

2

27

5

73

Total deferred tax assets (B)

811

-

65

(88)

41

11

29

9

-

849

NET EFFECT DEFERRED TAX ASSETS/LIABILITIES (B-A)

363

-

71

(55)

55

21

92

9

-

464

2

Notes

to the Consolidated annual report

2.1

General

information

2.2

Consolidated annual report

2.3

Financial statements

2.4

Basis of preparation

2.5

Changes in international accounting standards

2.6

Scope of consolidation

2.7

Consolidation policies and procedures

2.8

Accounting standards

and policies

2.9

Business Units

2.10

Results

sector by sector

2.11

Notes to the balance sheet

2.12

Net debt

2.13

Notes to the income statement

2.14

Earnings per share

2.15

Note on related party transactions

2.16

Significant

non-recurring events and transactions, pursuant to Consob Communication No. DEM/6064293 of July 28, 2006

2.17

Guarantees

and commitments with third parties

2.18

Other information

62 A2A Consolidated financial statements 2023 Notes to the Consolidated annual report

5) Other non-current assets

millions of euro

Balance at

12 31 2022

First-time consolidation effect

acquisitions 2023

Changes

Balance at

12 31 2023

of which included in the NFP

12 31 2022

12 31 2023

Other non-current assets

74

62

136

-

-

Non-current derivatives

12

(10)

2

12

2

Total other non-current assets

86

-

52

138

12

2

“Other non-current assets” were up by 62 million euro compared to December 31, 2022. This change is mainly attributable to the increase of receivables from the tax authorities for tax benefits under building bonuses due beyond the next financial year, for 52 million euro, the increase in security deposits for 18 million euro (of which 24 million euro paid to the Municipality of Milan for redevelopment charges), partly offset by the reduction in receivables for prior-year items related to water service revenues for 7 million euro.

“Non-current derivative instruments” amounted to 2 million euro, down 10 million euro compared to December 31, 2022. This item refers to interest rate hedging instruments and the decrease is attributable to a reduction in their fair value measurement.

Notes to the Consolidated annual report 2023 Consolidated financial statements A2A 63

Current assets

6) Inventories

millions of euro

Balance at

12 31 2022

First-time consolidation effect

acquisitions 2023

Changes

of the year

Balance at

12 31 2023

- Materials

115

-

23

138

- Material obsolescence provision

(23)

(2)

(25)

Total materials

92

-

21

113

- Fuel

435

(236)

199

- Others

7

(2)

5

Raw and ancillary materials and consumables

534

-

(217)

317

Third-party fuel

2

-

2

Total inventories

536

-

(217)

319

“Inventories” amounted to 319 million euro (536 million euro at December 31, 2022), net of the related obsolescence provision for 25 million euro (23 million euro at December 31, 2022).

Inventories show a total decrease of 217 million euro, as detailed below:

• 236 million euro attributable to the decrease in fuel inventories, which mainly reflects the decreasing trend observed during the year in the reference scenario (the inventories include the inventories of fuels for the production of electricity and the inventories of gas for the sales and storage activities thereof);

• 21 million euro related to the increase in inventories of materials, including the allocation to the material obsolescence provision;

• other decreases amounting to 2 million euro.

7) Trade receivables

millions of euro

Balance at

12 31 2022

First-time consolidation effect

acquisitions 2023

Changes

of the year

Balance at

12 31 2023

Trade receivables – invoices issued

1,404

403

1,807

Trade receivables – invoices to be issued

3,468

(1,495)

1,973

(Bad debts provision)

(192)

(48)

(240)

Total trade receivables

4,680

-

(1,140)

3,540

At December 31, 2023, “Trade receivables” amounted to 3,540 million euro (4,680 million euro at December 31, 2022), with a decrease of 1,140 million euro. In detail, the changes were as follows:

• for 1,126 million euro, the decrease in trade receivables from customers, which at December 31, 2023, showed a balance of 3,407 million euro (4,533 million euro at December 31, 2022);

• for 2 million euro, the decrease in receivables from associates, which had a balance of 53 million euro (55 million euro at the end of the previous year);

• for 4 million euro, the increase in receivables from the Municipalities of Milan and Brescia, which amounted to 80 million euro at year-end (76 million euro at December 31, 2022);

• the decrease in receivables for contract work in progress of 16 million euro (16 million euro as at December 31, 2022).

2

Notes

to the Consolidated annual report

2.1

General

information

2.2

Consolidated annual report

2.3

Financial statements

2.4

Basis of preparation

2.5

Changes in international accounting standards

2.6

Scope of consolidation

2.7

Consolidation policies and procedures

2.8

Accounting standards

and policies

2.9

Business Units

2.10

Results

sector by sector

2.11

Notes to the balance sheet

2.12

Net debt

2.13

Notes to the income statement

2.14

Earnings per share

2.15

Note on related party transactions

2.16

Significant

non-recurring events and transactions, pursuant to Consob Communication No. DEM/6064293 of July 28, 2006

2.17

Guarantees

and commitments with third parties

2.18

Other information

64 A2A Consolidated financial statements 2023 Notes to the Consolidated annual report

The change in trade receivables is mainly attributable to the reduction in tariffs for the sale of electricity and gas during the year in the reference scenario.

The “Bad debts provision”, calculated in compliance with IFRS 9, amounted to 240 million euro and showed a net increase of 48 million euro compared to December 31, 2022. This provision is considered adequate to cover the risks to which it relates.

The changes in the Bad debts provision are outlined in the following table:

millions of euro

Balance at

12 31 2022

First-time consolidation effect

acquisitions 2023

Provisions

Uses

Other changes

Balance at

12 31 2023

Bad debts provision

192

-

82

(33)

(1)

240

Provisions for the year amounted to 82 million euro, a decrease of 6 million euro compared to December 31, 2022 in relation to a lower credit exposure to customers due to the trend in the energy scenario, which compared to the previous year, saw a reduction in electricity and gas sales tariffs.

The following is the aging of trade receivables:

millions of euro | 12 31 2022 | 12 31 2023
Trade receivables of which: | 4,680 | 3,540
Current | 978 | 1,195
Past due of which: | 426 | 612
- Past due up to 30 days | 60 | 114
- Past due from 31 to 180 days | 198 | 202
- Past due from 181 to 365 days | 73 | 114
- Past due over 365 days | 95 | 182
Invoices to be issued | 3,468 | 1,973
Bad debts provision | (192) | (240)

Notes to the Consolidated annual report 2023 Consolidated financial statements A2A 65

8) Other current assets

millions of euro

Balance at

12 31 2022

First-time consolidation effect

acquisitions 2023

Changes

Balance at

12 31 2023

of which included in the NFP

12 31 2022

12 31 2023

Current derivatives

2,861

(1,335)

1,526

-

1

Other current assets of which:

428

310

738

- receivables from Cassa per i Servizi Energetici e Ambientali

140

(65)

75

- advances to suppliers

10

2

12

- receivables from employees

1

-

1

- tax receivables

139

(9)

130

- receivables related to future years/periods

34

(7)

27

- water cycle BU receivables

-

41

41

- receivables from social security entities

3

-

3

- Stamp office

1

-

1

- receivables for damage compensation

1

(1)

-

- receivables for COSAP advances

1

(1)

-

- receivables for security deposits

12

367

379

- receivables for RAI fee

3

1

4

- credit transfer Ge.S.I.

2

-

2

- other sundry receivables

81

(18)

63

Total other current assets

3,289

-

(1,025)

2,264

-

1

“Other current assets” showed a balance of 2,264 million euro compared to 3,289 million euro at December 31, 2022, highlighting a decrease of 1,025 million euro.

“Current derivative instruments” show a decrease of 1,335 million euro attributable to a reduction in the fair value measurement due to a lower average difference between subscription prices and market prices.

Receivables from Cassa per i Servizi Energetici e Ambientali, amounting to 75 million euro (140 million euro at December 31, 2022), mainly refer to receivables for equalizations pertaining to both 2023 and to outstanding receivables for equalizations pertaining to previous years and receivables for tariff components, net of collections made in the current year.

Tax receivables, equal to 130 million euro (139 million euro at December 31, 2022), mainly refer to receivables from the tax authorities for withholding taxes (mainly referring to tax credits for Ecobonus) and excise duties.

Receivables related to future years amounted to 27 million euro (34 million euro at December 31, 2022) and mainly refer to the advance payment of water derivation fees and insurance premiums.

Receivables for security deposits amounted to 379 million euro (12 million euro at December 31, 2022) and included 297 million euro for the deposit made by A2A S.p.A. to the Manager of the Electricity Market for operations on the electricity market as well as the deposit made to Snam Rete Gas to cover gas balances and the payment of 81 million euro made by A2A Energia S.p.A. relating mainly to the security deposit paid to Terna for the renewal of the withdrawal dispatching contract.

2

Notes

to the Consolidated annual report

2.1

General

information

2.2

Consolidated annual report

2.3

Financial statements

2.4

Basis of preparation

2.5

Changes in international accounting standards

2.6

Scope of consolidation

2.7

Consolidation policies and procedures

2.8

Accounting standards

and policies

2.9

Business Units

2.10

Results

sector by sector

2.11

Notes to the balance sheet

2.12

Net debt

2.13

Notes to the income statement

2.14

Earnings per share

2.15

Note on related party transactions

2.16

Significant

non-recurring events and transactions, pursuant to Consob Communication No. DEM/6064293 of July 28, 2006

2.17

Guarantees

and commitments with third parties

2.18

Other information

66 A2A Consolidated financial statements 2023 Notes to the Consolidated annual report

The water cycle BU receivable of 41 million euro is related to the sale of the water BU of the subsidiary Azienda Servizi Valtrompia S.p.A..

Other receivables, which amounted to 63 million euro (81 million euro as at December 31, 2022), decreased by 18 million euro mainly as a result of the completion of energy requalification and efficiency works at condominiums and third parties related to building bonuses.

9) Current financial assets

millions of euro

Balance at

12 31 2022

First-time consolidation effect

acquisitions 2023

Changes

Balance at

12 31 2023

of which included in the NFP

12 31 2022

12 31 2023

Other financial assets

14

-

19

33

14

33

Total current financial assets

14

-

19

33

14

33

“Current financial assets” amounted to 33 million euro (14 million euro at December 31, 2022). This item mainly refers to financial receivables from minority shareholders and third parties.

10) Current tax assets

millions of euro

Balance at

12 31 2022

First-time consolidation effect

acquisitions 2023

Changes

Balance at

12 31 2023

Current tax assets

35

-

6

41

At December 31, 2023, this item amounted to 41 million euro (35 million euro at December 31, 2022) and refers to current IRES and IRAP credits, to IRES and IRAP credits for amounts requested for reimbursement on payments from previous years and to the residual credit for Robin Tax, paid in previous years.

11) Cash and cash equivalents

millions of euro

Balance at

12 31 2022

First-time consolidation effect

acquisitions 2023

Changes

Balance at

12 31 2023

of which included in the NFP

12 31 2022

12 31 2023

Cash and cash equivalents

2,584

8

(963)

1,629

2,584

1,629

“Cash and cash equivalents” at December 31, 2023 represent the sum of the Group’s bank and postal asset balances. The effect of the first-time consolidation of acquisitions in 2023 amounted to 8 million euro.

The decrease for the year of 963 million euro was mainly due to the payment of one-off taxes related to the 2022 extra profit taxation and the early repayment of three bank loans in the amount of 500 million euro in order to optimize the use of liquidity with a consequent benefit on financial expenses.

This item includes term current accounts, in the amount of 190 million euro, related to trading on commodity derivative platforms.

Bank deposits include interest accrued even if it was not credited by the end of the financial year under review.

Notes to the Consolidated annual report 2023 Consolidated financial statements A2A 67

Equity and liabilities

Equity

Equity, which amounted to 4,802 million euro at December 31, 2023 (4,467 million euro at December 31, 2022), is set out in the following table:

millions of euro

Balance at

12 31 2022

Changes

Balance at

12 31 2023

Equity pertaining to the Group:

Share capital

1,629

-

1,629

Reserves

1,869

83

1,952

Group net income (loss) for the year

401

258

659

Total equity pertaining to the Group

3,899

341

4,240

Minority interests

568

(6)

562

Total equity

4,467

335

4,802

The change of the Shareholders’ equity was overall positive for 335 million euro. The net profit for the year generated a positive effect of 659 million euro, offset by the distribution of 283 million euro in dividends.

Lastly, the net fair value loss of cash flow hedge derivatives and the IAS 19 reserves for a total of 30 million euro and the net decrease in minority interests for 6 million euro also affected shareholders’ equity.

12) Share capital

“Share capital” amounted to 1,629 million euro and consists of 3,132,905,277 ordinary shares each of nominal value 0.52 euro.

13) Reserves

millions of euro

Balance at

12 31 2022

Changes

Balance at

12 31 2023

Reserves

1,869

83

1,952

of which:

Change in the fair value of cash flow hedge derivatives and Bond fair value

42

(44)

(2)

Tax effect

(12)

12

-

Cash flow hedge reserves

30

(32)

(2)

Change in the IAS 19 Revised reserve - Employee Benefits

(73)

3

(70)

Tax effect

19

(1)

18

IAS 19 Revised reserve - Employee Benefits

(54)

2

(52)

“Reserves”, which amounted to 1,952 million euro (1,869 million euro at December 31, 2022), consist of the legal reserve, extraordinary reserves, and the retained earnings of subsidiaries.

This item also includes the cash flow hedge reserve, negative for 2 million euro, which refers to the period-end measurement of derivatives qualifying for hedge accounting, and the fair value measurement of the Bonds in foreign currency net of the tax effect.

The balance also includes negative reserves of 52 million euro arising from the adoption of IAS 19 Revised “Employee Benefits” which requires actuarial profits and losses to be recognized directly in an equity reserve.

2

Notes

to the Consolidated annual report

2.1

General

information

2.2

Consolidated annual report

2.3

Financial statements

2.4

Basis of preparation

2.5

Changes in international accounting standards

2.6

Scope of consolidation

2.7

Consolidation policies and procedures

2.8

Accounting standards

and policies

2.9

Business Units

2.10

Results

sector by sector

2.11

Notes to the balance sheet

2.12

Net debt

2.13

Notes to the income statement

2.14

Earnings per share

2.15

Note on related party transactions

2.16

Significant

non-recurring events and transactions, pursuant to Consob Communication No. DEM/6064293 of July 28, 2006

2.17

Guarantees

and commitments with third parties

2.18

Other information

68 A2A Consolidated financial statements 2023 Notes to the Consolidated annual report

The item includes the equity reserve deriving from the first application of IFRS 9 equal to 32 million euro, and in particular the impairment of trade receivables according to the expected losses model.

Reconciliation between A2A S.p.A. net income and the net income of the Group

millions of euro

12 31 2023

12 31 2022

Net income (loss) for the year of A2A S.p.A.

488

545

Intra-group dividends eliminated from the consolidated financial statements

(344)

(463)

Net income (loss) of subsidiaries, associates and joint ventures

566

343

Other consolidation adjustments

(51)

(24)

Group net income (loss) for the year

659

401

Reconciliation between the equity of A2A S.p.A. and equity pertaining to the Group

millions of euro

12 31 2023

12 31 2022

Equity pertaining to A2A S.p.A.

3,789

3,603

- Elimination of the portion of the equity reserve resulting from profit on intra-group operations for the transfer of business units

(361)

(370)

- Retained earnings/(accumulated losses)

486

510

- Intra-group dividends eliminated from the consolidated financial statements

(344)

(463)

- Result of subsidiaries

566

343

- Other consolidation adjustments

104

276

Equity pertaining to the Group

4,240

3,899

14) Net result of the year

Positive result for 659 million euro.

15) Minority interests

millions of euro

Balance at

12 31 2022

Changes

Balance at

12 31 2023

Minority interests

568

(6)

562

“Minority interests” amounted to 562 million euro (568 million euro at December 31, 2022) and mainly represent the portions of capital, reserves and result pertaining to minority shareholders related to third-party shareholders.

Notes to the Consolidated annual report 2023 Consolidated financial statements A2A 69

Liabilities

Non-current liabilities

16) Non-current financial liabilities

millions of euro

Balance at

12 31 2022

First-time consolidation effect

acquisitions 2023

Changes

Balance at

12 31 2023

of which included in the NFP

12 31 2022

12 31 2023

Non-convertible bonds

4,612

-

188

4,800

4,612

4,800

Payables to banks

922

-

(293)

629

922

629

Non-current financial payables for rights of use

132

-

10

142

132

142

Payables to other lenders

201

2

(198)

5

201

5

Total non-current financial liabilities

5,867

2

(293)

5,576

5,867

5,576

“Non-current financial liabilities” amounted to 5,576 million euro (5,867 million euro at December 31, 2022), with a decrease of 293 million euro, net of the first-time consolidation effect of the year for 2 million euro.

“Non-convertible bonds” amounting to 4,800 million euro (4,612 million euro at December 31, 2022) relate to the following bonds, which are accounted for at amortized cost:

• 300 million euro, maturing in February 2025 and coupon of 1.75%, the nominal value of which is equal to 300 million euro;

• 298 million euro, maturing in October 2027 and coupon of 1.625%, the nominal value of which is equal to 300 million euro;

• 89 million euro, Private Placement in yen maturing in August 2036 and fixed rate of 5.405%, the nominal value of which is equal to 14 billion yen;

• 396 million euro, maturing in July 2029 and coupon of 1.00%, the nominal value of which is equal to 400 million euro;

• 497 million euro, maturing in July 2031 and coupon of 0.625%, the nominal value of which is equal to 500 million euro;

• 494 million euro, maturing in October 2032 and coupon of 0.625%, the nominal value of which is equal to 500 million euro;

• 495 million euro, maturing in November 2033 and coupon of 1.00%, the nominal value of which is equal to 500 million euro;

• 496 million euro, maturing in March 2028 and coupon of 1.5%, the nominal value of which is equal to 500 million euro;

• 597 million euro, maturing in June 2026 and coupon of 2.5%, the nominal value of which is equal to 600 million euro;

• 646 million euro, maturing in September 2030 and coupon of 4.5%, the nominal value of which is equal to 650 million euro.

• 492 million euro, maturing in September 2034 and coupon of 4.375%, the nominal value of which is equal to 500 million euro.

The increase in the non-current component of “Non-convertible bonds” of 188 million euro compared to December 31, 2022 was due to the counter effect of the issue of a new Green bond maturing in 2034, with nominal value 500 million euro and recorded in the financial statements net of amortized cost, partly offset by the reclassification to “Current financial liabilities” of the bond maturing in 2024 (300 million euro) and the decrease in the ECB exchange rate applied to the Private Placement in yen.

2

Notes

to the Consolidated annual report

2.1

General

information

2.2

Consolidated annual report

2.3

Financial statements

2.4

Basis of preparation

2.5

Changes in international accounting standards

2.6

Scope of consolidation

2.7

Consolidation policies and procedures

2.8

Accounting standards

and policies

2.9

Business Units

2.10

Results

sector by sector

2.11

Notes to the balance sheet

2.12

Net debt

2.13

Notes to the income statement

2.14

Earnings per share

2.15

Note on related party transactions

2.16

Significant

non-recurring events and transactions, pursuant to Consob Communication No. DEM/6064293 of July 28, 2006

2.17

Guarantees

and commitments with third parties

2.18

Other information

70 A2A Consolidated financial statements 2023 Notes to the Consolidated annual report

“Payables to banks” amounted to 629 million euro. This item recognized the principal portion of loans granted by the European Investment Bank in the amount of 547 million euro and by various credit institutions in the amount of 82 million euro. The decrease of 293 million euro at the end of the reporting year is attributable to the reclassification under current liabilities of portions of capital maturing in the next twelve months and to the early repayment of a bank loan (amounting to 100 million euro) in order to optimize the use of liquidity with a consequent benefit on financial expenses.

“Non-current financial payables for rights of use” amounted to 142 million euro, an increase of 10 million euro compared to December 31, 2022.

“Payables to other lenders” amounted to 5 million euro and show a decrease of 198 million euro, net of the effects deriving from the first-time consolidations for 2 million euro. This decrease is attributable to the early repayment, with the aim of optimizing the use of liquidity, of a loan from Cassa Depositi e Prestiti in the amount of 200 million euro.

For an analysis of the maturity dates of each item of these payables, please refer to the special detailed table in the “Other information” section in chapter 6) Financial Risk Management in paragraph d. Liquidity risk, while for further analysis of the division between fixed-rate and variable-rate payables, please refer to the special detailed table in paragraph b. Interest rate risk.

The following table shows the comparison, for each long-term debt category, between the book value and the fair value, as well as the portion maturing in the following 12 months, as better described in note 22) Current financial liabilities. For listed debt instruments, the fair value is determined using the market price, while for unlisted securities the fair value is determined using valuation models for each category of financial instrument and using market data relating to the closing date of the financial period, including the credit spreads of the A2A Group. Please note that this table does not contain the valuation of financial payables for rights of use.

millions of euro

Nominal value

Book value

Current portion

Non-current portion

Fair Value

Bonds

5,148

5,157

357

4,800

4,780

Loans from banks and other lenders

1,016

1,017

383

634

933

Total

6,164

6,174

740

5,434

5,713

17) Employee benefits

At December 31, 2023, the balance of this item amounted to 237 million euro (248 million euro at December 31, 2022) with changes as follows:

millions of euro

Balance at

12 31 2022

First-time consolidation effect

acquisitions 2023

Provisions

Uses

Other

changes

Balance at

12 31 2023

Employee leaving entitlement (TFR)

110

-

38

(12)

(32)

104

Employee benefits

138

-

-

(7)

2

133

Total employee benefits

248

-

38

(19)

(30)

237

The change is attributable for 38 million euro to provisions for the year, for 19 million euro to the decrease due to disbursements and for 37 million euro to the net decrease related to payments to pension funds. In addition, the actuarial valuations for the year include the increase resulting from actuarial gains/losses for a total of 6 million euro, as a result of the change in discount rates.

Notes to the Consolidated annual report 2023 Consolidated financial statements A2A 71

Technical valuations were carried out on the basis of the following assumptions:

millions of euro

2022

2023

Discount rate

from +3.34% to +3.77%

from +2.95% to +3.17%

Annual inflation rate

2.3%

2.0%

Annual seniority bonus increase rate

2.0%

2.0%

Annual additional months increase rate

0.0%

0.0%

Annual cost of electricity increase rate

2.0%

2.0%

Annual cost of gas increase rate

0.0%

0.0%

Annual salary increase rate

1.0%

1.0%

Annual TFR increase rate

3.225%

3.0%

Average annual increase rate of supplementary pensions

1.125%

1.125%

Annual turnover frequencies

from 4.0% to 5.0%

from 4.0% to 5.0%

Annual TFR advance frequencies

from 2.0% to 2.5%

from 2.0% to 2.5%

It is noted that:

• the annual discount rate used to determine the present value of the bond has been derived, in line with paragraph 83 of IAS 19, from the Iboxx Corporate AA index recognized at the measurement date. For this purpose, the yield with duration comparable to the duration of the work group evaluated was chosen;

• the annual rate of salary increase applied exclusively to companies with fewer than 50 employees on average in 2006 was determined on the basis of the reference data communicated by Group companies;

• the annual rate of TFR increase, according to art. 2120 of the Civil Code, is equal to 75% of inflation plus 1.5 percentage points;

• the annual advance and turnover frequencies are derived from historical experiences of the Group and the frequencies arising from the experience of the Actuary on a significant number of similar companies;

• for the demographic technical bases, it is noted that:

for “death”, the tables TG62 (Premungas), AS62 (Electricity and gas discount) and RG48 (other plans) were used;

for “inability”, the INPS tables divided by age and gender were used;

for “retirement”, the 100% parameter was used upon reaching the requirements of AGO (Obligatory General Insurance) in accordance with LD no. 04/2019;

for the “probability of leaving the family”, the table in the INPS model was used for projections to 2010 updated;

for the “frequency of the various structures of surviving nuclei and average age of members”, the table in the INPS model was used for projections to 2010.

2

Notes

to the Consolidated annual report

2.1

General

information

2.2

Consolidated annual report

2.3

Financial statements

2.4

Basis of preparation

2.5

Changes in international accounting standards

2.6

Scope of consolidation

2.7

Consolidation policies and procedures

2.8

Accounting standards

and policies

2.9

Business Units

2.10

Results

sector by sector

2.11

Notes to the balance sheet

2.12

Net debt

2.13

Notes to the income statement

2.14

Earnings per share

2.15

Note on related party transactions

2.16

Significant

non-recurring events and transactions, pursuant to Consob Communication No. DEM/6064293 of July 28, 2006

2.17

Guarantees

and commitments with third parties

2.18

Other information

72 A2A Consolidated financial statements 2023 Notes to the Consolidated annual report

18) Provisions for risks, charges and liabilities for landfills

millions of euro | Balance at 12 31 2022 | First-time consolidation effect acquisitions 2023 | Provisions | Releases | Uses | Other changes | Balance at 12 31 2023
Decommissioning provisions | 261 | 1 | 6 | - | (16) | 53 | 305
Landfill closing and post-closing expense provisions | 175 | - | 7 | (2) | (10) | 5 | 175
Tax provisions | 54 | - | 1 | (6) | - | - | 49
Personnel lawsuits and disputes provisions | 40 | - | 1 | - | (1) | 1 | 41
Other risk provisions | 199 | - | 65 | (4) | (13) | 11 | 258
Provisions for risks, charges and liabilities for landfills | 729 | 1 | 80 | (12) | (40) | 70 | 828

At December 31, 2023, “Provisions for risks, charges and liabilities for landfills” amounted to 828 million euro and showed an overall increase of 99 million euro.

“Decommissioning provisions”, which amounted to 305 million euro, include charges for costs of dismantling and recovery of production sites mainly related to thermoelectric plants and waste-to-energy plants. Changes during the year included utilizations of 16 million euro to cover charges incurred during the year under review, net provisions of 6 million euro, and other increases of 53 million euro attributable to the updating of appraisals and to changes in inflation and discount rates. The contribution deriving from first consolidations was 1 million euro.

The “Landfill closing and post-closing expense provisions”, which amounted to 175 million euro, refer to all the costs that will have to be incurred in the future for the sealing of the landfills in cultivation at the reporting date and for the subsequent post-operative management, as required by current regulations. Changes at December 31, 2023 included utilizations of 10 million euro, which represent actual disbursements during the year, net allocations of 5 million euro related to adjustments to the provisions for landfills following the update of the appraisals and inflation and discount rates, as well as other increases of 5 million euro.

“Tax provisions”, which amounted to 49 million euro, refer to provisions for pending litigation with the tax authorities or territorial entities for direct and indirect taxes, levies and excises.

“Personnel lawsuits and disputes provisions”, which totaled 41 million euro, refer to litigation with third parties for 34 million euro and employees for 3 million euro to cover liabilities that may arise from pending litigation, and lawsuits with Social Security Institutions for 4 million euro related to social security contributions that the Group believes it will not be required to pay and are the subject of specific disputes.

“Other provisions for risks”, which amounted to 258 million euro, refer to provisions relating to public water derivation fees for 132 million euro, to the mobility provision for the costs arising from the corporate restructuring plan, for 7 million euro, as well as other provisions for 119 million euro, which also include the provision related to the dispute over the Grottaglie landfill. The main components of these provisions are net allocations of 61 million euro, of which 44 million euro related to additional charges for hydroelectric derivation surcharges, uses of 13 million euro, as well as other increases of 11 million euro.

Notes to the Consolidated annual report 2023 Consolidated financial statements A2A 73

19) Other non-current liabilities

millions of euro

Balance at

12 31 2022

First-time consolidation effect

acquisitions 2023

Changes

Balance at

12 31 2023

of which included in the NFP

12 31 2022

12 31 2023

Other non-current liabilities

370

-

(46)

324

-

-

Non-current derivatives

-

-

11

11

-

11

Total other non-current liabilities

370

-

(35)

335

-

11

At December 31, 2023, this item decreased by 35 million euro compared to the balance at the end of the previous year.

“Other non-current liabilities”, which showed a balance of 324 million euro, refer to security deposits from customers, for 304 million euro, to liabilities pertaining to future years for 9 million euro, to medium/long-term payables to suppliers for 3 million euro, as well as other non-current liabilities for 8 million euro.

“Non-current derivative instruments” amounted to 11 million euro (no value at December 31, 2022) and refer to the fair value measurement of the hedging derivative relating to the yen bond maturing in 2036.

2

Notes

to the Consolidated annual report

2.1

General

information

2.2

Consolidated annual report

2.3

Financial statements

2.4

Basis of preparation

2.5

Changes in international accounting standards

2.6

Scope of consolidation

2.7

Consolidation policies and procedures

2.8

Accounting standards

and policies

2.9

Business Units

2.10

Results

sector by sector

2.11

Notes to the balance sheet

2.12

Net debt

2.13

Notes to the income statement

2.14

Earnings per share

2.15

Note on related party transactions

2.16

Significant

non-recurring events and transactions, pursuant to Consob Communication No. DEM/6064293 of July 28, 2006

2.17

Guarantees

and commitments with third parties

2.18

Other information

74 A2A Consolidated financial statements 2023 Notes to the Consolidated annual report

Current liabilities

20) Trade payables and other current liabilities

millions of euro

Balance at

12 31 2022

First-time consolidation effect

acquisitions 2023

Changes

Balance at

12 31 2023

of which included in the NFP

12 31 2022

12 31 2023

Advances and payables to customers

43

(37)

6

Payables to suppliers

5,481

1

(1,383)

4,099

Total trade payables

5,524

1

(1,420)

4,105

-

-

Payables to social security institutions

49

4

53

Current derivatives

2,561

(1,008)

1,553

Other current liabilities of which:

396

-

68

464

Payables to personnel

93

17

110

Payables to Cassa per i Servizi Energetici e Ambientali

83

69

152

Tax payables

98

(8)

90

Payables for tax transparency

5

-

5

Payables for A.T.O.

2

(1)

1

Payables to customers for work to be performed

37

(9)

28

Payables to customers for interest on security deposits

2

2

4

Payables to third-party shareholders

1

-

1

Payables for the purchase of equity investments

-

-

-

Payables for liabilities of competence of following years

-

9

9

Payables for auxiliary services

-

-

-

Payables for collections to be allocated

14

(11)

3

Payables to insurance companies

3

1

4

Payables for environmental compensation

3

1

4

Payables for RAI fee

8

(1)

7

Sundry payables

47

(1)

46

Total other current liabilities

3,006

-

(936)

2,070

-

-

Total trade payables and other current liabilities

8,530

1

(2,356)

6,175

-

-

“Trade receivables and other current liabilities” amounted to 6,175 million euro (8,530 million euro at December 31, 2022), representing a decrease of 2,355 million euro.

“Trade receivables” amounted to 4,105 million euro and compared to the closing of the previous year, represent a decrease of 1,420 million euro, excluding the changes related to the first-time consolidations for 1 million euro. The decrease is mainly attributable to the dynamics of energy commodity prices, as well as an efficient Net Working Capital management policy.

“Payables to social security institutions” amounted to 53 million euro, up 4 million euro compared to December 31, 2022 and relate to the Group’s debt position with social security and pension institutions.

“Current derivative instruments” amounted to 1,553 million euro (2,561 million euro at December 31, 2022) and refer to the fair value valuation of commodity derivatives. The decrease is mainly attributable to a reduction in the fair value measurement due to a lower average difference between subscription prices and market prices, despite a significant increase in volumes traded.

Notes to the Consolidated annual report 2023 Consolidated financial statements A2A 75

“Other current liabilities” mainly refer to:

• payables to employees for 110 million euro (93 million euro at December 31, 2022), relating to payables to employees for the productivity bonus accrued during the year, as well as the expense for holidays accrued but not taken at December 31, 2023;

• payables to Cassa per i Servizi Energetici e Ambientali for 152 million euro (83 million euro at December 31, 2022), regarding the payable for the tariff components, invoiced and not yet paid, as well as the payable for equalization liabilities related both to prior years and the year in question;

• tax payables for 90 million euro (98 million euro at December 31, 2022) related to payables to the tax authorities for excise, withholding taxes and VAT;

• payables to customers for work to be performed during the next financial year in the amount of 28 million euro (37 million euro at December 31, 2022).

21) Current financial liabilities

millions of euro

Balance at

12 31 2022

First-time consolidation effect

acquisitions 2023

Changes

Balance at

12 31 2023

of which included in the NFP

12 31 2022

12 31 2023

Non-convertible bonds

338

19

357

338

357

Payables to banks

651

(269)

382

651

382

Current financial payables for rights of use

31

4

35

31

35

Payables to other lenders

2

(1)

1

2

1

Total current financial liabilities

1,022

-

(247)

775

1,022

775

“Current financial liabilities” amounted to 775 million euro (1,022 million euro recorded at December 31, 2022) and showed a decrease of 247 million euro.

“Non-convertible bonds” amounted to 357 million euro and show an increase of 19 million euro. During the year, a bond with a nominal value of 300 million euro, which expired in December 2023 was repaid, offset by the reclassification from “Non-current financial liabilities” of the bond expiring in March 2024 of the same nominal value. At December 31, 2023, the calculation of interest coupons amounted to 57 million euro (38 million euro at December 31, 2022).

Current “Payables to banks”, which amounted to 382 million euro, comprises the principal portion of loans granted by the European Investment Bank, in the amount of 73 million euro, by various credit institutions, in the amount of 214 million euro, by utilization of “Hot money” lines, in the amount of 92 million euro, and accrued interest net of amortized cost, in the amount of 3 million euro. The year-on-year decrease of 269 million euro was mainly related to the reclassification from “Non-current financial liabilities” of residual loans due within the next twelve months, net of the portions repaid during the year.

“Current financial payables for rights of use” amounted to 35 million euro, an increase of 4 million euro compared to the previous year.

Current “Payables to other lenders” amounted to 1 million euro, a decrease of 1 million euro compared to the previous year.

2

Notes

to the Consolidated annual report

2.1

General

information

2.2

Consolidated annual report

2.3

Financial statements

2.4

Basis of preparation

2.5

Changes in international accounting standards

2.6

Scope of consolidation

2.7

Consolidation policies and procedures

2.8

Accounting standards

and policies

2.9

Business Units

2.10

Results

sector by sector

2.11

Notes to the balance sheet

2.12

Net debt

2.13

Notes to the income statement

2.14

Earnings per share

2.15

Note on related party transactions

2.16

Significant

non-recurring events and transactions, pursuant to Consob Communication No. DEM/6064293 of July 28, 2006

2.17

Guarantees

and commitments with third parties

2.18

Other information

76 A2A Consolidated financial statements 2023 Notes to the Consolidated annual report

22) Tax payables

millions of euro | Balance at 12 31 2022 | First-time consolidation effect acquisitions 2023 | Changes | Balance at 12 31 2023
Tax liabilities | 134 | - | (64) | 70

Tax payables amounted to 70 million euro (134 million euro at December 31, 2022) representing a decrease of 64 million euro over the previous year-end.

Notes to the Consolidated annual report 2023 Consolidated financial statements A2A 77

2.12

Net debt

23) Net debt

(pursuant to Communication ESMA/32-382-1138)

The following table provides details of net financial debt:

millions of euro | Note | 12 31 2022 | First-time consolidation effect acquisitions 2023 | 12 31 2023
Bonds - non-current portion | 17 | 4,612 |  | 4,800
Bank loans - non-current portion | 17 | 922 |  | 629
Non-current payables to other lenders | 17 | 201 | 2 | 5
Non-current financial payables for rights of use | 17 | 132 |  | 142
Other non-current liabilities | 20 | - |  | 11
Total medium/long-term debt |  | 5,867 | 2 | 5,587
Non-current financial assets - related parties | 3 | (5) |  | (5)
Non-current financial assets | 3 | (16) |  | (9)
Other non-current assets | 5 | (12) |  | (2)
Total medium/long-term financial receivables |  | (33) |  | (16)
Total non-current net debt |  | 5,834 | 2 | 5,571
Bonds - current portion | 22 | 338 |  | 357
Bank loans - current portion | 22 | 651 |  | 382
Current amounts due to other providers of finance | 22 | 2 |  | 1
Current financial payables for rights of use | 22 | 31 |  | 35
Other current liabilities | 21 | - |  | -
Total short-term debt |  | 1,022 |  | 775
Other current financial assets | 9 | (12) |  | (32)
Financial assets – related parties | 9 | (2) |  | (1)
Other current assets | 8 | - |  | (1)
Total short-term financial receivables |  | (14) |  | (34)
Cash and cash equivalents | 11 | (2,584) | (8) | (1,629)
Total current net debt |  | (1,576) | (8) | (888)
Net debt |  | 4,258 | (6) | 4,683

The Group net financial position was 4,683 million euro.

Insofar as the disclosure about indirect financial debt is concerned, the Group has identified financial commitments due within one year in connection with employee benefits, decommissioning provisions and liabilities for landfills, tax disputes and reverse factoring, amounting to about 65 million euro.

2

Notes

to the Consolidated annual report

2.1

General

information

2.2

Consolidated annual report

2.3

Financial statements

2.4

Basis of preparation

2.5

Changes in international accounting standards

2.6

Scope of consolidation

2.7

Consolidation policies and procedures

2.8

Accounting standards

and policies

2.9

Business Units

2.10

Results

sector by sector

2.11

Notes to the balance sheet

2.12

Net debt

2.13

Notes to the income statement

2.14

Earnings per share

2.15

Note on related party transactions

2.16

Significant

non-recurring events and transactions, pursuant to Consob Communication No. DEM/6064293 of July 28, 2006

2.17

Guarantees

and commitments with third parties

2.18

Other information

78 A2A Consolidated financial statements 2023 Notes to the Consolidated annual report

Pursuant to IAS 7 “Cash Flow Statement”, the following are the changes in financial assets and liabilities:

millions of euro

12 31 2022

Cash flow

Non-cash flow

12 31 2023

First-time consolidation effect acquisitions 2023

Change

in fair value

Other

changes

Bonds

4,950

219

(10)

(2)

5,157

Financial payables

1,939

(798)

2

51

1,194

Other liabilities

11

11

Financial assets

(35)

(18)

6

(47)

Other activities

(12)

9

(3)

Net liabilities deriving from financing activities

6,842

(597)

2

10

55

6,312

Cash and cash equivalents

(2,584)

963

(8)

(1,629)

Net debt

4,258

366

(6)

10

55

4,683

Notes to the Consolidated annual report 2023 Consolidated financial statements A2A 79

2.13

Notes to the income statement

For changes in the scope of consolidation as at December 31, 2023, please refer to the “Notes to the Balance Sheet Items” section.

