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Half-yearly financial report at June 30, 2017 Contents 3 Corporate boards Key figures of the A2A Group 6 Business Units 7 Geographical areas of activity 8 Group structure 9 Financial highlights at June 30, 2017 12 Shareholdings 13 A2A S.p.A. on the Stock Exchange 15 Alternative Performance Indicators (APM) Consolidated results and report on operations 22 Summary of results, assets and liabilities and financial position 33 Significant events during the period 40 Significant events after June 30, 2017 44 Outlook for operations 1 Consolidated financial statements 46 Consolidated balance sheet 48 Consolidated income statement 49 Consolidated statement of comprehensive income 50 Consolidated cash-flow statement 52 Statement of changes in Group equity 54 Balance sheet pursuant to Consob Resolution no. 17221 of March 12, 2010 56 Income statement pursuant to Consob Resolution no. 17221 of March 12, 2010 Notes to the Half-yearly financial report 58 General information 59 The Half-yearly financial report 60 Financial statements 61 Basis of preparation 62 Changes in international accounting standards 65 Scope of consolidation 66 Consolidation policies and procedures 75 Seasonal nature of the business 76 Summary of results sector by sector 78 Notes to the balance sheet 105 Net debt 107 Notes to the income statement 119 Earnings per share 120 Note on related party transactions 125 Significant non-recurring events and transactions 127 Guarantees and commitments with third parties 128 Other information Half-yearly financial report at June 30, 2017 Contents Attachments to the notes to the Half-yearly financial report 180 1. Statement of changes in tangibile assets 182 2. Statement of changes in intangibile assets 184 3. List of companies included in the consolidated financial statements 188 4. List of shareholdings in companies carried at equity 190 5. List of available-for-sale financial assets Evolution of the regulation and impacts on the Business Units of the A2A Group 194 Generation and Trading Business Unit 209 Commercial Business Unit 218 Environment Business Unit 230 Networks and Heat Business Unit 252 Foreign Business Unit Scenario and market 256 Macroeconomic scenario 260 Energy market trends 2 Results sector by sector 264 Results sector by sector 266 Generation and Trading Business Unit 270 Commercial Business Unit 273 Environment Business Unit 276 Networks and Heat Business Unit 280 Foreign Business Unit 282 A2A Smart City 283 Corporate Risks and uncertainties 286 Risks and uncertainties Sustainability responsible management 306 Sustainability responsible management Certification of the condensed half-yearly financial statements pursuant to article 154-bis, paragraph 5 of Legislative Decree no. 58/98 310 Certification of the condensed half-yearly financial statements pursuant to article 154-bis, paragraph 5 of Legislative Decree no. 58/98 311 Independent Auditor’s Report This is a translation of the Italian original “Relazione finanziaria semestrale al 30 giugno 2017” and has been prepared solely for the convenience of international readers. In the event of any ambiguity the Italian text will prevail. The Italian original is available on the website www.a2a.eu Half-yearly financial report at June 30, 2017 Corporate boards BOARD OF DIRECTORS CHAIRMAN Giovanni Valotti DEPUTY CHAIRMAN Alessandra Perrazzelli CHIEF EXECUTIVE OFFICER Luca Camerano DIRECTORS Giambattista Brivio 3 Giovanni Comboni Enrico Corali Luigi De Paoli Alessandro Fracassi Maria Chiara Franceschetti Guadiana Giusti Secondina Giulia Ravera Norberto Rosini BOARD OF STATUTORY AUDITORS CHAIRMAN Giacinto Gaetano Sarubbi STANDING AUDITORS Maurizio Leonardo Lombardi Chiara Segala SUBSTITUTE AUDITORS Sonia Ferrero Stefano Morri INDEPENDENT AUDITORS EY S.p.A. Key figures of the A2A Group Half-yearly financial report at June 30, 2017 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 diagram identified as a result of the reorganization carried out by the management: Business Units of the A2A Group Generation Commercial Environment Networks Foreign A2A Corporate 6 and Trading and Heat Smart City Thermoelectric Sale Collection and Electricity Electricity Telecommunication Corporate and hydroelectric of Electricity street sweeping networks generation and services services plants and Gas commercial Energy Treatment Gas networks Electricity Management networks Disposal Integrated water and energy cycle recovery Public lighting and other services District Heating Services Heat management 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. Half-yearly financial report at June 30, 2017 Geographical areas of activity 7 updated to June 30, 2017 hydroelectric plants thermoelectric plants cogeneration plants waste treatment plants technological partnerships Half-yearly