A2A S p A : 2024 Consolidated Financial Statements

About this update from A2a S.p.a.

2024 Consolidated Financial Statements :•›,a2 LIFE COMPANY Consolidated financial statements 2024 these Financial Statements are available at the website gruppoa2a.it Contents 1 Accounting statements 2.1 General information 16 1.1 Consolidated balance sheet 6 2.2 Consolidated annual report 17 1.2 Consolidated income statement 8 2.3 Financial statements 18 1.3 Consolidated statement 2.4 Basis of preparation 19 of comprehensive income 9 2.5 Changes in international 1.4 Consolidated cash-flow statement 10 accounting standards 20 1.5 Statement of changes in Group equity 11 2.6 Scope of consolidation 23 1.6 Consolidated balance sheet 2.7 Consolidation policies and procedures 26 pursuant to Consob Resolution no. 17221 2.8 Accounting standards and policies 29 of the consolidated financial statements 2 Notes to the Consolidated financial statements of March 12, 2010 12 1.7 Consolidated income statement pursuant to Consob Resolution no. 17221 of March 12, 2010 14 Business Units 45 Results sector by sector 46 Notes to the balance sheet 50 Net debt 82 Notes to the income statement 84 Earnings per share 94 Note on related party transactions 95 Significant non-recurring events and transactions, pursuant to Consob Communication No. DEM/6064293 of July 28, 2006 100 Guarantees and commitments with third parties 101 Other information 102 2 A2A Consolidated financial statements 2024 3 4 Attachments to the notes Independent Auditors' to the Consolidated Report financial statements 151 3.1 1. List of companies included in the consolidated annual report 144 2. List of shareholdings in companies carried at equity 148 3. List of holdings in other companies 149 Certification of the consolidated financial statements pursuant to article 154-bis, paragraph 5 of Legislative Decree no. 58/98 150 This is a translation of the Italian original "Relazione finanziaria annuale consolidata 2024" 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 Consolidated financial statements 2024 1 Accounting statements of the consolidated financial statements 1.1 Consolidated balance sheet (1) Assets millions of euro Note 12 31 2024 12 31 2023 Non-current assets Tangible assets 1 7,517 6,643 Intangible assets 2 4,299 3,630 Shareholdings carried according to equity method 3 25 30 Other non-current financial assets 3 88 67 Deferred tax assets 4 549 464 Other non-current assets 5 130 138 Total non-current assets 12,608 10,972 Current assets Inventories 6 316 319 Trade receivables 7 3,643 3,540 Other current assets 8 1,296 2,264 Current financial assets 9 32 33 Current tax assets 10 45 41 Cash and cash equivalents 11 1,549 1,629 Total current assets 6,881 7,826 Non-current assets held for sale 12 405 - Total assets 19,894 18,798 (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 39. Significant non-recurring events and transactions in the separate financial statements are provided in Note 40 pursuant to Consob Communication DEM/6064293 of July 28, 2006. 1 Accounting statements of the consolidated financial statements millions of euro Note 12 31 2024 12 31 2023 Equity Share capital 13 1,629 1,629 (Treasury shares) - - Reserves 14 2,952 1,952 Result of the year 15 864 659 Equity pertaining to the Group 5,445 4,240 Minority interests 558 562 Total Equity 6,003 4,802 Liabilities Non-current liabilities Non-current financial liabilities 17 6,317 5,576 Employee benefits 18 214 237 Provisions for risks, charges and liabilities for landfills 19 854 828 Other non-current liabilities 20 347 335 Total non-current liabilities 7,732 6,976 Current liabilities Trade payables 21 3,682 4,105 Other current liabilities 21 1,391 2,070 Current financial liabilities 22 955 775 Tax liabilities 23 120 70 Total current liabilities 6,148 7,020 Total liabilities 13,880 13,996 Liabilities directly associated with non-current assets held for sale 24 11 - Total equity and liabilities 19,894 18,798 Equity and liabilities 2 Notes to the Consolidated financial statements 3 Attachments to the notes to the Consolidated financial statements 4 Independent Auditors' Report 1.2 Consolidated income statement (1) millions of euro Note 01 01 2024 12 31 2024 01 01 2023 12 31 2023 Revenues Revenues from the sale of goods and services 12,570 14,492 Other operating income 287 266 Total revenues 26 12,857 14,758 Operating expenses Expenses for raw materials and services 9,218 11,591 Other operating expenses 419 381 Total operating expenses 27 9,637 11,972 Labour costs 28 892 815 Gross operating income - EBITDA 29 2,328 1,971 Depreciation, amortization, provisions and write-downs 30 1,011 954 Net operating