Moreover, the economic figures as at December 31, 2023 are not consistent with the previous year due to the following extraordinary transactions in 2022:

• acquisition in September 2022, and line-by-line consolidation by A2A Calore & Servizi S.r.l. of 100% of A2A Airport Energy S.p.A., a company engaged in the production and sale of electricity, heat and cooling;

• acquisition by A2A Rinnovabili S.p.A. of 100% of 4New S.r.l. and 3 New & Partners S.r.l., companies operating in the photovoltaic and wind power sectors, consolidated as of June 2022. A2A Rinnovabili S.p.A. also acquired, through its subsidiary 3 New & Partners S.r.l., 100% of 3 New & Partners Rinnovabili S.r.l. (a company incorporated in November 2022) resulting in the line-by-line consolidation, as of November 2022, of Daunia Calvello S.r.l. and Daunia Serracapriola S.r.l., companies that hold a portfolio of wind farms in Italy.

It should be noted that certain income statement items, referring to assets related to the integrated water service in accordance with IFRS 5, have been reclassified to "Net result from non-current assets held for sale"; consequently, the values as at December 31, 2022 have been restated.

2

Notes

to the Consolidated annual report

2.1

General

information

2.2

Consolidated annual report

2.3

Financial statements

2.4

Basis of preparation

2.5

Changes in international accounting standards

2.6

Scope of consolidation

2.7

Consolidation policies and procedures

2.8

Accounting standards

and policies

2.9

Business Units

2.10

Results

sector by sector

2.11

Notes to the balance sheet

2.12

Net debt

2.13

Notes to the income statement

2.14

Earnings per share

2.15

Note on related party transactions

2.16

Significant

non-recurring events and transactions, pursuant to Consob Communication No. DEM/6064293 of July 28, 2006

2.17

Guarantees

and commitments with third parties

2.18

Other information

80 A2A Consolidated financial statements 2023 Notes to the Consolidated annual report

24) Revenues

Revenues for the year totaled 14,758 million euro (23,156 million euro at December 31, 2022 Restated), therefore decreasing by 8,398 million euro.

Details of the more significant items are as follows:

millions of euro

12 31 2023

12 31 2022

Restated

Change

%

2023/2022

Revenues from the sale of goods

13,002

21,600

(8,598)

(39.8%)

Revenues from services

1,490

1,338

152

11.4%

Total revenues from the sale of goods and services

14,492

22,938

(8,446)

(36.8%)

Other operating revenues

266

218

48

22.0%

Total revenues

14,758

23,156

(8,398)

(36.3%)

The change, compared to the previous year, is attributable to the reduction in revenues in the wholesale energy markets both due to the lower unit prices and the lower volumes sold and traded of commodities, partially offset by the higher quantities sold of electricity and gas in the retail markets and by the contribution of the consolidation of A2A Airport Energy, a company acquired in September 2022.

Further details of the main items are as follows:

millions of euro

12 31 2023

12 31 2022

Restated

Change

%

2023/2022

Sale and distribution of electricity

8,436

14,839

(6,403)

(43.1%)

Sale and distribution of gas

3,991

6,076

(2,085)

(34.3%)

Sale of heat

272

340

(68)

(20.0%)

Sale of materials

69

81

(12)

(14.8%)

Sale of water

88

79

9

11.4%

Sales of environmental certificates

111

153

(42)

(27.5%)

Connection contributions

35

32

3

9.4%

Total revenues from the sale of goods

13,002

21,600

(8,598)

(39.8%)

Services to customers

1,490

1,338

152

11.4%

Total revenues from services

1,490

1,338

152

11.4%

Total revenues from the sale of goods and services

14,492

22,938

(8,446)

(36.8%)

Reintegration of costs – S. Filippo del Mela plant (Essential Unit plant)

25

-

25

n.s.

Damage compensation

8

14

(6)

(42.9%)

Contributions - Cassa Servizi Energetici ed Ambientali

5

6

(1)

(16.7%)

Rents receivable

6

4

2

50.0%

Contingent assets

43

36

7

19.4%

Incentives for production from renewable sources (feed-in tariff)

41

44

(3)

(6.8%)

Other revenues

138

114

24

21.1%

Other operating revenues

266

218

48

22.0%

Total revenues

14,758

23,156

(8,398)

(36.3%)

The item "Other operating revenues" shows an increase of 48 million euro, of which 25 million euro due to higher other revenues referring to the reinstatement of generation costs incurred for the San Filippo del Mela power plant (Essential Plant) pursuant to Resolution 803/2016.

Notes to the Consolidated annual report 2023 Consolidated financial statements A2A 81

Further details on the reasons for the performance of revenues relating to the various Business Units can be found in the paragraph “Result by sector”.

25) Operating costs

“Operating costs” amounted to 11,972 million euro (20,893 million euro at December 31, 2022 Restated), therefore representing a decrease of 8,921 million euro.

The main components of this item are as follows:

millions of euro

12 31 2023

12 31 2022

Restated

Change

%

2023/2022

Costs for raw materials and consumables

9,408

18,634

(9,226)

(49.5%)

Costs for services

2,183

1,866

317

17.0%

Total costs for raw materials and services

11,591

20,500

(8,909)

(43.5%)

Other operating costs

381

393

(12)

(3.1%)

Total operating costs

11,972

20,893

(8,921)

(42.7%)

“Total costs for raw materials and services” amounted to 11,591 million euro (20,500 million euro at December 31, 2022), decreasing by 8,909 million euro.

This decrease is due to the combined effect of the following factors:

• the decrease of 9,733 million euro in the purchase of raw materials and consumables, due to the decrease in costs for the purchase of power and fuel of 9,515 million euro, the decrease in the costs relating to the purchase of environmental certificates of 242 million euro, the increase in purchase of materials of 3 million euro, the decrease in water purchase costs for 1 million euro and the net increase of 22 million euro arising from hedging gains/losses on operating derivatives;

• an increase of 317 million euro in costs for delivery, subcontracted work and services;

• the increase in inventories of fuel and materials for 507 million euro.

2

Notes

to the Consolidated annual report

2.1

General

information

2.2

Consolidated annual report

2.3

Financial statements

2.4

Basis of preparation

2.5

Changes in international accounting standards

2.6

Scope of consolidation

2.7

Consolidation policies and procedures

2.8

Accounting standards

and policies

2.9

Business Units

2.10

Results

sector by sector

2.11

Notes to the balance sheet

2.12

Net debt

2.13

Notes to the income statement

2.14

Earnings per share

2.15

Note on related party transactions

2.16

Significant

non-recurring events and transactions, pursuant to Consob Communication No. DEM/6064293 of July 28, 2006

2.17

Guarantees

and commitments with third parties

2.18

Other information

82 A2A Consolidated financial statements 2023 Notes to the Consolidated annual report

For further information, the following table sets out details of the more significant components:

millions of euro | 12 31 2023 | 12 31 2022 Restated | Change | % 2023/2022
Purchases of power and fuel | 8,492 | 18,007 | (9,515) | (52.8%)
Purchases of materials | 199 | 196 | 3 | 1.5%
Purchases of water | 2 | 3 | (1) | (33.3%)
Hedging losses on operating derivatives | 7 | 14 | (7) | (50.0%)
Hedging gains on operating derivatives | (5) | (34) | 29 | (85.3%)
Purchases of emission certificates and allowances | 507 | 749 | (242) | (32.3%)
Total costs for raw materials and consumables | 9,202 | 18,935 | (9,733) | (51.4%)
Delivery and transmission costs | 1,173 | 990 | 183 | 18.5%
Maintenance and repairs | 242 | 220 | 22 | 10.0%
Other services | 768 | 656 | 112 | 17.1%
Total costs for services | 2,183 | 1,866 | 317 | 17.0%
Change in inventories of fuel and materials | 206 | (301) | 507 | n.s.
Total costs for raw materials and services | 11,591 | 20,500 | (8,909) | (43.5%)
Leasehold improvements | 145 | 133 | 12 | 9.0%
Concession fees | 122 | 119 | 3 | 2.5%
Contributions to territorial entities, consortia and ARERA | 14 | 13 | 1 | 7.7%
Taxes and duties | 39 | 74 | (35) | (47.3%)
Damages and penalties | 12 | 4 | 8 | n.s.
Contingent liabilities | 27 | 34 | (7) | (20.6%)
Other costs | 22 | 16 | 6 | 37.5%
Other operating costs | 381 | 393 | (12) | (3.1%)
Total operating costs | 11,972 | 20,893 | (8,921) | (42.7%)

The item "Other services" totaling 768 million euro includes, among others, communication costs of 36 million euro (in the previous year, they amounted to 33 million euro).

Trading margin

The following table sets out the results arising from the Trading Portfolio, including the effect of changes in derivative instruments; these figures relate to trading in electricity, gas and environmental certificates.

millions of euro

12 31 2023

12 31 2022

Change

Revenues

8,599

13,374

(4,775)

Operating costs

(8,538)

(13,293)

4,755

Total trading margin

61

81

(20)

The trading margin was positive for 61 million euro, a decrease of 20 million euro compared to December 31, 2022.

During 2023, the downward trend in prices, already present in the first half of the year, continued, thanks to the ample availability of Liquefied Natural Gas supplies and the reduction in energy consumption, also attributable to the winter season characterized by above-average temperatures.

The relative quietness of the market affected energy prices on short- and medium-term deliveries, helping to reduce the risk premium and volatility.

Notes to the Consolidated annual report 2023 Consolidated financial statements A2A 83

Compared to the same period of the previous year, the reduction in volatility proportionally decreased the absolute value of profit captured by trading activities despite the continued activity of flow intermediation, price quotation and market making.

26) Labour costs

Net of capitalized expenses, labour costs at December 31, 2023 amounted to 815 million euro (765 million euro at December 31, 2022).

“Labour costs” may be analyzed as follows:

millions of euro

12 31 2023

12 31 2022

Change

%

2023/2022

Wages and salaries

625

589

36

6.1%

Social security charges

207

196

11

5.6%

Employee leaving entitlement (TFR)

38

37

1

2.7%

Other costs

59

48

11

22.9%

Total labour costs before capitalizations

929

870

59

6.8%

Capitalized labour costs

(114)

(105)

(9)

8.6%

Total labour costs

815

765

50

6.5%

The table below shows the average number of employees by category:

12 31 2023

12 31 2022

Change

Managers

198

200

(2)

Middle Managers

896

828

68

White-collar workers

6,257

5,980

277

Blue-collar workers

6,489

6,447

42

Total

13,840

13,455

385

At December 31, 2023, the average labour cost per capita amounted to 58.89 thousand euro, up 3.6% from the previous year (when it was 56.86 thousand euro). The increase is mainly attributable to the increase in the existing workforce, the salary increases provided for by national collective labour agreements, and remuneration policy actions.

At December 31, 2023, the Group had 13,958 employees. At December 31, 2022, the Group had 13,655 employees.

Other labour costs include, for a value of 7 million euro (value less than 1 million euro at December 31, 2022) costs relating to the total cost of the company's restructuring plan related to future staff leaving for redundancy.

27) Gross operating margin

As a result of the above changes, consolidated “Gross operating margin” at December 31, 2023 amounted to 1,971 million euro (1,498 million euro at December 31, 2022 Restated).

For further information, please refer to the description in the paragraph "Analysis of the main business sectors" in the Report on Operations.

2

Notes

to the Consolidated annual report

2.1

General

information

2.2

Consolidated annual report

2.3

Financial statements

2.4

Basis of preparation

2.5

Changes in international accounting standards

2.6

Scope of consolidation

2.7

Consolidation policies and procedures

2.8

Accounting standards

and policies

2.9

Business Units

2.10

Results

sector by sector

2.11

Notes to the balance sheet

2.12

Net debt

2.13

Notes to the income statement

2.14

Earnings per share

2.15

Note on related party transactions

2.16

Significant

non-recurring events and transactions, pursuant to Consob Communication No. DEM/6064293 of July 28, 2006

2.17

Guarantees

and commitments with third parties

2.18

Other information

84 A2A Consolidated financial statements 2023 Notes to the Consolidated annual report

28) Depreciation, amortization, provisions and write-downs

“Depreciation, amortization, provisions and write-downs” totaled 954 million euro (816 million euro at December 31, 2022 Restated), representing an increase of 138 million euro.

The following table provides details of the individual items:

millions of euro

12 31 2023

12 31 2022

Restated

Change

%

2023/2022

Amortization of intangible assets

278

231

47

20.3%

Depreciation of tangible assets

523

491

32

6.5%

Net write-downs of fixed assets

2

2

-

-

Total amortization, depreciation and write-downs

803

724

79

10.9%

Provisions for risks

68

2

66

n.s.

Bad debt provision on receivables recognized as current assets

83

90

(7)

(7.8%)

Total depreciation, amortization, provisions and write-downs

954

816

138

16.9%

“Depreciation, amortization and write-downs” amounted to 803 million euro (724 million euro at December 31, 2022 Restated).

Amortization of intangible assets amounted to 278 million euro (231 million euro at December 31, 2022 Restated). Depreciation and amortization increased by 47 million euro, broken down as follows:

• increase in depreciation and amortization of 42 million euro, related to the integrated water service, gas distribution and metering, implementation of information systems and new customer lists;

• increase in depreciation and amortization of 5 million euro following the change in the scope of consolidation.

Depreciation of tangible assets show an increase of 32 million euro compared to December 31, 2022 and includes:

• higher depreciation of 15 million euro, mainly relating to the investments which went into production after December 31, 2022;

• higher depreciation of 17 million euro, relating to the first-time consolidations;

• higher depreciation of 3 million euro for rights of use;

• higher depreciation of 3 million euro related to the new appraisals and change in discount and inflation rates on the closure/post closure provisions for landfills and decommissioning;

• lower depreciation of 6 million euro related to the disinvestment plan for the assets of the Linea 1 waste-to-energy treatment and storage plant in Parona and to some photovoltaic plants.

Write-downs for the year amounted to 2 million euro (2 million euro as at December 31, 2022) and mainly related to the cancellation of projects no longer in the company's core business.

“Provisions for risks” had a net effect of 68 million euro (net effect of 2 million euro at December 31, 2022) due to the provisions for the year of 80 million euro relating to the provision for derivation fees public water for 46 million euro, to provisions for closure and post-closure costs of landfills and decommissioning for 13 million euro, to provisions relating to compensation linked to delays in the management of active connection files for 13 million euro and to other provisions for 8 million euro, adjusted by surpluses mainly following the release of tax provisions, closure and post-closure expense provisions on landfills and other provisions for 12 million euro.

For further information, reference is made to note 18) Provisions for risks, charges and liabilities for landfills.

The "Bad debt provision" amounted to 83 million euro (90 million euro at December 31, 2022), of which 82 million euro related to the provision for the year for risks on trade receivables and 1 million euro to the provision for risks on other receivables.

Notes to the Consolidated annual report 2023 Consolidated financial statements A2A 85

29) Net operating income

“Net operating income” amounted to 1,017 million euro (682 million euro at December 31, 2022 Restated).

30) Result from non-recurring transactions

The "Result from non-recurring transactions" amounted to 2 million euro (157 million euro at December 31, 2022) and refers to the capital gain deriving from the sale of land in the Bovisa area located in the City of Milan, while in the previous year, it referred to the sale of three properties located in Milan that took place in February 2022.

31) Financial balance

The “Financial balance” closed with net expense of 140 million euro (net expense of 88 million euro at December 31, 2022).

Details of the more significant items are as follows:

millions of euro

12 31 2023

12 31 2022

Change

%

2023/2022

Financial income

83

35

48

n.s.

Financial expenses

(222)

(125)

(97)

77.6%

Portion of income and expenses when shareholdings are carried at equity

-

2

(2)

(100.0%)

Result from disposal of other shareholdings

(1)

-

(1)

n.s.

Total financial balance

(140)

(88)

(52)

59.1%

“Financial income” amounted to 83 million euro (35 million euro at December 31, 2022) and may be analyzed as follows:

Financial income

millions of euro

12 31 2023

12 31 2022

Change

%

2023/2022

Bank income

56

3

53

n.s.

Realized on financial derivatives

-

2

(2)

n.s.

Gains on disposals of financial assets

-

4

(4)

n.s.

Other financial income of which:

27

26

1

3.8%

Financial income from the Municipality of Brescia (IFRIC 12)

5

10

(5)

(50.0%)

Foreign exchange gains

1

5

(4)

(80.0%)

Other income

21

11

10

90.9%

Total financial income

83

35

48

n.s.

The increase in income from credit institutions is mainly attributable to the increase in lending rates applied to the investment of short-term liquidity.

2

Notes

to the Consolidated annual report

2.1

General

information

2.2

Consolidated annual report

2.3

Financial statements

2.4

Basis of preparation

2.5

Changes in international accounting standards

2.6

Scope of consolidation

2.7

Consolidation policies and procedures

2.8

Accounting standards

and policies

2.9

Business Units

2.10

Results

sector by sector

2.11

Notes to the balance sheet

2.12

Net debt

2.13

Notes to the income statement

2.14

Earnings per share

2.15

Note on related party transactions

2.16

Significant

non-recurring events and transactions, pursuant to Consob Communication No. DEM/6064293 of July 28, 2006

2.17

Guarantees

and commitments with third parties

2.18

Other information

86 A2A Consolidated financial statements 2023 Notes to the Consolidated annual report

“Financial expenses”, which amounted to 222 million euro, increased by 97 million euro compared to December 31, 2022, and may be analyzed as follows:

Financial expenses

millions of euro

12 31 2023

12 31 2022

Change

%

2023/2022

Interest on bond loans

124

74

50

67.6%

Interest charged by banks

38

15

23

n.s.

Interest on Cassa Depositi e Prestiti loans

2

1

1

100.0%

Realized on financial derivatives

-

1

(1)

n.s.

Decommissioning costs

9

9

-

-

Other financial expenses of which:

49

25

24

96.0%

Discounting charges

15

11

4

36.4%

Financial expenses (IFRS 16)

3

2

1

50.0%

Financial expenses (IFRIC 12)

3

4

(1)

(25.0%)

Foreign exchange losses

1

3

(2)

(66.7%)

Other expenses

27

5

22

n.s.

Total financial expenses before capitalizations

222

125

97

77.6%

Capitalized financial expenses

-

-

-

-

Total financial expenses

222

125

97

77.6%

The increase in interest on bonds in the amount of 50 million euro is attributable to the three bond issues carried out during 2022 (totaling 1,750 million euro), which had only started to accrue interest from the date of issue, and the 500 million euro bond issue carried out during the first quarter of 2023.

The increase in financial expenses to credit institutions, amounting to 23 million euro, is mainly attributable to the rise in the interest rate curve, as a result of the restrictive monetary policies implemented by central banks to counter the growing inflationary pressure, which led to higher expenses on gross financial debt at variable and non-hedged rates. This deterioration was more than offset by the variable-rate remuneration of liquidity (as described with reference to financial income), which mitigates the interest rate risk on the Group's variable and non-hedged debt.

The Equity method valuation of the shareholdings was less than one million euro. It was equal to 2 million euro in the previous year and mainly referred to the positive valuation of shareholdings in some associated companies.

The “Result from disposal of other shareholdings” had a negative value of 1 million euro and derived from the effect of the disposal of the shareholding in Suncity Group.

Notes to the Consolidated annual report 2023 Consolidated financial statements A2A 87

32) Income taxes

millions of euro | 12 31 2023 | 12 31 2022 | Change | % 2023/2022
Current IRES | 241 | 150 | 91 | 60.7%
Current IRAP | 53 | 42 | 11 | 26.2%
Effect of differences - taxes of previous years | (5) | (5) | - | -
Total current taxes | 289 | 187 | 102 | 54.5%
Deferred tax assets | (41) | 35 | (76) | n.s.
Deferred tax liabilities | (49) | - | (49) | n.s.
Solidarity contribution L. 197/2022 | - | 117 | (117) | n.s.
Contribution L.D. no. 21 of March 21, 2022 | - | 5 | (5) | n.s.
Total income taxes | 199 | 344 | (145) | (42.2%)

“Income taxes” for the year amounted to 199 million euro (344 million euro at December 31, 2022) and the breakdown is as follows:

• for 241 million euro current Ires for the year;

• for 53 million euro current Irap for the year;

• for -5 million euro taxes of previous years;

• for -41 million euro deferred tax assets;

• for -49 million euro deferred tax liabilities.

Pursuant to Article 162-bis of Presidential Decree no. 917/1986, the parent company A2A in the 2023 financial year qualifies as a so-called "non-financial holding company". Accordingly, A2A determined the total amount of IRAP for the 2023 financial year by adding to the net production value, determined in accordance with the provisions specific to joint-stock companies (pursuant to Articles 5 and 11 of Legislative Decree no. 446/1997), the difference between:

• interest and similar income

• interest and similar expense

according to the provisions contained in Art. 6, paragraph 9 of Legislative Decree no. 446/1997. The production value thus calculated was subject to the average IRAP rate of 5.56%.

It should be noted that in the financial year under review, the right was exercised to opt for the "exemptive revaluation" regime which, based on the provisions of art. 15, paragraphs 10 et seq. of Decree Law no. 185/2008, provides for the recognition of the higher tax values of the controlling interests arising from the Purchase Price Allocation (PPA) process and recorded in the consolidated financial statements as goodwill and other intangible assets.

Against the payment of the substitute tax of 33 million euro, the derogatory revaluation resulted in the recognition of net deferred tax assets of 55 million euro, relating to off-balance-sheet deductions of the higher revalued values. These deferred tax assets will be released pro rata in connection with off-balance-sheet deductions starting in 2025.

2

Notes

to the Consolidated annual report

2.1

General

information

2.2

Consolidated annual report

2.3

Financial statements

2.4

Basis of preparation

2.5

Changes in international accounting standards

2.6

Scope of consolidation

2.7

Consolidation policies and procedures

2.8

Accounting standards

and policies

2.9

Business Units

2.10

Results

sector by sector

2.11

Notes to the balance sheet

2.12

Net debt

2.13

Notes to the income statement

2.14

Earnings per share

2.15

Note on related party transactions

2.16

Significant

non-recurring events and transactions, pursuant to Consob Communication No. DEM/6064293 of July 28, 2006

2.17

Guarantees

and commitments with third parties

2.18

Other information

88 A2A Consolidated financial statements 2023 Notes to the Consolidated annual report

The reconciliation between the tax burden posted in the Consolidated Financial Statements and theoretical tax liabilities, calculated on the basis of theoretical rates applicable in Italy, is as follows:

Reconciliation between the tax burden posted in the Financial Statements and theoretical tax liabilities

millions of euro | 2023 | 2022 Restated
Pre-tax result | 879 | 751
Net write-downs of fixed assets | 2 | 2
Pre-tax result adjusted by write-downs and the result of assets held for sale | 881 | 753
Theoretical rates based on applicable tax rates (1) | 211 | 180
Tax effect of write-downs | - | -
Adjustment of prior year taxes | (13) | (10)
Exemptive revaluation (Decree-Law 185/2008) | (22) | -
Permanent differences | 4 | 10
Contribution L.D. no. 21 of March 21, 2022 | - | 5
Solidarity contribution L. 197/2022 | - | 117
Other differences | (21) | -
Total taxes charged to Income statement (excluding IRAP) | 159 | 302
CURRENT IRAP | 40 | 42
Total taxes charged to Income statement | 199 | 344

(1) Taxes have been calculated considering a theoretical IRES rate of 24%

Global Minimum Tax

Legislative Decree no. 209 of December 27, 2023 implemented Directive no. 2022/EU/2523 on "Global Minimum Tax" (legislation commonly referred to as "Pillar II"), with the express purpose of ensuring a minimum level of taxation for multinational or domestic groups of companies as of January 1, 2024.

The new rules affect companies located in Italy that are part of a multinational or domestic group with annual revenues of 750 million euro or more, a revenue threshold that must be reached in at least two of the four financial years immediately preceding the financial year considered.

Therefore, with effect from January 1, 2024, the A2A Group, since it exceeded the revenue threshold of 750 million euro, for two of the four previous financial years, falls within the scope of application of the "Pillar II" regulations, set forth in Directive no. 2022/EU/2523 and Legislative Decree no. 209/2023.

In this regard, it is noted that paragraph 4.A of IAS 12 provides, as an exception to the provisions of said Standard, for the non-recognition and disclosure of deferred tax assets and liabilities related to "Pillar II" taxes.

In these financial statements, therefore, no information is provided and no assets or liabilities are recognized for deferred taxes related to taxes in relation to "Pillar II" regulations.

Moreover, as the rule is not effective at the reporting date, no current taxes have been recognized accordingly.

With reference to the "Pillar II" regulations, as a preliminary reminder, it is recalled that in 2023, the A2A Group promptly took steps to assess the possible impact of the regulations in question in the jurisdictions in which it is established and to ensure that the regulatory obligations in force from January 1, 2024 are correctly fulfilled.

It is also noted that the exposure of Group entities (and any jointly controlled entities) to "Pillar II" taxes is a direct consequence of the level of actual taxation in each individual jurisdiction. This level is then, of course, proportional to various, concomitant and/or related factors such as, for example, the income produced therein, the level of the nominal tax rate, the tax rules for determining the tax base, and the institution, form and use of tax incentives or benefits.

Given, however, the complexity of determining the level of actual taxation, the "Pillar II" legislation provides, for the first effective periods, for the possibility of applying a simplified regime based primarily on accounting information available for each jurisdiction, which, if at least one of three tests under this simplification (so-called transitional safe harbor from country-by-country reporting) is passed, results in reduced compliance burdens and zero taxation from "Pillar II".

Notes to the Consolidated annual report 2023 Consolidated financial statements A2A 89

Based on the information known or reasonably estimable at the reporting date, the A2A Group's exposure to taxes arising from the "Pillar II" legislation at the reporting date, including on the basis of transitional safe harbors, is assessed as not significant.

Based on the analyses performed, in fact, all Group entities (and jointly controlled entities) are located in jurisdictions that satisfy at least one of the three tests set forth in the transitional safe harbor and, therefore, considering the information known or reasonably estimable as of the reporting date, there does not appear to be any exposure of the Group to taxation arising from the "Pillar II" legislation to date.

33) Net result from discontinued operations held for sale

The “Net result from discontinued operations held for sale” amounted to 3 million euro (41 million euro at December 31, 2022 Restated) and mainly refers to the sale relating to the Integrated Water Service to Acque Bresciane, due to the expiry of the concession, which did not generate gains in the year under review. This BU was considered a disposal group and was included in the Smart Infrastructures Business Unit.

34) Result of minorities

The “Result of minorities” is negative for the Group for 24 million euro and mainly includes the portion attributable to minority interests of the Acinque Group and the AEB Group. In the previous year, the item showed a negative balance for the Group for 47 million euro.

35) Group result for the year

The “Group result for the year” was positive for 659 million euro (positive for 401 million euro at December 31, 2022).

2

Notes

to the Consolidated annual report

2.1

General

information

2.2

Consolidated annual report

2.3

Financial statements

2.4

Basis of preparation

2.5

Changes in international accounting standards

2.6

Scope of consolidation

2.7

Consolidation policies and procedures

2.8

Accounting standards

and policies

2.9

Business Units

2.10

Results

sector by sector

2.11

Notes to the balance sheet

2.12

Net debt

2.13

Notes to the income statement

2.14

Earnings per share

2.15

Note on related party transactions

2.16

Significant

non-recurring events and transactions, pursuant to Consob Communication No. DEM/6064293 of July 28, 2006

2.17

Guarantees

and commitments with third parties

2.18

Other information

90 A2A Consolidated financial statements 2023 Notes to the Consolidated annual report

36) Earnings per share

| 01 01 2023 12 31 2023 | 01 01 2022 12 31 2022 Restated
Earnings (loss) per share (in euro) |  |
-basic | 0.2101 | 0.1281
-basic, from continuing operations | 0.2092 | 0.1150
-basic, from assets held for sale | 0.0009 | 0.0131
-diluted | 0.2101 | 0.1281
-diluted, from continuing operations | 0.2092 | 0.1150
-diluted, from assets held for sale | 0.0009 | 0.0131
Weighted average number of outstanding shares for the calculation of earnings (loss) per share |  |
-basic | 3,132,905,277 | 3,132,905,277
-diluted | 3,132,905,277 | 3,132,905,277

2.14

Earnings per share

Notes to the Consolidated annual report 2023 Consolidated financial statements A2A 91

2.15

Note on related party transactions

37) Note on related party transactions

The definition of “related parties” is included in the international accounting standard describing the disclosures, which must be made for related party transactions in financial statements (revised IAS 24).

Relationships with parent companies and their subsidiaries

On October 5, 2007, the Municipalities of Milan and Brescia signed a Shareholders’ Agreement to regulate the ownership structure of A2A S.p.A.; this gave the Municipalities joint control over the company.

Specifically, the merger effective January 1, 2008, regardless of the legal structure established, was considered a joint venture, whose joint control was exercised by the Municipalities of Milan and Brescia, each of which owned a share equal to 27.5%.

On June 13, 2014, the Shareholders’ Meeting modified the company’s governance system, passing from the original two-tier system, adopted in 2007, to a “traditional” system of management and control through the appointment of the Board of Directors.

In December 2014, the Municipalities of Milan and Brescia sold a total shareholding of 0.51% of A2A S.p.A., while in the first two months of 2015, the Municipalities of Milan and Brescia sold an additional shareholding of 4.5% of A2A S.p.A..

On October 4, 2016, the Municipalities of Milan and Brescia renewed for another three years, with effect from January 1, 2017, the Shareholders' Agreement signed on December 30, 2013, concerning 1,566,452,642 ordinary shares representing 50% plus two shares of the share capital of A2A S.p.A.. On May 20, 2016, the two Municipalities had proceeded to sign an appendix to the Agreement, which envisaged reducing from six months to three months the term of the agreement, during which it is possible to terminate the same.

On October 26, 2016, the Municipality of Milan received from the Municipality of Brescia the proposal, approved by the Council of said Municipality on October 25, 2016, to partially amend the shareholders' agreement relating to A2A S.p.A. existing between the two Municipalities. In particular, said proposal requires the commitment of the two Municipalities to maintain syndicated and bound, in the new agreement, a number of shares held by them in equal measure, equal to 42% of the share capital of A2A S.p.A.. On November 4, 2016, the Council of the Municipality of Milan, after having favorably examined the proposal of the Municipality of Brescia of a partial amendment to the shareholders' agreement, submitted to the Municipal Council the proposal of the new shareholders' agreement for the final determinations of competence.

On January 23, 2017, the Milan City Council approved the new Shareholders' Agreement between the Municipality of Milan and the Municipality of Brescia regarding the shareholding in A2A S.p.A. and has undertaken the commitment not to proceed with the disposal of any shares owned by the Municipality of Milan.

On August 2, 2019, the Municipality of Milan, also on behalf of the Municipality of Brescia, announced that the aforementioned Shareholders' Agreement was not subject to termination. Consequently, the agreement is to be considered renewed with effect from February 1, 2020 to January 31, 2023.

On August 2, 2022, the Municipality of Milan, also on behalf of the Municipality of Brescia, announced that the aforementioned Shareholders' Agreement was not subject to termination. Consequently, the agreement is to be considered renewed with effect from February 1, 2023 to January 31, 2026.

At the date of approval of these consolidated Financial Statements at December 31, 2023, each of the two shareholders hold 25% of the share capital plus one share (overall equal to 50% plus two shares), which allows the two municipalities to maintain control over the Company.

2

Notes

to the Consolidated annual report

2.1

General

information

2.2

Consolidated annual report

2.3

Financial statements

2.4

Basis of preparation

2.5

Changes in international accounting standards

2.6

Scope of consolidation

2.7

Consolidation policies and procedures

2.8

Accounting standards

and policies

2.9

Business Units

2.10

Results

sector by sector

2.11

Notes to the balance sheet

2.12

Net debt

2.13

Notes to the income statement

2.14

Earnings per share

2.15

Note on related party transactions

2.16

Significant

non-recurring events and transactions, pursuant to Consob Communication No. DEM/6064293 of July 28, 2006

2.17

Guarantees

and commitments with third parties

2.18

Other information

92 A2A Consolidated financial statements 2023 Notes to the Consolidated annual report

The A2A Group companies and the Municipalities of Milan and Brescia routinely entertain commercial relationships related to the supply of electricity, gas, heat, and potable water, management of public lighting systems and street lights, management of water purification and sewers, garbage collection and street sweeping and video surveillance.

Similarly, the A2A Group companies entertain commercial relationships with the companies controlled directly and indirectly by the Municipalities of Milan and Brescia, for example, Metropolitana Milanese S.p.A., ATM S.p.A., Brescia Mobilità S.p.A., Brescia Trasporti S.p.A. and Centrale del Latte di Brescia S.p.A., supplying them with electrical energy, gas, heat, water purification and sewer service at market rates appropriate to the supply conditions and providing the services required. Note that these companies are considered related parties in the preparation of the financial statement schedules pursuant to Consob Resolution 17221 of March 12, 2010.

The relationships between the Municipalities of Milan and Brescia and the A2A Group, in relation to granting the services associated with public lighting, street lights, management and supply of electricity, gas, heat, and water purification and sewer service are regulated by special conventions and specific contracts.

The relationships between the companies controlled by the Municipalities of Milan and Brescia, which refer to the supply of electricity, are at arm’s length conditions.

In particular, on April 12, 2017, Amsa S.p.A., a subsidiary of A2A S.p.A., in execution of the original assignment ordered in 2001, signed a contract with the Municipality of Milan for the management of services aimed at environmental protection for the period from January 1, 2017 to February 8, 2021; following the publication of the first tender cancelled by the Municipality in consideration of the appeals notified and the second tender still in progress, the assignment was extended until March 31, 2024.

The tender now in progress was published on December 30, 2021; it is a European open procedure tender for the contracting of the municipal waste management service with reduced environmental impact from a life-cycle perspective, pursuant to the action plan for the environmental sustainability of consumption in the public administration sector (PAN GPP) and the Decree of the Ministry of the Environment and Protection of Land and Sea of February 13, 2014.

The bid submission date, originally set for July 11, 2022, has been set for October 31, 2022. Two operators notified appeals against the notice to the Regional Administrative Court of Milan, appeals that ended with the rejection rulings of October 16, 2023. The operator who also submitted a bid, within the deadline, notified an appeal to the Council of State.

The bids submitted by Amsa and one of the applicants were examined by the Municipality of Milan. The activities of the jury were concluded on December 18, 2023; on January 11, 2023 and February 9, 2024, the RUP of the Municipality of Milan formulated requests to Amsa for the information necessary to verify the congruity of the winning bid, and the conclusion of said procedure is necessary to reach the award decision.

Relationships with subsidiaries and associates

The parent company A2A S.p.A., operates like a centralized treasury for the majority of the subsidiaries.

Relations between the companies are regulated through current accounts between the parent company and the subsidiaries, on which rates are applied, at market conditions, based on variable Euribor, with specific spreads for companies. For the financial year 2023, A2A S.p.A. and its subsidiaries have adopted the VAT procedure of the Group.

Note that for IRES purposes, A2A S.p.A. files for tax on a consolidated basis, together with its main subsidiaries, in accordance with arts. 117-129 of Presidential Decree no. 917/86. To this end, with each of the subsidiaries joining, a special contract was drawn up to regulate the tax advantages/disadvantages transferred, with specific reference to the current entries. These contracts also govern the transfer of any excess of ROL as set forth by prevailing legislation.

The parent company provides the subsidiaries and associates with administrative, fiscal, legal, management and technical services in order to optimize the resources available in the company and to use the existing expertise in terms of economic convenience. These services are governed by specific service contracts stipulated annually. A2A S.p.A. also makes office space and operating areas at its own premises available to subsidiaries and associates, as well as associated services. These are provided at market conditions.

The companies A2A gencogas S.p.A. and A2A Energiefuture S.p.A., for a monthly fee related to the actual availability of the thermoelectric plants, provide to the Parent Company the power generation service.

Notes to the Consolidated annual report 2023 Consolidated financial statements A2A 93

As of July 1, 2018, the Acinque Group's related-party transactions with related parties of the A2A Group are shown as related parties.

As of November 1, 2020, the AEB Group's related-party transactions with related parties of the A2A Group are shown as related parties.

* * *

The information on corporate governance and ownership structures required by article 123-bis of Legislative Decree no. 58/1998, as amended, is contained in a separate document “Report on Corporate Governance and Ownership Structures for the year ended December 31, 2023”, which forms an integral part of the financial statements documentation.

In compliance with the requirements of the “Regulation on provisions relating to related party transactions” adopted by Consob with Resolution no. 17221 of March 12, 2010 and subsequently amended by Resolution no. 17389 of June 23, 2010, by way of a resolution of November 11, 2010 the Management Board approved, following the favorable opinion of the Internal Control Committee, the prescribed procedure for identifying the rules and controls designed to ensure the transparency and substantial and procedural correctness of the related party transactions carried out by A2A S.p.A. directly or through its subsidiaries. The aforementioned Procedure was applied effective January 1, 2011 and subsequently amended on August 1, 2012, November 7 and December 18, 2013 and June 22, 2015.

Following a periodic review, the Procedure was subsequently amended/supplemented and approved by the Board of Directors on June 20, 2016, subject to the favorable opinion of the Audit and Risks Committee and then updated on June 22, 2017, in view of Consob Resolution no. 19925 of March 22, 2017 and on December 16, 2019, in view of the amendments to art. 192-quinquies of Legislative Decree no. 58 of February 24, 1998 (“TUF”) (art. 4 of Legislative Decree no. 49 of May 10, 2019).

Lastly, by resolution of the Board of Directors on June 25, 2021, subject to the favorable opinion of the Related Parties Committee established by board resolution of May 13, 2021, the Procedure was amended - effective as of July 1, 2021 - to comply with the Related Parties Regulation, as amended by Consob Resolution no. 21624 of December 10, 2020, in implementation of the so-called “Shareholders’ Rights II” Directive. The aforementioned Procedure can be found on www.gruppoa2a.it.

The company has availed itself of the possibility permitted by article 70, paragraph 8 and article 71, paragraph 1-bis of the Issuers’ Regulations, and hence of derogating from the requirement to make an information document available to public in the event of significant mergers, spin-offs, share capital increases by means of the contribution of assets in kind, acquisitions and disposals.