financial report at June 30, 2017 Group structure A2A S.p.A. 100.00% 70.00% 100.00% 100.00% 100.00% 100.00% 41.75% 100.00% 51.00% A2A gencogas A2A Alfa A2A Energia A2A Ambiente A2A Ciclo Unareti EPCG A2A Smart Linea Group Idrico City Holding 100.00% 50.00% 100.00% 100.00% 100.00% 100.00% 96.17% A2A PremiumGas Linea Più (1) Amsa A2A Calore Unareti Servizi Linea Com Energiefuture & Servizi Metrici 100.00% 33.33% 100.00% 75.00% 100.00% 23.94% Linea LumEnergia Aprica Consul A2A Illuminazione ACSM-AGAM Energia (1) System Pubblica 8 50.00% 50.00% 100.00% 90.00% 91.60% Ergosud Metamer Linea Aspem Retragas Ambiente (1) 39.49% 100.00% 60.00% 89.00% Rudnik Uglja Linea Proaris Camuna ad Pljevlja Gestioni (1) Energia 100.00% 100.00% 74.80% MF Waste (1) Linea Reti ASVT e Impianti (1) 80.00% 90.85% Lomellina LD Reti (1) Energia Business Units Generation and Trading Commercial Environment Networks and Heat Foreign A2A Smart City (1) Shareholdings held through Linea Group Holding S.p.A.. This chart shows the most significant shareholdings of the A2A Group. Other companies See attachments 3, 4 and 5 for full details of shareholdings. Half-yearly financial report at June 30, 2017 Financial highlights at June 30, 2017 (**) Revenues _______________________________________________ 2,918 millions of euro Gross operating income __________________________________ 649 millions of euro Result of the period ______________________________________ 157 millions of euro Dividend ________________________________________________ 0 .0492 euro per share 9 Income statement figures 01 01 2017 01 01 2016 Millions of euro 06 30 2017 06 30 2016 Revenues 2,918 2,323 Operating expenses (1,922) (1,398) Labour costs (347) (311) Gross operating income - EBITDA 649 614 Depreciation, amortization, provisions and write-downs (280) (234) Net operating income - EBIT 369 380 Result from non-recurring transactions 1 52 Financial balance (92) (59) Result before taxes 278 373 Income taxes (119) (106) Net result from discontinued operations 1 - Minorities (3) (13) Group result of the period 157 254 Gross operating income/Revenues 22.2% 26.4% (**) The figures serve as performance indicators as required by CESRN/05/178/B. Half-yearly financial report at June 30, 2017 Financial highlights at June 30, 2017 Balance sheet figures 06 30 2017 12 31 2016 Millions of euro Restated Net capital employed 6,358 6,415 Equity attributable to the Group and minorities 3,311 3,279 Consolidated net financial position (3,047) (3,136) Consolidated net financial position/Equity attributable to the Group and minorities 0.92 0.96 Consolidated net financial position / EBITDA 4.69 2.55 Financial data 01 01 2017 01 01 2016 Millions of euro 06 30 2017 06 30 2016 Net cash flows from operating activities 412 370 Net cash used in investing activities (171) (163) Free cash flow (Cash Flow Statement figure) 241 207 Key indicators 06 30 2017 06 30 2016 10 Average 6-month Euribor (0.247%) (0.126%) Average price of Brent (US$/bbl) 52.8 41.0 Average of the PUN (Single Nationwide Price) Base load (Euro/MWh) 51.2 37.0 Average of the PUN (Single Nationwide Price) Peak load (Euro/MWh) 57.4 40.9 Average price of coal (Euro/tonne) 72.9 42.0 Average price of gas to the PSV (*) (Euro/MWh) 19.3 14.6 Average price of emission certificates EU ETS (**) (Euro/tonne) 5.0 5.7 (*) Price of gas of reference for the Italian market (**) EU Emissions Trading System Half-yearly financial report at June 30, 2017 Financial highlights at June 30, 2017 Group’s key operational indicators 06 30 2017 06 30 2016 Thermoelectric production (GWh) 4,775 3,722 Hydroelectric production (GWh) 1,640 2,262 Electricity sold to wholesale customers (GWh) 3,387 3,122 Electricity sold on the Power Exchange (GWh) 5,914 6,532 Electricity sold to retail customers (GWh) 3,927 3,989 POD Electricity (#/1000) 1,050 961 Gas sold to retail customers (Mcm) 905 664 PDR Gas (#/1000) 1,295 1,084 Waste collected (Kton) 800 678 Residents served (#/1000) 3,562 2,859 Waste disposed of (Kton) 1,763 1,224 Electricity sold by WTE (GWh) 923 825 Electricity distributed (GWh) 5,773 5,466 11 Gas distributed (Mcm) 1,410 1,039 Water distributed (Mcm) 33 31 RAB Electricity (M€) 645 608 RAB Gas (M€) 1,160 971 Heat sales (GWht) 1,552 1,332 Cogeneration production (GWh) 162 109 Thermoelectric production (GWh) - EPCG 496 412 Hydroelectric production (GWh) - EPCG 488 1,082 Electricity sold by EPCG (domestic market) (GWh) 1,240 1,160 Half-yearly financial report at June 30, 2017 Shareholdings (*) Municipality of Milan 25.0% Market 49.2% 12 Municipality of Brescia 25.0% Treasury shares 0.8% (*) Source CONSOB for Stakes higher than 3% (update at June 30, 2017). Key figures of A2A S.p.A. 06 30 2017 12 31 2016 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) 23,721,421 23,721,421 Half-yearly financial report at June 30, 2017 A2A S.p.A.