income - EBIT 31 1,317 1,017 Result from non-recurring transactions 32 5 2 Financial balance Financial income 105 83 Financial expenses 218 222 Affiliates 2 - Result from disposal of other shareholdings - (1) Total financial balance 33 (111) (140) Result before taxes 1,211 879 Income taxes 34 319 199 Result after taxes from operating activities 892 680 Net result from discontinued operations 35 - 3 Net result 892 683 Minorities 36 (28) (24) Group result of the year 37 864 659 Result per share (in euro): - basic 0.2759 0.2101 - basic from continuing operations 0.2759 0.2092 - basic from assets held for sale 0.0000 0.0009 - diluted 0.2759 0.2101 - diluted from continuing operations 0.2759 0.2092 - diluted from assets held for sale 0.0000 0.0009 (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 39. Significant non-recurring events and transactions in the separate financial statements are provided in Note 40 pursuant to Consob Communication DEM/6064293 of July 28, 2006. 1.3 Consolidated statement of comprehensive income millions of euro 12 31 2024 12 31 2023 Net result of the year (A) 892 683 Actuarial gains/(losses) on Employee's Benefits booked in the Net equity 15 3 Tax effect of other actuarial gains/(losses) (6) (1) Total actuarial gains/(losses) net of the tax effect (B) 9 2 Effective part of gains/(losses) on cash flow hedge (13) (43) Tax effect of other gains/(losses) 4 11 Total gains/(losses) on cash flow hedge net of tax (C) (*) (9) (32) Gains/(losses) on financial assets measured at Fair Value 9 - Tax effect of other gains/(losses) (3) - Total gains/(losses) of financial assets measured at Fair Value net of tax (D) 6 - Total comprehensive result (A) + (B) + (C) + (D) 898 653 Total comprehensive result attributable to: Shareholders of the parent company 870 629 Minority interests (28) (24) (*) The effects of these items will be reclassified to the income statement in subsequent years. 1 Accounting statements of the consolidated financial statements 2 Notes to the Consolidated financial statements 3 Attachments to the notes to the Consolidated financial statements 4 Independent Auditors' Report 1.4 Consolidated cash-flow statement millions of euro 12 31 2024 12 31 2023 Cash and cash equivalents at the beginning of the year 1,629 2,584 Operating activities Net result 892 683 Net income taxes 319 199 Net financial interests 117 139 Capital gains/expenses (3) (3) Tangible assets depreciation 580 523 Intangible assets amortization 304 278 Fixed assets write-downs/disposals 23 17 Net provisions 113 151 Result from affiliates (2) 1 Net financial interests paid (108) (101) Net taxes paid (304) (317) Dividends paid (320) (302) Change in trade receivables (169) 1,057 Change in trade payable (435) (1,420) Change in inventories 10 217 Other changes 122 (82) Cash flow from operating activities 1,139 1,040 Investment activities Investments in tangible assets (1,051) (947) Investments in intangible assets and goodwill (461) (429) Investments in shareholdings and securities (*) (1,312) (45) Cash and cash equivalents from first consolidations asset 1 8 Disposal of fixed assets and shareholdings 4 48 Issue of loans to other than financial institutions - - Cash receipt/repayment from loans to other than financial institutions 6 6 Cash flow from investment activities (2,813) (1,359) Free cash flow (1,674) (319) Financing activities Changes in financial liabilities Borrowings/bonds issued 1,942 943 Repayment of borrowings/bond (1,031) (1,505) Lease payments (50) (36) Other changes - (38) Total changes in financial liabilities (*) 861 (636) Capital instruments - perpetual hybrid bond Issue of perpetual hybrid bond 742 - Coupon paid on perpetual hybrid bond (9) - Capital instruments - perpetual hybrid bond 733 - Cash flow from financing activities 1,594 (636) Change in cash and cash equivalents (80) (955) Cash and cash equivalents at the end of the year 1,549 1,629 (*) Cleared of balances in return of shareholders' equity and other balance sheet items. 1.5 Statement of changes in Group equity Changes from January 1, 2023 to December 31, 2023 millions of euro Share capital Treasury shares Cash Flow Hedge Reserve for equity instruments - perpetual hybrid bonds 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. 