2

Notes

to the Consolidated annual report

2.1

General

information

2.2

Consolidated annual report

2.3

Financial statements

2.4

Basis of preparation

2.5

Changes in international accounting standards

2.6

Scope of consolidation

2.7

Consolidation policies and procedures

2.8

Accounting standards

and policies

2.9

Business Units

2.10

Results

sector by sector

2.11

Notes to the balance sheet

2.12

Net debt

2.13

Notes to the income statement

2.14

Earnings per share

2.15

Note on related party transactions

2.16

Significant

non-recurring events and transactions, pursuant to Consob Communication No. DEM/6064293 of July 28, 2006

2.17

Guarantees

and commitments with third parties

2.18

Other information

94 A2A Consolidated financial statements 2023 Notes to the Consolidated annual report

Below are the tables with detail of the related party transactions, in accordance with the Consob Resolution no. 17221 of March 12, 2010:

Balance sheet millions of euro | Total 12 31 2023 | Associated companies and subsidiaries of associates | Related companies | Municipality of Milan | Companies controlled directly and indirectly Municipality of Milan | Municipality of Brescia | Companies controlled directly and indirectly Municipality of Brescia | Related parties individuals | Total related parties | % effect on the balance sheet item
Total assets of which: | 18,798 | 52 | 41 | 92 | 23 | 18 | - | - | 226 | 1.2%
Non-current assets | 10,972 | 6 | 25 | 24 | - | 5 | - | - | 60 | 0.5%
Shareholdings | 30 | 6 | 24 | - | - | - | - | - | 30 | 100.0%
Other non-current financial assets | 67 | - | 1 | - | - | 5 | - | - | 6 | 9.0%
Other non-current assets | 138 | - | - | 24 | - | - | - | - | 24 | 17.4%
Current assets | 7,826 | 46 | 16 | 68 | 23 | 13 | - | - | 166 | 2.1%
Trade receivables | 3,540 | 46 | 9 | 68 | 23 | 12 | - | - | 158 | 4.5%
Other current assets | 2,264 | - | 1 | - | - | - | - | - | 1 | 0.0%
Current financial assets | 33 | - | 6 | - | - | 1 | - | - | 7 | 21.2%
Total liabilities of which: | 13,996 | 69 | 6 | 3 | 1 | 8 | - | - | 87 | 0.6%
Current liabilities | 7,020 | 69 | 6 | 3 | 1 | 8 | - | - | 87 | 1.2%
Trade payables | 4,105 | 64 | 5 | 3 | 1 | 8 | - | - | 81 | 2.0%
Other current liabilities | 2,070 | 5 | 1 | - | - | - | - | - | 6 | 0.3%

Income statement millions of euro | Total 12 31 2023 | Associated companies and subsidiaries of associates | Related companies | Municipality of Milan | Companies controlled directly and indirectly Municipality of Milan | Municipality of Brescia | Companies controlled directly and indirectly unicipality of Brescia | Related parties individuals | Total related parties | % effect on the balance sheet item
Revenues | 14,758 | 63 | 31 | 330 | 93 | 42 | 4 | - | 563 | 3.8%
Revenues from the sale of goods and services | 14,492 | 63 | 31 | 330 | 93 | 42 | 4 | 4 | 563 | 3.9%
Operating expenses | 11,972 | 66 | 14 | 11 | 8 | 9 | - | - | 108 | 0.9%
Expenses for raw materials and services | 11,591 | - | 14 | 1 | 8 | - | - | - | 23 | 0.2%
Other operating expenses | 381 | 66 | - | 10 | - | 9 | - | - | 85 | 22.3%
Labour costs | 815 | - | - | - | - | - | - | 1 | 1 | 0.1%
Result from non-recurring transactions | 2 | - | - | 2 | - | - | - | - | 2 | n.s.
Financial balance | (140) | - | - | - | - | 5 | - | - | 5 | (3.6%)
Financial income | 83 | - | - | - | - | 5 | - | - | 5 | 6.0%

Section 2 of this file provides complete schedules as required under Consob Resolution no. 17221 of March 12, 2010.

It should be noted that during the year, A2A S.p.A. made grants totaling 3 million euro to foundations that have been included on a voluntary basis among related parties. Specifically, these involve: Fondazione AEM, Fondazione ASM, Fondazione LGH E.T.S., Comitato Banco dell’Energia Onlus, Fondazione Brescia Musei and Associazione Centro Teatrale Bresciano.

* * *

With regard to the compensation paid to the corporate governance bodies, reference shall be made to the document “Remuneration Report – 2024” available on the website www.gruppoa2a.it.

Notes to the Consolidated annual report 2023 Consolidated financial statements A2A 95

2.16

Significant non-recurring events and transactions, pursuant to Consob Communication No. DEM/6064293 of July 28, 2006

38) Significant non-recurring events and transactions, pursuant to Consob Communication No. DEM/6064293 of July 28, 2006

It should be noted that in the year under review, the possibility was exercised, pursuant to Article 15, paragraphs 10 et seq. of Legislative Decree No. 185/2008, to revalue, or recognize, the higher tax values of controlling interests arising from the Purchase Price Allocation (PPA) process and recognized in the consolidated financial statements as goodwill and other intangible assets. Against the payment of the substitute tax of 33 million euro, the derogatory revaluation resulted in the recognition of net deferred tax assets of 55 million euro, relating to off-balance-sheet deductions of the higher revalued values. These deferred tax assets will be released pro rata in connection with off-balance-sheet deductions starting in 2025.

During the year, the Group finalized the agreement with Acque Bresciane S.r.l., effective as of May 31, 2023, for the sale of the Integrated Water Service (IWS) Unit of the subsidiary Azienda Servizi Valtrompia S.p.A.. The Group had collected a first tranche of the sale value, amounting to 38 million euro, and recorded 41 million euro in other receivables pending the definition by the ATO (Ufficio d'Ambito - Ambit Office) of the final sale price at the closing of the transaction. As at December 31, 2023, the Group recognized 3 million euro under "Net result from operating assets sold/held for sale" regarding the reclassification of revenues and costs related to the unit sold.

Effective August 1, 2023, in accordance with the program to rationalize the group's non-strategic assets, the sale of the "Val Staffora" business unit to Romeo Gas S.p.A. was finalized and concluded.

2

Notes

to the Consolidated annual report

2.1

General

information

2.2

Consolidated annual report

2.3

Financial statements

2.4

Basis of preparation

2.5

Changes in international accounting standards

2.6

Scope of consolidation

2.7

Consolidation policies and procedures

2.8

Accounting standards

and policies

2.9

Business Units

2.10

Results

sector by sector

2.11

Notes to the balance sheet

2.12

Net debt

2.13

Notes to the income statement

2.14

Earnings per share

2.15

Note on related party transactions

2.16

Significant

non-recurring events and transactions, pursuant to Consob Communication No. DEM/6064293 of July 28, 2006

2.17

Guarantees

and commitments with third parties

2.18

Other information

Notes to the Consolidated annual report 2023 Consolidated financial statements A2A 97

millions of euro

12 31 2023

12 31 2022

Guarantees received

1,074

950

Guarantees provided

2,461

2,505

Guarantees received

Guarantees received amounted to 1,074 million euro (950 million euro at December 31, 2022) and included 475 million euro for sureties and security deposits issued by subcontractors to guarantee the proper execution of the work assigned and 518 million euro for sureties and security deposits received from customers to guarantee the regularity of payments and guarantees received by the ACINQUE Group for 60 million euro and guarantees received by the AEB Group for 21 million euro.

Guarantees provided and commitments with third parties

Guarantees provided amounted to 2,461 million euro (2,505 million euro at December 31, 2022), of which for obligations undertaken in the loan agreements of 125 million euro. These guarantees have been issued by banks for 1,611 million euro, insurance companies for 39 million euro and the parent company A2A S.p.A., as parent company guarantee, for 672 million euro and guarantees provided by the ACINQUE Group for 90 million euro and guarantees provided by the AEB Group for 49 million euro.

* * *

Group companies hold third party assets under concession, relating mainly to the integrated water cycle, amounting to 66 million euro.

2.17

Guarantees and commitments with third parties

2

Notes

to the Consolidated annual report

2.1

General

information

2.2

Consolidated annual report

2.3

Financial statements

2.4

Basis of preparation

2.5

Changes in international accounting standards

2.6

Scope of consolidation

2.7

Consolidation policies and procedures

2.8

Accounting standards

and policies

2.9

Business Units

2.10

Results

sector by sector

2.11

Notes to the balance sheet

2.12

Net debt

2.13

Notes to the income statement

2.14

Earnings per share

2.15

Note on related party transactions

2.16

Significant

non-recurring events and transactions, pursuant to Consob Communication No. DEM/6064293 of July 28, 2006

2.17

Guarantees

and commitments with third parties

2.18

Other information

98 A2A Consolidated financial statements 2023 Notes to the Consolidated annual report

1) Significant events for the Group after December 31, 2023

For a description, reference is made to the paragraph “Significant events after December 31, 2023” of the Report on operations.

2) Information on treasury shares

At December 31, 2023, A2A S.p.A. had no treasury shares.

3) Transactions as per IFRS 3 revised

In 2023, the A2A Group completed the following acquisition of investments, which fall within the provisions of IFRS 3:

• the acquisition by A2A Calore & Servizi S.p.A. of 100% of Termica Cologno S.r.l. resulting in the full consolidation of the company.

The transaction summarized above is classified as business combination in accordance with international standard IFRS 3 “Business Combinations”; the Group fully consolidated the companies through the application of the acquisition method prescribed by IFRS 3, by virtue of the control obtained on the entities acquired.

IFRS 3 requires all business combinations to be accounted for using the acquisition method within twelve months from acquisition. The acquirer must therefore recognize all the identifiable assets, liabilities and contingent liabilities relating to the acquisition at their fair values at the acquisition date and highlight the eventual recognition of goodwill.

The fee transferred in a business combination is determined at the date of acquisition of control and is equal to the fair value of assets transferred, liabilities incurred, and any equity instruments issued by the acquirer. Costs directly attributable to the transaction are recognized in the income statement when incurred. At the date of acquisition of control, the net equity of the investee companies is determined by attributing to individual assets and liabilities their fair value, except in cases where the IFRS provisions provide a different valuation criterion. Any residual difference with respect to the purchase cost, if positive, is recognized under the item “Goodwill” (hereinafter also goodwill); if negative, it is recognized in the income statement.

Business combination Termica Cologno S.r.l.

On June 19, 2023, A2A Calore & Servizi S.r.l., a company 100% owned by A2A S.p.A., acquired 100% of the investment in Termica Cologno S.r.l. company that owns a cogeneration thermoelectric plant. The acquisition transaction was concluded for a value of 9 million euro (the price was fully settled at the transaction closing) and generated goodwill of 2 million euro.

4) Information on non-current assets and liabilities held for sale and discontinued operations (IFRS 5)

The items “Non-current assets held for sale” and “Liabilities directly associated with non-current assets held for sale” had a nil balance at December 31, 2023 as in the previous year.

5) Rules on public funding (Compliance with art. 1, paragraphs 125 et seq. of Law 124/17)

Pursuant to art. 1, paragraphs 125 and following Law 124/17, as reformulated by art. 35 of Decree Law 34/19, and considering that the Group companies have not received “subsidies, grants, advantages, contributions or aid, whether in cash or in kind, not general and with no consideration, remuneration or compensation”, this note is negative.

This is without prejudice to the fact that other information is (also in the wake of the principle pursuant to art. 18 L. 241/1990) available elsewhere, also by virtue of the criterion set forth in paragraph 127 of the same art. 1 L. 124/17, which prescribes to “avoid the accumulation of irrelevant information”, as well as what is specified in paragraph 125 quinquies of the same art. 1 L. 124/17 by virtue of which “for State aid and de minimis aid contained in the National Register of State Aid referred to in article 52 of Law No. 234 of December 24, 2012, the registration of aid in the aforesaid system, with consequent publication in the transparency section provided therein, carried out by the entities granting or managing

2.18

Other information

Notes to the Consolidated annual report 2023 Consolidated financial statements A2A 99

such aid pursuant to the relevant rules, takes the place of the publication obligations placed on the entities referred to in paragraphs 125 and 125-bis”.

It should also be noted that the companies of the A2A Group operate (for the most part) in regulated sectors. Therefore, some sums are recognized by public bodies, but not as subsidies/contributions, but as recognition of the activities they provide or as forms of compensation for costs incurred to meet specific regulatory obligations and in any case by virtue of a general regime. Also all these forms of payment have not been indicated: also in compliance with both the literal aspect of the regulations and with the interpretation criteria that the company has identified (see above).

6) Financial risk management

The A2A Group operates in the electricity, natural gas and district heating industry and is exposed to various financial risks in performing its activity:

a) commodity risk;

b) interest rate risk;

c) exchange rate risk not related to commodities;

d) liquidity risk;

e) credit risk;

f) equity risk;

g) default and covenant non-compliance risk.

The commodity price risk, related to the volatility of energy commodity prices (gas, electricity, fuel oil, coal, etc.) and prices of environmental securities (EUA/ETS emission rights, green certificates, white certificates, etc.), consists of the possible negative effects that a change in the market price of one or more commodities may have on the cash flows and income prospects of the company, including the exchange rate risk related to the same commodities.

Interest rate risk is the risk of additional financial costs as the result of an unfavorable change in interest rates.

Currency risk not related to commodities is the risk of higher costs or lower revenues because of an unfavorable change in exchange rates between currencies.

Liquidity risk is the risk that financial resources will not be sufficient to meet established financial and business obligations in a timely manner.

Credit risk is the exposure to potential losses deriving from non-performance of commitments by commercial, trading and financial counterparties.

Equity risk is the possibility of incurring losses due to an unfavorable change in the price of shares.

Default and covenant non-compliance risk represent the possibility that loan agreements or bond regulations to which one or more Group companies are party contain provisions allowing the counterparties, banks or bondholders, to ask the debtor for immediate reimbursement of the amounts lent if certain events take place.

Details on the risks to which the A2A Group is exposed are provided below.

a. Commodity risk

a.1) Commodity price risk and exchange rate risk involved in commodity activities

The Group is exposed to price risk, including the related currency risk, on all of the energy commodities that it handles, namely electricity, natural gas, heat, coal, fuel oil and environmental certificates; the results of production, purchases and sales are similarly affected by fluctuations in the prices of such energy commodities. These fluctuations act both directly and indirectly, through formulas and indexing in the pricing structure.

To stabilize cash flows and to assure the Group’s economic and financial stability, A2A S.p.A. has an Energy Risk Policy that sets out clear guidelines to manage and control the above risks, based on guidance by the Committee of Chief Risk Officers Organizational Independence and Governance Working Group (CCRO) and the Group on Risk Management of Eurelectric. Reference was also made to the Accords of the Basel Committee on bank supervision and the requirements laid down in

2

Notes

to the Consolidated annual report

2.1

General

information

2.2

Consolidated annual report

2.3

Financial statements

2.4

Basis of preparation

2.5

Changes in international accounting standards

2.6

Scope of consolidation

2.7

Consolidation policies and procedures

2.8

Accounting standards

and policies

2.9

Business Units

2.10

Results

sector by sector

2.11

Notes to the balance sheet

2.12

Net debt

2.13

Notes to the income statement

2.14

Earnings per share

2.15

Note on related party transactions

2.16

Significant

non-recurring events and transactions, pursuant to Consob Communication No. DEM/6064293 of July 28, 2006

2.17

Guarantees

and commitments with third parties

2.18

Other information

100 A2A Consolidated financial statements 2023 Notes to the Consolidated annual report

international accounting standards on how to recognize the volatility of commodity price and financial derivatives in the income statement and balance sheet.

In the A2A Group, assessment of this kind of risk is centralized at the holding company, which has established a Group Risk Management Organizational Unit as part of the Planning, Finance and Control Organizational Unit. This unit has the task to manage and monitor market and commodity risks, to create and evaluate structured products, to propose financial energy risk hedging strategies, and to support senior management in defining the Group’s energy risk management policies.

Each year, the Board of Directors of A2A S.p.A. sets the Group’s commodity risk limits approving the PaR and VaR proposed (prepared in the Risk Committee) in conjunction with approval of the Budget/Business Plan; Group Risk Management supervises the situation to ensure compliance with these limits and proposes to senior management the hedging strategies designed to bring risk within the set limits, if exceeded.

The activities that are subject to risk management include all of the positions on the physical market for energy products, both purchasing/production and sales, and all of the positions in the energy derivatives market taken by Group companies.

For the purpose of monitoring risks, industrial and trading portfolios have been separated and are managed in different ways. The industrial portfolio consists of the physical and financial contracts directly relating to the Group’s industrial operations, namely where the objective is to enhance production capacity also through the wholesaling and retailing of gas, electricity and heat.

The trading portfolio comprises all contracts, both physical and financial, entered into to supplement the profits made from the industrial activities, i.e. all contracts that are ancillary though not strictly necessary to the industrial activity.

In order to identify trading activity, the A2A Group follows the Capital Adequacy Directive and the definition of assets held for trading provided by International Accounting Standard (IFRS) 9: namely assets held for the purpose of short-term profit taking on market prices or margins, without being for hedging purposes, and designed to create a high-turnover portfolio.

Given that they exist for different purposes, the two portfolios have been segregated and are monitored separately with specific tools and limits. More specifically, the trading portfolio is subject to particular risk control and management procedures as laid down in Deal Life Cycle documents.

Senior management is systematically updated on changes in the Group’s commodity risk by the Group Risk Management Unit, which controls the Group’s net exposure. This is calculated centrally on the entire asset and contract portfolio and monitors the overall level of economic risk assumed by the industrial and trading portfolios (Profit at Risk - PaR, Value at Risk - VaR, Stop Loss).

a.2) Commodity derivatives, analysis of transactions

Derivatives of the industrial portfolio considered hedges

The hedging of price risk by means of derivatives focuses on protecting against the volatility of energy prices on the power exchange (IPEX-EEX), stabilizing electricity price margins on the wholesale market with particular attention being paid to fixed price energy sales and purchases and stabilizing price differences deriving from various indexing mechanisms for the pricing of gas and electricity. To that end, hedging contracts were executed during the year on electricity purchase and sale agreements and on contracts to hedge the fee for the use of electricity transport capacity between the areas of the IPEX market (CCC contracts); hedging contracts were also concluded for the purchase and sale of gas so as to protect sales margins and at the same time keep the risk profile to within the limits set by the Group’s Energy Risk Policy.

As part of the optimization of the portfolio of greenhouse gas emission allowances (see Directive 2003/87/EC), the A2A Group has stipulated Future contracts on the ICE ECX (European Climate Exchange) price. These are considered hedging transactions from an accounting point of view in the event of demonstrable surplus/deficit quotas.

The fair value at December 31, 2023 was -2.3 million euro (32.4 million euro at December 31, 2022).

Derivatives of the industrial portfolio not considered hedges

Again with a view to optimizing the Industrial Portfolio, Future contracts have been entered into on the ICE ECX (European Climate Exchange) stock exchange price. These do not qualify as hedging transactions from an accounting point of view as they fail to meet the requirement set out in the accounting standards.

The fair value at December 31, 2023 was 1.1 million euro (0.2 million euro at December 31, 2022).

Notes to the Consolidated annual report 2023 Consolidated financial statements A2A 101

Derivatives of the Trading Portfolio

As part of its trading activity, the A2A Group has taken out Future contracts on major European energy stock exchanges (EEX, ICE) and Forward and Option contracts on the price of electricity with delivery in Italy and neighboring countries such as France, Germany and Switzerland. The Group has also stipulated Future contracts on the ICE ECX (European Climate Exchange) stock exchange price. Also as part of trading activities, Future, Forward and Option contracts were also stipulated for the market price of gas (ICE-Endex, CEGH, PEGAS).

The fair value at December 31, 2023 was -26.9 million euro (268.1 million euro at December 31, 2022).

a.3) Energy Derivatives, risk assessment of Industrial Portfolio derivatives

PaR 1 or Profit at Risk, is used to assess the impact that fluctuations in the market price of the underlying have on the financial derivatives taken out by the A2A Group that are attributable to the industrial portfolio. It is the change in the value of a financial instruments portfolio within set probability assumptions as the result of a shift in the market indices. The PaR is calculated using the Montecarlo Method (at least 10,000 trials) and a 99% confidence level. It simulates scenarios for each relevant price driver depending on the volatility and correlations associated with each one, using as the central level the forward market curves at the balance sheet date, if available. By means of this method, after having obtained a distribution of probability associated with changes in the result of outstanding financial contracts, it is possible to extrapolate the maximum change expected over a time horizon given by the accounting period at a set level of probability. Based on this methodology, over the time horizon of the accounting period and in the event of extreme market movements and at a 99% confidence level, the expected maximum negative change in financial derivatives outstanding at December 31, 2023 was 113.328 million euro (192.226 million euro at December 31, 2022).

millions of euro

12 31 2023

12 31 2022

Profit at Risk (PaR)

Worst case

Best case

Worst case

Best case

Confidence level 99%

(113.328)

145.548

(192.226)

299.227

The A2A Group therefore expects, with a 99% probability, not to have changes compared to the fair value at December 31, 2023 exceeding 113.328 million euro of its entire portfolio of financial instruments due to unfavorable commodity price fluctuations in the 12 months following. If there are any negative changes in the fair value of hedge derivatives, these would be compensated by changes in the underlying physical.

a.4) Energy Derivatives, risk assessment of Trading Portfolio derivatives

VaR 2 (Value at Risk) is used to assess the impact that fluctuations in the market price of the underlying have on the financial derivatives taken out by the A2A Group that are attributable to the trading portfolio. It is the negative change in the value of a financial instruments portfolio within set probability assumptions as the result of an unfavorable shift in the market indices. VaR is calculated using the RiskMetrics method with a holding period of 3 days and a confidence level of 99%. Alternative methods are used for contracts where it is not possible to perform a daily estimate of VaR such as stress test analysis

Based on this method, in the case of extreme market movements, with a confidence level of 99% and a holding period of 3 days, the maximum estimated loss on the derivatives in question was 0.480 million euro at December 31, 2023 (2.948 million at December 31, 2022). In order to ensure closer monitoring of activities, VaR and Stop Loss (the sum of VaR, P&L Realized and P&L Unrealized) limits are also set.

1 Profit at Risk: statistical measurement of the maximum potential negative deviation of the margin of an asset portfolio in case of unfavourable market changes over a given time horizon and with a defined confidence interval.

2 Value at Risk: statistical measurement of the maximum potential drop in the fair value of an asset portfolio in the event of unfavourable movements in the market with a given time horizon and confidence level.

2

Notes

to the Consolidated annual report

2.1

General

information

2.2

Consolidated annual report

2.3

Financial statements

2.4

Basis of preparation

2.5

Changes in international accounting standards

2.6

Scope of consolidation

2.7

Consolidation policies and procedures

2.8

Accounting standards

and policies

2.9

Business Units

2.10

Results

sector by sector

2.11

Notes to the balance sheet

2.12

Net debt

2.13

Notes to the income statement

2.14

Earnings per share

2.15

Note on related party transactions

2.16

Significant

non-recurring events and transactions, pursuant to Consob Communication No. DEM/6064293 of July 28, 2006

2.17

Guarantees

and commitments with third parties

2.18

Other information

102 A2A Consolidated financial statements 2023 Notes to the Consolidated annual report

The following are the results of the assessments:

millions of euro |  | 12 31 2023 |  | 12 31 2022
Value at Risk (VaR) | VaR | Stop Loss | VaR | Stop Loss
Confidence level 99%, holding period 3 days | (0.480) | (0.480) | (2.948) | (2.948)

b. Interest rate risk

The Group is exposed to the risk that changes in the interest rate curve result in changes in economic results, cash flows and the value of assets and liabilities measured at fair value. The volatility of financial expenses associated to the performance of interest rates is monitored and mitigated through a policy of interest rate risk management aimed at identifying a balanced mix of fixed-rate and variable rate loans and the use of derivatives that limit the effects of fluctuations in interest rates.

The book value and type of gross debt at December 31, 2023 are shown in the table below:

millions of euro |  |  | 12 31 2023 |  |  | 12 31 2022
| Before hedging | After hedging | % after hedging | Before hedging | After hedging | % after hedging
Fixed rate | 5,431 | 5,548 | 87% | 5,168 | 5,332 | 77%
Variable rate | 920 | 803 | 13% | 1,721 | 1,557 | 23%
Total | 6,351 | 6,351 | 100% | 6,889 | 6,889 | 100%

At December 31, 2023, the following are the hedging instruments for interest rate risk:

millions of euro |  | 12 31 2023 |  | 12 31 2022
Hedging instrument Hedged asset | Fair value | Notional | Fair value | Notional
IRS Floating rate loan subsidiaries | 2.4 | 25.4 | 4.4 | 43.9
Total | 2.4 | 25.4 | 4.4 | 43.9

Notes to the Consolidated annual report 2023 Consolidated financial statements A2A 103

With reference to the accounting treatment, hedging derivatives for interest rate risk can be classified as follows:

millions of euro

Accounting treatment | Type of derivatives |  | Financial | assets |  |  | Financial | liabilities |
|  | Notional | at: | Fair | value at: | Notional | at: | Fair | value at:
|  | 12 31 2023 | 12 31 2022 | 12 31 2023 | 12 31 2022 | 12 31 2023 | 12 31 2022 | 12 31 2023 | 12 31 2022
Cash flow hedge | IRS | - | - | - | - | 25.4 | 43.9 | 2.4 | 4.4
Total |  | - | - | - | - | 25.4 | 43.9 | 2.4 | 4.4

Derivatives on interest rates at December 31, 2023 in cash flow hedge refer to the following loans:

The Group performs sensitivity analysis by estimating the effects on the value of financial statement items relating to the portfolio of financial instruments deriving from changes in the level of interest rates.

Loan

Derivative

Accounting

A5 variable rate bank loan, maturity December 2025, residual debt at December 31, 2023 of 4.4 million euro.

IRS on 100% of the amount of the loan until maturity thereof.

At December 31, 2023, the fair value was positive for 0.2 million euro.

The loan is measured at amortized cost.

The IRS is a cash flow hedge, with 100% recognized in a specific equity reserve.

VOLTA GREEN ENERGY variable rate bank loan, maturity December 2026, residual debt at December 31, 2023 of 0.8 million euro.

IRS on 100% of the amount of the loan until maturity thereof.

At December 31, 2023, the fair value was positive for 0.04 million euro.

The loan is measured at amortized cost.

The IRS is a cash flow hedge, with 100% recognized in a specific equity reserve.

LA CASTILLEJA ENERGIA variable rate bank loan, maturity December 2034, residual debt at December 31, 2023 of 20.2 million euro.

IRS on 75% of the amount of the loan until December 2030.

At December 31, 2023, the fair value was positive for 2.2 million euro.

The loan is measured at amortized cost.

The IRS is a cash flow hedge, with 100% recognized in a specific equity reserve.

In particular, the sensitivity analysis measures the potential impact on the Income Statement and shareholders’ equity of different market scenarios that would determine the change in fair value of derivative financial instruments and the change in financial expenses related to the portion of gross debt not hedged.

These market scenarios are obtained by shifting the reference interest rate curve at the reporting date up and down in parallel.

Keeping all other variables constant, the pre-tax result would be influenced by changes in the level of interest rates as follows:

millions of euro

Effect on the Income Statement (before tax)

Effect on Equity

(before tax)

-50 bps

+50 bps

-50 bps

+50 bps

Change in financial expenses on gross variable-rate debt after hedging

3.1

(3.1)

-

-

Change in fair value of derivative financial instruments classified as non-hedge

-

-

-

-

Change in fair value of derivative financial instruments classified as hedge (excluding BCVA as per IFRS 13):

Cash flow hedge

-

-

(0.4)

0.4

Fair value hedge

-

-

-

-

2

Notes

to the Consolidated annual report

2.1

General

information

2.2

Consolidated annual report

2.3

Financial statements

2.4

Basis of preparation

2.5

Changes in international accounting standards

2.6

Scope of consolidation

2.7

Consolidation policies and procedures

2.8

Accounting standards

and policies

2.9

Business Units

2.10

Results

sector by sector

2.11

Notes to the balance sheet

2.12

Net debt

2.13

Notes to the income statement

2.14

Earnings per share

2.15

Note on related party transactions

2.16

Significant

non-recurring events and transactions, pursuant to Consob Communication No. DEM/6064293 of July 28, 2006

2.17

Guarantees

and commitments with third parties

2.18

Other information

104 A2A Consolidated financial statements 2023 Notes to the Consolidated annual report

c. Exchange rate risk not related to commodities

The Group is exposed to the risk that changes in exchange rates with respect to the currency of account may lead to changes in its results of operations and cash flows. In relation to exchange rate risk other than that included in the price of commodities, the hedging instrument at December 31, 2023 is as follows:

millions of euro

12 31 2023

12 31 2022

Hedging instrument

Hedged asset

Fair value

Notional

Fair value

Notional

Cross Currency IRS

Fixed rate bond in foreign currency

(10.7)

98.0

7.2

98.0

Total

(10.7)

98.0

7.2

98.0

With regard to the accounting treatment, it is specified that the hedging derivative above is in cash flow hedge with full recognition in the equity reserve.

In particular, the underlying of the Cross Currency IRS derivative refers to the bond at fixed rate of 14 billion yen with maturity 2036 bullet issued in 2006.

A cross currency swap contract was stipulated for the entire duration of this loan, which converts the principal and interest payments from yen into euro.

At December 31, 2023, the fair value of the hedge was negative for 10.7 million euro.

It should be noted that a 10% positive shift in the EURJPY forward curve, with a consequent depreciation of the JPY, would result in a worsening of the fair value and, consequently, of the impact on shareholders’ equity of 11 million euro. Conversely, a 10% negative shift in the EURJPY forward curve, resulting in an appreciation of the JPY, would result in an improvement in fair value of 13.4 million euro.

This sensitivity analysis was performed with the aim of calculating the effect of changes in the forward curve of the euro/yen exchange rate on the fair value ignoring any impact on the adjustment due to the bCVA.

d. Liquidity risk

Liquidity risk is the risk that the Group is unable to meet its obligations in a timely manner or that it is able to do so under unfavorable economic conditions due to situations of tension or systemic crisis or to the changed perception of its riskiness by the market. This risk includes: i) the risk related to the company’s inability to raise new funds (Funding Risk) and, ii) the risk related to the company’s inability to liquidate assets on the market in a timely manner and at market conditions (Liquidity Market Risk).

One of the main factors influencing the market’s perceived riskiness is the creditworthiness of A2A assigned by rating agencies. This judgement plays a very important role because it influences the ability of A2A to access sources of financing as well as the related costs. A deterioration in creditworthiness could lead to a limitation of access to the capital market and/or financing costs with a negative impact on the economic, financial and equity situation. A2A has a medium- and long-term rating of BBB (stable outlook) with S&P and Baa2 (stable outlook) with Moody’s.

Notes to the Consolidated annual report 2023 Consolidated financial statements A2A 105

The profile of the Group’s gross debt maturities is as follows:

The risk management policy, both in the short and medium/long term, is realized through (i) a debt management strategy diversified by funding sources with a balanced maturity profile, (ii) access to various sources of financing in terms of market and counterparty and (iii) maintenance of financial resources, consisting of both liquidity and committed credit lines, sufficient to meet expected and unexpected commitments over a given time horizon.

millions of euro

Accounting Balance

12 31 2023

Portions maturing

within 12 months

Portions maturing

beyond 12 months

Portions maturing by

12 31 2025

12 31 2026

12 31 2027

12 31 2028

After

Bonds

5,157

357

4,800

299

597

298

496

3,110

Financial payables for rights of use*

177

35

142

32

20

19

15

56

Loans from banks and other lenders

1,017

383

634

107

87

76

79

285

Total

6,351

775

5,576

438

704

393

590

3,451

It does not include fair value derivatives included in the net financial position.

(*) Including finance leases.

At December 31, 2023, the Group had a total of 3,559 million euro, as follows:

(i) committed revolving credit lines of 1,580 million euro, of which: a) 20 million euro maturing in 2024, b) 560 million euro maturing in 2025, c) 800 million euro maturing in 2026, d) 200 million euro maturing in 2028, unused;

(ii) available and not yet disbursed term loans of 350 million euro maturing between 2033 and 2043;

(iii) cash and cash equivalents totaling 1,629 million euro, including 1,487 million euro at the Parent Company level.

In addition, A2A maintains a Bond Issuance Program (Euro Medium Term Note Program), the size of which was increased to 7 billion euro with the annual renewal in July 2023; at December 31, 2023, 1,950 million euro is available.

Over the years, A2A has embarked on a path of issues with ESG characteristics, in the form of Green Bonds and Sustainability-Linked Bonds. For A2A, the failure to meet certain sustainability KPI (ESG) targets can lead to an increase in the financing costs of the debt instruments to which these KPIs are linked. In particular, A2A issued two Sustainability-Linked Bonds, the first in 2021 with a 10-year maturity and the second in 2022 with a 6-year maturity: for both bonds, the failure to reach the target related to the chosen KPI will result in a coupon increase of 25 basis points.

The following table represents the repayment schedule of financial liabilities (excluding payables for rights of use and including trade payables). The amounts shown in the table are future cash flows, nominal and non-discounted, determined with reference to the remaining contractual maturities, for the principal and interest portions. The undiscounted nominal flows of derivative contracts on interest rates are also included. Finally, any revocable financial lines used and current accounts payable are due within the next financial year.

2

Notes

to the Consolidated annual report

2.1

General

information

2.2

Consolidated annual report

2.3

Financial statements

2.4

Basis of preparation

2.5

Changes in international accounting standards

2.6

Scope of consolidation

2.7

Consolidation policies and procedures

2.8

Accounting standards

and policies

2.9

Business Units

2.10

Results

sector by sector

2.11

Notes to the balance sheet

2.12

Net debt

2.13

Notes to the income statement

2.14

Earnings per share

2.15

Note on related party transactions

2.16

Significant

non-recurring events and transactions, pursuant to Consob Communication No. DEM/6064293 of July 28, 2006

2.17

Guarantees

and commitments with third parties

2.18

Other information

106 A2A Consolidated financial statements 2023 Notes to the Consolidated annual report

12 31 2023

millions of euro

1- 3

MONTHS

4- 12

MONTHS

BEYOND

12 MONTHS

Bonds

341

67

5,498

Loans from banks and other lenders

21

309

769

Total financial flows

362

376

6,267

Payables to suppliers

872

25

8

Total trade flows

872

25

8

12 31 2022

millions of euro

1- 3

MONTHS

4- 12

MONTHS

BEYOND

12 MONTHS

Bonds

19

379

5,165

Loans from banks and other lenders

176

520

1,278

Total financial flows

195

899

6,443

Payables to suppliers

1,082

26

9

Total trade flows

1,082

26

9

e. Credit risk

Credit risk relates to the possibility that a counterparty, commercial or trading, may be in default, or fail to respect its commitment in the manner and timing provided by contract. This type of risk is managed by the Group through specific procedures (Credit Policy, Energy Risk Management procedure) and appropriate mitigation actions.

This risk is overseen by both the Credit Management function allocated centrally (and the corresponding functions of the operating companies) and the Group Risk Management Organizational Unit responsible for supporting the Group companies with reference to both commercial and trading activities. Risk mitigation is through the prior assessment of the creditworthiness of the counterparty and the constant verification of compliance with exposure limit as well as through the request for adequate guarantees.

The credit terms granted to customers as a whole have a variety of deadlines, in accordance with applicable law and market practice. In cases of delayed payment, default interest is charged as explicitly prescribed by the underlying supply contracts or by current law (application of the default rate as per Legislative Decree 231/2002).

Trade receivables are stated in the balance sheet net of any write-downs; the amount shown is considered to be a correct reflection of the realizable value of the receivables portfolio. For the aging of trade receivables, reference is made to note “Trade receivables”.

.f. Equity risk

At December 31, 2023, the A2A Group was not exposed to equity risk.

In particular, it should be noted that the parent company A2A S.p.A. did not hold any treasury shares at December 31, 2023.

As prescribed by IAS/IFRS, treasury shares do not constitute an equity risk as their purchase cost is deducted from equity, and even if they are sold any gain or loss on the purchase cost does not have any effect on income statement.

g. Covenants non-compliance risk

Bonds, loans, leases and committed revolving bank lines present terms and conditions in line with market practice for each type of instrument. In particular, they envisage:

• negative pledge clauses whereby the parent company undertakes not to pledge its assets and those of its material subsidiaries (as defined in the relevant documentation from time to time), subject to certain exceptions and a maximum permitted threshold, specifically identified;

• cross-default clauses, whereby, in the event of an event of default (exceeding specific materiality thresholds) on a specific financial indebtedness of the parent company and, in some cases, its material subsidiaries (as defined in the relevant documentation from time to time), a default also occurs on other loans or financial debt of the parent company that may become immediately due;

• pari passu clauses, whereby the parent company’s bonds and financial obligations have the same level of seniority as its other present and future non-secured and non-subordinated bonds or financial obligations.

Notes to the Consolidated annual report 2023 Consolidated financial statements A2A 107

The bonds issued by A2A S.p.A. include (i) senior unsecured bonds for a nominal amount of 5,050 million euro (book value at December 31, 2023 equal to 5,066 million euro) issued as part of the EMTN Program, which provide to investors a Change of Control Put option in the event of a change of control of the parent company resulting in a consequent downgrade of the rating to sub-investment grade level in the following 180 days (if within these 180 days, the company’s rating returns to investment grade, the option may not be exercised); (ii) a bond in yen placed privately with a maturity in 2036 for a nominal amount of 98 million euro (book value at December 31, 2023 equal to 91 million euro), which provides to the investor a Put option in the event that the rating of the parent company is lower at BBB- or equivalent level (sub-investment grade).

The loans stipulated by A2A S.p.A. with the European Investment Bank (EIB), for a total nominal debt of 527 million euro (in addition to a further 200 million euro not yet disbursed) and a book value of 529 million euro, of which 203 million have a maturity of more than five years, include (i) a credit rating clause (if rated lower than BBB- or equivalent sub-investment grade) that provides for the obligation of A2A to inform EIB in the event of a rating downgrade and, in such circumstance, the right of EIB to request additional guarantees from A2A and, where such guarantees are not provided or are not satisfactory to EIB, the right to request early repayment of the loan, and ii) a clause for the parent company’s change of control, with the right for the bank to invoke, subject to notice to the company containing the reasons, early repayment of the loan.