1 Accounting statements of the consolidated financial statements 2 Notes to the Consolidated financial statements 3 Attachments to the notes to the Consolidated financial statements 4 Independent Auditors' Report Changes from January 1, 2024 to December 31, 2024 millions of euro Share capital Treasury shares Cash Flow Hedge Reserve for equity instruments - perpetual hybrid bonds 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, 2023 1,629 - (2) 1,954 659 4,240 562 4,802 Result allocation 659 (659) Distribution of dividends (300) (300) (20) (320) IAS 19 reserves (*) 9 9 9 Cash flow hedge reserves (*) (9) (9) (9) Financial assets measured at Fair Value (*) 6 6 6 Change in scope (99) (99) (13) (112) Capital instruments -perpetual hybrid bond 742 742 742 Capital instruments -coupon paid on perpetual hybrid bond (9) (9) (9) Other changes 1 1 1 2 Group and minorities result of the year 864 864 28 892 Net equity at December 31, 2024 1,629 - (11) 742 2,221 864 5,445 558 6,003 (*) These form part of the statement of comprehensive income. 1.6 Consolidated balance sheet pursuant to Consob Resolution no. 17221 of March 12, 2010 Assets millions of euro 12 31 2024 of which Related Parties (note 39) 12 31 2023 of which Related Parties (note 39) Non-current assets Tangible assets 7,517 6,643 Intangible assets 4,299 3,630 Shareholdings carried according to equity method 25 25 30 30 Other non-current financial assets 88 4 67 6 Deferred tax assets 549 464 Other non-current assets 130 138 24 Total non-current assets 12,608 10,972 Current assets Inventories 316 319 Trade receivables 3,643 111 3,540 158 Other current assets 1,296 1 2,264 1 Current financial assets 32 1 33 7 Current tax assets 45 41 Cash and cash equivalents 1,549 1,629 Total current assets 6,881 7,826 Non-current assets held for sale 405 - Total assets 19,894 18,798 1 Accounting statements of the consolidated financial statements millions of euro 12 31 2024 of which Related Parties (note 39) 12 31 2023 of which Related Parties (note 39) Equity Share capital 1,629 1,629 (Treasury shares) - - Reserves 2,952 1,952 Result of the year 864 659 Equity pertaining to the Group 5,445 4,240 Minority interests 558 562 Total Equity 6,003 4,802 Liabilities Non-current liabilities Non-current financial liabilities 6,317 5,576 Employee benefits 214 237 Provisions for risks, charges and liabilities for landfills 854 8 828 Other non-current liabilities 347 335 Total non-current liabilities 7,732 6,976 Current liabilities Trade payables 3,682 30 4,105 81 Other current liabilities 1,391 2 2,070 6 Current financial liabilities 955 775 Tax liabilities 120 70 Total current liabilities 6,148 7,020 Total liabilities 13,880 13,996 Liabilities directly associated with non-current assets held for sale 11 - Total equity and liabilities 19,894 18,798 Equity and liabilities 2 Notes to the Consolidated financial statements 3 Attachments to the notes to the Consolidated financial statements 4 Independent Auditors' Report 1.7 Consolidated income statement pursuant to Consob Resolution no. 17221 of March 12, 2010 millions of euro 01 01 2024 12 31 2024 of which Related Parties (note 39) 01 01 2023 12 31 2023 of which Related Parties (note 39) Revenues Revenues from the sale of goods and services 12,570 552 14,492 563 Other operating income 287 266 Total revenues 12,857 14,758 Operating expenses Expenses for raw materials and services 9,218 31 11,591 23 Other operating expenses 419 45 381 85 Total operating expenses 9,637 11,972 Labour costs 892 2 815 1 Gross operating income - EBITDA 2,328 1,971 Depreciation, amortization, provisions and write-downs 1,011 954 Net operating income - EBIT 1,317 1,017 Result from non-recurring transactions 5 2 2 Financial balance Financial income 105 83 5 Financial expenses 218 222 Affiliates 2 2 - Result from disposal of other shareholdings - (1) Total financial balance (111) (140) Result before taxes 1,211 879 Income taxes 319 199 Result after taxes from operating activities 892 680 Net result from discontinued operations - 3 Net result 892 683 Minorities (28) (24) Group result of the year 864 659 Consolidated financial statements 2024 2 Notes to the Consolidated financial statements 2.1 General information 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. 2.2 Consolidated annual report The consolidated annual report (hereafter referred to as the "Annual report") of the A2A Group at December 31, 2024, 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, 2024 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 report at December 31, 2023 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, 2024. 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, 2024 was approved on March 20, 2025 by the Board of Directors, which authorized 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. 1 Accounting statements of the consolidated financial statements 2 Notes to the Consolidated financial statements 3 Attachments to the notes to the Consolidated financial statements 4 Independent Auditors' Report 2.3 Financial statements 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 incorporates the informational amendments to 'IAS 7' effective from January 1, 2024, as detailed in the relevant section 'Changes in International Accounting Standards', and the ESMA (European Securities and Markets Authority) recommendations updated as of October 29, 2024. The Group classifies cash flows for dividends paid and interest paid/collected as cash flows from operating activities. 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, 2023. 2.4 Basis of preparation The consolidated annual financial report at December 31, 2024 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 principles, the accounting policies and the methods of measurement used in the preparation of the Annual Report are consistent with those used to prepare the Consolidated Annual Report at December 31, 2023, except as specified below in relation to the newly issued principles. The Group has not adopted in advance any new principles, interpretations, or amendments that have been issued but are not yet in force. 1 Accounting statements of the consolidated financial statements 2 Notes to the Consolidated financial statements 3 Attachments to the notes to the Consolidated financial statements 4 Independent Auditors' Report 2.5 Changes in international accounting standards 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, 2024. 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, 2024, 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, 2024, 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: On January 23, July 15, 2020, and October 31, 2022, the International Accounting Standards Board (IASB) issued three additions to IAS 1 "Presentation of Financial Statements": The classification of liabilities as either current or non-current, and non-current liabilities with covenants, aims to better define the concept of liabilities and their classification between short-term and medium- to longterm. 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 entity must have the right to defer the settlement of the liability for at least 12 months after the balance sheet date. The change includes: the stipulation that the right to defer settlement must exist as of the date of the Financial Statements; a clarification regarding the fact that the classification is not influenced by management's intentions or expectations about the possibility of using the deferral right; a clarification on how the financing conditions influence the classification; a clarification on the requirements for classifying liabilities that an entity intends to or might settle through the issuance of its own equity instruments. 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. The amendments had no impact on the financial report. on September 22, 2022, the IASB issued a supplement to IFRS 16 "Liabilities in a sale and leaseback" 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 amendment aims to enhance the criteria for sale and leaseback transactions under IFRS 16, but it does not modify the accounting for leases unrelated to sale and leaseback transactions. The amendments had no impact on the financial report. 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). This financial report reflects the alterations to the disclosure mandated by the amendments. Accounting standards, amendments and interpretations approved this year and applicable as of subsequent years 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. No material impacts are expected for the Group with reference to this amendment. Accounting standards, amendments and interpretations not yet approved by the European Union On April 9, 2024, the IASB published IFRS 18, which establishes requirements for the presentation of information in the financial statements in order to improve the uniformity of the information provided and promote comparability between financial statements. The standard focuses in particular on the presentation of the income statement for which a predefined structure is provided divided into categories (operating, investing, financial, tax and discontinued operations) and as many subtotals. However, it also sets rules for the aggregation and disaggregation of information on the basis of their common characteristics in order to identify the information to be provided directly in the financial statements rather than in the notes. The standard will be applicable to financial statements closed on or after January 1, 2027. The Group is currently assessing the impacts of these amendments. On May 9, 2024, the IASB published the new IFRS 19 standard applicable for financial statements from January 1, 2027. The standard applies to non-publicly