A loan of the subsidiary Agripower (formerly Fragea), whose residual debt at December 31, 2023 was 1.8 million euro, is secured by collateral on the property and plant financed.

The committed revolving bank lines of A2A S.p.A., for a total of 1,560 million euro, provide a Change of Control clause which, in the event of a change of control of the parent company causing a Material Adverse Effect, allows the majority of banks lending the line to request the line to be extinguished and any amounts drawn down to be repaid.

Some Acinque, and LA CASTILLEJA ENERGIA bank loans include financial covenants, as shown in the relevant table below.

At June 30, 2023, one of the three covenants in the Acinque EIB loan contract (Net Financial Debt/Ebitda) was not met.

With reference to the exceeding of the covenant as described above, it should be noted that Acinque requested the European Investment Bank to issue a waiver and that the Bank granted, subject to the issue by A2A S.p.A., a first demand guarantee for the entire amount financed in favor of the Bank, which took place in the second half of 2023 and with maturity on December 31, 2024. As at December 31, 2023, this covenant was met.

2

Notes

to the Consolidated annual report

2.1

General

information

2.2

Consolidated annual report

2.3

Financial statements

2.4

Basis of preparation

2.5

Changes in international accounting standards

2.6

Scope of consolidation

2.7

Consolidation policies and procedures

2.8

Accounting standards

and policies

2.9

Business Units

2.10

Results

sector by sector

2.11

Notes to the balance sheet

2.12

Net debt

2.13

Notes to the income statement

2.14

Earnings per share

2.15

Note on related party transactions

2.16

Significant

non-recurring events and transactions, pursuant to Consob Communication No. DEM/6064293 of July 28, 2006

2.17

Guarantees

and commitments with third parties

2.18

Other information

108 A2A Consolidated financial statements 2023 Notes to the Consolidated annual report

A2A Group - Financial covenants at December 31, 2023

Company

Lender

Level of reference

Level recognized

Date of recognition

ACINQUE

BEI

Available cash flow/net financial debt >= 14.0%

Financial debt/equity <= 75.0%

Net financial debt/Ebitda <= 3.0

22.86%

59.08%

2.86x

12/31/23

12/31/23

12/31/23

ACINQUE

Cassa Centrale Banca - Credito Cooperativo Italiano S.p.A.

Net Financial debt/Ebitda <= 4.0

Net Financial debt/Equity <= 1.0

2.86x

50.40%

12/31/23

12/31/23

ACINQUE

Banca Sella

Net Financial debt/Ebitda <= 4.0

2.8x

12/31/23

LA CASTILLEJA ENERGIA

CaixaBank

Debt Service Coverage Ratio >= 1.05x or not <1.10x for four consecutive Calculation Dates

Senior Debt / Equity ratio <= 85%

1.50x

78%

12/31/23

12/31/23

Analysis of forward transactions and derivatives

Tests were performed to determine whether these transactions qualify for hedge accounting in accordance with International Accounting Standard IFRS 9.

In particular:

1) transactions qualifying for hedge accounting under IFRS 9: can be analyzed between transactions to hedge cash flows (cash flow hedges) and transactions to hedge fair value of assets and liabilities (fair value hedges). For the cash flow hedges, the accrued result is included in gross operating margin when realized on commodity derivatives and in the financial balance for interest rate and currency derivatives, whereas the future value is shown in equity. For fair value hedge transactions, the impacts in the Income Statement are recorded within the same line of the financial statements;

2) transactions not considered as hedges for the purposes of IFRS 9, can be:

a. margin hedges: for all hedging transactions of cash flows or the market value in line with internal risk policies, the accrued result and future value are included in gross operating margin for commodity derivatives and in the financial balance for interest rate and currency derivatives;

b. trading transactions: the accrued result and future value are recognized above gross operating margin for commodities transactions and in financial income and expense for interest rate and currency transactions.

The use of derivatives in the A2A Group is governed by a coordinated set of procedures (Energy Risk Policy, Deal Life Cycle) which are based on industry best practices and designed to limit the risk of the Group being exposed to commodity price fluctuations, based on a cash flow hedging strategy.

The derivatives are measured at fair value based on the forward market curve at the balance sheet date, if the asset underlying the derivative is traded on markets with a forward pricing structure. In the absence of a forward market curve, fair value is measured on the basis of internal estimates using models that refer to industry best practices.

The A2A Group uses “continuous-time” discounting to measure fair value. As a discount factor, it uses the interest rate for risk-free assets, identified in the Euro Overnight Index Average (EONIA) rate and represented in its forward structure by the Overnight Index Swap (OIS) curve. The fair value of the cash flow hedges has been classified on the basis of the underlying derivative contracts in accordance with IFRS 9.

In compliance with the provisions of IFRS 13, the fair value of an over-the-counter (OTC) financial instrument is determined taking into account the non-performance risk. To quantify the fair value adjustment attributable to this risk, A2A has, in line with best market practices, developed a proprietary model called the “bilateral Credit Value Adjustment” (bCVA), which takes into account changes in the creditworthiness of the counterpart as well as the changes in its own creditworthiness.

Notes to the Consolidated annual report 2023 Consolidated financial statements A2A 109

The bCVA has two addends, calculated by considering the possibility that both counterparties go bankrupt, known as the Credit Value Adjustment (CVA) and the Debit Value Adjustment (DVA):

• the CVA is a negative component and contemplates the probability that the counterparty will default and at the same time that A2A has a receivable due from the counterparty;

• the DVA is a positive component and contemplates the probability that A2A will default and at the same time that the counterparty has a receivable due from A2A.

The bCVA is therefore calculated with reference to the exposure, measured on the basis of the market value of the derivative at the time of the default, the Probability of Default (PD) and the Loss Given Default (LGD). This latter item, which represents the non- recoverable portion of the receivable in the case of default, is measured on the basis of the IRB Foundation Methodology as stated in the Basel 2 accords, whereas the PD is measured on the basis of the rating of the counterparties (internal rating based where not available) and the historic probability of default associated with this and published annually by Standard & Poor’s.

Applying the above method did not result in significant changes in fair value measurements.

2

Notes

to the Consolidated annual report

2.1

General

information

2.2

Consolidated annual report

2.3

Financial statements

2.4

Basis of preparation

2.5

Changes in international accounting standards

2.6

Scope of consolidation

2.7

Consolidation policies and procedures

2.8

Accounting standards

and policies

2.9

Business Units

2.10

Results

sector by sector

2.11

Notes to the balance sheet

2.12

Net debt

2.13

Notes to the income statement

2.14

Earnings per share

2.15

Note on related party transactions

2.16

Significant

non-recurring events and transactions, pursuant to Consob Communication No. DEM/6064293 of July 28, 2006

2.17

Guarantees

and commitments with third parties

2.18

Other information

110 A2A Consolidated financial statements 2023 Notes to the Consolidated annual report

Instruments outstanding at December 31, 2023

A) On interest and exchange rates

The following analyses show the notional amounts of derivative contracts stipulated and not expired at the reporting date, by maturity:

millions of euro

Notional Value (a)

Balance

sheet

value

(b)

Progressive effect to Income statement

(c)

Due within 1 year

Due in 1 to 5 years

Due over 5 years

to be received

to be paid

to be received

to be paid

to be received

to be paid

Interest rate risk management

cash flow hedges as per IFRS 9

4.2

9.9

11.3

2.4

-

not considered hedges as per IFRS 9

Total derivatives on interest rates

-

4.2

-

9.9

-

11.3

2.4

-

Exchange rate risk management

considered hedges as per IFRS 9

- on commercial transactions

- on non-commercial transactions

98.0

(10.7)

not considered hedges as per IFRS 9

- on commercial transactions

- on non-commercial transactions

Total derivatives on exchange rates

-

-

-

-

-

98.0

(10.7)

-

(a) Represents the sum of the notional value of the elementary contracts that derive from any dismantling of complex contracts.

(b) Represents the net receivable (+) or payable (-) recognized in the balance sheet following the measurement of derivatives at fair value.

(c) Represents the adjustment of derivatives to fair value recognized progressively over time in the Income Statement from stipulation of the contract until the current date.

Notes to the Consolidated annual report 2023 Consolidated financial statements A2A 111

B) On commodities

The following is an analysis of the commodity derivative contracts outstanding at the balance sheet date set up for the purpose of managing the risk of the fluctuations in the market prices of commodities.

Volume by Maturity

Notional Value

Fair value

Due within 1 year

Due within two years

Due within

ten years

Balance sheet

Value

(*)

Progressive effect to Income statement (**)

Energy product price risk management

Unit of measurement

Quantity

Millions of euro

Millions of euro

Millions of euro

A. Cash flow hedges as per IFRS 9, including:

(2.3)

-

- Electricity

TWh

0.4

0.1

0.2

57.1

(3.6)

- Oil

Bbl

- Coal

Tonnes

- Natural Gas

TWh

0.6

30.2

3.9

- Natural Gas

Millions of cubic metres

- Exchange rate

Millions of dollars

- Emission rights

Tonnes

347,000

2,000

30.3

(2.6)

B. considered fair value hedges as per IFRS 9

-

-

C. not considered hedges as per IFRS 9 of which:

(25.8)

(294.1)

C.1 hedge margin

1.1

0.9

- Electricity

TWh

- Oil

Bbl

- Natural Gas

Degrees day

- Natural Gas

TWh

- CO2 emission rights

Tonnes

127,000

11.4

1.1

0.9

- Exchange rate

Millions of dollars

C.2 trading transactions

(26.9)

(295.0)

- Electricity

TWh

15.3

4.2

2,737.8

(74.8)

(165.2)

- Natural Gas

TWh

105.4

16.6

2.4

6,357.5

47.8

(129.5)

- CO2 emission rights

Tonnes

2,304,000

344,000

236.9

0.1

(0.3)

- Environmental Certificates

MWh

- Environmental Certificates

Tep

Total

(28.1)

(294.1)

(*) Represents the net receivable (+) or payable (-) recognized in the balance sheet following the measurement of derivatives at fair value.

(**) Represents the adjustment of derivatives to fair value recognized over time in the Income Statement from stipulation of the contract to the present date.

2

Notes

to the Consolidated annual report

2.1

General

information

2.2

Consolidated annual report

2.3

Financial statements

2.4

Basis of preparation

2.5

Changes in international accounting standards

2.6

Scope of consolidation

2.7

Consolidation policies and procedures

2.8

Accounting standards

and policies

2.9

Business Units

2.10

Results

sector by sector

2.11

Notes to the balance sheet

2.12

Net debt

2.13

Notes to the income statement

2.14

Earnings per share

2.15

Note on related party transactions

2.16

Significant

non-recurring events and transactions, pursuant to Consob Communication No. DEM/6064293 of July 28, 2006

2.17

Guarantees

and commitments with third parties

2.18

Other information

112 A2A Consolidated financial statements 2023 Notes to the Consolidated annual report

Financial and operating results for derivative transactions at December 31, 2023

Effects on the balance sheet

The following table shows the balance sheet figures at December 31, 2023, for derivative transactions.

millions of euro | Note | Total
Assets |  |
Non-current assets |  | 2
Other non-current assets - Derivatives | 5 | 2
Current assets |  | 1,526
Other current assets - Derivatives | 8 | 1,526
Total assets |  | 1,526
Liabilities |  |
Non-current liabilities |  | 11
Other non-current liabilities - Derivatives | 19 | 11
Current liabilities |  | 1,553
Trade payables and other current liabilities - Derivatives | 20 | 1,553
Total liabilities |  | 1,564

Notes to the Consolidated annual report 2023 Consolidated financial statements A2A 113

Effect on the income statement

The following table sets out the income statement figures at December 31, 2023 arising from the management of derivatives.

millions of euro | Note | Realized during the year | Change in fair value during the year | Amounts recognized in the income statement
Revenues | 24 |  |  |
Revenues from the sale of goods |  |  |  |
Energy product price risk management and exchange rate risk management on commodities |  |  |  |
- considered hedges as per IFRS 9 |  | 41 | - | 41
- not considered hedges as per IFRS 9 |  | 800 | 454 | 1,254
Total revenues from the sale of goods |  | 841 | 454 | 1,295
Operating expenses | 25 |  |  |
Expenses for raw materials and services |  |  |  |
Energy product price risk management and exchange rate risk management on commodities |  |  |  |
- considered hedges as per IFRS 9 |  | (65) | - | (65)
- not considered hedges as per IFRS 9 |  | (533) | (748) | (1,281)
Total costs for raw materials and services |  | (598) | (748) | (1,346)
Total recognized in Gross operating income (*) |  | 243 | (294) | (51)
Financial balance | 31 |  |  |
Financial income |  |  |  |
Interest rate risk management and equity risk management |  |  |  |
Income on derivatives |  |  |  |
- considered hedges as per IFRS 9 |  | - | - | -
- not considered hedges as per IFRS 9 |  | - | - | -
Total |  | - | - | -
Total financial income |  | - | - | -
Financial expenses |  |  |  |
Interest rate risk management and equity risk management |  |  |  |
Expenses on derivatives |  |  |  |
- considered hedges as per IFRS 9 |  | - | - | -
- not considered hedges as per IFRS 9 |  | - | - | -
Total |  | - | - | -
Total Financial expenses |  | - | - | -
Total recognized in financial balance |  | - | - | -

(*) The figures do not include the effect of the net presentation of the negotiation margin of trading activities.

2

Notes

to the Consolidated annual report

2.1

General

information

2.2

Consolidated annual report

2.3

Financial statements

2.4

Basis of preparation

2.5

Changes in international accounting standards

2.6

Scope of consolidation

2.7

Consolidation policies and procedures

2.8

Accounting standards

and policies

2.9

Business Units

2.10

Results

sector by sector

2.11

Notes to the balance sheet

2.12

Net debt

2.13

Notes to the income statement

2.14

Earnings per share

2.15

Note on related party transactions

2.16

Significant

non-recurring events and transactions, pursuant to Consob Communication No. DEM/6064293 of July 28, 2006

2.17

Guarantees

and commitments with third parties

2.18

Other information

114 A2A Consolidated financial statements 2023 Notes to the Consolidated annual report

Classes of financial instruments

To complete the analyses required by IFRS 7 and IFRS 13, the following table sets out the various types of financial instrument that are to be found in the various balance sheet items, with an indication of the accounting policies used and, in the case of financial instruments measured at fair value, an indication of where changes are recognized (income statement or equity).

The last column of the table shows the fair value of the instrument at December 31, 2023, where applicable.

Criteria to measure the reported amount of financial instruments

millions of euro

Note

Financial instruments measured at fair value with changes recognized in:

Financial instruments measured at amortized cost

Statement of Financial Position Value

Fair value

(*)

Income statement

Equity

(1)

(2)

(3)

(4)

Assets

Other non-current financial assets

Financial assets measured at fair value of which:

- unlisted

1

1

n.a.

- listed

-

-

Financial assets held to maturity

-

-

-

Other non-current financial assets

66

66

66

Total other non-current financial assets

3

67

Other non-current assets

5

2

136

138

138

Trade receivables

7

3,540

3,540

3,540

Other current assets

8

1,515

11

738

2,264

2,264

Current financial assets

9

33

33

33

Cash and cash equivalents

11

1,629

1,629

1,629

Liabilities

Financial liabilities

Non-current and current bonds

16

and 21

89

5,068

5,157

5,157

Other non-current and current financial liabilities

16

and 21

1,194

1,194

1,194

Other non-current liabilities

19

11

324

335

335

Trade payables

20

4,105

4,105

4,105

Other current liabilities

20

1,540

13

517

2,070

2,070

(*) The fair value has not been calculated for receivables and payables not related to derivative contracts and loans as the corresponding carrying amount is a good approximation to this.

(1) Financial assets and liabilities measured at fair value with the changes in fair value recognized in the Income Statement

(2) Cash flow hedges

(3) Financial assets available for sale measured at fair value with profit/loss recognized in equity

(4) Loans and receivables and financial liabilities measured at amortized cost

Notes to the Consolidated annual report 2023 Consolidated financial statements A2A 115

Fair value hierarchy

IFRS 7 and IFRS 13 require that fair value classification of financial instruments to be based on the quality of the input source used to calculate the fair value.

In particular, IFRS 7 and IFRS 13 set out three levels of fair value:

• level 1: this level consists of financial assets and liabilities for which fair value is based on (unadjusted) prices for identical assets or liabilities quoted on active official or over-the-counter markets;

• level 2: this level consists of financial assets and liabilities for which fair value is based on inputs other than quoted prices included within level 1 that are observable for the asset or liability either directly or indirectly;

• level 3: this level consists of financial assets and liabilities for which fair value is based on unobservable market data. This level includes instruments measured on the basis of internal estimates made using proprietary methods based on best sector practice.

An analysis of the assets and liabilities included in the three fair value levels is set out in the following fair value hierarchy table.

millions of euro | Note | Level 1 | Level 2 | Level 3 | Total
Assets measured at fair value | 3 |  | 1 |  | 1
Other non-current assets | 5 |  | 2 |  | 2
Other current assets | 8 | 1,524 | 1 | 1 | 1,526
Total assets |  | 1,524 | 4 | 1 | 1,529
Non-current financial liabilities | 17 | 89 |  |  | 89
Other non-current liabilities | 19 |  | 11 |  | 11
Other current liabilities | 20 | 1,552 | 1 | - | 1,553
Total liabilities |  | 1,641 | 12 | - | 1,653

Sensitivity analysis for financial instruments included in level 3

As required by IFRS 13, the following table sets out the effects arising from changes in the unobservable parameters used in calculating fair value for financial instruments included in level 3 of the hierarchy.

Financial instrument

Parameter

Parameter change

Sensitivity

(millions of euro)

Commodity Derivatives

Probability of Default (PD)

1%

(0.002)

Commodity Derivatives

Loss Given Default (LGD)

25%

(0.000)

Commodity Derivatives

Price underlying interconnection capacity zonal Italy (CCC)

1%

0.0027

2

Notes

to the Consolidated annual report

2.1

General

information

2.2

Consolidated annual report

2.3

Financial statements

2.4

Basis of preparation

2.5

Changes in international accounting standards

2.6

Scope of consolidation

2.7

Consolidation policies and procedures

2.8

Accounting standards

and policies

2.9

Business Units

2.10

Results

sector by sector

2.11

Notes to the balance sheet

2.12

Net debt

2.13

Notes to the income statement

2.14

Earnings per share

2.15

Note on related party transactions

2.16

Significant

non-recurring events and transactions, pursuant to Consob Communication No. DEM/6064293 of July 28, 2006

2.17

Guarantees

and commitments with third parties

2.18

Other information

116 A2A Consolidated financial statements 2023 Notes to the Consolidated annual report

7) Main regulatory provisions regarding concessions and agreements in the sectors of activity in which the A2A Group operates

Large hydroelectric derivation concessions

The national discipline on large derivation hydroelectric concessions (i.e. plants with a nominal power greater than 3 MW) was originally dictated by R.D. 1775/1933, which was based on the issuance of concessions by the State on a long-term basis. This regulatory framework was subsequently superseded first by electricity sector nationalization Law no. 1643/1962, which resulted in Enel taking over the majority 3 of hydroelectric concessions with the relative recognition of an unlimited duration, and then by the liberalization of the market as a result of Legislative Decree 79/1999 (implementing Directive 96/92/EC), which introduced with art. 12 (and subsequent amendments) the principles of:

• the temporariness of the concessions, establishing a validity period (2029) for concessions without expiration because they are owned by Enel and assigning the term of December 31, 2010 for concessions that have already expired or are expiring by that date;

• contestability of concessions in the event of expiration, forfeiture or renunciation, providing the call for tenders by the competent administration (now the Region) for the allocation of the same for consideration.

Pending the reallocation of expired concessions, Legislative Decree 79/1999 (article 12, paragraph 8bis) provides that the outgoing concession holder is to continue to operate the concession under the same conditions as those laid down in the regulations and specifications in force. Some regions have also enacted regional laws concerning the so-called “temporary continuation of operation” of expired concessions, providing for the imposition of an additional fee.

Article 11-quater of Law 12/2019 has partially further amended the regulation of large-scale hydroelectric concessions: the new rules provide that the Regions regulate with their own laws the methods, procedures and criteria for the allocation of concessions, which may be entrusted to economic operators identified through a tender, or to public/private joint ventures with selection of the private partner through a tender, or through forms of partnership under Legislative Decree 50/2016.

Article 7 of Law 118/2022 (Annual Law for the Market and Competition 2021) established that the procedure for awarding the contract must be started within 2 years of the entry into force of the individual Regional Laws and, in any case, no later than December 31, 2023.

The duration of the new concessions will have to be between 20 and 40 years, with the possible extension of the maximum period by a further 10 years depending on the complexity of the project proposal and the amount of investment.

Article 11-quater cited (paragraph 1-quinquies) provides that a specific regional measure (after consulting ARERA) will define:

• a State fee to be paid on a six-monthly basis to the Regions, comprising a fixed component linked to the average nominal power of the concession and a variable calculated as a percentage of normalized revenues;

• the possible obligation for the concessionaires to supply annually and free of charge 220 kWh per kW of concession power for at least 50% destined to public services of the provincial territories involved in the derivation.

In terms of compensation to outgoing operators, article 11-quater prescribes:

• for wet works: the transfer without compensation of ownership to the Regions, except for the compensation only of investments not yet amortized;

• for dry works, the recognition of a value derived from accounting records or certified appraisal. In the event of non-inclusion in the project of the incoming concessionaire, removal and disposal of movable property is envisaged at the expense of the latter, while immovable property remains the property of the entitled parties.

Lombardy Region, with Article 31 of Regional Law 23/2019 (Budget Reconciliation 2020-22), has defined, starting from 2020, the obligation to supply free energy to the Region by all holders of concessions of large derivation (220 kWh for each kW of concession power), whether they are exercised before or after expiry, providing the monetization to be calculated based on the hourly zonal price that forms on the electricity market weighted on the quantity of energy injected into the grid by the power plant.

Lombardy Region approved R.L. 5/2020 (as amended by Regional Law 19/2021), which regulates the modalities and procedures for assigning concessions for large hydroelectric derivations and determines the state fee according to the

3 With the exception of derivations in the ownership of self-producers, municipal companies and local authorities.

Notes to the Consolidated annual report 2023 Consolidated financial statements A2A 117

new bi-component structure 4. This law also defines the reconnaissance activity aimed at subsequent tendering. Subsequently, the Lombardy Region adopted Regulation 3/2022 for the preliminary procedures for the assessment of the public interest in relation to the various uses of water, as well as Regulation 9/2022 regulating the timing and procedures for the allocation procedures, a regulation that was later challenged before the Superior Court of Public Waters by a number of operators (the case is still pending).

Most of A2A S.p.A. large-scale hydroelectric derivation concessions located in Valtellina (for a nominal concession power of around 215 MW) have expired; Lombardy Region with Regional Council Resolution XI/1706 of December 28, 2023 allowed the temporary continuation of its operation until December 31, 2024, or shorter term, should the reassignment procedures, not yet started, be concluded at an earlier date, confirming the payment of an additional fee and the non-application of the partial exemption from the state fee on the Premadio 1, Grosio, Lovero and Stazzona plants. With reference to the Resio (BS) concession, owned by Linea Green S.p.A. (a wholly-owned subsidiary of A2A S.p.A.), the Lombardy Region announced with R.C.R. 1602 of December 18, 2023 the start of the reallocation procedure, defining the essential elements of the notice to be issued in the following 120 days. Other A2A S.p.A. concessions (plants in Mese, Friuli and Calabria for a total nominal concession capacity of about 345 MW) expire in 2029, as the Gravedona concession of Acinque Innovazione S.r.l. (Acinque Group), also with an expiry date of 2029.

Concessions for thermoelectric power plants

As far as concessions for thermoelectric power plants are concerned, the relevant regulations have evolved in a very heterogeneous manner. For example, with reference to concessions for the derivation of public water for industrial use, the discipline was initially defined by Law no. 2644/1884 and by Royal Decree 1775/1933 to subsequently have an outline on a more local basis also through agreements with specific consortia of reclamation and irrigation.

The granting bodies may be identified alternatively in the Region and in the Province for concessions for the derivation of public water and for those relating to the occupation of state-owned areas and in the Port Authorities for concessions relating to the occupation of maritime state-owned areas.

A2A Energiefuture S.p.A. and A2A Gencogas S.p.A. hold the following types of concessions for the operation of their own thermoelectric power plants:

• concessions for the derivation of public water: (i) for the cooling of thermoelectric power plants; (ii) for industrial use; (iii) for other uses;

• concessions for the occupation of: (i) state-owned areas; (ii) maritime state-owned areas.

Natural gas distribution and metering service

The regulations governing concessions for the distribution of natural gas through local networks, initially contained in the deeds of award stipulated with the municipalities in implementation of laws of principle dated back to the early 1900s, have been the subject of numerous amendments over the years.

The main ones, introduced by Articles 14 and 15 of Legislative Decree 164/2000 (transposing Directive 98/30/EC), defined the criteria for standardizing the sector providing: (i) a maximum duration of 12 years for concessions, (ii) the award of the service by local authorities through a public tender and (iii) the relationship with the operator is regulated by a specific standard contract approved by ministerial decree containing, in particular, the procedures for performing the service, the quality objectives, the economic aspects and the conditions for early termination of the company for failure by the operator.

Subsequently, Article 46-bis of LD 159/2007 delegated the Ministers of economic development and for regional affairs and local autonomies, having heard the Unified Conference and on the advice of the Authority for electricity and gas (now ARERA), to define the criteria for holding the tenders,

4 With reference to the fixed component, Council Resolution no. XII/618 of July 10, 2023 updated the relative tariff following the application of the annual variation of the ISTAT index on the industrial price for the production, transport and distribution of electricity, setting it at 93.37 euro/kW for 2023.

2

Notes

to the Consolidated annual report

2.1

General

information

2.2

Consolidated annual report

2.3

Financial statements

2.4

Basis of preparation

2.5

Changes in international accounting standards

2.6

Scope of consolidation

2.7

Consolidation policies and procedures

2.8

Accounting standards

and policies

2.9

Business Units

2.10

Results

sector by sector

2.11

Notes to the balance sheet

2.12

Net debt

2.13

Notes to the income statement

2.14

Earnings per share

2.15

Note on related party transactions

2.16

Significant

non-recurring events and transactions, pursuant to Consob Communication No. DEM/6064293 of July 28, 2006

2.17

Guarantees

and commitments with third parties

2.18

Other information

118 A2A Consolidated financial statements 2023 Notes to the Consolidated annual report

establishing that they no longer be carried out by individual Municipality but by Minimum Territorial Areas (ATEM), subsequently identified as 177 by MiSE MD of January 19, 2011, while the subsequent MD October 18, 2011 defined the Municipalities belonging to each ATEM. Finally, MD 226/2011 defined the tender criteria.

Over the years, the regulations have been subject to many innovations, especially with reference to the provisions for defining the redemption value to be recognized to the outgoing operator and the valorization of the assets owned by the Conceding Entities (inter alia, see the Annual Market and Competition Law 2021) and the terms within which the tenders must be announced, extended several times, and the penalties originally envisaged for the Conceding Entities in the event of non-compliance have been eliminated.

As far as the A2A Group is concerned, the natural gas distribution concessions are held by Unareti S.p.A., Azienda Servizi Valtrompia S.p.A., LD Reti S.r.l., RetiPiù S.r.l.5 (AEB Group), in addition to Lereti S.p.A 6 and Reti Valtellina Valchiavenna S.r.l. (two companies of the Acinque Group). The main contracts 7 relate to the ATEM of Milan 1 (where Unareti S.p.A. is assignee of the service following a tender launched pursuant to MD 226/2011) and the provincial capitals of Brescia, Bergamo, Varese, Cremona 8, Lodi, Lecco, Sondrio and Monza-Brianza (as well as numerous municipalities, in the provinces of Brescia, Bergamo, Como, Cremona, Lecco, Lodi, Monza-Brianza, Pavia, Varese).

Concession for the distribution and metering of electricity service

Electricity distribution activities are carried out under a thirty-year concession granted by the Ministry of Economic Development for each municipal area, pursuant to art. 9 of Legislative Decree 79/1999 (expiry December 31, 2030).

As far as the A2A Group is concerned, the electricity distribution and metering concessions are held by Unareti S.p.A., Camuna Energia S.r.l., LD Reti S.r.l. and RetiPiù S.r.l. (AEB Group), while they are held by Reti Valtellina Valchiavenna S.r.l. for the Acinque Group, and concern the municipalities of Milan, Rozzano, Brescia, Cremona, Sondrio and Seregno, in addition to numerous municipalities in the province of Brescia and Sondrio.

Integrated Water Service (SII)

In accordance with the provisions of Legislative Decree 152/2006, the SII is organized on the basis of Optimal Territorial Ambits (ATO) defined by the Regions and, as a rule, coinciding with the provincial territory. In compliance with the scope plan and the principle of a single management, the Ambit Government Entity (EGA) decides on the form of management (award by tender, mixed public-private company and in house providing) and, consequently, provides for the award, for 30 years, of the SII in compliance with national regulations on the organization of local public services to networks of economic importance. The direct award may be made to entirely public companies that meet the requirements of European law and are in any case owned by the local authorities covered by the ATO.

LD 201/2011 (so-called ‘Salva Italia’) entrusted ARERA with the regulatory and control competences in the SII. The Authority has introduced significant innovations, providing for Consolidated Texts on tariff preparation, technical quality, contractual quality, user fee structure, arrears, social bonus and metering rules.

The SII is applied art. 34 of Law Decree 179/12 supplemented by Law 115/2015 (Article 8, paragraph 1), which establishes mandatory principles for local authorities for the award of services and regulates the transitional period of pre-existing awards validly absent. In particular, it is envisaged that the award of services provided by listed companies and subsidiaries of listed companies (such as those held by subsidiaries of A2A S.p.A.) will cease upon expiry of the service contract or other acts governing the relationship.

LD 133/2014 (Unlock Italy Decree) provided that, at the time of first application, the EGA, in order to ensure the achievement of the principle of single management within the ATO, provide for the award to the single operator of the area at the end of the existing management, operating on the basis of an award approved in accordance with the legislation pro tempore in force and not declared ceased pursuant to law. The legislator provided for certain exceptions to the establishment of the single operator by the EGA: in particular, in the event that the ATO coincides with the regional territory, it is allowed to award the SII in territorial areas, however, not less than the territory corresponding to the provinces or metropolitan cities.

5 Following the industrial integration with the A2A Group, the municipalities present in the ATEMs of Milan 4, Bergamo 1, Bergamo 2, Bergamo 3 and Bergamo 5 (around 78 thousand PoR) were demerged with transfer by Unareti S.p.A. in favor of the AEB Group (and therefore to RetiPiù S.r.l.), effective from November 1, 2020.

6 The company was created on January 1, 2020 from the merger between Acsm Agam Reti Gas Acqua S.p.A. and Lario Reti Gas S.r.l..

7 In March 2022, the extraordinary transaction with Romeo Gas S.p.A. took effect, which led to the sale of some localities previously managed by Unareti S.p.A. and LD Reti S.r.l. and all of Serenissima Gas S.p.A. (Acinque Group company).

8 Determination no. 733 of November 21, 2023 revoked the ATEM CR2-3 Call for Tenders, published in 2015.

Notes to the Consolidated annual report 2023 Consolidated financial statements A2A 119

The A2A Group carries out the SII, through its subsidiaries and safeguarded in accordance with Legislative Decree 152/2006, in Brescia and in several municipalities of the province by means of A2A Ciclo Idrico S.p.A.9 and Azienda Servizi Valtrompia S.p.A. (ASVT)10 and by means of Lereti S.p.A. (Acinque Group) in Varese and Como and relative provinces 11.

District heating

In Italy, there is no comprehensive legislative framework defining the way in which the district heating service is to be awarded, since neither the national legislator nor the administrative case-law in its rulings have unambiguously considered district heating as a local public service. Applicable to the service is Legislative Decree 201/2022. In Lombardy, an initial discipline is dictated by Regional Law 26/2003. In such a poorly defined regulatory context, the local authority that considers this service as a local public service regulates it using licensing schemes and, in previous years, also authorizing schemes. In other cases, the municipalities do not assume district heating as a public service and, therefore, regulate different aspects such as the use of the subsoil.

In cases where district heating is used as a public service, the relationship between the municipality and the operator is governed by agreements or service contracts with which the granting body has awarded the management within the municipality, providing for a fee and certain rules for the provision of the service, for a period that is ordinarily long in view of the underlying investments, also conferring exclusive management.

Legislative Decree 102/2014 (transposing Directive 2012/27/EC on energy efficiency) attributed in Articles 9, 10 and 16 specific regulation and control powers to ARERA also in the district heating/district cooling sector, albeit only on specific aspects since it is not a true tariff regulation, so much so that the supply price has always been defined by each operator, based on the characteristics of its system, users and the territory served. However, in recent years, the Authority has intervened, regulating various areas of the service, including:

i. price transparency through the definition of minimum contents of supply contracts and the introduction of information obligations for operators;

ii. commercial quality by introducing specific obligations for operators (compliance with specific and general levels, compensation);

iii. technical quality in relation to security and continuity and the quality of metering, introducing service obligations and quality standards for the metering of energy supplied to users.

The aforementioned Legislative Decree was recently amended by Article 47 bis of Law 41/2023, which provided for the introduction of a cost-reflective regulation of district heating tariffs. ARERA Resolution 638/2023/R/tlr approved the TLR Tariff Methodology, which defines a transitional economic regulation for 2024, based on a revenue constraint calculated using the avoided cost methodology (gas) for the end customer, while from 2025, the adoption of a full regime method (which should remain RAB-based) is envisaged.

As far as the A2A Group is concerned, the service is managed by A2A Calore e Servizi S.r.l. and by Gelsia S.r.l.12 (AEB Group), and for the Acinque Group by Comocalor S.p.A., Acinque Tecnologie S.p.A. and Acinque Energy Greenway S.r.l.. The main municipalities that use the service are

9 The Brescia EGA concluded the preliminary investigation process regarding the rotation in the management of the concessions previously granted to A2A Ciclo Idrico S.p.A. that had reached their natural expiry date and/or had been aggregated and the consequent sale of the business compendium instrumental to them after liquidation of the residual industrial value, as defined in application of the ARERA Resolutions, to Acque Bresciane S.r.l., a totally public company established in 2017. The 12 municipalities concerned are Bassano Bresciano, Bedizzole, Isorella, Manerbio, Milzano, Offlaga, Remedello, Roncadelle, San Gervasio Bresciano, San Zeno, Verolavecchia and Visano. In order to execute, the companies defined agreements in 2023, the execution date of which is being updated.

10 The concessions for the SII in the municipalities of Bovegno, Caino, Collio, Concesio, Gardone Val Trompia, Irma, Lodrino, Lumezzane, Marcheno, Marmentino, Pezzaze, Polaveno, Sarezzo, Tavernole Sul Mella, and Villa Carcina have reached their natural expiry date and the related business segments were transferred by ASVT S.p.A. to Acque Bresciane S.r.l. on June 1, 2023 subject to settlement of the residual industrial value as defined in application of the ARERA Resolutions.

11 In the ATO of Como, Como Acqua S.r.l, a totally public company established to manage the SII in the Province, took over from Lereti S.p.A. the management of the aqueduct service in the Municipality of Cernobbio as of January 1, 2023. In the ATO of Varese, the reorganization of operations for the future process of taking over the expiring concessions is being studied, in agreement with the EGA and the Area Manager Alfa S.r.l..

12 Gelsia S.r.l. operates district heating services not under a concession but under private initiatives.

2

Notes

to the Consolidated annual report

2.1

General

information

2.2

Consolidated annual report

2.3

Financial statements

2.4

Basis of preparation

2.5

Changes in international accounting standards

2.6

Scope of consolidation

2.7

Consolidation policies and procedures

2.8

Accounting standards

and policies

2.9

Business Units

2.10

Results

sector by sector

2.11

Notes to the balance sheet

2.12

Net debt

2.13

Notes to the income statement

2.14

Earnings per share

2.15

Note on related party transactions

2.16

Significant

non-recurring events and transactions, pursuant to Consob Communication No. DEM/6064293 of July 28, 2006

2.17

Guarantees

and commitments with third parties

2.18

Other information

120 A2A Consolidated financial statements 2023 Notes to the Consolidated annual report

Bergamo, Brescia, Milan, Cremona (as well as some municipalities in the same provinces), Lodi, Varese, Como, Lecco (here also in the municipalities of Valmadrera and Malgrate 13), Monza, Seregno and Giussano.

Public lighting

The public lighting service includes the management of systems (operation, maintenance and periodic checks) as well as the supply of electricity to supply the lighting points, as well as the implementation of modernization and energy requalification interventions. Even for public lighting, as for district heating, there is no detailed regulatory framework. Local authorities that also identify this service as a local public service of economic importance must comply with art. 34 of LD 179/2012 and subsequent amendments and Legislative Decree 201/2022 and, therefore, entrust the service in compliance with EU principles.

As highlighted by the Annex to Ministerial Decree of March 28, 2018 that disciplines the “Minimum environmental criteria of public lighting services” (CAM), in implementation of a general principle of the law, the duration of the service to be awarded must be commensurate with the activities included in the contract, the degree of economic exposure envisaged and, therefore, the time needed to amortize the investment plan.

The A2A Group manages the public lighting service 14 through A2A Illuminazione Pubblica S.p.A. (AEB Group companies), in Milan and in thirteen municipalities of its province, in Brescia and in Bergamo, in addition, among others, to the municipalities of Bisignano, Busto Arsizio, Carbonara al Ticino, Casalmaggiore, Cassano Magnago, Castelletto sopra Ticino, Crevoladossola, Fiorenzuola d’Arda, Isola d’Asti, Melissano, San Gregorio Magno, Sant’Arsenio, Seregno, Stradella, Villanova D’Ardenghi, Villanterio and Volpiano. Through Acinque Group companies, the service is managed in numerous municipalities, including Bovisio Masciago, Cantello, Castiglione Olona, Costa Masnaga, Melzo, Monza, Nova Milanese, Pero, Robbiate, Zibido San Giacomo and Messina (Acinque Tecnologie S.p.A.), as well as in the municipalities of Sernio, Sondrio, Tirano and Valdisotto (Reti Valtellina Valchiavenna S.r.l.).

Management of the municipal hygiene service

Environmental services are related to the case of local public services of economic importance and the procedures for awarding them are governed by art. 202 of Legislative Decree 152/2006 and by art. 34 of Law Decree 179/2012 as well as by Legislative Decree 201/2022. The services of collection, transport, sweeping and washing of roads, recovery and disposal of waste are regulated by a specific service contract with the granting Municipality aimed at defining the essential elements of the award including the duration of management, the economic aspects of the contractual relationship as well as the organizational and management methods of the service and the quantitative and qualitative levels of the services provided. In defining the concessionary relationship, the Granting Body takes into account the achievement of objectives of efficiency, effectiveness and cost-effectiveness of the service.

Budget Law 2018 entrusted ARERA with the regulatory and control powers in the waste sector, including differentiated, urban and assimilated waste: Resolution 389/2023/R/rif defined the criteria for the recognition of the efficient operating and investment costs of the integrated waste service for the period 2024-2025 (MTR-2 update), setting the criteria for defining the access tariffs to the treatment plants of undifferentiated and OFMSW. In addition, Resolution 15/2022/R/rif introduced the Consolidated Act for the regulation of the quality of municipal waste management for the period 2023-2025, providing for a set of contractual and technical quality obligations, minimum and homogeneous for all management, flanked by quality indicators and related general standards differentiated by regulatory schemes, identified in relation to the actual starting quality level guaranteed to users in the various management schemes.

Lombardy Region has organized integrated waste management using the provisions of art. 200, paragraph 7, of Legislative Decree 152/2006, i.e. without the establishment of any Optimal Territorial Area (ATO) and attributing to the municipalities the competences for entrusting the service, which they exercise individually or in associated form. In addition, with Council Resolution no. 5777/2021, the Region complied with the provisions of ARERA Resolution no. 363/2021/R/rif, declaring the treatment plants for undifferentiated waste and OFMSW to be “additional” (i.e. whose access fees are not determined by ARERA). The Region has, however, strengthened the monitoring obligations of plant operators, reserving the possibility of revising said declaration during the biennial updating of tariffs and following any changes in market conditions and the adoption of the National Waste Management Plan.

13 The design, development, and management of district heating in the municipalities of Lecco, Malgrate, and Valmadrera will be carried out by Acinque Energy Greenway S.r.l., a company owned by Varese Risorse S.p.A. (70%) and Silea S.p.A. (30%).

14 Inclusive for some municipalities also the management of traffic lights and votive lamps.

Notes to the Consolidated annual report 2023 Consolidated financial statements A2A 121

ARERA also published Resolution no. 385/2023/R/rif on the adoption of the “Standard scheme of the service contract for the regulation of relations between entrusting bodies and managers of the municipal waste service”, defining the minimum essential contents required by current legislation, without prejudice to the contractual autonomy of the Parties in regulating further contents, in compliance with current legislation and regulatory measures.

The urban hygiene service is provided by Amsa S.p.A., Aprica S.p.A., Linea Gestioni S.r.l. (merged into Aprica S.p.A. from December 31, 2023), controlled by A2A Ambiente S.p.A., and by Gelsia Ambiente S.r.l. (AEB Group), while for the Acinque Group, it is carried out by Acinque Ambiente S.r.l.. The main awards concern Lombardy (municipalities of Milan 15, Brescia, Bergamo, Como, Cremona and Lodi with different deadlines based on the deeds governing the relationship with the individual municipalities) and East Liguria.

15 The tender for the award of the contract for the management of the urban hygiene service in the Municipality of Milan (called with Determination to contract no. 12344 of December 30, 2021) is being awarded (Amsa S.p.A. first on the list).

2

Notes

to the Consolidated annual report

2.1

General

information

2.2

Consolidated annual report

2.3

Financial statements

2.4

Basis of preparation

2.5

Changes in international accounting standards

2.6

Scope of consolidation

2.7

Consolidation policies and procedures

2.8

Accounting standards

and policies

2.9

Business Units

2.10

Results

sector by sector

2.11

Notes to the balance sheet

2.12

Net debt

2.13

Notes to the income statement

2.14

Earnings per share

2.15

Note on related party transactions

2.16

Significant

non-recurring events and transactions, pursuant to Consob Communication No. DEM/6064293 of July 28, 2006

2.17

Guarantees

and commitments with third parties

2.18

Other information

122 A2A Consolidated financial statements 2023 Notes to the Consolidated annual report

8) Update of the main legal and tax disputes still pending

Adequate provisions are provided where necessary for the disputes and litigation described below.

It is noted that if there is no explicit reference to the presence of a provision, the Group assessed the corresponding risk as possible without appropriating provisions in the financial statements.

It should be noted that certain disputes illustrated in previous financial statements and still pending are not further reported due to the absence of updates or the modification of the previous risk situation.

A2A S.p.A.

Reorganization of Edison - compensation cases

Carlo Tassara: first lawsuit for damages against EDF and A2A S.p.A. First and second instance

On March 24, 2015, Carlo Tassara S.p.A. notified A2A, Electricité de France (EDF) and Edison a summons requesting the Court of Milan to condemn A2A and EDF to compensation for damages allegedly suffered by Carlo Tassara, in its capacity as minority shareholder of Edison, in relation to the mandatory tender offer launched by EDF on Edison shares consequently to the transaction by which, in 2012, A2A sold its indirect shareholding in Edison to EDF and simultaneously acquired 70% of the capital of Edipower from Edison and Alpiq.

In the summons notified, Carlo Tassara complained that, in the transaction, EDF and A2A agreed on a mutual “discount” on the price paid by EDF for the purchase of Edison shares, on the one hand, and on the price paid by A2A for the purchase of 70% of Edipower, on the other. This discount was expected to be the result of abusive conduct by EDF and A2A as shareholders of Edison and the violation, among other things, of the regulations on transactions with related parties. This - according to Carlo Tassara - was expected to allow maintaining artificially low the price of the Edison shares paid to A2A and consequently the tender offer price paid to minorities of Edison (which by law was expected to be equal to that paid to A2A).

The writ of summons did not quantify the damage allegedly suffered by Carlo Tassara as a result of such transactions. However, with brief on February 20, 2017, Carlo Tassara requested the judge (who rejected the preliminary request) to have an expert witness to calculate the damages (specifying that they should have been quantified in the alleged difference between the tender offer price and the market value that the Edison shares had previously). Carlo Tassara also filed an appraisal in which such damages were quantified in a total amount between 197 and 232 million euro, amount to calculate the compensation due from each of the companies that will be considered responsible by the judge.

After several postponements justified also by modifications of the judge, on October 17, 2018, the judge rejected the requests for investigation of the plaintiffs, setting March 19, 2019 as the hearing for clarification of conclusions.

On September 8, 2021, the Milan Business Court filed Sentence 7859 rejecting all of the claims made by Carlo Tassara S.p.A., without accepting the reconstruction according to which the shareholders acted to cause an undervaluation of Edison and Edipower. According to the Business Court of First Instance, in the case submitted, the conditions for assessing management and coordination were not met. The Court also found that the price of Edison shares, at which EDF purchased its shares during the tender offer, was not subject to review because it was the price defined by Consob pursuant to article 106 of the TUF; the sentence also highlights the difference between the price of Edison shares and the value of the Edipower subsidiary and, more importantly, the price at which the latter was sold to A2A.

Carlo Tassara S.p.A. served a writ of summons on the appeal and A2A S.p.A. entered an appearance requesting that the Tassara S.p.A. appeal be declared inadmissible as well as groundless, and re-proposed the exceptions, defenses and requests raised in the first level of judgement for full protection. At the first hearing on March 2, 2022, the judge adjourned the case for clarification of conclusions and the hearing as a result of the adjournments to May 8, 2024.

Carlo Tassara: second lawsuit for damages against Transalpina dell’Energia and A2A S.p.A.

On April 14, 2022, Carlo Tassara S.p.A. served a new summons on the Court of Milan, requesting that Transalpina Di Energia and A2A be ordered, jointly and severally with each other, to pay Carlo Tassara S.p.A. the damages that will be quantified in the course of the proceedings, after ascertaining and declaring the liability of the two companies for the breach of article 106 TUF (Total Tender Offer).

Notes to the Consolidated annual report 2023 Consolidated financial statements A2A 123

In the writ of summons, Carlo Tassara S.p.A. quantifies the damage caused by the write-down of the value of its equity investment in Edison at 316,843,562.97 euro, figure resulting from the theoretical value of the tender offer calculated by Carlo Tassara S.p.A. on the basis of:

a) Value of Edison shares recorded in the financial statements by TDE and A2A (1.5003 euro/share);

b) Value assigned by Edison in fair value appraisals (1.3 euro/share);

c) Highest edict value identified by Consob (0.95 euro/share);

d) Market value to be defined by the Court.

The writ of summons provides a description of the facts related to the extraordinary transaction to be ascertained: (i) the avoidance and violation of article 106 of the TUF and (ii) the demonstration of the existence of an alleged pact between the two defendants to depress Edison’s value, prior to launching a takeover bid - with the consequent violation of the rule protecting minority shareholders of listed companies and non-achievement of the latter of: (i) control price and (ii) market price of the Edison shares held by Carlo Tassara S.p.A..

In anticipation of the first hearing set for January 11, 2023, A2A entered an appearance and illustrated the grounds for the rejection of the appeal. At the hearing, the judge declared the default of TDE (which did not enter an appearance and did not appear at the hearing) and, on January 12, 2023, with an order outside the hearing, adjourned the case for the definition of the conclusions to July 4, 2023, in order to allow the panel, before considering the merits of the deeded claims, to examine the procedural objections raised by A2A. After said hearing, the parties were able to file their pleadings and the filing of the first instance ruling is awaited. On March 1, 2024, a non-definitive sentence was filed, putting the case back on the register for the continuation of the preliminary investigation phase - with separate ordinance, the court set the next hearing for March 12 - and rejecting the preliminary objections of inadmissibility of the claim, lack of passive legitimacy of A2A and lis pendens.

Class Action notified by shareholder of ordinary shares

On May 4, 2022, a natural person shareholder, owner - at the date of the reorganization transactions of Edison S.p.A. - of 1,250,000 ordinary shares of Edison S.p.A. (equal to 0.025% of the share capital of Edison S.p.A.), served a summons pursuant to article 140-bis of Legislative Decree September 6, 2005, no. 206 of the Consumer Code for a class action before the Business Court of Milan, seeking an order that Transalpina Di Energia and A2A, jointly and severally with each other, pay to itself, and to all class members who joined the action within the terms that may be set by the Court after declaring the admissibility of the action, compensation for damages to be quantified in the course of the proceedings, after ascertaining and declaring the liability of the two companies for the breach of article 106 TUF (Total Tender Offer).

The factual reconstruction proposed by the plaintiff and the alleged liability of the two defendant companies retrace the contents of the writ of summons served a few weeks earlier by Carlo Tassara S.p.A. (reference is therefore made to the statement of this position).

The hearing was held on November 24, 2022 and on January 12, 2023, the Court filed an order in which it declared the class action request inadmissible, accepting the objections and defenses of A2A and sentencing the plaintiff to pay A2A legal expenses and to publish the operative part of the order in “Il Sole 24 Ore” newspaper within the following 30 days.

On March 1, 2023, the original applicant notified to A2a S.p.A. the complaint already filed in the Court of Appeal and the order setting the hearing for May 10, 2023. Following said hearing, the Court of Appeal set a new hearing for November 15, 2023. Following the discussion, the filing of the complaint ruling is awaited.

If the complaint is upheld, the first-instance class action proceedings, currently not proceeding in light of the January 12, 2023 order, would resume.

The Group, having fulfilled the requirements of the regulations in force, does not consider likely the risk for which it has not allocated any provisions.

2

Notes

to the Consolidated annual report

2.1

General

information

2.2

Consolidated annual report

2.3

Financial statements

2.4

Basis of preparation

2.5

Changes in international accounting standards

2.6

Scope of consolidation

2.7

Consolidation policies and procedures

2.8

Accounting standards

and policies

2.9

Business Units

2.10

Results

sector by sector

2.11

Notes to the balance sheet

2.12

Net debt

2.13

Notes to the income statement

2.14

Earnings per share

2.15

Note on related party transactions

2.16

Significant

non-recurring events and transactions, pursuant to Consob Communication No. DEM/6064293 of July 28, 2006

2.17

Guarantees

and commitments with third parties

2.18

Other information

124 A2A Consolidated financial statements 2023 Notes to the Consolidated annual report

Shareholders’ Agreement between A2A S.p.A. and Pessina Costruzioni S.p.A. for the management of ASM NOVARA S.P.A.

In March 2013, Pessina Costruzioni established arbitration proceedings against A2A S.p.A. to have the latter declared in breach of the shareholders’ agreement signed between the parties on August 4, 2007 with reference to the company ASM NOVARA S.p.A. (now extinct) and to order A2A S.p.A. to pay damages accordingly. With an award filed on June 30, 2015, the arbitration board, with dissenting opinion of the arbitrator appointed by A2A S.p.A., found A2A S.p.A. responsible for the breach of the shareholders’ agreement and, consequently, ordered it to pay damages, which were awarded on an equitable basis.

The Court of Appeal of Milan on November 23, 2016 with Sentence 4337/16 rejected the appeal of A2A S.p.A. for nullity of the award.

The Court of Cassation, with Order 18220 filed on June 26, 2023, accepted the first reason of the appeal notified by A2A S.p.A., considered the remaining reasons absorbed and quashed with adjournment the sentence of the Court of Appeal of Milan.

The company A2A S.p.A. and also the company Pessina Costruzioni resumed the case in the Court of Appeal within the time limit. In the event that A2A S.p.A.’s claim for the nullity of the award is upheld and the Court makes a new decision on the merits of the dispute, by way of a conditional cross-appeal, Pessina has also made a claim for damages in the amount originally requested and greater than the amount recognized by the award in application of the principle of fairness; for both cases, the Court of Appeal has set May 22, 2024 as the first hearing.

The Group, having already complied with the award and in view of the stage of the proceedings, has not set aside any provisions as of today.

Derivations of public water for the production of hydroelectricity

A2A S.p.A. (“A2A”) and the subsidiary Linea Green S.p.A. (“LG”) challenged the Lombardy Region’s measures concerning the exercise of large hydroelectric concessions after their expiry, on the grounds that they were contrary to the pro tempore legal framework. For A2A, of significance are the concessions in Grosotto, Lovero, Stazzona, Grosio and Premadio I; for LG, the Resio concession.

With particular reference to the imposition of additional fees on expired concessions, the companies contested Regional Council Resolution no. 5130/2016, which quantified the additional fee as 20 euro/kW of nominal power. The Court of Cassation recently ruled (February 2024, Ordinances nos. 4800 and 4382) unfavorable to A2A and LG, recognizing the legitimacy of the provisional tariff identified by the aforementioned Regional Council Resolution. The relevant amounts had, however, been fully provisioned as a matter of prudence.

A2A also contested - as contrary to the pro-tempore regulations in force - the annulment of the partial exemption of the State fee ordered by the Lombardy Region for the expired concessions that benefited from it. The Court of Cassation dismissed the appeals relating to the Premadio I (Sent. no. 15990/2020) and Grosio (Ordinance no. 4371/2024) concessions, while the judgments are still pending relating to the Lovero and Stazzona concessions, in which A2A obtained favorable second instance rulings (Superior Court of Public Waters (TSAP) sentences no. 171/2023 and 2/2024), which were challenged in Cassation by the Region.

Also in Lombardy, imposed, in alleged implementation of art. 12 of Legislative Decree 79/1999 as amended by Law 12/2019, was the free transfer of electricity, in monetized form (220 kWh per kW of nominal power). The relevant measures were challenged by A2A and LG. With regard to expired concessions, following negative rulings by the TSAP (no. 203/2022), appeals before the Supreme Court of Cassation are pending. For concessions that have not yet expired, the Judge has not yet ruled on the merits, as the definition of jurisdiction is still disputed. The Lombardy Region also requested, in alleged implementation of art. 12 of Legislative Decree 79/1999, the payment of the State fee so-called Binomio, consisting of a fixed and a variable component. A2A and LG have filed appeals before the TSAP, and the judgments are still pending.

In Friuli-Venezia Giulia, A2A holds concessions in force until 2029. Similarly to Lombardy, a judgment against the imposition of the free energy transfer was initiated, which is still pending at the TSAP on appeal, after a negative first instance sentence (Venice Regional Court of Public Waters sentence no. 2006/2023). An action was also brought against the imposition of the state fee so-called Binomio, still pending at TSAP.

Notes to the Consolidated annual report 2023 Consolidated financial statements A2A 125

For all disputes relating to hydroelectric fees and assimilated charges, the companies have prudently set aside a provision for risks for the entire amount claimed by the granting public administration.

A2A Energiefuture S.p.A.

Monfalcone Plant Investigation (RGNR 195/17 and then RG Tribunal 492/2023 Public Prosecutor of Gorizia)

On March 8 and 9, 2017, following orders of the Public Prosecutor of Gorizia, the Monfalcone Plant of A2A Energiefuture S.p.A. was inspected during which surveys and samplings (on coal in stock, on the ashes, on fume treatment residues, emissions from the chimney) and documentary acquisitions (on the servers of the emissions monitoring system, on fuel analysis forms, etc.) were performed. On the same date, the guarantee information has been notified to three employees, regarding an investigation for the offences referred to in Article 452 bis of the Italian Criminal Code. Environmental pollution. The suspect employees appointed trusted defenders.

Subsequently, between December 2017 and January 2018, and then in December 2018 and July 2020, the Public Prosecutor of Gorizia proceeded with the acquisition of additional documentation at the plant.

On May 6, 2021 (and subsequently on June 4, 2021), the defenders of the former head of the plant (but not the other two employees who had received information of guarantee) were notified of the conclusion of the preliminary investigation pursuant to article 415 bis of the code of criminal procedure in relation to the crime of environmental disaster pursuant to article 452 quater, paragraph 1, no. 2 and paragraph 2 of the Criminal Code. From the same notification, it emerged that the company is charged with the offence referred to in article 25 undecies, paragraph 1, letter b), in relation to article 5, paragraph 1, letter a) of Legislative Decree 231/01.

In said notice of conclusion of the investigations, it was contested that the seabed in the area in front of the power plant quay has been compromised by coal run-off, the air has been compromised by emissions from the power plant and the balance of the ecosystem has been altered by contamination with heavy metals. A similar notice was served on May 10, 2021 at the Monfalcone power plant.

On July 29, 2021, the defense attorney of the former head of the plant was served with a decree scheduling a preliminary hearing for November 24, 2021 before the Preliminary Investigation Judge (GIP) of Gorizia.

At the hearing of November 24, 2021, the Company’s lawyer raised a preliminary objection of the nullity of the notice pursuant to article 415-bis of the Code of Criminal Procedure of the conclusion of the preliminary investigations since not duly notified. The exception was upheld by the Judge who referred the case back to the Public Prosecutor’s Office so that it could serve a new notice of conclusion of the preliminary investigations. As a result of this decision, the trial regressed to the preliminary investigation stage.

On July 1, 2022, a new notice pursuant to article 415 bis of the Code of Criminal Procedure of the conclusion of preliminary investigations was served on the defense counsel of the former head of the plant and on the defense counsel of the company. The new notice no longer contemplates the offence referred to in article 452 quater of the Criminal Code, i.e. environmental disaster, but rather that referred to in articles 452 bis and 452 quinquies of the Criminal Code, i.e. environmental pollution/unintentional crimes against the environment. Consequently, by virtue of the new and different predicate offences referred to by the Public Prosecutor, the charge against the company in relation to administrative liability has also been amended, which now concerns the offence referred to in article 25 undecies, paragraph 1(a) and (c) of Legislative Decree 231/01.

On April 17, 2023, both the natural person and the company, albeit with some formal flaws, were served with the notice of the pre-trial hearing on October 31, 2023.

At that hearing, the Company asserted the notification flaws and the judge decided to renew the notification to the entity only and to continue the two proceedings against a natural person and a legal person as one. Therefore, a new pre-trial hearing was scheduled, which was first discussed on March 5, 2024 and will continue on March 12, 2024.

2

Notes

to the Consolidated annual report

2.1

General

information

2.2

Consolidated annual report

2.3

Financial statements

2.4

Basis of preparation

2.5

Changes in international accounting standards

2.6

Scope of consolidation

2.7

Consolidation policies and procedures

2.8

Accounting standards

and policies

2.9

Business Units

2.10

Results

sector by sector

2.11

Notes to the balance sheet

2.12

Net debt

2.13

Notes to the income statement

2.14

Earnings per share

2.15

Note on related party transactions

2.16

Significant

non-recurring events and transactions, pursuant to Consob Communication No. DEM/6064293 of July 28, 2006

2.17

Guarantees

and commitments with third parties

2.18

Other information

126 A2A Consolidated financial statements 2023 Notes to the Consolidated annual report

Linea Ambiente S.r.l. – Grottaglie landfill

Court of Taranto - Criminal Proceeding RGNR 2785/18

On March 14, 2019, an employee of A2A Ambiente S.p.A., seconded to Linea Ambiente S.r.l. as the company’s Chief Operating Officer, was remanded in custody as part of investigations into the offences referred to in articles 319 and 321 of the Italian Criminal Code with reference to an alleged bribery connected with the issue of Executive Decision no. 45 dated April 5, 2018 by the Province of Taranto for the orographic optimization of the Linea Ambiente S.r.l.’s Grottaglie landfill.

On August 1, 2019, the Court of Taranto - Office of the Judge for Preliminary Investigation - at the request of the Prosecutor’s Office, ordered the immediate trial, i.e. without a preliminary hearing being held, of the defendants subject to pre-trial custody, including the employee of A2A Ambiente, against whom the measure of pre-trial custody in prison was replaced by house arrest and, subsequently, with the obligation to stay in the municipality of residence and, finally, with the prohibition of residence in the province of Taranto (even this last measure was later revoked by order of January 24, 2022), setting the first hearing for this purpose on November 4, 2019. The trial ended with the reading of the verdict at the hearing on November 16, 2022. On May 15, 2023, Ruling 3459/2022 was filed.

The A2A Ambiente employee was sentenced to 8 years plus disqualification penalties. No confiscation measure was ordered against the employee; confiscation was ordered against another defendant and part of this amount is ascribed as partial consideration for the adoption of Determination No. 45 of April 5, 2018.

Taranto Court of Appeal 515/2023 R.G. App.

The first hearing before the Court of Appeal for the discussion of all appeals notified by the defendants natural persons and the Public Prosecutor is set for May 14, 2024.

The Public Prosecutor appealed the first instance ruling on the failure to confiscate from the defendants natural persons the criminal profit amounting to 20,304,974.88 euro (indicated in the seizure order of May 18, 2021). Therefore, no judgement was formed on the point of refusal of confiscation and the Court of Appeal will have to decide whether to confirm or reform the ruling of the Court of Taranto.

The Court of Appeal, at the first hearing on February 21, 2024, due to profiles related to the composition of the Board, adjourned the case without hearing to a new Board at the hearing of May 14, 2024.

Court of Taranto no. 5400/19 R.G. Administrative Responsibility

Precautionary measures

On May 7, 2020, the Guardia di Finanza notified Linea Ambiente S.r.l. of a preventive seizure order issued by the GIP of Taranto on March 12, 2020 in the context of Proceedings no. 2785/18 R.G.N.R. and 5400/19 R.G. Admin. Resp. and deed of execution of preventive seizure pursuant to art. 53 of Legislative Decree 231/01, also valid as guarantee information pursuant to art. 369 of the Italian Criminal Code.

For the first time, Linea Ambiente was informed of the existence of Criminal Proceedings no. 5400/19 R.G. Admin. Resp. of Entities for bribery offences pursuant to article 25, paragraph 2, of Legislative Decree 231/01.

The preventive seizure, on May 7, 2020, was arranged up to the amount of 26,273,298 euro (equal to the presumed profit of the offence). On May 13, 2020 was the notification of appointment of a judicial administrator of the assets seized, including company shares and receivables.

On May 21, 2020, Linea Ambiente proposed a request for review of the seizure order, which was discussed in the Council Chamber on June 9, 2020, and rejected. The cautionary requests have been confirmed.

On June 11, 2020, a decree releasing the Linea Ambiente portions was notified. On September 10, 2020, the company was notified of the conclusion of the preliminary investigations pursuant to article 415-bis of the Code of Criminal Procedure. The notification was repeated, with partial changes, on January 21, 2021. On January 21, 2021, the Taranto Public Prosecutor’s Office notified the defense lawyer of Linea Ambiente of an order to release and return 95.004% of the shares in Lomellina Energia held by Linea Ambiente and already placed under preventive seizure. This was done on the basis of a new estimate of the value of the shares made by the judicial administrator and on the fact that after the seizures made by the Guardia di Finanza there remained sums equal to about 5% the value of said shares.

On May 18, 2021, the Taranto Preliminary Investigation Judge (GIP), following the annulment by the Supreme Court of the preventive seizure order notified on May 7, 2020, issued a new preventive seizure order recalculating the “profit from the crime” as 20,304,974.88 euro (compared to the previous amount of 26,273,298.13 euro) by subtracting the “out-of-pocket costs” incurred by Linea Ambiente and quantified as 5,968,323.25 euro. In fact, the Supreme Court found that the original determination was erroneous of the alleged profit, identified by the Judge for Preliminary

Notes to the Consolidated annual report 2023 Consolidated financial statements A2A 127

Investigation in the gross revenue that Linea Ambiente would have derived as a result of the landfill contributions made in the period April 2018 - February 2019, for a total amount of 26,273,398.13 euro. Consequently, the Supreme Court ordered the annulment of the decree and the return of the acts to the GIP of Taranto to comply with the principles of law dictated by the Supreme Court, according to which the profit is only the advantage of immediate and direct causal derivation of the crime. In the new seizure order notified on May 18, 2021, however, according to the Linea Ambiente defense, this principle was again disregarded and therefore on May 27, 2021, an appeal was filed with the Supreme Court against the same, requesting its cancellation. At the hearing on November 10, 2021, the Court declared the appeal inadmissible due to lack of standing because, according to the Court of Cassation, Linea Ambiente should not have been considered as a party to the committal proceedings opened with the sentence of annulment pronounced by the Court of Cassation on the appeal brought by the company’s former Operating Director (in other words, according to the Court of Cassation, the judge of the Taranto Magistrate’s Court, as judge of the committal, could have ruled only against the original appellant, i.e. the former Operating Director, and not also against the other parties affected by the original decree).

On June 29, 2021, the Linea Ambiente counsel was re-notified of the preventive seizure order issued on May 18, 2021 by the GIP and the minutes of the execution of the same by which it was ordered to release and return to Linea Ambiente 3.352% of the shares held by it in the company Lomellina Energia for an estimated value (by the Judicial Administrator) of 1,617,284.96 euro. In May 2021, the Group complied with the request of the Judicial Administrator to pay the amounts seized up to the amount of 14 million euro. Subsequently, with a measure notified on March 14, 2022, granting the petition filed by the company, the GIP of Taranto ordered that the preventive seizure of Linea Ambiente’s shareholding in Lomellina Energia still under seizure (1.644 %) be transferred to the corresponding sum of money (equal to 793,164.55 euro) to be paid to the indicated account. Once this payment had been made, in execution of the said decree, on May 17, 2022 the Guardia di Finanza released from seizure and returned to Linea Ambiente the 1.644 % of the shares it held in Lomellina Energia that had already been seized.

The proceedings of merit

On March 18, 2021, the Linea Ambiente S.r.l. counsel was served with the notice of the preliminary hearing scheduled for June 10, 2021 before the Taranto Preliminary Hearings Judge. In this preliminary hearing, the Municipality of Grottaglie filed a request to join the civil action. At the subsequent hearing on July 22, 2021, the defense of Linea Ambiente S.r.l. objected to the inadmissibility of the civil action of the Municipality of Grottaglie against Linea Ambiente S.r.l.. The Preliminary Hearings Judge (GUP) accepted the objection and consequently declared the inadmissibility of the constitution of a civil party of the Municipality of Grottaglie, also rejecting the request of the latter, carried out in the alternative, to authorize the summons of the company as civil liable party, postponing the proceeding to November 11, 2021 for the continuation of the preliminary hearing. At this hearing, the defense raised a number of preliminary issues and the Judge granted time to respond and adjourned the hearing until January 20, 2022. At the hearing on January 20, 2022, the judge rejected the preliminary objections and adjourned the hearing on March 31, 2022, then to May 31, 2022, for a decision on the preliminary motions; at that hearing, due to the impediment of the Magistrate’s Court judge, an adjournment to September 29, 2022 was ordered; at the subsequent hearing on November 17, 2022, the parties requested an adjournment to acquire the conclusions of the proceedings against the natural persons and a new schedule was set. At the hearing of December 22, 2022, the Public Prosecutor delivered their conclusions with a request for committal for trial against the entity, setting the subsequent hearings for the conclusions of the other parties for January 19 and 26 and February 2, 2023; a new hearing was then set for March 30, 2023 for the Public Prosecutor’s replies and possible taking of decisions on jurisdiction by the Judge.

At the hearing on March 30, scheduled for the replies of the Public Prosecutor, after activities connected to another defendant, the Judge again ordered a postponement to April 6, 2023, a hearing in which the Preliminary Hearing Judge at the Court of Taranto, Ms Misserini, ordered committal for trial of Linea Ambiente, pursuant to Legislative Decree 231 of 2001, and of all the other defendants in the proceedings in question, natural and legal persons, before the Court of Taranto in collegial composition - 1st criminal section, for September 13, 2023.

2

Notes

to the Consolidated annual report

2.1

General

information

2.2

Consolidated annual report

2.3

Financial statements

2.4

Basis of preparation

2.5

Changes in international accounting standards

2.6

Scope of consolidation

2.7

Consolidation policies and procedures

2.8

Accounting standards

and policies

2.9

Business Units

2.10

Results

sector by sector

2.11

Notes to the balance sheet

2.12

Net debt

2.13

Notes to the income statement

2.14

Earnings per share

2.15

Note on related party transactions

2.16

Significant

non-recurring events and transactions, pursuant to Consob Communication No. DEM/6064293 of July 28, 2006

2.17

Guarantees

and commitments with third parties

2.18

Other information

128 A2A Consolidated financial statements 2023 Notes to the Consolidated annual report

Several hearings have taken place since September 13, 2023, all of which have been postponed due to the incompatibility of some of the members of the board. After the reading at the hearing of February 12, 2024 of the order of the President of the Court concerning the composition of the new board, the Court set a first hearing for March 4, 2024 at which it decided on the constitution of the civil parties, accepted by ordinance a request of the Public Prosecutor to clarify one of the charges, and set a new hearing for October 7, 2024 for the examination of preliminary issues.

The risk assessment considers multiple concomitant factors such as: (i) the committal for trial of the Company in Proceeding no. 5400/19 R.G. Head Admin.; (ii) the content of ruling 3459/2022 and the already intervened fixing of the first hearing of the relative appeal ruling; (iii) the appeal lodged by the Public Prosecutor against Ruling 3459/2022 that had rejected the request for confiscation; (iv) the new value of the sum determined in the seizure decree notified on May 18, 2021 as profit deriving from the hypothetical predicate offence. In fact, in the event of conviction of the Company, the confiscation of the price or profit of the offence is provided for.

At present, in light of the events that occurred during 2023, the company considers the risk of confiscation likely, even though the first instance ruling is not expected before 2025.

Linea Ambiente vs.Province of Taranto – Grottaglie Landfill

In January 2021 (with reiteration in February 2022), the Province of Taranto sent a warning notice for the removal of the waste dumped during the period of validity of DD 45/18, which also constitutes a response to the requests that the company had made in previous years regarding the procedures for fulfilling the obligations resulting from the Sentence of the Council of State no. 5985/2019, which had annulled the substantial variation no. 45/2018. The Province, according to as stated in the meagre communication of 2021, which does not give evidence of the provincial inquiry, does not open the required authorization procedure and indicates to the company: (i) to remove the waste delivered in excess of the authorized quantities, (ii) to restore the landfill profiles in accordance with authorization 426/08 and (iii) to activate the closure activities.

On February 9, 2021, Linea Ambiente met with the Province, expressly reserving the right to challenge the warning, in order to outline a technical path necessary to take appropriate action; in particular, the company illustrated a preliminary investigation path from which all possible solutions could emerge, including a new request for a substantial variant of the current authorization in line with Council of State Sentence 5986/2019.

In view of the flaws in the deed, the company appealed to the Apulia Regional Administrative Court to have the warning cancelled and notified additional grounds against the February 2022 communication; a hearing on the merits has not yet been scheduled.

A change in the administrative structure with possible effects also on the warning order will result from the outcome of the new procedural phase that began with the submission of the request for the issuance of the Single Authorization Order by the company during 2023.

The Group has set aside an adequate provision to cover any risk.

Lecce Public Prosecutor’s Office - Criminal Proceeding no. 6369/2019 R.G.N.R.

On February 26, 2020, at the Rovato headquarters of Linea Ambiente S.r.l., the Brescia Finance Police executed the “Search and Seizure Warrant” issued on February 5, 2020 by the Lecce Public Prosecutor’s Office (Public Prosecutor Mignone) in relation to criminal proceedings no. 6369/2019 R.G.N.R..

The Finance Police then acquired a copy of the company’s Organisational Model and the deeds and documents relating to the information flows destined for the Linea Ambiente S.r.l. Supervisory Body from November 2014 to January 2019.

The criminal proceedings have been filed against the company Linea Ambiente S.r.l. and the legal representative pro tempore for the offences referred to in articles 452 quaterdecies of the Italian Criminal Code (activities organized for the illicit waste trafficking) and 256 and paragraphs 1 and 3 of Legislative Decree 152/2006 (respectively waste collection, transport and disposal activities in the absence of the prescribed authorization/registration and the construction and management of unauthorized landfills) from which the company’s administrative liability derives pursuant to articles 24 and 25 undecies of Legislative Decree 231/2001 and this - the said measure states - “in order to have, with several operations and through the setting up of continuous and organized means and activities, managed and illegally disposed of large quantities of urban waste, creating an illegal landfill, in order to obtain an unfair profit”. These alleged offences were supposedly committed in “Rome and Grottaglie from November 1, 2014 to January 28, 2019 with permanence”.

Notes to the Consolidated annual report 2023 Consolidated financial statements A2A 129

Together with the “Search and Seizure Warrant”, the Finance Police notified the company “Guarantee and on the right of defense information”, from which it emerges that the company AMA S.p.A. of Rome, “owner of the TMB Rocca Cencia and Salario plants in Rome”, was also entered in the same proceedings.

The company has been informed that individuals who are legal representatives or directors of Linea Ambiente S.r.l. and AMA S.p.A. during the interested period have received only a first request to extend the preliminary investigations in the same proceedings.

Amsa S.p.A.

Milan Public Prosecutor’s Office - Criminal Proceeding no. 33490/16 R.G.N.R. - 43494/19 R.G.N.R. – 27023/19 RGGIP 7485/2021 R.G. DIP

On May 7, 2019, the Carabinieri investigative unit of Monza showed up at the Amsa S.p.A. headquarters to notify an order for the exhibition of documents issued by the Milan Public Prosecutor’s Office, relating to the documentation concerning three tenders launched by Amsa S.p.A. in 2017-2018, as well as the supplies made to it by a specific supplier. In relation to these proceedings, the Company’s Chief Operating Officer and other employees were investigated, as well as three members of a tender judging committee issued by Amsa S.p.A..

No dispute has been raised against Amsa S.p.A. on the basis of the regulations on the administrative liability of legal persons, as Amsa S.p.A. considers itself to be an “injured party” and, in fact, has filed a complaint with the Public Prosecutor’s Office through a trusted lawyer.

On December 23, 2019, lawyer of Amsa - as the injured party - was served notice for the setting of the preliminary hearing on February 17, 2020. As a result of this hearing, the Judge for Preliminary Investigation adjourned the hearing to May 25, 2020, setting a provisional schedule for its continuation. The measure in question does not cover the members of the tender committee, whose position has been withdrawn and closed. Filed as civil parties were Amsa S.p.A. and A2A Calore & Servizi S.r.l., as it was found to be an injured party in the same proceedings in relation to agreements made to its detriment by some companies competing in the district heating installation tenders, which tended to distort free competition.

On January 18, 2021, the lawyer of Amsa S.p.A. was served notice of the setting of the preliminary hearing relating to the second line of investigation, registered under number 34213/19 R.G.N.R. - 21296/19 R.G.I.P. connected to the first. The preliminary hearing of this second matter was set for March 19, 2021 for the joining of the proceedings.

Amsa also filed as civil party against some of the defendants and in respect of certain allegations in connection with this additional matter. The trial underwent a series of postponements and the discussion of the preliminary hearing ended at the hearing on July 15, 2021 in which the defendants were sent for trial and the first hearing was set for November 18, 2021. At the hearing of July 8, 2021, at the conclusion of the reconnaissance on the requests for alternative rites, the Judge also set the calendar for the treatment of alternative rites, scheduling numerous hearings between September and October 2021.

At the hearing of October 21, 2021, set for the decision on alternative procedures, the Judge, as regards the positions of interest to AMSA, accepted the plea bargains requested by pronouncing a sentence of application of the penalty, while for a defendant who had requested an abbreviated trial, it pronounced a sentence of acquittal.

At the hearing on November 18, 2021, the preliminary issues raised by the defense of the defendants on remand were discussed; at the end of the hearing, the Court reserved its decision and adjourned the proceedings until the hearing on December 10, 2021. At this hearing the Court, in order to withdraw its reservation, rejected the objections raised by the defense and then opened the hearing, inviting the parties to formulate their preliminary requests, on which it reserved the right to decide, adjourning the hearing until January 14, 2022. At this hearing, the Court granted the preliminary investigations, admitted the testimonial and documentary evidence requested and ordered the transcription of telephone and environmental interceptions. The case was postponed to March 14, 2022 for the commencement of the pre-trial investigation, and several hearings for the hearing of witnesses were scheduled until October 2, 2023, which will also include the reading of the ruling. At

2

Notes

to the Consolidated annual report

2.1

General

information

2.2

Consolidated annual report

2.3

Financial statements

2.4

Basis of preparation

2.5

Changes in international accounting standards

2.6

Scope of consolidation

2.7

Consolidation policies and procedures

2.8

Accounting standards

and policies

2.9

Business Units

2.10

Results

sector by sector

2.11

Notes to the balance sheet

2.12

Net debt

2.13

Notes to the income statement

2.14

Earnings per share

2.15

Note on related party transactions

2.16

Significant

non-recurring events and transactions, pursuant to Consob Communication No. DEM/6064293 of July 28, 2006

2.17

Guarantees

and commitments with third parties

2.18

Other information

130 A2A Consolidated financial statements 2023 Notes to the Consolidated annual report

the hearing on May 15, 2023, the Public Prosecutor formulated the related requests for conviction.