accountable subsidiaries belonging to a group that prepares consolidated financial statements according to IAS/IFRS and allows them to use IFRS accounting standards by adopting simplified financial reporting based on the provisions of the new standard instead of those of the other standards. The amendments will have no impact on the financial report. In 2024, the International Accounting Standards Board (IASB) issued two amendments to IFRS 9 and IFRS 7, one concerning "Changes to the Classification and Measurement of Financial Instruments" and the other related to "Renewable Energy Contracts". The effective date for both amendments is set for January 1, 2026. "Changes to the Classification and Valuation of Financial Instruments": Amendments to IFRS 9 clarify the circumstances under which a financial asset or liability is recognized and derecognized. According to the amendments, a company generally writes off its financial liability on the settlement date. Normally, this is the date when the payment is completed. The amendments also introduce an exception, permitting the company to write off its financial liability prior to the settlement date, which is the date when the payment is initiated and cannot be cancelled. The exception is available when the company uses an electronic payment system that satisfies all of the following criteria: no practical way to retract, halt, or cancel the payment instruction; no practical means to access the money needed for the settlement as a result of the payment instruction; and the settlement risk connected with the electronic payment system is insignificant. The amendments also introduce an additional SPPI test (solely for payments of principal and interest) for financial assets with contractual terms that reference a potential event, including those related to ESG factors, that are not directly tied to changes in basic lending risks or costs. For instance, this applies when cash flows vary based on whether the borrower meets an ESG target specified in the loan contract. Under the former formulation, it was indeed unclear whether the contractual cash flows from certain financial assets with environmental, social, and governance (ESG) characteristics and similar contingent attributes qualified as "solely payments of principal and interest", which is necessary for recognition at amortized cost. This could have involved measuring such activities at fair value through the income statement. Under the amendments, certain financial assets, 1 Accounting statements of the consolidated financial statements 2 Notes to the Consolidated financial statements 3 Attachments to the notes to the Consolidated financial statements 4 Independent Auditors' Report including those possessing ESG-related attributes, may satisfy the SPPI criterion, provided that their cash flows don't significantly differ from those of an identical financial asset without such characteristics. - The amendment to IFRS 7 mandates additional disclosure for financial assets and liabilities with contractual terms referencing a potential event, including those associated with ESG factors, as well as for equity instruments classified at fair value through other comprehensive income. "Contracts relating to renewable energy sources": clarifies the requirements for applying the "own-use exemption"; establishes the rules for the use of these contracts as hedging instruments in a hedge accounting relationship; introduces a new set of information designed to enable investors to grasp the influence of these contracts on the company's performance and its cash flows. The Group is currently assessing the impacts of these amendments. On July 18, 2024, the International Accounting Standards Board (IASB) issued the eleventh volume of annual improvements aimed at enhancing the consistency and comprehensibility of the standards. The effective date for the amendments is set for January 1, 2026. The main changes concerned IFRS 9 Financial Instruments: the amendment specifies that when a lease is terminated, it falls under the jurisdiction of IFRS 9, replacing the typical application of IFRS 16. As a result, any disparity between the present value of the liability and the payment made must be recognized in the income statement; the amendment also addresses a conflict between IFRS 9 and IFRS 15 regarding the initial measurement of trade receivables by specifying that trade receivables without a significant financial component must initially be recognized according to the provisions of IFRS 15. The Group is currently assessing the impacts of these amendments. 