At the hearing on October 2, 2023, the Court filed the operative part of the ruling in which all persons still subject to ordinary trial responsible for the conduct to the detriment of the two companies that had joined the civil action were acquitted because the fact did not exist.

Sentence 13661/2023 of October 2, 2023 with reasons was filed on January 18, 2024. Appeals have been lodged; the companies are considering the related contents.

Linea Green S.p.A.

Brescia Public Prosecutor’s Office - Criminal Proceeding no. 3891/2020 R.G.N.R.

On September 22, 2020, the person in charge of the technical and operational management of the Isola hydroelectric plant on the Grigna stream in Barzio Inferiore was notified of a request for an extension of the preliminary investigation. The interested party thus learned of the existence of investigations involving the latter in relation to an alleged crime of environmental pollution in conjunction with the legal representative of the company that owns the plant, which does not belong to Linea Green, but to a third company with which Linea Green has signed a management contract.

Subsequently, on March 26, 2021, the Carabinieri from the Forestry Department appeared at the Linea Green offices to acquire documentation and, on that occasion, invited the company’s legal representative to appoint a lawyer for the company, since, as shown in the report notified, it was “under investigation for the administrative offence depending on the crime referred to in article 25 undecies paragraph 1 letter a) of Legislative Decree 231/01”, i.e. in relation to the offence of environmental pollution referred to in article 452 bis of the Criminal Code.

There are no reports of any developments.

Acinque S.p.A. (formerly ACSM-AGAM S.p.A.)

Acinque S.p.A. (formerly ACSM-AGAM S.p.A.) and Acinque Ambiente S.r.l. (formerly Acsm Agam Ambiente S.r.l.): lawsuit for damages against the Municipality of Varese regarding the municipal sanitation concession

Acinque S.p.A. (formerly ACSM-AGAM S.p.A.) and Acinque Ambiente S.r.l. (formerly ACSM-AGAM S.p.A.), in 2020, filed a lawsuit with the Special Business Court of Milan seeking a declaration of contractual and non-contractual non-fulfilment by the Municipality of Varese, with a consequent order for damages. The Municipality of Varese caused direct damage to the assets of the Acinque Group (formerly ACSM-AGAM) by ordering the early termination of the service contract signed with Acinque Ambiente S.r.l. (formerly Acsm Agam Ambiente S.r.l.). Acinque Ambiente S.r.l. (formerly Acsm Agam Ambiente S.r.l.) in fact reduced the income flows connected to the contract and bore unforeseen and otherwise avoidable charges for the transitory

continuation of the contract at more onerous conditions and Acinque S.p.A. (formerly ACSM-AGAM S.p.A.) suffered a significant reduction in the value of the subsidiary’s equity investment, despite and after the signing of the Framework Agreement that characterized the extraordinary transaction in 2018. After the order of the Court of Milan of January 20, 2022 declaring the lack of jurisdiction of the Court of Milan and the jurisdiction of the ordinary Court of Varese, the Companies resumed the proceedings before the Court of Varese. Following the first hearing on September 20, 2022, the Company requested the admission of witness evidence, a request to which the Municipality of Varese objected. The Judge retained the case for decision, and after the filing of closing statements on October 10, 2023 for closing arguments and October 30, 2023 for reply briefs. On February 27, 2024, the filing was announced of the sentence declaring inadmissible the action of Acinque S.p.A. (formerly ACSM-AGAM S.p.A.) and rejecting the requests for compensation of Acinque Ambiente S.r.l. (formerly Acsm Agam Ambiente S.r.l.). The companies will take the corresponding decisions.

AEB S.p.A.

Monza Public Prosecutor’s Office - Criminal Proceeding no. 1931/2021 R.G.N.R.

On July 5, 2021, officers and agents of the Guardia di Finanza of Seregno showed up at the headquarters of AEB S.p.A. in Seregno to execute “personal and local search orders” and “request for delivery - local search order”. The proceedings, which in the initial phase was against unknown persons, arise from two complaints presented to the Prosecutor’s Office of Monza on November 25, 2019 and on February 10, 2020 by Tiziano Mariani, at the time Municipal Councillor of the Municipality of Seregno, who also filed an appeal with the TAR, now concluded.

The “personal and local search decree”, which also contains the “guarantee information” pursuant to art. 369 Criminal Procedure Code to the person subjected to the investigation, concerned the Chair of the Board of Directors of AEB

Notes to the Consolidated annual report 2023 Consolidated financial statements A2A 131

S.p.A. investigated, jointly with other persons not indicated, for the crimes referred to in the art. 353 bis Criminal Code (disturbance of the freedom of the procedure for choosing a contractor), 319 Criminal Code (bribery for an act contrary to the duties of office), 321 Criminal Code (penalties for the briber), committed between “October 2019 and in present permanency.”

At the same time, AEB was served with a “request for delivery and a local search decree” with which the Monza Prosecutor’s Office ordered the acquisition of documentation concerning the transaction.

Subsequently, on September 24, 2021, the Finance Police of Seregno, delegated by the Monza Prosecutor’s Office, appeared at the A2A Milan headquarters to serve, as part of Procedure no. 1931/2021 R.G.N.R. relating to the merger between the A2A and AEB Groups, a notice of non-repeatable technical checks on the IT supports previously seized.

From the document in question, it emerged that the proceedings were pending not only against certain persons outside the A2A Group, but also against certain persons, other than the current directors of A2A S.p.A., who at the time of the events held positions in A2A S.p.A., Unareti S.p.A. and A2A Illuminazione pubblica S.r.l. in various capacities involved in the project in question. The notice of non-repeatable technical investigations also contained information on guarantees and the right of defense in relation to the investigation concerning the alleged offences under Articles 110 Criminal Code (conspiracy), 353 bis Criminal Code (disturbance of the freedom of the procedure for choosing a contractor), 319 Criminal Code (bribery for an act contrary to the duties of office), 321 Criminal Code (penalties for the corruptor).

On July 5, 2023, the notice of conclusion of the preliminary investigation was served on only some of the natural persons subject to the notice of investigation, which was, moreover, announced in a press release issued by the Monza Prosecutor’s Office on July 7, 2023.

As far as A2A is concerned, the notice was served on only one of the original addressees of the guarantee notice.

It appears from the notice that the alleged offences are different from those set out in the previous acts and relate to violations of Articles 353bis Criminal Code (Disturbance of the freedom of the procedure for choosing a contractor), and article 353 of the Criminal Code (Disturbance of the freedom of auctions).

On November 22, 2023, the Monza Prosecutor’s Office issued a new press release announcing that it had filed a request for committal for trial against the same persons reached by the notice of conclusion of July 5, 2023 and for the aforementioned offences.

The preliminary hearing before the Preliminary Hearing Judge at the Court of Monza was set for April 5, 2024.

A2A Ambiente S.p.A.

Busto Arsizio Public Prosecutor’s Office - Criminal Proceeding no. 9079/2021 R.G.N.R. (formerly no. 24/2017 R.G.N.R.)

On February 18, 2021, the Carabinieri - forestry department showed up at the Gerenzano landfill site in execution of investigation activities delegated by the Public Prosecutor’s Office of Busto Arsizio within the framework of criminal proceeding no. 24/2017 R.G.N.R. Form 44 (i.e. against unknown persons), to acquire documentation on the plant, then notifying the person in charge of the plant and the head of A2A Ambiente’s “Impianti Lombardia” organizational structure of the proceedings for the alleged offences under articles 81 paragraph 2 (continuation), 110 (conspiracy), 452 quater (environmental disaster), 452 septies (obstruction of control) of the Italian Criminal Code.

Gerenzano is a former quarry, later converted into a landfill, located in the territory of the municipality of the same name, which owns it, with an area of about 80 hectares. It is divided into two lots Gerenzano 1 and Gerenzano 2.

Gerenzano 1 is the original unit, dating back to the mid-1960s when waste disposal activities began. At the end of the 1970s, 200 municipalities, including Milan, delivered waste there. In July 1980, the Municipality of Gerenzano and the municipal company of the Municipality of Milan (then AMNU) signed an agreement whereby AMNU exclusively took over the management of the landfill of waste from the Municipality of Milan and 69 other municipalities.

2

Notes

to the Consolidated annual report

2.1

General

information

2.2

Consolidated annual report

2.3

Financial statements

2.4

Basis of preparation

2.5

Changes in international accounting standards

2.6

Scope of consolidation

2.7

Consolidation policies and procedures

2.8

Accounting standards

and policies

2.9

Business Units

2.10

Results

sector by sector

2.11

Notes to the balance sheet

2.12

Net debt

2.13

Notes to the income statement

2.14

Earnings per share

2.15

Note on related party transactions

2.16

Significant

non-recurring events and transactions, pursuant to Consob Communication No. DEM/6064293 of July 28, 2006

2.17

Guarantees

and commitments with third parties

2.18

Other information

132 A2A Consolidated financial statements 2023 Notes to the Consolidated annual report

AMNU then built a new controlled landfill and carried out environmental remediation and restoration works (with regional contributions).

The cultivation of Gerenzano 1 by AMNU, later to become AMSA, continued until its final closure in 1988. A new area was then identified where Gerenzano 2 was built and managed by AMSA from 1989 to 1991, the year in which conferring ceased.

In the context of the obligations taken on with the management of the landfill for environmental recovery, AMSA carried out a series of interventions including the impermeable cover, the biogas collection and combustion plant, weir wells and groundwater purging, the treatment plant for emitted groundwater, leachate collection works, a leachate purifier, and environmental recovery interventions.

The operation of the plants in application of the authorization measures will have to continue until the waste is mineralized, as far as biogas is concerned, and until the water table is back in good condition, as far as purging wells are concerned.

As regards the latter activity, AMSA took responsibility for a situation of degradation and pollution that existed prior to its taking over the management of the area, in relation to which it had no responsibility. In 2013, as part of the reorganization of the A2A Group’s environmental chain, A2A Ambiente took over from AMSA in the management of the Gerenzano landfill and in the service contract still in force as a result of technical extensions with the Municipality of Milan for the post-mortem management service of the landfill.

On July 1, 2022, the conclusion of the preliminary investigations pursuant to article 415-bis of the Code of Criminal Procedure was notified.

In the notice, the person in charge (at the time of the contested facts, i.e. from May 29, 2015 to November 13, 2020) of the Gerenzano Hub and the person in charge of the “Lombardy Plants” structure (the latter in current permanence) are charged with having caused an environmental disaster in the management of the plant (article 452 quater of the Criminal Code) by means of an unlawful dysfunction of the purification plant of the groundwater emitted by means of a hydraulic barrier so as not to carry out the containment of the contamination of the water table and by means of an unlawful dysfunction of the purification plant for the treatment of the polluting fluids before their discharge into the Bozzente stream and of having obstructed and eluded the environmental supervision and control activities by ARPA (article 452 septies Criminal Code from May 29, 2015 permanently for the person in charge of the facility and from November 21, 2016 for the person in charge of the Hub).

No charges against the company under Legislative Decree 231/01 appear in the notice of conclusion of investigations. On November 10, 2022, the decree was served setting March 2, 2023 as the date of the preliminary hearing. At the preliminary hearing, the defense counsel objected to the nullity of the request for committal for trial due to flaws in the notification of the notice of conclusion of the preliminary investigation. The Preliminary Hearings Judge upheld and ordered the return of the documents to the Public Prosecutor, who served a new notice of conclusion of the preliminary investigation a few days later.

At the hearing on February 1, 2024 called to decide on the plea bargaining request made by one of the two individuals, the Preliminary Hearings Judge did not accept it and referred the case back to the Public Prosecutor due to the tenuousness of the agreed penalty.

Measures are still awaited concerning the other natural person for whom the Public Prosecutor asked the Preliminary Hearing Judge to dismiss the case and the legal person against whom preliminary investigations are still pending.

* * *

The following information is provided in connection with the main litigation of a fiscal nature.

A2A gencogas S.p.A. (formerly Abruzzoenergia S.p.A.) - General IRES/IRAP/VAT audit for fiscal years 2014 and 2015

On January 19, 2016, the Finance Police - Chieti Unit commenced a general audit of A2A gencogas S.p.A. (formerly Abruzzoenergia S.p.A.) for fiscal years 2014 and 2015 for IRES, IREP and VAT purposes. This audit was completed on May 25, 2016. The company submitted comments to the formal notice of assessment by the inspectors. In December 2016, the Revenue Agency of Chieti issued notices of assessment for IRES, IRAP and VAT for the years 2011 and 2012 and, in August 2017, served notices of assessment for IRES, IRAP and VAT for the years 2013 and 2014. The company has proposed a timely appeal against all the deeds notified. The Provincial Tax Commission of Chieti and the Regional Tax Commission of Pescara issued unfavorable rulings for IRES and IRAP. The appeals against the VAT assessment notices for the years 2011-2014 were rejected by the Provincial Tax Commission of Chieti and upheld by the Regional Tax Commission of Pescara. On May 8, 2019, the Company filed an appeal with the Supreme Court for IRES 2011 and 2012. In February 2020, the Company filed an appeal with the Supreme Court for IRES 2013 and 2014 and IRAP 2011-

Notes to the Consolidated annual report 2023 Consolidated financial statements A2A 133

2014 and a counter-appeal with the Supreme Court for VAT 2011 and 2012. On May 5, 2020, the Company filed a counter-appeal with the Supreme Court for 2013-2014 VAT. A risk provision of 2 million euro has been recognized.

A2A S.p.A. - Registration tax for transfer of business unit and sale of the investment Chi.na.co. S.r.l.

On April 4, 2016, the Provincial Directorate I of Milan - Regional Office of Milan 1 - notified the invitation to appear to provide clarifications on a business transfer in the company Chi.na.co. S.r.l. and the subsequent sale of the investment held in it under control for registration tax purposes. The invitation was followed by a contradictory with the Office and subsequent notification by the latter of the notice of liquidation to the acquiring counterparty, which filed an appeal on September 28, 2016. The Provincial Tax Commission of Milan rejected the appeal with sentence filed on July 07, 2017. On February 13, 2018, the acquiring company filed an appeal, which was rejected by the Milan Regional Administrative Court. On April 8, 2019, the Company filed an appeal with the Supreme Court. On February 21, 2020, the Office filed a counter-appeal and a cross-appeal with the Supreme Court. The risks provision recognized for 1.4 million euro was fully used for the payment of the amounts requested with the liquidation notice.

A2A S.p.A. (merging company of AMSA Holding S.p.A.) - VAT Tax assessments for tax years from 2001 to 2005

In early 2006, the Italian Finance Police – Lombardy Regional Unit, Milan – carried out a tax audit of AMSA Holding S.p.A. (now A2A S.p.A.) for VAT purposes for tax years 2001 to 2005.

The audit ended with the issue of a final report contesting the legitimacy of the ordinary VAT rate, in place of the special rate applied by suppliers for waste disposal and plant maintenance, as well as the subsequent deduction made after the invoices issued for these services were duly paid.

The report was followed by formal notices of assessment from the Tax Revenue Office (Milan 3 Office) for each year audited; appeals were then filed with the Provincial Tax Commission within the term provided by law.

The appeals for 2001 and for 2004 and 2005 were discussed on January 25, 2010 and on February 17, 2010 respectively, with a favorable outcome for the company in all cases. The Tax Revenue Office appealed against the verdict of the first court. The Regional Tax Commission rejected this appeal for all three years, 2001, 2004 and 2005.

For 2001, the Tax Revenue Office filed an appeal with the Supreme Court against which AMSA Holding S.p.A. (now A2A S.p.A.), filed a cross-appeal on November 9, 2012. At the hearing on December 12, 2018, the Company requested that the case be suspended in order to assess the facilitated settlement of the dispute. On May 24, 2019, the company filed an application for a facilitated settlement of pending tax disputes and definitively settled its tax claim.

The outcomes of the 2002 and 2003 disputes were also favorable for the company but the Tax Revenue Office filed an appeal against both sentences. The appeal for 2002 was discussed on November 30, 2010, and by way of a sentence lodged on February 2, 2011 the Milan Regional Tax Commission overturned the sentence of the first court, upholding the Tax Revenue Office’s appeal on almost all counts with the exception of the hazardous waste category. The Company filed an appeal with the Supreme Court for 2002. The hearing was held on December 12, 2018 and the appeal was upheld and the judgement was adjourned to the Regional Technical Committee (CTR). On December 23, 2019, the Company filed an appeal for reinstatement in CTR and an appeal for revocation with the Supreme Court. For 2003 the appeal made by the Tax Revenue Office was discussed on November 7, 2011 before the Regional Tax Commission which rejected it with a sentence filed on November 11, 2011. The Tax Revenue Office has not appealed to the Supreme Court for 2003, 2004 and 2005 and the sentence has become final, thereby closing the litigation.

No provisions for risks have been recognized.

2

Notes

to the Consolidated annual report

2.1

General

information

2.2

Consolidated annual report

2.3

Financial statements

2.4

Basis of preparation

2.5

Changes in international accounting standards

2.6

Scope of consolidation

2.7

Consolidation policies and procedures

2.8

Accounting standards

and policies

2.9

Business Units

2.10

Results

sector by sector

2.11

Notes to the balance sheet

2.12

Net debt

2.13

Notes to the income statement

2.14

Earnings per share

2.15

Note on related party transactions

2.16

Significant

non-recurring events and transactions, pursuant to Consob Communication No. DEM/6064293 of July 28, 2006

2.17

Guarantees

and commitments with third parties

2.18

Other information

134 A2A Consolidated financial statements 2023 Notes to the Consolidated annual report

A2A Ciclo Idrico S.p.A. – IMU assessment notices of Municipality of Montichiari for the years 2013-2018

On December 4, 2019, the Municipality of Montichiari (BS) issued notices of assessment for IMU purposes for the years from 2013 to 2018 regarding the purification plant located in the territory of the same municipality. On January 29, 2020, the Company filed an appeal with the Provincial Tax Commission, which rejected the appeal. On November 22, 2022, the company filed an appeal and a hearing is pending. A risk provision of 0.7 million euro has been recognized.

A2A Energia S.p.A. merging company of Linea Più S.p.A. - General IRES/IRAP/VAT audit for fiscal years 2013 and 2014

On September 17, 2019 the Lombardy Regional Department - Large Taxpayers Section - opened in respect of A2A Energia S.p.A. (merging company of Linea Più S.p.A.) a general audit for IRES, IRAP and VAT purposes for tax periods 2013 and 2014. This audit was completed on October 22, 2019. On December 24, 2019, the Lombardy Regional Department issued notices of assessment for IRES, ROBIN TAX, IRAP and VAT purposes for the tax periods verified. On July 24, 2020, the Company appealed against all the assessments to the Provincial Tax Commission. At the hearing on May 11, 2021, the Milan Provincial Tax Commission upheld the company’s appeals. On September 24, 2021, the Office filed an appeal and, on November 19, 2021, the Company filed a counter-claim to the appeal that was discussed at the hearing on June 10, 2022, during which the Regional Tax Commission of Milan rejected the Office’s appeal. The terms for the filing of the appeal for Cassation by the Office are pending. A risk provision of 10.3 million euro has been recognized.

A2A Ambiente S.p.A. - Tax audit on sulphur dioxide and nitrogen oxides SO2 NOx emissions for the 2014 and 2019 tax periods

On October 24, 2019, the Naples Customs Agency 2 - Excise Department for Audits and Controls - opened against A2A Ambiente S.p.A. an administrative technical audit of the Acerra waste-to-energy plant for the recovery of the tax on emissions of sulphur dioxide and nitrogen oxides for the years 2014-2019. The audit was completed on February 27, 2020. On April 24, 2020, the Company submitted its observations regarding the notice of assessment prepared by the inspectors. On December 11, 2020, the Naples Customs Agency served notice of payment and imposition of penalties for the years 2015-2019. In March 2021, the Company filed an appeal with the Naples Provincial Tax Commission. On November 7, 2022, the company filed an appeal, which was upheld by the CGT II of Naples at the hearing on May 3, 2023. The terms for the filing of the appeal for Cassation by the Office are pending. A risk provision of 0.5 million euro has been recognized.

Linea Ambiente S.r.l. - General IRES/IRAP/VAT audit for fiscal years 2017-2019

On October 13, 2022, the Guardia di Finanza - Brescia Economic-Financial Police Unit - opened a general audit for IRES, IRAP and VAT purposes against the company Linea Ambiente S.r.l. for the tax periods 2017-2019. This audit was completed on October 28, 2022. The tax audit report disputed the deductibility of certain costs incurred by the company during the period audited. On the basis of the notice of assessment issued by the Brescia Finance Police (G.d.F.) and having unsuccessfully exhausted the attempts to adhere to it, the Brescia Revenue Agency/Provincial Directorate notified the Company (and, with regard to IRES, its consolidating company A2A S.p.A.) of six notices of assessment for IRES for the years 2017/2019, IRAP for the years 2017/2018 and VAT for the years 2017/2019. The company appealed to the competent bodies. A risk provision of 0.747 million euro has been recognized.

3

Attachments

to the notes

to the Consolidated

annual report

136 A2A Consolidated financial statements 2023 Attachments to the notes to the Consolidated annual report

3.1

1. List of companies included in the consolidated annual report

Company name

Registered

office

Share capital

(thousands of euro unless otherwise indicated)

% of

shareholding

consolidated

by Group

at 12 31 2023

(line-by-line consolidation)

Shareholding

%

Shareholder

Scope of consolidation

Unareti S.p.A.

Brescia

965,250

100.00%

100.00%

A2A S.p.A.

A2A Calore & Servizi S.r.l.

Brescia

150,000

100.00%

100.00%

A2A S.p.A.

A2A Smart City S.p.A.

Brescia

3,448

100.00%

100.00%

A2A S.p.A.

A2A Energia S.p.A.

Milan

3,000

100.00%

100.00%

A2A S.p.A.

A2A Ciclo Idrico S.p.A.

Brescia

70,000

100.00%

100.00%

A2A S.p.A.

A2A Ambiente S.p.A.

Brescia

250,000

100.00%

100.00%

A2A S.p.A.

A2A Montenegro d.o.o.

Podgorica (Montenegro)

100

100.00%

100.00%

A2A S.p.A.

A2A Energiefuture S.p.A.

Milan

50,000

100.00%

100.00%

A2A S.p.A.

A2A gencogas S.p.A.

Milan

450,000

100.00%

100.00%

A2A S.p.A.

A2A Services & Real Estate S.p.A.

Milan

1,050

100.00%

100.00%

A2A S.p.A. (81.33%)

Ambiente Energia Brianza S.p.A (8.38%)

Acinque S.p.A. (10.29%)

A2A Airport Energy S.p.A.

Milan

5,200

100.00%

100.00%

A2A Calore & Servizi S.r.l.

Termica Cologno S.r.l.

Milan

1,000

100.00%

100.00%

A2A Calore & Servizi S.r.l.

Retragas S.r.l.

Brescia

34,495

91.60%

91.60%

A2A S.p.A. (87.27%)

Unareti S.p.A. (4.33%)

Camuna Energia S.r.l.

Cedegolo (BS)

900

89.00%

89.00%

A2A S.p.A. (74.50%)

Linea Green S.p.A. (14.50%)

A2A Alfa S.r.l. in liquidation

Milan

100

70.00%

70.00%

A2A S.p.A.

Proaris S.r.l. in liquidation

Milan

1,875

60.00%

60.00%

A2A S.p.A.

Azienda Servizi Valtrompia S.p.A.

Gardone Val Trompia (BS)

8,939

74.80%

74.80%

A2A S.p.A. (74.55%)

Unareti S.p.A. (0.25%)

Yada Energia S.r.l.

Milan

4,000

100.00%

100.00%

A2A Energia S.p.A.

LaboRAEE S.r.l.

Milan

90

100.00%

100.00%

Amsa S.p.A.

Ecolombardia 4 S.p.A.

Milan

13,515

68.78%

68.78%

A2A Ambiente S.p.A.

Sicura S.r.l.

Milan

1,040

96.80%

96.80%

A2A Ambiente S.p.A.

Sistema Ecodeco UK Ltd

Canvey

Island Essex

(UK)

250

(GBP)

100.00%

100.00%

A2A Ambiente S.p.A.

A.S.R.A.B. S.p.A.

Cavaglià (BI)

2,582

70.00%

70.00%

A2A Ambiente S.p.A.

Nicosiambiente S.r.l.

Milan

50

99.90%

99.90%

A2A Ambiente S.p.A.

Bioase S.r.l.

Sondrio

677

70.00%

70.00%

A2A Ambiente S.p.A.

Aprica S.p.A.

Brescia

10,000

100.00%

100.00%

A2A Ambiente S.p.A.

Amsa S.p.A.

Milan

10,000

100.00%

100.00%

A2A Ambiente S.p.A.

Bergamo Servizi S.r.l.

Brescia

10

100.00%

100.00%

Aprica S.p.A.

A2A Integrambiente S.r.l.

Brescia

10

100.00%

100.00%

A2A Ambiente S.p.A. (74%)

Aprica S.p.A. (1%)

Amsa S.p.A. (25%)

Attachments to the notes to the Consolidated annual report 2023 Consolidated financial statements A2A 137

Company name

Registered

office

Share capital

(thousands of euro unless otherwise indicated)

% of

shareholding

consolidated

by Group

at 12 31 2023

(line-by-line consolidation)

Shareholding

%

Shareholder

A2A Security S.c.p.a.

Milan

52

99.81%

99.81%

A2A S.p.A. (45.96%)

Unareti S.p.A. (18.37%)

A2A Ciclo Idrico S.p.A. (10.49%)

Amsa S.p.A. (9.14%)

A2A gencogas S.p.A. (3.95%)

A2A Ambiente S.p.A. (4.33%)

A2A Calore & Servizi S.r.l. (2.60%)

A2A Energiefuture S.p.A. (1.93%)

A2A Energia S.p.A. (0.19%)

A2A Energy Solutions S.r.l. (0.19%) Linea Green S.p.A. (0.19%)

LD Reti S.r.l. (0.19%)

Linea Ambiente S.r.l. (0.19%)

A2A Smart City S.p.A. (0.19%)

Acinque S.p.A. (0.19%)

Aprica S.p.A. (0.38%)

Retragas S.r.l. (0.19%)

Lereti S.p.A. (0.19%)

Azienda Servizi Valtrompia S.p.A. (0.19%)

Acinque Energia S.r.l. (0.19%)

Acinque Tecnologie S.p.A. (0.19%)

Reti Valtellina Valchiavenna S.r.l. (0.19%)

Acinque Farmacie S.r.l. (0.19%)

WALDUM TADINUM ENERGIA S.r.l.

Gualdo Tadino (PG)

10

90.00%

90.00%

A2A Ambiente S.p.A.

LumEnergia S.p.A.

Villa Carcina (BS)

300

99.97%

99.97%

A2A Energia S.p.A.

A2A Energy Solutions S.r.l.

Milan

4,000

100.00%

100.00%

A2A S.p.A.

ES Energy S.r.l.

Jesi (AN)

10

50.00%

50.00%

A2A S.p.A.

A2A Rinnovabili S.p.A.

Milan

50

100.00%

100.00%

A2A S.p.A.

Fair Renew S.r.l.

Milan

10

60.00%

60.00%

A2A Rinnovabili S.p.A.

renewA21 S.r.l.

Milan

20

100.00%

100.00%

A2A Rinnovabili S.p.A.

renewA22 S.r.l.

Milan

220

100.00%

100.00%

A2A Rinnovabili S.p.A.

renewA23 S.r.l.

Milan

20

100.00%

100.00%

A2A Rinnovabili S.p.A.

renewA24 S.r.l.

Milan

20

100.00%

100.00%

A2A Rinnovabili S.p.A.

renewA25 S.r.l.

Milan

20

100.00%

100.00%

A2A Rinnovabili S.p.A.

Des Energia Tredici S.r.l.

Milan

10

100.00%

100.00%

A2A Rinnovabili S.p.A.

CS Solar2 S.r.l.

Milan

15

100.00%

100.00%

A2A Rinnovabili S.p.A.

Flabrum S.r.l.

Milan

100

100.00%

100.00%

A2A Rinnovabili S.p.A.

Solar italy V S.r.l.

Milan

10

100.00%

100.00%

A2A Rinnovabili S.p.A.

Cilea Energia S.r.l.

Milan

-

100.00%

100.00%

A2A Rinnovabili S.p.A.

Tosti Energia S.r.l.

Milan

-

100.00%

100.00%

A2A Rinnovabili S.p.A.

Bellini Energia S.r.l.

Milan

-

100.00%

100.00%

A2A Rinnovabili S.p.A.

Corelli Energia S.r.l.

Milan

-

100.00%

100.00%

A2A Rinnovabili S.p.A.

Monteverdi Energia S.r.l.

Milan

-

100.00%

100.00%

A2A Rinnovabili S.p.A.

Gash 1 S.r.l.

Milan

10

100.00%

100.00%

A2A Rinnovabili S.p.A.

Gash 2 S.r.l.

Milan

10

100.00%

100.00%

A2A Rinnovabili S.p.A.

Volta Green Energy S.r.l.

Milan

10

100.00%

100.00%

A2A Rinnovabili S.p.A.

Mogorella S.r.l.

Milan

10

100.00%

100.00%

A2A Rinnovabili S.p.A.

Juwi Development 12 S.r.l.

Milan

10

100.00%

100.00%

A2A Rinnovabili S.p.A.

Juwi Development 13 S.r.l.

Milan

10

100.00%

100.00%

A2A Rinnovabili S.p.A.

VGE 01 S.r.l.

Milan

10

70.00%

70.00%

Volta Green Energy S.r.l.

3

Attachments

to the notes

to the Consolidated annual report

3.1

1. List of companies included in the consolidated annual report

3.2

2. List of shareholdings

in companies carried at equity

3.3

3. List of

holdings in other companies

3.4

Certification of the consolidated financial statements

pursuant to article

154-bis, paragraph

5 of Legislative

Decree no. 58/98

138 A2A Consolidated financial statements 2023 Attachments to the notes to the Consolidated annual report

Company name

Registered

office

Share capital

(thousands of euro unless otherwise indicated)

% of

shareholding

consolidated

by Group

at 12 31 2023

(line-by-line consolidation)

Shareholding

%

Shareholder

VGE 02 S.r.l.

Milan

10

100.00%

100.00%

Volta Green Energy S.r.l.

VGE 03 S.r.l.

Milan

10

100.00%

100.00%

Volta Green Energy S.r.l.

VGE 04 S.r.l.

Milan

10

100.00%

100.00%

Volta Green Energy S.r.l.

VGE 06 S.r.l.

Milan

10

100.00%

100.00%

Volta Green Energy S.r.l.

R2R S.r.l.

Rovereto (TN)

10

60.00%

60.00%

A2A Rinnovabili S.p.A.

R2R 01 S.r.l.

Milan

10

100.00%

100.00%

R2R S.r.l.

R2R 02 S.r.l.

Milan

10

100.00%

100.00%

R2R S.r.l.

R2R 03 S.r.l.

Milan

10

100.00%

100.00%

R2R S.r.l.

R2R 04 S.r.l.

Milan

10

100.00%

100.00%

R2R S.r.l.

LD Reti S.r.l.

Lodi

32,976

95.60%

95.60%

A2A S.p.A.

Linea Green S.p.A.

Cremona

7,000

100.00%

100.00%

A2A S.p.A.

Linea Ambiente S.r.l.

Rovato (BS)

1,400

100.00%

100.00%

A2A Ambiente S.p.A.

AGRIPOWER S.p.A.

Milan

600

100.00%

100.00%

A2A Ambiente S.p.A.

DONNA RICCA BIOENERGIA S.R.L. SOCIETA' AGRICOLA

Milan

10

51.00%

51.00%

AGRIPOWER S.p.A.

IUMAGAS BIOENERGY SOCIETA' AGRICOLA A.R.L.

Milan

50

51.00%

51.00%

AGRIPOWER S.p.A.

MARSICA AGROENERGIA S.R.L.

Milan

60

54.02%

54.02%

AGRIPOWER S.p.A.

PONZANO BIOENERGIA SOCIETA' AGRICOLA A.R.L.

Milan

40

51.00%

51.00%

AGRIPOWER S.p.A.

PRATI BIOENERGIA SOCIETA' AGRICOLA A.R.L.

Bologna

40

100.00%

100.00%

AGRIPOWER S.p.A.

ROBERTA BIOENERGIA S.R.L.

Milan

10

51.00%

51.00%

AGRIPOWER S.p.A.

SAN QUIRICO BIOENERGIA SOCIETA' AGRICOLA A.R.L.

Milan

160

93.75%

93.75%

AGRIPOWER S.p.A.

SCALENGHE BIOGAS SOCIETA' AGRICOLA S.R.L.

Milan

10

82.00%

82.00%

AGRIPOWER S.p.A.

STROVINA BIOENERGIA SOCIETA' AGRICOLA A.R.L.

Milan

40

51.00%

51.00%

AGRIPOWER S.p.A.

TORRE ZUINA SOCIETA' AGRICOLA A.R.L.

Milan

10

51.00%

51.00%

AGRIPOWER S.p.A.

TULA BIOENERGIA SOCIETA' AGRICOLA A.R.L.

Milan

40

51.00%

51.00%

AGRIPOWER S.p.A.

VITTORIA BIOENERGIA S.R.L.

Milan

50

75.00%

75.00%

AGRIPOWER S.p.A.

CONSORZIO UMBRIA BIOENERGIA

Zola Predosa (BO)

1

90.02%

90.02%

AGRIPOWER S.p.A.

Asm Energia S.p.A.

Vigevano (PV)

2,511

45.00%

45.00%

A2A Energia S.p.A.

Acinque S.p.A.

Monza

197,344

41.34%

41.34%

A2A S.p.A.

Lereti S.p.A.

Como

86,450

100.00%

100.00%

Acinque S.p.A.

ComoCalor S.p.A.

Como

3,516

51.00%

51.00%

Acinque S.p.A.

Reti Valtellina Valchiavenna S.r.l.

Sondrio

2,000

100.00%

100.00%

Acinque S.p.A.

Acinque Energia S.r.l.

Lecco

17,100

99.75%

99.75%

Acinque S.p.A.

Acinque Ambiente S.r.l.

Varese

4,500

100.00%

100.00%

Acinque S.p.A.

Acinque Tecnologie S.p.A.

Monza

6,000

100.00%

100.00%

Acinque S.p.A.

Acinque Innovazione S.r.l.

Monza

21,800

100.00%

100.00%

Acinque S.p.A.

Acinque Farmacie S.r.l.

Sondrio

100

100.00%

100.00%

Acinque S.p.A.

Acinque Energy Greenway S.r.l.

Monza

8,464

70.00%

70.00%

Acinque Tecnologie S.p.A.

A2A E-MOBILITY S.r.l.

Milan

1,000

100.00%

100.00%

A2A S.p.A.

Attachments to the notes to the Consolidated annual report 2023 Consolidated financial statements A2A 139

Company name

Registered

office

Share capital

(thousands of euro unless otherwise indicated)

% of

shareholding

consolidated

by Group

at 12 31 2023

(line-by-line consolidation)

Shareholding

%

Shareholder

Ambiente Energia Brianza S.p.A.

Seregno (MB)

119,496

34.44%

33.52%

A2A S.p.A.

A2A Illuminazione Pubblica S.r.l.

Brescia

19,000

100.00%

100.00%

Ambiente Energia Brianza S.p.A.

Gelsia S.r.l.

Seregno (MB)

20,345

100.00%

100.00%

Ambiente Energia Brianza S.p.A.

RetiPiù S.r.l.

Desio (MB)

110,000

100.00%

100.00%

Ambiente Energia Brianza S.p.A.

VGE 05 S.r.l.

Seregno (MB)

10

90.00%

90.00%

Ambiente Energia Brianza S.p.A.

Gelsia Ambiente S.r.l.

Desio (MB)

4,671

100.00%

100.00%

Ambiente Energia Brianza S.p.A. (70%)

A2A Integrambiente S.r.l. (30%)

4NEW S.r.l.

Milan

811

100.00%

100.00%

A2A Rinnovabili S.p.A.

4NEW MONTE GRIGHINE S.r.l.

Milan

10,000

100.00%

100.00%

4NEW S.r.l.

CERVETERI ENERGIA S.r.l.

Milan

21

100.00%

100.00%

4NEW S.r.l.

DE - STERN 12 S.r.l.

Milan

50

100.00%

100.00%

4NEW S.r.l.

STCS S.r.l.

Milan

10

100.00%

100.00%

4NEW S.r.l.

LA CASTILLEJA ENERGIA SL

Madrid (ES)

4

100.00%

100.00%

GLOBAL ONEGA SL

SISTEMES ENERGETICS CONESA I SOCIEDAD LIMITADA

Madrid (ES)

3

100.00%

100.00%

RESPETO AL MEDIO

AMBIENTE SL (50%)

GLOBAL ONEGA SL (50%)

GLOBAL ONEGA SL

Madrid (ES)

10

100.00%

100.00%

4NEW S.r.l.

RESPETO AL MEDIO AMBIENTE SL

Madrid (ES)

3

100.00%

100.00%

4NEW S.r.l.

3 New & Partners S.r.l.

Milan

25,000

100.00%

100.00%

A2A Rinnovabili S.p.A.

3 New & Partners rinnovabili S.r.l.

Milan

10

100.00%

100.00%

3 New & Partners S.r.l.

Mimiani wind S.r.l.

Milan

100

100.00%

100.00%

3 New & Partners S.r.l.

Daunia Calvello S.r.l.

Milan

100

100.00%

100.00%

3 New & Partners rinnovabili

S.r.l. (51%)

A2A Rinnovabili S.p.A. (49%)

Daunia Serracapriola S.r.l.

Milan

2,000

100.00%

100.00%

3 New & Partners rinnovabili

S.r.l. (70%)

A2A Rinnovabili S.p.A. (30%)

3

Attachments

to the notes

to the Consolidated annual report

3.1

1. List of companies included in the consolidated annual report

3.2

2. List of shareholdings

in companies carried at equity

3.3

3. List of

holdings in other companies

3.4

Certification of the consolidated financial statements

pursuant to article

154-bis, paragraph

5 of Legislative

Decree no. 58/98

140 A2A Consolidated financial statements 2023 Attachments to the notes to the Consolidated annual report

3.2

2. List of shareholdings in companies carried at equity

Company name

Registered

office

Share capital

(thousands

of euro)

Shareholding

%

Shareholder

Carrying amount

at 12 31 2023

(thousands

of euro)

Shareholdings in companies carried at equity

PremiumGas S.p.A. in liquidation

Bergamo

120

50.00%

A2A Alfa S.r.l. in liquidation

-

Ergosud S.p.A.

Rome

81,448

50.00%

A2A gencogas S.p.A.

-

Metamer S.r.l.

San Salvo (CH)

2,000

50.00%

A2A Energia S.p.A.

2,868

NETCITY S.r.l.

Pescara

20

49.00%

A2A Energia S.p.A.

1,478

SET S.r.l.

Toscolano Maderno (BS)

104

49.00%

A2A S.p.A.

1,168

Messina in Luce S.c.a.r.l.

Monza

20

70.00%

Acinque Tecnologie S.p.A. (55%)

A2A Illuminazione Pubblica S.r.l.(15%)

11

Serio Energia S.r.l.

Concordia sulla Secchia (MO)

1,000

40.00%

A2A S.p.A.

328

Visano Soc. Trattamento Reflui S.c.a.r.l.

Brescia

25

40.00%

A2A S.p.A.

10

Blugas Infrastrutture S.r.l.

Mantova

14,300

27.51%

A2A S.p.A.

4,269

COSMO Società Consortile a Responsabilità Limitata

Brescia

100

52.00%

A2A Calore & Servizi S.r.l.

134

Crit S.c.a.r.l.

Cremona

548

33.00%

A2A S.p.A.

125

G.Eco S.r.l.

Treviglio (BG)

500

40.00%

Aprica S.p.A.

2,925

Bergamo Pulita S.r.l.

Bergamo

10

50.00%

A2A Ambiente S.p.A.

73

Tecnoacque Cusio S.p.A.

Omegna (VB)

206

25.00%

A2A Ambiente S.p.A.

337

Fratelli Omini S.p.A.

Novate Milanese (MI)

260

30.00%

A2A Ambiente S.p.A.

6,531

ASM Codogno S.r.l.

Codogno (LO)

1,898

49.00%

Aprica S.p.A.

3,134

Prealpi Servizi S.r.l. in liquidation

Varese

5,451

12.47%

Acinque S.p.A.

-

Consul System S.p.A.

Ascoli Piceno

2,000

49.00%

A2A Energy Solution S.r.l.

6,300

Società Agricola Mattioli Energia S.r.l.

Finale Emilia (MO)

20

20.00%

AGRIPOWER S.p.A.

475

Total shareholdings

30,166

Attachments to the notes to the Consolidated annual report 2023 Consolidated financial statements A2A 141

3.3

3. List of holdings in other companies

Company name

Shareholding

%

Shareholder

Carrying amount

at 12 31 2023

(thousands

of euro)

Immobiliare-Fiera di Brescia S.p.A.

0.90%

A2A S.p.A.

AQM S.r.l.

7.80%

A2A S.p.A. (7.52%)

LumEnergia S.p.A. (0.28%)

AvioValtellina S.p.A.

0.18%

A2A S.p.A.

Banca di Credito Cooperativo dell'Oglio e del Serio s.c.

n.s.

A2A S.p.A.

L.E.A.P. S.c.a.r.l.

8.29%

A2A S.p.A.

Guglionesi Ambiente S.c.a.r.l.

1.01%

A2A Ambiente S.p.A.

S.I.T. S.p.A.

0.26%

Aprica S.p.A.

Stradivaria S.p.A.

n.s.

A2A S.p.A.

DI.T.N.E. S.c.a.r.l.

1.79%

A2A S.p.A.

E.M.I.T. S.r.l. in liquidation

10.00%

A2A S.p.A.

COMIECO

5.63%

A2A Ambiente S.p.A.

CONAPI S.c.a.r.l.

20.00%

A2A Ambiente S.p.A.

Casalasca Servizi S.p.A.

13.88%

Aprica S.p.A.

Confidi Toscana S.c.a.r.l.

n.s.

Linea Ambiente S.r.l.

Credito Valtellinese

n.s.

Linea Ambiente S.r.l.

Futura S.r.l.

1.00%

A2A Calore & Servizi S.r.l.

Comodepur S.c.p.a. in liquidation

9.81%

Acinque S.p.A.

T.C.V.V.V. S.p.A.

0.25%

Acinque S.p.A.

Lago di Como Gal S.c.a.r.l.

3.00%

Acinque S.p.A.

CIAL-CONSORZIO IMBALLAGGIO ALLUMINIO

0.60%

A2A Ambiente S.p.A.

COREVE

0.88%

A2A Ambiente S.p.A.

COREPLA-CONSORZIO RECUPERO PLASTICA NAZIONALE

3.04%

A2A Ambiente S.p.A.

RICREA-CONSORZIO NAZIONALE RICICLO E RECUPERO IMBALLAGGI ACCIAIO

n.s.

A2A Ambiente S.p.A.

CIC-CONSORZIO ITALIANO COMPOSTATORI

n.s.

A2A Ambiente S.p.A.

Musa S.c.a.r.l.

7.00%

A2A S.p.A.

Total investments in other companies

1,483

3

Attachments

to the notes

to the Consolidated annual report

3.1

1. List of companies included in the consolidated annual report

3.2

2. List of shareholdings

in companies carried at equity

3.3

3. List of

holdings in other companies

3.4

Certification of the consolidated financial statements

pursuant to article

154-bis, paragraph

5 of Legislative

Decree no. 58/98

142 A2A Consolidated financial statements 2023 Attachments to the notes to the Consolidated annual report

3.4

Certification of the consolidated financial statements pursuant to article 154-bis, paragraph 5 of Legislative Decree no. 58/98

1. The undersigned, Renato Mazzoncini, as CEO of A2A S.p.A., and Luca Moroni, as Financial Reporting Manager of A2A S.p.A. also considering the provisions of article 154-bis, paragraphs 3 and 4, of Legislative Decree no. 58 of February 24, 1998, as amended, hereby attest:

• the adequacy in relation to the characteristics of the company and

• the effective application

of administrative and accounting procedures for the preparation of financial statements in the year 2023.

2. It is also certified that:

2.1 the consolidated financial statements as at December 31, 2023:

a) have been prepared in accordance with International Financial Reporting Standards as endorsed by the European Community pursuant to Regulation (EC) no. 1606/2002 of the European Parliament and of the Council of July 19, 2002;

b) correspond to the information contained in the accounting ledgers and records;

c) provide a true and fair representation of the equity, economic and financial situation of the issuer and the whole of the companies included in the scope of consolidation.

2.2 the Report on Operations includes reliable analysis on the performance, result of operations and the business of the issuer and of all entities included in the consolidated financial statements as well as description of principal risks and uncertainties to which they are exposed.

Milan, March 11, 2024

Renato Mazzoncini(Chief Executive Officer)

Luca Moroni(Financial Reporting Manager)

4

Independent

Auditors’

Report

144 A2A Consolidated financial statements 2023 Independent Auditors’ Report

4

Independent Auditors’ Report

Independent Auditors’ Report 2023 Consolidated financial statements A2A 145

4

Independent Auditors’ Report

146 A2A Consolidated financial statements 2023 Independent Auditors’ Report

Independent Auditors’ Report 2023 Consolidated financial statements A2A 147

4

Independent Auditors’ Report

148 A2A Consolidated financial statements 2023 Independent Auditors’ Report

Independent Auditors’ Report 2023 Consolidated financial statements A2A 149

4

Independent Auditors’ Report

150 A2A Consolidated financial statements 2023 Independent Auditors’ Report

2023

Separate Financial Statements

Separate

financial

statements

2023

these Financial Statements are available at the website

gruppoa2a.it

2

Notes

General information on A2A S.p.A. 22

Financial statements 23

Basis of preparation 24

Changes in international accounting standards 25

Accounting standards and policies 27

Notes to the balance sheet 40

Net debt 62

Notes to the income statement 63

Note on related party transactions 81

Significant non-recurring events and transactions, pursuant to Consob Communication No. DEM/6064293 of July 28, 2006 86

Guarantees and commitments with third parties 88

Other information 89

Contents

2 A2A Separate financial statements 2023

Balance sheet 12

Income statement 14

Statement of comprehensive income 15

Cash-flow statement 16

Statement of changes in equity 17

Balance sheet pursuant to Consob Resolution no. 17221 of March 12, 2010 18

Income statement pursuant to Consob Resolution no. 17221 of March 12, 2010 20

1

Annual financial statements

4

Overview of performance, financial conditions

and net debt

125

4

Independent Auditors’

Report

131

5

Report of the Board of Auditors

3

Attachments

1/a. Statement of changes in investments in subsidiaries 114

1/b. Statement of changes in investments in affiliates 115

1/c. Statement of changes in investments in other companies 116

2/a. List of investments in subsidiaries 117

2/b. List of investments in affiliates 119

Key data of the financial statements of the main subsidiaries and affiliates prepared according to IAS/IFRS (pursuant to art. 2429.4 of the Italian Civil Code) 120

Key data of the financial statements of the main subsidiaries and affiliates prepared according to ITALIAN GAAP (pursuant to art. 2429.4 of the Italian Civil Code) 122

Certification of the financial statements pursuant to article 154-bis, paragraph 5 of Legislative Decree no. 58/98 124

2023 Separate financial statements A2A 3

This is a translation of the Italian original “Bilancio separato 2023” and has been prepared solely for the convenience of international readers. In the event of any ambiguity the Italian text will prevail. The Italian original is available at the website gruppoa2a.it

A2A S.p.A.

The Parent Company is responsible for strategic vision, planning, control, financial management and coordination of the A2A Group activities. It also provides services to support the business and operating activities of Group companies (administrative, legal, supply, and personnel management services, information technology and communications) in order to optimize the resources available and use existing expertise in the most efficient manner. These services are governed by intercompany service agreements.

Finally, A2A S.p.A. provides its subsidiaries with office space and operating areas, as well as related services.

A2A S.p.A. owns some hydroelectric plants in Valtellina, the hydroelectric unit in Calabria and the unit in Mese, as well as the hydroelectric plants of the unit in Udine.

Results

millions of euro

12 31 2023

12 31 2022

Change

Percentage change

Revenues

Revenues from the sale of goods and services

11,046.0

19,667.2

(8,621.2)

(43.8%)

Other operating income

16.4

21.1

(4.7)

(22.3%)

Total revenues

11,062.4

19,688.3

(8,625.9)

(43.8%)

Operating expenses

Costs for raw materials and services

(9,790.8)

(18,354.0)

8,563.2

(46.7%)

Other operating expenses

(657.7)

(827.7)

170.0

(20.5%)

Total operating expenses

(10,448.5)

(19,181.7)

8,733.2

(45.5%)

Labor costs

(195.7)

(174.9)

(20.8)

11.9%

Gross operating income

418.2

331.7

86.5

26.1%

Depreciation, amortization and write-downs

(133.5)

(123.4)

(10.1)

8.2%

Provisions

(48.7)

(38.8)

(9.9)

25.5%

Net operating income

236.0

169.5

66.5

39.2%

Result from non-recurring transactions

1.8

155.2

(153.4)

(98.8%)

Financial income

520.1

469.3

50.8

10.8%

Financial expenses

(182.5)

(97.0)

(85.5)

88.1%

Total financial balance

337.6

372.3

(34.7)

(9.3%)

Result before taxes

575.4

697.0

(121.6)

(17.4%)

Income taxes

(87.4)

(181.1)

93.7

(51.7%)

Result after taxes from operating activities

488.0

515.9

(27.9)

(5.4%)

Net result from discontinued operations

0.2

29.7

(29.5)

(99.3%)

Net result of the year

488.2

545.6

(57.4)

(10.5%)

In the year in question A2A S.p.A. shows revenues for a total of 11,062.4 million euro (19,688.3 million euro in the previous year). Sales revenues (10,779.2 million euro) mainly refer to electricity sales to wholesalers, institutional operators, even on IPEX markets (Italian Power Exchange) and subsidiaries, sales of gas and fuels to third parties and subsidiaries and the sale of materials and environmental certificates. Revenues from services (266.8 million euro) mainly relate to provisions to subsidiaries of administrative, fiscal, legal, managerial and technical services, and revenues from the Municipality of Milan for the video surveillance service.

4 A2A Separate financial statements 2023 Overview of performance, financial conditions and net debt

Overview of performance, financial conditions and net debt

The decrease in sales revenues is mainly due to the decrease in prices on the wholesale markets of both electricity and gas, as well as lower revenues from sales of CO2 mainly due to the lower functioning of the thermoelectric plants managed by A2A S.p.A. through tolling contracts.

Other revenues (16.4 million euro) refer to rent from subsidiaries, contingent assets recorded following the difference in provisions for previous years, reimbursements for damages and penalties received from customers, insurance companies and private individuals. In the previous year, this item included incentives for production from renewable sources “feed-in tariff” in the amount of 8.2 million euro; in 2023, the amount of these incentives was zero as a result of the increase in the 2022 PUN above the threshold of 180 euro/MWh required by the GRIN incentive calculation formula.

Operating expenses amounted to 10,448.5 million euro (19,181.7 million euro at December 31, 2022) and refer to costs for raw materials (9,218.0 million euro) related primarily to purchases of energy and fuels, both for electricity production and for resale to customers and wholesalers, in addition to purchases of materials and environmental certificates; service costs (572.8 million euro), which refer to the logistics costs for the transport on the national network of natural gas, costs for maintenance and repairs related to both the plants and the information systems of the company, as well as costs for services from third parties and from subsidiaries and associates; to other operating costs (657.7 million euro), which refer to the contracting of the thermoelectric production plants tolling agreement of subsidiaries, the costs relating to the use of a portion of the electricity capacity of Ergosud S.p.A., as well as water derivation fees, damages and penalties.

The decrease in operating expenses derives mainly from the decrease in costs for raw materials, attributable to the reduction in unit procurement prices due to the decrease recorded in the reference scenario with essentially the same volumes purchased, as well as the decrease in CO2 purchases due to the lower volumes issued related to the reduction in thermoelectric production, partly offset by the increase in costs for services mainly due to the higher costs for the transportation and storage of natural gas and the higher costs for IT services relating to the development of new projects.

Labor costs amounted to 195.7 million euro (174.9 million euro at December 31, 2022). The increase for the year includes both the effect of new staff additions realized in 2023 and contractual renewals, as well as remuneration policy actions.

Due to the dynamics mentioned above the EBITDA amounted to 418.2 million euro (331.7 million euro at December 31, 2022).

“Amortization and depreciation, provisions and write-downs” of the year amounted to 182.2 million euro (162.2 million euro at December 31, 2022) and include amortization, depreciation and write-downs of the tangible and intangible assets for 133.5 million euro (123.4 million euro at December 31, 2022) and provisions for 48.7 million euro (38.8 million euro at December 31, 2022), mainly related to provisions for risks.

“Net operating income” was positive for 236.0 million euro (169.5 million euro at December 31, 2022).

The “Result from non-recurring transactions” amounted to 1.8 million euro, while at December 31, 2022, it amounted to 155.2 million euro and referred to the capital gain from the sale of land in the Bovisa area located in the Municipality of Milan, while in the previous year, it referred to the gain from the sale of three properties located in Milan that took place in February 2022.

Financial operations reported a positive balance of 337.6 million euro (positive for 372.3 million euro at December 31, 2022). This item includes dividends from investees of 283.2 million euro (407.4 million euro at December 31, 2022), as well as net financial income of 54.4 million euro (net financial expenses 35.1 million euro at December 31, 2022).

The “Result before taxes” was positive for 575.4 million euro (positive for 697.0 million euro at December 31, 2022).

Overview of performance, financial conditions and net debt 2023 Separate financial statements A2A 5

Overview of performance, financial conditions and net debt

“Income taxes” amounted to 87.4 million euro (181.1 million euro at December 31, 2022) and refer to current taxes calculated on taxable income IRES and IRAP, partially offset by deferred tax assets and liabilities. In the previous year, taxes included, for 99.8 million euro, the Extraordinary Solidarity Contribution planned for the year 2022, determined pursuant to article 1, paragraphs 115-119 of Law no. 197 of December 29, 2022 (Budget Law 2023).

The “Net result from discontinued operations” was positive for 0.2 million euro (positive for 29.7 million euro at December 31, 2022) and refers to the collection from Retragas S.r.l. of the portion due to A2A S.p.A. relating to the price adjustment of the sale of the Val Staffora BU carried out by Retragas S.r.l. to ROMEO GAS S.p.A.. In 2022, this item referred to the capital gain, net of the effect of current taxes on the same, realized from the sale of the shareholding in ROMEO GAS S.p.A., after the demerger of the unit in favor of the latter relative to gas distribution referred to ATEM deemed non-strategic by Unareti S.p.A..

The “Net result of the year” was positive for 488.2 million euro (545.6 million euro at December 31, 2022).

* * *

Net year capex amounted to 135.0 million euro and in particular involved interventions on the hydroelectric plants, computer network equipment and devices, buildings, fixed assets in progress, capex in the Group’s information systems and software and net investments in equity.

6 A2A Separate financial statements 2023 Overview of performance, financial conditions and net debt

Balance sheet and financial position

millions of euro

12 31 2023

12 31 2022

Change

Percentage change

Capital employed

Net fixed capital

5,175.6

5,103.9

71.7

1.4%

- Tangible assets

895.7

901.0

(5.3)

(0.6%)

- Intangible assets

204.3

168.1

36.2

21.5%

- Shareholdings and other non-current

financial assets (*)

4,227.6

4,209.1

18.5

0.4%

- Other non-current assets/liabilities (*)

46.9

19.4

27.5

n.s.

- Deferred tax assets/liabilities

95.1

66.4

28.7

43.2%

- Provisions for risks, charges and liabilities

for landfills

(170.9)

(128.1)

(42.8)

33.4%

- Employee benefits

(123.1)

(132.0)

8.9

(6.7%)

of which with counter-entry to equity

(36.1)

(50.3)

14.2

(28.2%)

Net Working Capital and Other Current

Assets/Liabilities

(398.7)

(405.6)

6.9

(1.7%)

Net Working Capital:

(625.6)

(562.4)

(63.2)

11.2%

Inventories

173.0

389.2

(216.2)

(55.5%)

Trade receivables

2,179.9

3,655.0

(1,475.1)

(40.4%)

Trade payables

(2,978.5)

(4,606.6)

1,628.1

(35.3%)

Other current assets/liabilities:

226.9

156.8

70.1

44.7%

- Other current assets/liabilities (*)

262.2

253.4

8.8

3.5%

- Current tax assets/tax liabilities

(35.3)

(96.6)

61.3

(63.5%)

of which with counter-entry to equity

(2.4)

32.3

(34.7)

n.s.

Assets/liabilities held for sale (*)

-

-

-

-

of which with counter-entry to equity

-

-

-

-

Total capital employed

4,776.9

4,698.3

78.6

1.7%

Sources of funds

Shareholders' equity

3,788.7

3,603.0

185.7

5.2%

Total financial position after one year

4,773.6

4,305.4

468.2

10.9%

Total financial debt within one year

(3,785.4)

(3,210.1)

(575.3)

17.9%

Total Net Financial Position

988.2

1,095.3

(107.1)

(9.8%)

of which with counter-entry to equity

(2.3)

5.6

(7.9)

n.s.

Total sources

4,776.9

4,698.3

78.6

1.7%

(*) Excluding balances included in the Net Financial Position.

At December 31, 2023, “Capital employed” totaled 4,776.9 million euro, partly covered by “Equity” in the amount of 3,788.7 million euro and net debt of 988.2 million euro; provided below are the main items that make up the Capital Employed.

“Net fixed capital” amounted to 5,175.6 million euro, up 71.7 million euro compared to December 31, 2022.

Changes are detailed below:

• Tangible assets decreased by 5.3 million euro due to:

decrease of 87.5 million euro for the depreciation charge for the year;

investments made during the year for a total of 72.2 million euro;

other increases for 15.4 million euro resulting mainly from changes in contracts for rights of use;

Overview of performance, financial conditions and net debt 2023 Separate financial statements A2A 7

Overview of performance, financial conditions and net debt

disposal of assets, net of accumulated depreciation, for 5.3 million euro due to the sale of land in the Bovisa area located in the Municipality of Milan, the sale of land and buildings in Piazza Po to Unareti S.p.A., and the sale of land, buildings and plants in Valtellina to E-distribuzione S.p.A.;

• Intangible assets increased by 36.2 million euro on December 31, 2022, due to:

made during the year for a total of 58.8 million euro;

increase due to the effect of extraordinary transactions for 1.5 million euro;

decrease of 46.0 million euro for the depreciation charge for the year;

other increases for 21.9 million euro;

• Shareholdings and other non-current financial assets amounted to 4,227.6 million euro, up 18.5 million euro compared to December 31, 2022, attributable to:

50.0 million euro increase in the shareholding in A2A Rinnovabili S.p.A. following the conversion of the first tranche of part of the financial receivable from the company into equity of the same;

increase of 6.2 million euro relating to the capital contribution subscribed in the investee company A2A E-MOBILITY S.r.l.;

sale for 40.0 million euro of the investment in Yada Energia S.r.l. to the subsidiary A2A Energia S.p.A.;

write-down of 0.2 million euro and collection of 2.5 million euro related to the investment in Proaris S.r.l. in liquidation pending the conclusion of its liquidation process;

establishment of the company A2A Services & Real Estate S.p.A. (formerly A2A Servizi S.r.l.) and subsequent contribution of the “Group Shared Services & Real Estate” business unit for 0.8 million euro;

purchase of the 33% shareholding in Crit S.c.a.r.l. from the subsidiary A2A Smart City S.p.A. for 0.2 million euro;

increase of 4.0 million euro in other financial assets, in particular investments made in innovative start-ups through Corporate Venture Capital projects;

• Other non-current assets and liabilities show an increase of 27.5 million euro as a result of higher non-current assets related to both security deposits and receivables from the tax authorities for tax benefits under building bonuses due beyond one year;

• Deferred tax assets amounted to 95.1 million euro (66.4 million euro at December 31, 2022) and show an increase of 28.7 million euro, net of the effect of extraordinary transactions, negative for 0.8 million euro;

• Provisions for risks, charges and liabilities for landfills recorded an increase of 42.8 million euro. The following should be noted: an increase resulting from net provisions for the year of 43.7 million euro, mainly related to public water derivation fees and lawsuits pending with third parties; uses for the year of 5.3 million euro, the effect of extraordinary transactions, negative for 1.5 million euro, while other positive changes amounted to 5.9 million euro;

• Employee benefits showed a decrease of 8.9 million euro, net of the effect of extraordinary transactions, negative for 4.5 million euro, referring to actuarial valuations, disbursements for the year and payments to pension funds, partly offset by net provisions for the year.

Net Working Capital and Other Current Assets/Liabilities

“Net Working Capital”, defined as the algebraic sum of trade receivables, closing inventories and trade payables, amounted to a negative 625.6 million euro, down by 63.2 million euro compared to December 31, 2022. Comments on the main items are given below:

• “Inventories” amounted to 173.0 million euro (389.2 million euro at December 31, 2022), net of the relative obsolescence provision for 0.7 million euro, unchanged compared to the previous year. The decrease was due to the reduction in gas and coal inventories compared to the end of the previous year, mainly reflecting the downward trend observed during the year in the reference scenario;

• “Trade receivables” amounted to 2,179.9 million euro (3,655.0 million euro at December 31, 2022), with a decrease of 1,475.1 million euro. The decrease in trade receivables is mainly related to the reduction in tariffs for the sale of electricity and gas observed during the year in the reference scenario.The “Bad debts provision”, calculated in compliance with IFRS 9, amounted to 10.1 million euro and showed a net increase of 4.8 million euro compared to December 31, 2022;

• “Trade payables” amounted to 2,978.5 million euro and decreased by 1,628.1 million euro as a result of a reduction in commodity trading transactions with bilateral counterparties, as well as an efficient Net Working Capital management policy.

8 A2A Separate financial statements 2023 Overview of performance, financial conditions and net debt

“Other current assets/liabilities” evidenced a net increase of 70.1 million euro, mainly due to:

• net decrease in derivative assets for 328.8 million euro;

• increase in guarantee deposits for 293.0 million euro;

• net decrease in current tax liabilities for 61.3 million euro;

• net increase in assets/liabilities for tax consolidation for 68.7 million euro;

• decrease in other current liabilities due to extraordinary transactions for 2.0 million euro;

• other decreases in other current assets for 22.1 million euro.

Shareholders’ equity

“Shareholders’ equity”, equal to 3,788.7 million euro, shows a positive change for a total of 185.7 million euro, net of the positive effect of extraordinary transactions of 9 million euro.

The net profit for the year generated a positive effect of 488.2 million euro, offset by the distribution of 283.2 million euro in dividends. There was also a negative effect in the valuation of cash flow hedge derivatives and IAS 19 reserves for 28.3 million euro.

The “Net Financial Position” at December 31, 2023 amounted to 988.2 million euro (1,095.3 million euro at end 2022). The gross debt amounted to 6,493.3 million euro, up by 649.4 million euro compared to December 31, 2022. Cash and cash equivalents amounted to 1,487.4 million euro, down 851.1 million euro. Other net financial assets and liabilities showed a positive balance of 4,017.7 million euro with a net increase of 308.8 million euro compared to December 31, 2022 net of the negative effect of extraordinary transactions for 0.6 million euro.

Overview of performance, financial conditions and net debt 2023 Separate financial statements A2A 9

Overview of performance, financial conditions and net debt

1

Annual

financial

statements

1.1

Balance sheet (1)

Assets

amounts in euro

Note

12 31 2023

12 31 2022

Non-current assets

Tangible assets

1

895,732,259

900,950,676

Intangible assets

2

204,289,861

168,096,678

Shareholdings

3

4,202,373,558

4,183,541,756

Other non-current financial assets

3

574,944,016

1,361,415,880

Deferred tax assets

4

95,046,576

66,464,335

Other non-current assets

5

50,293,343

30,061,354

Total non-current assets

6,022,679,613

6,710,530,679

Current assets

Inventories

6

173,048,742

389,282,148

Trade receivables

7

2,179,878,054

3,654,977,757

Other current assets

8

1,981,555,526

2,979,212,244

Current financial assets

9

3,478,748,427

2,365,954,047

Current tax assets

10

17,034,418

17,594,228

Cash and cash equivalents

11

1,487,378,564

2,338,464,796

Total current assets

9,317,643,731

11,745,485,220

Non-current assets held for sale

12

-

36,920

Total assets

15,340,323,344

18,456,052,819

(1) As required by Consob Resolution no. 17221 of March 12, 2010, the effects of relations with related parties in the separate financial statements are highlighted in the accounting statements and commented on in Note 35. Significant non-recurring events and transactions in the separate financial statements are provided in Note 36 pursuant to Consob Communication DEM/6064293 of July 28, 2006.

12 A2A Separate financial statements 2023 Annual financial statements

Annual financial statements 2023 Separate financial statements A2A 13

Equity and liabilities

amounts in euro

Note

12 31 2023

12 31 2022

Equity

Share capital

13

1,629,110,744

1,629,110,744

(Treasury shares)

-

-

Reserves

14

1,671,334,819

1,428,348,635

Net result of the year

15

488,210,234

545,581,220

Total equity

3,788,655,797

3,603,040,599

Liabilities

Non-current liabilities

Non-current financial liabilities

16

5,312,613,362

5,648,397,055

Employee benefits

17

123,148,493

132,030,237

Provisions for risks, charges and liabilities for landfills

18

170,854,446

128,135,471

Other non-current liabilities

19

14,157,804

3,514,368

Total non-current liabilities

5,620,774,105

5,912,077,131

Current liabilities

Trade payables

20

2,978,488,057

4,606,633,526

Other current liabilities

20

1,719,337,012

2,725,805,437

Current financial liabilities

21

1,180,741,454

1,494,275,653

Tax liabilities

22

52,326,919

114,220,473

Total current liabilities

5,930,893,442

8,940,935,089

Total liabilities

11,551,667,547

14,853,012,220

Liabilities associated with non-current assets held for sale

-

-

Total equity and liabilities

15,340,323,344

18,456,052,819

12 A2A Separate financial statements 2023 Annual financial statements

Annual financial statements 2023 Separate financial statements A2A 13

1

Annual

financial

statements

1.1

Balance sheet

1.2

Income statement

1.3

Statement

of comprehensive

income

1.4

Cash-flow statement

1.5

Statement

of changes

in equity

1.6

Balance sheet pursuant to Consob Resolution no. 17221 of

March 12, 2010

1.7

Income statement pursuant to Consob Resolution no. 17221 of

March 12, 2010

amounts in euro

Note

01 01 2023

12 31 2023

01 01 2022

12 31 2022

Revenues

Revenues from the sale of goods and services

11,045,993,962

19,667,224,374

Other operating income

16,447,078

21,113,211

Total Revenues

24

11,062,441,040

19,688,337,585

Operating expenses

Expenses for raw materials and services

9,790,846,301

18,353,989,353

Other operating expenses

657,678,357

827,713,747

Total Operating expenses

25

10,448,524,658

19,181,703,100

Labour costs

26

195,726,649

174,892,072

Gross operating income - EBITDA

27

418,189,733

331,742,413

Depreciation, amortization, provisions and write-downs

28

182,244,787

162,247,131

Net operating income - EBIT

29

235,944,946

169,495,282

Result from non-recurring transactions

30

1,789,992

155,202,574

Financial balance

Financial income

520,117,596

469,295,089

Financial expenses

182,478,065

97,033,211

Total financial balance

31

337,639,531

372,261,878

Result before taxes

575,374,469

696,959,734

Income taxes

32

87,353,525

181,087,527

Result after taxes from operating activities

488,020,944

515,872,207

Net result from discontinued operations

33

189,290

29,709,013

Net result of the year

34

488,210,234

545,581,220

(1) As required by Consob Resolution no. 17221 of March 12, 2010, the effects of relations with related parties in the separate financial statements are highlighted in the accounting statements and commented on in Note 35. Significant non-recurring events and transactions in the separate financial statements are provided in Note 36 pursuant to Consob Communication DEM/6064293 of July 28, 2006.

1.2

Income statement (1)

14 A2A Separate financial statements 2023 Annual financial statements

Annual financial statements 2023 Separate financial statements A2A 15

amounts in euro

12 31 2023

12 31 2022

Net result of the year (A)

488,210,234

545,581,220

Actuarial gains/(losses) on Employee’s Benefits booked in the Net equity

3,630,262

11,878,337

Tax effect of other actuarial gains/(losses) on employee benefits recognized in equity

(1,085,045)

(3,043,184)

Total actuarial gains/(losses) net of the tax effect (B)

2,545,217

8,835,153

Effective part of gains/(losses) on cash flow hedge

(42,493,663)

(2,168,825)

Tax effect of other gains/(losses)

11,573,258

1,627,801

Total other gains/(losses) net of the tax effect (C)

(30,920,405)

(541,024)

Total comprehensive result (A) + (B) + (C)

459,835,046

553,875,349

With the exception of the actuarial effects on employee benefits recognized in equity, the other effects stated above will be reclassified to the Income Statement in subsequent years.

1.3

Statement of comprehensive income

14 A2A Separate financial statements 2023 Annual financial statements

Annual financial statements 2023 Separate financial statements A2A 15

1

Annual

financial

statements

1.1

Balance sheet

1.2

Income statement

1.3

Statement

of comprehensive

income

1.4

Cash-flow statement

1.5

Statement

of changes

in equity

1.6

Balance sheet pursuant to Consob Resolution no. 17221 of

March 12, 2010

1.7

Income statement pursuant to Consob Resolution no. 17221 of

March 12, 2010

amounts in euro

12 31 2023

12 31 2022

Cash and cash equivalents at the beginning of the year

2,338,464,796

886,354,322

Operating activities

Net Result

488,210,234

545,581,220

Net income taxes

87,353,525

181,087,527

Net financial interests

(48,448,085)

35,109,376

Capital gains/expenses

(8,650,785)

(184,956,859)

Tangible assets depreciation

87,476,554

85,164,247

Intangible assets amortization

45,954,585

37,912,640

Fixed assets write-downs/disposals

69,311

213,462

Shareholdings write-up/down

206,864

-

Net provisions

48,745,428

38,956,782

Net financial interests paid

22,346,788

(28,966,375)

Net taxes paid

(209,182,250)

(270,217)

Dividends paid

(283,214,637)

(283,214,637)

Change in trade receivables

1,470,038,404

(1,500,295,038)

Change in trade payable

(1,628,145,469)

2,433,767,267

Change in inventories

216,233,405

(285,414,786)

Other changes

(49,421,032)

(557,605,259)

Cash flow from operating activities

239,572,840

517,069,350

Investment activities

Investments in tangible assets

(72,169,720)

(39,423,862)

Investments in intangible assets and goodwill

(58,781,201)

(51,759,049)

Investments in shareholdings and securities (*)

(60,449,276)

(26,285,000)

Disposal of fixed assets and shareholdings

56,389,643

295,360,222

Cash flow from investment activities

(135,010,554)

177,892,311

Free Cash Flow

104,562,286

694,961,661

Financing activities

Changes in financial assets

Change in intercompany currency accounts

(310,805,455)

(1,136,406,218)

Issuance of loans

(24,000,000)

(95,091,589)

Proceeds from loans

69,530,665

61,117,657

Other changes

(61,929,118)

(14,207,479)

Total changes in financial assets (*)

(327,203,908)

(1,184,587,629)

Changes in financial liabilities

Change in intercompany currency accounts

(77,151,826)

298,273,518

Borrowings/bonds issued

800,000,000

4,168,000,000

Repayment of borrowings/bond

(1,379,049,398)

(2,497,049,398)

Other changes

27,756,614

(27,487,678)

Total changes in financial liabilities (*)

(628,444,610)

1,941,736,442

Cash flow from financing activities

(955,648,518)

757,148,813

Change in cash and cash equivalents

(851,086,232)

1,452,110,474

Cash and cash equivalents at the end of the year

1,487,378,564

2,338,464,796

(*) Cleared of balances in return of shareholders’ equity and other balance sheet items.

1.4

Cash-flow statement

16 A2A Separate financial statements 2023 Annual financial statements

Annual financial statements 2023 Separate financial statements A2A 17

Changes

from January 1, 2022

to December 31, 2022

amounts in euro

Share

capital

Note 13

Treasury

shares

Cash Flow

Hedge

Note 14

Reserves

Note 14

Net

result

of the year

Note 15

Total

Equity

Equity at December 31, 2021

1,629,110,744

-

27,675,810

1,190,115,650

485,477,683

3,332,379,887

Allocation of net result

485,477,683

(485,477,683)

-

Dividend distribution

(283,214,637)

(283,214,637)

IAS 19 reserve (*)

8,835,153

8,835,153

Cash flow hedge reserves (*)

(541,024)

(541,024)

Other changes

-

Net result of the year (*)

545,581,220

545,581,220

Equity at December 31, 2022

1,629,110,744

-

27,134,786

1,401,213,849

545,581,220

3,603,040,599

Changes

from January 1, 2023

to December 31, 2023

amounts in euro

Share

capital

Note 13

Treasury

shares

Cash Flow

Hedge

Note 14

Reserves

Note 14

Net

result

of the year

Note 15

Total

Equity

Equity at December 31, 2022

1,629,110,744

-

27,134,786

1,401,213,849

545,581,220

3,603,040,599

Contribution from

non-recurring transactions (***)

8,994,789

8,994,789

Allocation of net result

545,581,220

(545,581,220)

-

Dividend distribution

(283,214,637)

(283,214,637)

IAS 19 reserve (*)

2,545,217

2,545,217

Cash flow hedge reserves (*)

(30,920,405)

(30,920,405)

Other changes

-

Net result of the year (*)

488,210,234

488,210,234

Equity at December 31, 2023

1,629,110,744

-

(3,785,619)

1,675,120,438

488,210,234

3,788,655,797

Availability of Equity Reserves

D

A-B-C

A: For share capital increase

B: To cover losses

C: For distribution to Shareholders - available for 1,450,823,739 euro (**)

D: Reserves not avaliable

(*) These form part of the statement of comprehensive income.

(**) Of which subject to tax moderate suspension equal to 124,783,022 euro, and subject to tax suspension following the realignment of Legislative Decree 104/20 for 227,529,561 euro.

(***) For further details, reference is made to the paragraph “Significant non-recurring events and transactions, pursuant to Consob Communication No. DEM/6064293 of July 28, 2006”.