2.6 Scope of consolidation The Consolidated Annual Report at December 31, 2024 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: acquisition by A2A S.p.A. of 90% of the Duereti S.r.l., a company operating in electricity distribution, with consequent line-by-line consolidation; acquisition by Acinque S.p.A. of 70% of Agesp Energia S.r.l., a company operating in the sale of electricity and gas, with consequent line-by-line consolidation; acquisition by A2A Rinnovabili S.p.A. of 70% of the company Parco Friulano 2 S.r.l. with consequent line-by-line consolidation; acquisition by Agripower S.p.A. of 100% of Biomax Società Agricola a r.l., a company operating in the production of electricity from biogas, with consequent line-by-line consolidation; acquisition by A2A Ambiente S.p.A. of the remaining 30% of the company A.S.R.A.B. S.p.A. operating in waste disposal; acquisition by A2A S.p.A. of the remaining 4.4% of the company LD Reti S.r.l.; incorporation of the company A2A Storage S.r.l. by A2A Rinnovabili S.p.A., which owns 100% of it, consolidated on a line-by-line basis; incorporation of the company A2A Trezzo Ambiente S.r.l. held 86% by A2A Ambiente S.p.A. and 4% by A2A Calore & Servizi S.r.l. with consequent a line-by-line consolidation of the company; incorporation of TEXELERA S.c. a r.l., held 51% by A2A S.p.A., with consequent line-by-line consolidation of the company; sale of the company Tula Bioenergia Società Agricola a r.l. previously consolidated on a line-by-line basis; de-registration of Proaris S.r.l. in liquidation, previously consolidated on a line-by-line basis following the completion of the liquidation process. 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. 1 Accounting statements of the consolidated financial statements 2 Notes to the Consolidated financial statements 3 Attachments to the notes to the Consolidated financial statements 4 Independent Auditors' Report Breakdown of the balance sheet with evidence of the effect of the first consolidation of the 2024 acquisitions millions of euro Note Consolidated at 12 31 2023 A2A Rinnovabili Group Biomax Società Agricola a r.l. Agesp Energia S.r.l. Duereti S.r.l. Total effect first consolidation acquisitions 2024 Changes Consolidated at 12 31 2024 Assets Non-current assets Tangible assets 1 6,643 6 2 13 393 414 460 7,517 Intangible assets 2 3,630 23 6 29 890 948 (279) 4,299 Shareholdings carried according to equity method 3 30 - - - - - (5) 25 Other non-current financial assets 3 67 - - 1 - 1 20 88 Deferred tax assets 4 464 - - 2 13 15 70 549 Other non-current assets 5 138 - - 1 - 1 (9) 130 Total non-current assets 10,972 29 8 46 1,296 1,379 257 12,608 Current assets Inventories 6 319 - 1 - 6 7 (10) 316 Trade receivables 7 3,540 - - 16 - 16 87 3,643 Other current assets 8 2,264 - 1 4 - 5 (973) 1,296 Current financial assets 9 33 - - - - - (1) 32 Current tax assets 10 41 - - - - - 4 45 Cash and cash equivalents 11 1,629 - - 1 - 1 (81) 1,549 Total current assets 7,826 - 2 21 6 29 (974) 6,881 Non-current assets held for sale 12 - - - - - - 405 405 Total assets 18,798 29 10 67 1,302 1,408 (312) 19,894 Liabilities Non-current liabilities Non-current financial liabilities 17 5,576 - 2 10 1 13 728 6,317 Deferred tax liabilities - - - 5 - 5 (5) - Employee benefits 18 237 - - 1 1 2 (25) 214 Provisions for risks, charges and liabilities for landfills 19 828 - - 3 5 8 18 854 Other non-current liabilities 20 335 - - 2 126 128 (116) 347 Total non-current liabilities 6,976 - 2 21 133 156 600 7,732 Current liabilities Trade payables 21 4,105 - 1 11 - 12 (435) 3,682 Other current liabilities 21 2,070 - - 9 28 37 (716) 1,391 Current financial liabilities 22 775 - - 2 1 3 177 955 Tax liabilities 23 70 - - - - - 50 120 Total current liabilities 7,020 - 1 22 29 52 (924) 6,148 Total liabilities 13,996 - 3 43 162 208 (324) 13,880 Liabilities directly associated with non-current assets held for sale 24 - - - - - - 11 11 Total liabilities 13,996 - 3 43 162 208 (313) 13,891 millions of euro Note A2A Rinnovabili Group Biomax Società Agricola a r.l. Agesp Energia S.r.l. Duereti S.r.l. Total effect consolidation new acquisitions 2024 Old perimeter at 12 31 2024 Consolidated at 12 31 2024 Consolidated at 12 31 2023 Revenues Revenues from the sale of goods and services - 1 49 - 50 12,520 12,570 14,492 Other operating income - - - - - 287 287 266 Total revenues 26 - 1 49 - 50 12,807 12,857 14,758 Operating expenses Expenses for raw materials and services - 1 43 - 44 9,174 9,218 11,591 Other operating expenses - - - 1 1 418 419 381 Total operating expenses 27 - 1 43 1 45 9,592 9,637 11,972 Labour costs 28 - - 2 - 2 890 892 815 Gross operating income -EBITDA 29 - - 4 (1) 3 2,325 2,328 1,971 Depreciation, amortization, provisions and write-downs 30 - - 2 (1) 1 1,010 1,011 954 Net operating income - EBIT 31 - - 2 - 2 1,315 1,317 1,017 Result from non-recurring transactions 32 - - - - - 5 5 2 Financial balance Financial income - - - - - 105 105 83 Financial expenses - - 1 - 1 217 218 222 Affiliates - - - - - 2 2 (1) Result from disposal of other shareholdings - - - - - - - - Total financial balance 33 - - (1) - (1) (110) (111) (140) Result before taxes - - 1 - 1 1,210 1,211 879 Income taxes 34 - - - - - 319 319 199 Result after taxes from operating activities - - 1 - 1 891 892 680 Net result from discontinued operations 35 - - - - - - - 3 Net result - - 1 - 1 891 892 683 Minorities 36 - - - - - (28) (28) (24) Group result of the year 37 - - 1 - 1 863 864 659 Breakdown of the economic effect of the consolidation of new acquisitions 2024 1 Accounting statements of the consolidated financial statements 2 Notes to the Consolidated financial statements 3 Attachments to the notes to the Consolidated financial statements 4 Independent Auditors' Report 2.7 Consolidation policies and procedures 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. Although the Group holds an equity interest of less than 50.01%, it controls the companies Acinque S.p.A., Ambiente Energia Brianza S.p.A. and ASM Energia S.p.A. by virtue of specific shareholders' agreements. 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. Effect on the consolidation procedures of certain agreements involving the shares or quotas of Group companies 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 2024, 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. Options on the shares of Agesp Energia S.r.l. On January 3, 2024, Acinque S.p.A. acquired 70% of the company Agesp Energia S.r.l.. As a result of the shareholders' agreement entered into between Acinque S.p.A. and Agesp S.p.A. (seller), there is a put option granted by Acinque S.p.A. to Agesp S.p.A. on the remaining 30% share that can be exercised until the expiry of the 3rd (third) year from the date of signing of the Notary Deed. Therefore, the Group has recognized as a liability the present value of the estimated outlay of 8 million euro which it will not be able to avoid if the option is exercised. Options on the shares of Duereti S.r.l. On December 31, 2024, A2A S.p.A. acquired 90% of Duereti S.r.l.. Due to the shareholders' agreement between A2A S.p.A. and E-Distribuzione S.p.A. (seller), there is a put option granted by A2A S.p.A to E-Distribuzione S.p.A. on the remaining 10% share that can be exercised until the expiry of the 3rd (third) year from the date of signing of the Notary Deed. Therefore, the Group has recognized as a liability the present value of the estimated outlay of 127 million euro which it will not be able to avoid if the option is exercised. Options on the shares of A2A Trezzo Ambiente S.r.l. A2A Trezzo Ambiente S.r.l. was incorporated on May 14, 2024, with A2A Ambiente S.p.A. holding an 86% stake and A2A Calore & Servizi S.r.l. holding a 4% stake. The shareholders' agreement established at the time of incorporation between the companies of the A2A Group and Termokimik S.p.A. (holder of the remaining 10% stake), provides for the possibility for Termokimik S.p.A. to exercise, starting from the completion of the redevelopment activities of the waste-to-energy facility under concession, a sale option to the majority shareholder A2A Ambiente S.p.A. for a share up to the same percentage as its current interest, less one percentage point. Therefore, the Group has recognized as a liability the present value of the estimated outlay of 5 million euro which it will not be able to avoid if the option is exercised. 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. 1 Accounting statements of the consolidated financial statements 2 Notes to the Consolidated financial statements 3 Attachments to the notes to the Consolidated financial statements 4 Independent Auditors' Report Procedure for the consolidation of assets and liabilities held for sale (IFRS 5) In the case of particularly significant amounts and exclusively in relation to non-current assets and liabilities held for sale, in accordance with IFRS 5, the intra-group financial receivables and payables are eliminated. 2.8 Accounting standards and policies 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 as investment property, if any. 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. 1 Accounting statements of the consolidated financial statements 2 Notes to the Consolidated financial statements 3 Attachments to the notes to the Consolidated financial statements 4 Independent Auditors' Report

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