1.5

Statement of changes in equity

16 A2A Separate financial statements 2023 Annual financial statements

Annual financial statements 2023 Separate financial statements A2A 17

1

Annual

financial

statements

1.1

Balance sheet

1.2

Income statement

1.3

Statement

of comprehensive

income

1.4

Cash-flow statement

1.5

Statement

of changes

in equity

1.6

Balance sheet pursuant to Consob Resolution no. 17221 of

March 12, 2010

1.7

Income statement pursuant to Consob Resolution no. 17221 of

March 12, 2010

amounts in euro

12 31 2023

of which

Related

Parties

(note 35)

12 31 2022

of which

Related

Parties

(note 35)

Non-current assets

Tangible assets

895,732,259

32,995,630

900,950,676

35,677,650

Intangible assets

204,289,861

168,096,678

Shareholdings

4,202,373,558

4,202,373,558

4,183,541,756

4,183,541,756

Other non-current financial assets

574,944,016

549,607,930

1,361,415,880

1,340,053,457

Deferred tax assets

95,046,576

66,464,335

Other non-current assets

50,293,343

24,054,346

30,061,354

9,031

Total non-current assets

6,022,679,613

6,710,530,679

Current assets

Inventories

173,048,742

389,282,148

Trade receivables

2,179,878,054

1,356,290,379

3,654,977,757

1,815,966,583

Other current assets

1,981,555,526

126,138,049

2,979,212,244

84,427,159

Current financial assets

3,478,748,427

3,454,198,026

2,365,954,047

2,363,842,449

Current tax assets

17,034,418

17,594,228

Cash and cash equivalents

1,487,378,564

2,338,464,796

Total current assets

9,317,643,731

11,745,485,220

Non-current assets held for sale

-

36,920

Total assets

15,340,323,344

18,456,052,819

1.6

Balance sheet

pursuant to Consob Resolution no. 17221 of March 12, 2010

Assets

18 A2A Separate financial statements 2023 Annual financial statements

Annual financial statements 2023 Separate financial statements A2A 19

amounts in euro

12 31 2023

of which

Related

Parties

(note 35)

12 31 2022

of which

Related

Parties

(note 35)

Equity

Share capital

1,629,110,744

1,629,110,744

(Treasury shares)

-

-

Reserves

1,671,334,819

1,428,348,635

Net result of the year

488,210,234

545,581,220

Total equity

3,788,655,797

3,603,040,599

Liabilities

Non-current liabilities

Non-current financial liabilities

5,312,613,362

29,482,289

5,648,397,055

32,782,940

Employee benefits

123,148,493

132,030,237

Provisions for risks, charges and liabilities for landfills

170,854,446

3,259,747

128,135,471

2,000,000

Other non-current liabilities

14,157,804

3,514,368

Total non-current liabilities

5,620,774,105

5,912,077,131

Current liabilities

Trade payables

2,978,488,057

448,830,491

4,606,633,526

697,422,175

Other current liabilities

1,719,337,012

41,105,442

2,725,805,437

68,158,051

Current financial liabilities

1,180,741,454

589,155,649

1,494,275,653

662,218,839

Tax liabilities

52,326,919

114,220,473

Total current liabilities

5,930,893,442

8,940,935,089

Total liabilities

11,551,667,547

14,853,012,220

Liabilities associated with non-current assets held for sale

-

-

Total equity and liabilities

15,340,323,344

18,456,052,819

Equity and liabilities

18 A2A Separate financial statements 2023 Annual financial statements

Annual financial statements 2023 Separate financial statements A2A 19

1

Annual

financial

statements

1.1

Balance sheet

1.2

Income statement

1.3

Statement

of comprehensive

income

1.4

Cash-flow statement

1.5

Statement

of changes

in equity

1.6

Balance sheet pursuant to Consob Resolution no. 17221 of

March 12, 2010

1.7

Income statement pursuant to Consob Resolution no. 17221 of

March 12, 2010

1.7

Income statement

pursuant to Consob Resolution no. 17221 of March 12, 2010

amounts in euro

01 01 2023

12 31 2023

of which

Related

Parties

(note 35)

01 01 2022

12 31 2022

of which

Related

Parties

(note 35)

Revenues

Revenues from the sale of goods and services

11,045,993,962

6,149,719,877

19,667,224,374

8,021,230,680

Other operating income

16,447,078

5,934,354

21,113,211

5,370,537

Total Revenues

11,062,441,040

19,688,337,585

Operating expenses

Expenses for raw materials and services

9,790,846,301

503,943,564

18,353,989,353

509,080,669

Other operating expenses

657,678,357

517,152,724

827,713,747

695,115,105

Total Operating expenses

10,448,524,658

19,181,703,100

Labour costs

195,726,649

1,240,389

174,892,072

1,766,345

Gross operating income - EBITDA

418,189,733

331,742,413

Depreciation, amortization, provisions and write-downs

182,244,787

7,751,168

162,247,131

7,862,123

Net operating income - EBIT

235,944,946

169,495,282

Result from non-recurring transactions

1,789,992

1,789,992

155,202,574

Financial balance

Financial income

520,117,596

463,338,314

469,295,089

457,724,023

Financial expenses

182,478,065

10,392,082

97,033,211

397,920

Total financial balance

337,639,531

372,261,878

Result before taxes

575,374,469

696,959,734

Income taxes

87,353,525

181,087,527

Result after taxes from operating activities

488,020,944

515,872,207

Net result from discontinued operations

189,290

29,709,013

Net result of the year

488,210,234

545,581,220

20 A2A Separate financial statements 2023 Annual financial statements

Notes 2023 Separate financial statements A2A 21

2

Notes

22 A2A Separate financial statements 2023 Notes

A2A S.p.A. is a company with legal personality organized under the laws of the Italian Republic which operates, also through its subsidiaries (“Group”), both in Italy and abroad.

In particular, as the “Parent Company”, A2A S.p.A. is responsible for the guiding strategy, administration, planning and control, financial management and coordinating the activities of the A2A Group.

Therefore, Group companies benefit from administrative, tax, legal, personnel management, procurement and communication services, so as to optimize the resources that are available within the Group and to use the existing known how in a cost-effective way.

The A2A Group mainly operates in the following sectors:

• production, sale and distribution of electricity even from renewable resources;

• sale and distribution of gas;

• 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;

• technical consultancy relating to energy efficiency certificates.

The separate financial statements for A2A S.p.A. are presented in euro, which is also the functional currency in the economies in which the company operates. In particular, the following notes are prepared in thousands of euro.

The separate financial statements of A2A S.p.A. at December 31, 2023, have been prepared on a going-concern basis and comprise the balance sheet, income statement, statement of comprehensive income, cash flow statement, statement of changes in equity and these notes.

The separate financial statements of A2A S.p.A. at December 31, 2023 have been prepared:

• in compliance with Legislative Decree 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 International Accounting Standard Board (IASB) and approved by the European Union. 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 separate financial statements, the same standards used for the financial statements at December 31, 2022 were applied, other than the principles and interpretations described in detail in the paragraph below “Changes in accounting principles” adopted for the first time on January 1, 2023.

These explanatory notes include the supplemental information required by the Italian civil code, by Consob Resolutions no. 15519 and 15520 of July 27, 2006, and Consob communication no. 6064293 of July 28, 2006.

In this file, use has been made of some Alternative Performance Measures (APM) that are different from the financial indicators expressly provided for by the IAS/IFRS international accounting standards adopted by the company; for details of these indicators, please see the specific paragraph Alternative Performance Measures (APM) in the Report on Operations.

These separate financial statements for the year ended December 31, 2023, were approved on March 11, 2024, by the Board of Directors, which authorized its publication, and has been audited by EY S.p.A. in accordance with their appointment by the shareholders' meeting of June 11, 2015, for the nine years from 2016 to 2024.

2.1

General information on A2A S.p.A.

Notes 2023 Separate financial statements A2A 23

For the balance sheet, the company A2A S.p.A. has adopted a format which separates current and non-current assets and liabilities, as required by par. 60 et seq. of IAS 1.

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.

The specific line items “Result from non-recurring transactions” and “Result from disposal of other shareholdings” are in the format of the income statement in order to provide clear and immediate identification of the results arising from non-recurring transactions forming part of continuing operations, separating these from the results from discontinued operations/held for sale. In particular, it should be noted that the item “Result from non-recurring transactions” is intended to include the results from the sale of investments in subsidiaries and associates and other non-operating expenses/income. This item is presented between net operating income and the financial balance. In this way net operating income is not affected by non-recurring operations, making it easier to measure the effective performance of the Group’s ordinary operating activities.

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.

The accounting schedules included in the annual report are in the same format as those used in the separate financial statements at December 31, 2022.

2.2

Financial statements

2

Note s

2.1

General

information

on A2A S.p.A.

2.2

Financial statements

2.3

Basis of preparation

2.4

Changes in international accounting standards

2.5

Accounting standards

and policies

2.6

Notes to the balance sheet

2.7

Net debt

2.8

Notes to the income statement

2.9

Note on related party transactions

2.10

Significant

non-recurring events and transactions, pursuant to Consob Communication No. DEM/6064293 of July 28, 2006

2.11

Guarantees

and commitments with third parties

2.12

Other information

24 A2A Separate financial statements 2023 Notes

The separate financial statements as at December 31, 2023, have 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 accounting standards, the accounting policies and the methods of measurement used in the preparation of the separate financial statements are consistent with those used to prepare the annual separate financial statements at December 31, 2022, except as specified below regarding newly enacted standards.

2.3

Basis of preparation

Notes 2023 Separate financial statements A2A 25

Pursuant to IAS 8, the subsequent paragraph “Accounting standards, amendments and interpretations applicable by the company as of the current year” indicates and briefly illustrates the amendments in force as of January 1, 2023.

The following paragraph, “Accounting standards, amendments and interpretations approved by the European Union” instead detail the accounting standards and interpretations already issued, not yet approved by the European Union and therefore not applicable for the preparation of the financial statements at December 31, 2023, any impacts of which will then be transposed as of the financial statements of the following years.

Accounting standards, amendments and interpretations applicable as of the current year

As from January 1, 2023, applicable to the Group are the following additions to specific paragraphs of the international accounting standards already adopted by the Group companies in previous years:

• IAS 1 “Presentation of the Financial Statements”: issued by the IASB on February 12, 2021 and endorsed on March 2, 2022, which provides guidance and examples to help entities apply materiality judgements to disclosures on accounting standards. The amendments are intended to help entities provide more useful accounting standard disclosures by replacing the requirement for entities to provide their “significant” accounting standards with a requirement to provide disclosures about their “material” accounting standards; in addition, guidance is added on how entities apply the concept of materiality in making accounting standard disclosure decisions. The group updated its disclosures on the basis of the new materiality concept, without noting any significant impact on the disclosure of accounting policies;

• IAS 8 “Accounting policies, changes in accounting estimates and errors”: issued by the IASB on February 12, 2021 and endorsed on March 2, 2022. The amendments clarify the distinction between changes in accounting estimates and changes in accounting standards and error correction. They also clarify how entities use measurement techniques and inputs to develop accounting estimates. The amendments had no impact on the Group's consolidated financial statements;

• IAS 12 “Income Taxes”: issued by the IASB on May 7, 2021 and endorsed on August 11, 2022 in which it clarifies how to account for deferred taxes on transactions such as leases and decommissioning provisions. In particular, the option, previously provided for, not to calculate deferred taxation upon initial recognition of assets and liabilities deriving from lease contracts and/or decommissioning provisions is eliminated. This addition clarifies, therefore, that all companies are required to recognize deferred taxation on the transactions in question. The amendments had no impact on the Group's consolidated financial statements;

• IFRS 17 “Insurance contracts”: issued by the IASB on May 18, 2017 and endorsed on November 19, 2021, applicable to companies that issue insurance contracts. The amendments had no impact on the Group's consolidated financial statements;

• IFRS 17 “Insurance Contracts”: issued by the IASB on December 9, 2021 and endorsed on September 8, 2022 in which it adds a transition option relating to comparative information presented on first-time application of IFRS 17 and IFRS 9. The amendment aims to help entities avoid temporary accounting mismatches between financial assets and liabilities of insurance contracts, and therefore at improving the usefulness of comparative information of the financial statements. The amendments had no impact on the Group's consolidated financial statements;

• IAS 12 “Income Taxes” entitled “International tax reform: rules for the application of the second pillar”: issued on May 23, 2023 and endorsed on November 9, 2023. The amendments clarify that IAS 12 applies to income taxes arising from the tax law enacted or promulgated to implement the rules established by the OECD 'second pillar', which establishes a coordinated system to ensure

2.4

Changes in international accounting standards

2

Note s

2.1

General

information

on A2A S.p.A.

2.2

Financial statements

2.3

Basis of preparation

2.4

Changes in international accounting standards

2.5

Accounting standards

and policies

2.6

Notes to the balance sheet

2.7

Net debt

2.8

Notes to the income statement

2.9

Note on related party transactions

2.10

Significant

non-recurring events and transactions, pursuant to Consob Communication No. DEM/6064293 of July 28, 2006

2.11

Guarantees

and commitments with third parties

2.12

Other information

26 A2A Separate financial statements 2023 Notes

that multinational enterprises with revenues in excess of 750 million euro pay a tax of at least 15% on income derived in each of the jurisdictions in which they operate and which is expected to come into force in 2024.The amendments introduce a temporary mandatory exception to the accounting for deferred taxes arising from the jurisdictional implementation of rules and disclosure requirements to help users of financial statements better understand the company's exposure to income taxes arising from such legislation, prior to its effective date.The company had no impact on the financial statements.

Accounting standards, amendments and interpretations approved this year and applicable as of subsequent years

• On January 23, 2020, July 15, 2020 and October 31, 2022, the IASB issued three additions to IAS 1 “Presentation of Financial Statements” that aim to better define the concept of liabilities and the related classification between short and medium/long-term. The additions were approved on December 20, 2023.Specifically, emphasis is placed on the temporal concept of transferring money or other resources to the counterparty to settle the liability. The following aspects are also clarified: what is meant by a subordination right; that the subordination right must exist at the end of the reporting period; classification is not impacted by the probability that the entity will exercise its subordination right; only if a derivative embedded in a convertible liability is itself an equity instrument does the maturity of the liability not impact its classification.Furthermore, the latest amendment specifies that only covenants that an entity must meet by the reporting date will affect the classification of a liability as current or non-current.These additions will be applicable to financial statements closed on or after January 1, 2024. The company is currently assessing the impacts of these amendments;

• on September 22, 2022, the IASB issued a supplement to IFRS 16 “Leases” clarifying how to account for a sale and leaseback transaction that provides for variable payments based on the performance or use of the asset subject to the transaction.The integration was approved on November 21, 2023 and will be applicable to the financial statements as of January 1, 2024. No impacts are expected on the company's economic and financial situation.

Accounting standards, amendments and interpretations not yet approved by the European Union

• On May 25, 2023, the IASB issued a supplement to IAS 7 “Statement of Cash Flows” and IFRS 7 “Financial Instruments: Disclosures”.The amendments clarify the characteristics of supplier financing arrangements (e.g. reverse factoring instruments) and define the information to be provided on the impact of these arrangements on the company's liabilities and cash flows (e.g. terms and conditions, book value and balance sheet item in which financial debts are recorded, with an indication of those for which the financial supplier has already settled the corresponding portion of trade debt, maturity bands of financial debts and comparable trade debts, but not included in arrangements).These additions will be applicable to financial statements closed on or after January 1, 2024. The company is currently assessing the impacts of these amendments;

• on August 15, 2023, the IASB issued a supplement to IAS 21 “The effects of changes in foreign exchange rates” to regulate the procedures to be followed in the event of currency non-convertibility. The amendments introduce requirements to determine when a currency is convertible into another currency and when it is not and require an entity to estimate the spot exchange rate when it determines that a currency is not convertible into another currency. These additions will be applicable to financial statements closed on or after January 1, 2025. The company is currently assessing the impacts of these amendments.

Notes 2023 Separate financial statements A2A 27

Translation of foreign currency items

The separate financial statements of A2A are presented in euro; this is also the functional currency of the economies in which the company operates.

Transactions in other currencies are initially recognized at the exchange rates at the date of the transaction. Monetary assets and liabilities denominated in foreign currency are translated into euro at the exchange rates at the balance sheet date.

Non-monetary items measured at historical cost in foreign currency are translated at the exchange rates at the date of the transaction. Non-monetary items measured at fair value are translated at the exchange rates at the date when the fair value was determined.

Tangible assets

Assets for business use are classified as tangible assets, while non-business assets are classified in the eventuality as investment property.

Tangible assets are measured at cost, including any additional charges directly attributable to bringing the asset into an operating condition (e.g. transport, customs duty, installation and testing costs, notary and land registry fees and any non-deductible VAT), increased when material and where there are obligations by the present value of the estimated cost of restoring the location from an environmental point of view or dismantling the asset. Borrowing costs, where directly attributable to the purchase or construction of an asset, are capitalized as part of the cost of the asset if the type of asset so warrants.

If important components of tangible assets have different useful lives, they are accounted for separately using the “component approach”, assigning to each component its own useful life for the purpose of calculating depreciation (the component approach).

Land, whether occupied by residential or industrial buildings or devoid of construction, is not depreciated as it has an unlimited useful life, except for land used in production activities that is subject to deterioration over time (e.g. landfills, quarries).

Ordinary maintenance costs are fully expensed to the income statement in the year they are incurred. Costs for maintenance carried out at regular intervals are attributed to the assets to which they refer and are depreciated over the specific residual possibility of use of such.

Tangible assets are stated net of accumulated depreciation and any write-downs. Depreciation is charged from the year in which the individual asset enters service on a straight-line basis over the estimated useful life of the asset for the business. The estimated realizable value which is deemed to be recoverable at the end of an asset’s useful life is not depreciated. The useful life of each asset is reviewed annually and any changes, if needed, are made with a view to showing the correct value of the asset.

Landfills are depreciated on the basis of the percentage filled, which is calculated as the ratio between the volume occupied at the end of the period and the total volume authorized.

2.5

Accounting standards and policies

2

Note s

2.1

General

information

on A2A S.p.A.

2.2

Financial statements

2.3

Basis of preparation

2.4

Changes in international accounting standards

2.5

Accounting standards

and policies

2.6

Notes to the balance sheet

2.7

Net debt

2.8

Notes to the income statement

2.9

Note on related party transactions

2.10

Significant

non-recurring events and transactions, pursuant to Consob Communication No. DEM/6064293 of July 28, 2006

2.11

Guarantees

and commitments with third parties

2.12

Other information

28 A2A Separate financial statements 2023 Notes

The main depreciation rates used, which are based on technical and economic considerations, are as follows:

• non-industrial buildings ..............................................................................................................................................................................................14.12%

• industrial buildings .......................................................................................................................................................................................................16.22%

• production plants ...........................................................................................................................................................................................1.43% - 19.67%

• distribution networks ..................................................................................................................................................................................4.17% - 10.00%

• miscellaneous equipment ........................................................................................................................................................................9.99% - 19.67%

• furniture and fittings ......................................................................................................................................................................................................10.32%

• electrical and electronic office machines - data processing systems .......................................................................10.00% - 25.00%

• means of transport........................................................................................................................................................................................................10.00%

• other miscellaneous assets .................................................................................................................................................................9.99% - 20.00%

• fibre optic network ......................................................................................................................................................................................4.99% - 10.08%

• improvements to third-party assets - buildings ...........................................................................................................................5.24% - 46.15%

Tangible assets are subjected to impairment testing if there is any indication that an asset may be impaired in accordance with the paragraph below “Impairment of assets”; write-downs may be reversed in subsequent periods if the reasons for which they were recognized no longer apply.

When an asset is disposed of or if future economic benefits are no longer expected from using an asset, it is removed from the balance sheet and any gain or loss (being the difference between the disposal proceeds and the carrying amount) is recognized in the income statement in the year of the derecognition.

Leasing

Assets for rights of use are recognized on the start date of the lease, i.e. the date on which the underlying asset is available for use.

Rights to use assets are measured at cost, net of accumulated depreciation and impairment losses, and adjusted for any restatement of lease liabilities. The cost of assets for rights of use includes the amount of lease liabilities recognized and lease payments made on or before the commencement of the lease. Assets for right of use are depreciated on a straight-line basis from the effective date to the end of the useful life of the asset consisting of the right of use or at the end of the lease term, whichever is earlier.

If the lease transfers ownership of the underlying asset to the lessee at the end of the term of the contract or if the cost of the asset consisting of the right of use reflects the fact that the lessee will exercise the purchase option, the asset consisting of the right of use is depreciated from the effective date until the end of the useful life of the underlying asset.

Lease liabilities are recognized at the present value of lease payments not yet paid at the reporting date. Lease payments also include the exercise price of a purchase option if it is reasonably certain that the option will be exercised.

Intangible assets

Intangible assets are identifiable non-monetary assets without physical substance which are controlled by the enterprise and able to produce future economic benefits, and include goodwill when acquired for consideration.

The fact of being identifiable distinguishes an intangible asset that has been acquired from goodwill; this requirement is normally met when: (i) the intangible asset is attributable to a legal or contractual right, or (ii) the asset is separable, in other words it can be sold, transferred, rented or exchanged individually or as an integral part of other assets.

Control by the enterprise consists of the right to enjoy the future economic benefits flowing from the asset and to restrict the access of others to those benefits.

Intangible assets are stated at purchase or production cost, including ancillary charges, determined in the same way as for tangible assets. Intangible fixed assets produced internally are not capitalized but recognized in the income statement in the year in which the costs are incurred.

Notes 2023 Separate financial statements A2A 29

Intangible assets with a definite useful life are reported in the financial statements net of the related accumulated amortization and impairments in the same way as for tangible assets. Changes in the expected useful life or in the ways in which the future economic benefits of an intangible asset are achieved by the Company are accounted for by suitably adjusting the period or method of amortization, treating them as changes in accounting estimates. The amortization of intangible fixed assets with a definite useful life is charged to income statement in the cost category that reflects the function of the intangible asset concerned.

Intangible assets are subjected to impairment testing if there are specific indications that they may be impaired, in accordance with the paragraph below “Impairment of assets”; impairment losses may be reversed in subsequent periods if the reasons for which they were recognized no longer apply.

Intangible assets with an indefinite useful life and those that are not yet available for use are subjected to impairment testing on an annual basis, whether or not there are any specific indications that they may be impaired, in accordance with the paragraph below “Impairment of assets”. Impairment losses recognized for goodwill are not reversed.

Gains or losses on the disposal of an intangible asset are calculated as the difference between the disposal proceeds and the carrying amount of the asset and recognized in the Income Statement at the time of the disposal.

The following amortization rates are applied to intangible assets with a definite useful life:

• industrial patents and intellectual property rights ........................................................................20.00% - 33.34%

• concessions, licenses, trademarks and similar rights ....................................................................16.67% - 33.34%

• other tangible assets .........................................................................................................................................2.13% - 20.00%

Impairment/Reversal of tangible assets, intangible assets and equity investments

Tangible assets, intangible assets and investments are subjected to impairment testing if there is any specific indication that there may be an impairment loss.

Goodwill, other intangible assets with an indefinite useful life and assets not available for use are tested for impairment at least annually or more frequently if there is any specific indication that they may be impaired.

Impairment testing consists of comparing the carrying amount of an asset or impairment with an estimate of the related recoverable amount.

The recoverable amount of an asset or investment is the higher of its fair value less costs to sell and its value in use. To determine the value in use of an asset or investment, the entity calculates the present value of the estimated future cash flows on the basis of business plans prepared by management, before tax, applying a pre-tax discount rate which reflects current market assessments of the time value of money and the risks specific to the asset or investment. If the recoverable amount of an asset or investment is lower than its carrying amount, a loss is recognized in the Income Statement. If a loss recognized for an asset other than goodwill no longer exists or is reduced, the carrying amount of the asset or cash-generating unit is increased to the new estimate of recoverable value, which may not exceed the carrying amount that would have been determined had no impairment loss been recognized for the asset. Reversals of impairment losses are immediately recognized in the income statement.

When the recoverable amount of the individual asset cannot be estimated, it is based on the cash generating unit (CGU) or group of CGUs that the asset belongs to and/or to which it may be reasonably allocated.

CGUs are identified on the basis of the company’s organizational and business structure as homogeneous aggregations that generate independent cash inflows deriving from the continuous use of the assets allocated to them.

2

Note s

2.1

General

information

on A2A S.p.A.

2.2

Financial statements

2.3

Basis of preparation

2.4

Changes in international accounting standards

2.5

Accounting standards

and policies

2.6

Notes to the balance sheet

2.7

Net debt

2.8

Notes to the income statement

2.9

Note on related party transactions

2.10

Significant

non-recurring events and transactions, pursuant to Consob Communication No. DEM/6064293 of July 28, 2006

2.11

Guarantees

and commitments with third parties

2.12

Other information

30 A2A Separate financial statements 2023 Notes

Environmental certificates: emission quotas and White Certificates

Different accounting policies are applied to quotas or certificates held for own use in the “Industrial Portfolio” and those held for trading purposes in the “Trading Portfolio”.

Surplus quotas or certificates held for own use in the “Industrial Portfolio” which are in excess of the Group’s requirements in relation to the obligations accruing at year end are recognized as other intangible assets at the actual cost incurred. Quotas or certificates assigned free of charge are recognized at a zero carrying amount. Given that they are assets for instant use, they are not amortized but subjected to impairment testing. The recoverable amount is the higher of value in use and market value. If, on the other hand, there is a deficit because the requirement exceeds the quotas or certificates in portfolio at the balance sheet date, a provision is recognized for the amount needed to meet the residual obligation, estimated on the basis of any purchase contracts, spot or forward, already signed at the balance sheet date; otherwise on the basis of market prices.

Quotas or certificates held for trading in the “Trading Portfolio” are recognized in inventories and measured at the lower of purchase cost and estimated realizable value based on market trends. Quotas or certificates assigned free of charge are recognized at a zero carrying amount. Market value is established on the basis of any sales contracts, spot or forward, already signed at the balance sheet date; otherwise on the basis of market prices.

Shareholdings in subsidiaries, associates and joint ventures

Subsidiaries are companies in which the parent company “is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee”, as defined by IFRS 10. Control is generally assumed to exist when a company holds either directly or indirectly more than half of the exercisable voting rights at an ordinary shareholders’ meeting, also considering potential voting rights, meaning voting rights deriving from convertible financial instruments.

Associates are companies in which the parent has a significant influence over strategic decisions, despite not having control, also considering potential voting rights, meaning voting rights deriving from convertible financial instruments; significant influence is assumed to exist when A2A S.p.A. holds, either directly or indirectly, more than 20% of voting rights exercisable at an ordinary shareholders’ meeting.

In order to determine the existence of significant influence, management’s judgement is required to evaluate all facts and circumstances.

The company reviews the existence of significant influence when facts and circumstances indicate that there has been a change in one or more of the elements considered for the test of the existence of significant influence.

A joint venture is a contractual agreement whereby two or more parties undertake an income generating activity subject to joint control.

These investments are recorded at cost. The Company performs annual impairment tests on investments with quantitative and qualitative impairment loss indicators.

Long term construction contracts in progress

Construction contracts with durations exceeding one year in progress are valued in accordance with IFRS 15. In particular, over-the-time revenues are recognized if it can be demonstrated that: a) the customer simultaneously receives and consumes the benefits of the contract in force at the same time as the service is provided b) the service provided improves.

Construction contracts currently in progress are measured on the basis of the contractual fees that have accrued with reasonable certainty on the basis of the stage of completion, using the “cost to cost” method, so as to allocate the revenues and net result of the contract to the individual periods to which they belong in proportion to the progress being made on the project. Any difference, positive or negative, between the value of the contracts and advances received is recognized as an asset or a liability respectively.

In addition to the contractual fees, contract revenues include variants, price revisions and incentive awards to the extent that it is probable that they represent actual revenues that can be reliably determined. Ascertained losses are recognized independently of the stage of completion of contracts.

Notes 2023 Separate financial statements A2A 31

Inventories

Inventories of materials and fuel are measured at the lower of weighted average cost and market value at the balance sheet date. Weighted average cost is determined for the period of reference for each inventory code. Weighted average cost includes any additional costs (such as sea freight, customers charges, insurance and lay or demurrage days in the purchase of fuel). Inventories are constantly monitored and, where necessary, obsolete stocks are written down with a charge to the Income Statement.

Inventories of gas held for trading purposes, in storage at separate facilities as opposed to gas used for industrial purposes, are measured at fair value at the reporting date as required by IAS 2 par. 3 letter b.

Power Purchase Agreement

Power Purchase Agreements (PPA) that provide for the physical delivery of energy and that do not meet the requirements of IFRS 10 for the existence of control or joint control over a company or asset and IFRS 16 for the recognition of a lease, but that meet the definition of a derivative in IFRS 9, are accounted for under the rules of the own use exemption when the relevant conditions are met.

Financial instruments

Financial instruments include shareholdings (excluding shareholdings in subsidiaries, joint ventures and associates) held for trading (so-called trading shareholdings) or available for sale, non-current receivables and loans and other non-current financial assets, trade and other receivables deriving from company operations and other current financial assets such as cash and cash equivalents. The latter consist of bank and postal deposits, readily negotiable securities used as temporary investments of surplus cash and financial receivables due within three months. Financial instruments also include financial payables (bank loans and bonds), trade payables, other payables and other financial liabilities and derivatives.

Financial assets and liabilities are recognized at the time that the contractual rights and obligations forming part of the instrument arise.

Financial assets and liabilities are accounted for in accordance with IFRS 9 “Financial Instruments”.

Financial assets

Initial recognition

Financial assets are classified into two categories alone - “at fair value” or “at amortized cost”. Classification within the two categories is carried out on the basis of an entity’s business model and the contractual cash flow characteristics of the financial asset. A financial asset is measured at amortized cost if both of the following requirements are met: the objective of the entity’s business model is to hold assets to collect contractual cash flows (and therefore in substance not to earn trading profits) and the characteristics of the cash flows of the asset are solely payments of principal and interest. A financial asset is measured at fair value if it is not measured at amortized cost.

Debt instruments may be recorded at fair value through profit or loss upon initial recognition if this results in the elimination or significant reduction of an accounting mismatch.

All equity instruments - both listed and unlisted - are measured at fair value.

The entity does not refer to the option of presenting changes in the fair value of equity instruments that are not held for trading in equity; that option is not permitted for equity instruments that are held for trading. This designation is permitted on initial recognition, may be adopted for each individual instrument and is irrevocable.

2

Note s

2.1

General

information

on A2A S.p.A.

2.2

Financial statements

2.3

Basis of preparation

2.4

Changes in international accounting standards

2.5

Accounting standards

and policies

2.6

Notes to the balance sheet

2.7

Net debt

2.8

Notes to the income statement

2.9

Note on related party transactions

2.10

Significant

non-recurring events and transactions, pursuant to Consob Communication No. DEM/6064293 of July 28, 2006

2.11

Guarantees

and commitments with third parties

2.12

Other information

32 A2A Separate financial statements 2023 Notes

Subsequent valuation

Measurement subsequent to initial recognition depends on which of the following categories the financial instrument falls into:

• Financial assets at amortized cost (debt instruments);

• Financial assets at fair value in the Income Statement with reclassification of cumulative gains and losses (debt instruments);

• Financial assets at fair value in the Income Statement without reversal of cumulative gains and losses at the time of derecognition (equity instruments);

• Financial assets at fair value in the Income Statement.

Financial assets at amortized cost

Financial assets at amortized cost are valued using the effective interest method and are subject to impairment.

Gains and losses are recognized in the income statement when the asset is derecognized, modified or revalued.

Investments in equity instruments

Gains and losses on these financial assets are never reclassified to the income statement. Dividends are recognized as other income in the income statement when the right to payment has been approved, except when the company benefits from such income as a recovery of part of the cost of the financial asset, in which case such profits are recognized in OCI. Equity instruments recognized at fair value through OCI are not subject to impairment testing.

Financial assets measured at fair value through the income statement

This category includes assets held for trading, assets designated at the time of initial recognition as financial assets at fair value with changes recognized in the Income Statement, or financial assets that must be measured at fair value. Assets held for trading are all those assets acquired for sale or repurchase in the short term. Derivatives, including those separated, are classified as financial instruments held for trading unless they are designated as effective hedging instruments. Financial assets with cash flows that are not represented solely by principal and interest payments are classified and measured at fair value in the Income Statement, regardless of the business model. Notwithstanding the criteria for debt instruments to be classified at amortized cost or at fair value through OCI, as described above, debt instruments may be recognized at fair value in the Income Statement upon initial recognition if this results in the elimination or significant reduction of an accounting mismatch.

Financial instruments at fair value with changes recognized in the Income Statement are recognized in the statement of financial position at fair value and net changes in fair value are recognized in profit/(loss) for the year.

Dividends on listed equity investments are also recognized as other income in the statement of profit/(loss) for the year when the right to payment is established.

The embedded derivative contained in a non-derivative hybrid contract, in a financial liability or in a principal non-financial contract, is separated from the principal contract and accounted for as a separate derivative, if: its economic characteristics and the risks associated with it are not closely correlated with those of the principal contract; a separate instrument with the same terms as the embedded derivative would meet the definition of a derivative; and the hybrid contract is not measured at fair value in the Income Statement. Embedded derivatives are measured at fair value, with changes in fair value recognized in the Income Statement. A restatement occurs only when there is a change in the terms of the contract that significantly changes the cash flows otherwise expected or a reclassification of a financial asset to a category other than fair value in the Income Statement.

An embedded derivative included in a hybrid contract that contains a financial asset is not separated from the host contract. The financial asset together with the embedded derivative is classified entirely as a financial asset at fair value in the Income Statement.

Notes 2023 Separate financial statements A2A 33

Derecognition

A financial asset is derecognized when:

• the rights to receive cash flows from the asset no longer apply;

• the company has transferred to a third party the right to receive cash flows from the asset or has assumed a contractual obligation to transfer them. In substance, the transfer is completed when: the company has transferred all the risks and rewards of ownership of the asset or has transferred control of the asset while maintaining the related risks and rewards.

In cases where the company has transferred the rights to receive cash flows from an asset or signed an agreement under which it retains the contractual rights to receive the cash flows from the financial asset but assumes a contractual obligation to pay the cash flows to one or more beneficiaries (pass-through), it assesses whether and to what extent it has retained the risks and rewards of ownership. In the cases in which it has neither transferred nor retained substantially all of the risks and rewards or has not lost control of the asset, it continues to be recognized in the financial statements of the company to the extent of its continuing involvement in the asset. In this case, the company also recognizes an associated liability. The transferred asset and the associated liability are valued to reflect the rights and obligations that remain with the company.

When the entity’s continuing involvement is a guarantee of the transferred asset, involvement is measured on the basis of the lower of the amount of the asset and the maximum amount of consideration received that the entity might have to repay.

Financial liabilities

Financial liabilities are classified, at the time of initial recognition, at fair value in the Income Statement, as mortgages and loans or as derivatives designated as hedges.

Directly attributable transaction costs are added to the valuation.

The company’s financial liabilities include trade payables and other payables, mortgages and loans, including current account overdrafts and derivative financial instruments.

The subsequent evaluation depends on the classification of the main instrument:

• financial liabilities at fair value in the Income Statement, typically of a trading nature (settlement and transfer in the short term). This category includes financial derivatives held for trading (speculative);

• loans and receivables: valued at amortized cost using the effective interest method. Gains and losses are recognized in the Income Statement when the liability is settled, as well as through amortization.

A financial liability is derecognized when the obligation underlying the liability is settled or cancelled.

Derivative financial instruments and hedge accounting

These are initially recognized at fair value on the date the contract is signed and the subsequent measurement is also at fair value.

To classify a derivative as a hedge, the company formally designates and documents the hedging relationship, its risk management objectives and the strategy pursued.

From January 1, 2018, the following must be identified: a) the hedging instrument b) the nature of the risk being hedged c) the way in which the company will assess the effectiveness of the hedge.

The hedging relationship is effective if:

• there is an economic relationship between the hedged item and the hedging instrument;

• the effect of the credit risk does not prevail over the changes in value resulting from the aforementioned economic relationship;

• the hedging ratio of the hedging relationship is the same as that resulting from the quantity of the hedged item that the company actually hedges and the quantity of the hedging instrument that the company actually uses to hedge this quantity of hedged item.

2

Note s

2.1

General

information

on A2A S.p.A.

2.2

Financial statements

2.3

Basis of preparation

2.4

Changes in international accounting standards

2.5

Accounting standards

and policies

2.6

Notes to the balance sheet

2.7

Net debt

2.8

Notes to the income statement

2.9

Note on related party transactions

2.10

Significant

non-recurring events and transactions, pursuant to Consob Communication No. DEM/6064293 of July 28, 2006

2.11

Guarantees

and commitments with third parties

2.12

Other information

34 A2A Separate financial statements 2023 Notes

Transactions that meet the above criteria are accounted for as follows:

Fair value hedging

If a derivative financial instrument is designated as a hedge against exposure to changes in the fair value of an asset or liability attributable to a specific risk, the gain or loss resulting from subsequent changes in fair value of the hedging instrument is recognized in the Income Statement. The profit or loss deriving from the adjustment to fair value of the item hedged, for the part attributable to the hedged risk, changes the book value of this item and is recognized in the Income Statement. Cash flow hedge - If a derivative financial instrument is designated to hedge the exposure to the variability of the cash flows of an asset or a liability recognized in the Financial Statements or of a highly probable transaction, the effective portion of the resulting profits or losses deriving from the fair value adjustment of the derivative instrument is recognized in a specific equity reserve. The cumulative profit or loss is reversed from the equity reserve and recorded in the Income Statement in the same years in which the effects of the hedged transaction are recognized in the Income Statement. The gain or loss associated with that part of the ineffective hedge is recognised in the Income Statement immediately. If the hedged transaction is no longer considered probable, the unrealized gains or losses recognized in the equity reserve are immediately recognized in the Income Statement.

Cash flow hedges

The portion of gain or loss on the hedged instrument relating to the effective portion of the hedge is recognized in other comprehensive income in the cash flow hedge reserve, while the ineffective portion is recognized directly in the Income Statement. The cash flow hedge reserve is adjusted to the lower of the cumulative gain or loss on the hedging instrument and the cumulative change in the fair value of the hedged item.

Amounts accumulated under other components of the comprehensive income statement are recorded, depending on the nature of the underlying hedged transaction. If the hedged transaction subsequently results in the recognition of a non-financial component, the accumulated amount in equity is removed from the separate component of equity and included in the cost or other carrying amount of the asset or liability hedged. This is not considered a reclassification of the items recognized in OCI for the period. This also applies in the case of a hedged forecast transaction of a non-financial asset or a non-financial liability that subsequently becomes an irrevocable commitment to which fair value hedge accounting is applied.

For any other cash flow hedge, the amount accumulated in OCI is reclassified in the Income Statement as a reclassification adjustment in the same period or periods during which the hedged cash flows impact profit or loss.

If the cash flow hedge accounting is discontinued, the accumulated amount in OCI must remain so if the hedged future cash flows are expected to occur. Otherwise, the amount shall be immediately reclassified to profit or loss for the period as a reclassification adjustment. After suspension, once the hedged cash flow occurs, any accumulated amount remaining in OCI must be accounted for depending on the nature of the underlying transaction as described above.

Non-current assets held for sale, disposal groups and discontinued operations – IFRS 5

Non-current assets held for sale, disposal groups and discontinued operations whose carrying amount will be recovered principally through sale rather than continuous use are measured at the lower of their carrying amount and fair value less costs to sell. A disposal group is a group of assets to be disposed of together as a group in a single transaction together with the liabilities directly associated with those assets that will be transferred in that transaction. Discontinued operations on the other hand consist of a significant component of the Group such as a separate major line of business or a geographical area of operations or a subsidiary acquired exclusively with a view to resale.

In accordance with IFRSs, the figures for non-current assets held for sale, disposal groups and discontinued operations are shown on two specific lines in the balance sheet: non-current assets held for sale and liabilities directly associated with non-current assets held for sale.

Non-current assets held for sale are not depreciated or amortized and are measured at the lower of carrying amount and