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A2A as an investment

Page updated at FY'21 results

Value from assets

A2A is a Life Company which creates value from asset quality, diversification and synergies

ASSETS

A2A asset portfolio - first class asset base and size

ENERGY

Generation
~2 ,2 GW of RES installed capacity

  • Thermoelectric capacity: 6,428 MW
  • Hydroelectric capacity: 1,944 MW
  • Photovoltaic capacity: 273 MW
  • Wind Capacity 8 MW


Market
Leader for quality and customer satisfaction

  • Electricity Customers: 1,383 k
  • Gas Customers: 1,573 k

WASTE

National operator in energy and material recovery

  • Inhabitants served: 4.06 millions
  • Waste collected: 1,893 Kton
  • Waste disposed of: 3,423 Kton
  • WTE and other plants electricity production: 2,082 GWh
  • WTE and other plants heat production: 1,640 GWht 

SMART INFRASTRUCTURES

Networks
Incumbent in the key areas

  • Electricity distributed: 11.4 TWh
  • Gas distributed: 3,4 Bcm
  • Water distributed: 76 Mcm
  • Electricity RAB:  753 €Mn
  • Gas RAB: 1,578 €M
  • Water Cycle Fixed Assets: 411 €M


Heat
1st domestic operator

  • Heat volumes sales: 3.2 TWht
  • Electricity production from cogeneration plants:
    0.3 TWh

BUSINESS SYNERGIES

A2A increases business resilience by reducing the level of risk

Examples of Industrial hedging:

  • Hedging RES production with customer portfolio
  • Diversification of power production sources
  • Closing waste cycle: supervision of the entire chain, from collection to treatment
  • Thermal recovery of heat from WtE / CCGT for district heating
  • Integrated management with treatment of sewage sludge

RESULTS

2021 Beyond the Expectations

A2A Group Highlights
(million euros)
2021 2020 2019 2018
Revenues 11,549 6,848 7,324 6,494
Reported EBITDA 1,428 1,200 1,234 1,231
Ordinary EBITDA 1,397 1,187 1,192 1,192
EBIT 660 554 687 588
EBT 590 473 581 490
Group net income 504 364 389 344
Ordinary Group Net income 400 335 378 438
DPS (€) 0.0904 0.080 0.0775 0.07
Dividend Yield (%) 5.4% 6.1% 4.8% 4.6%
Net Financial Position -4,113 -3,472 -3,154 -3,022
Consolidated Capex 1,074 738 627 500
Net Free cash flow - Change in NFP -641 -318 -132 204
Manpower (units) 13,176 12,907 12,186 12,080
More in-depth click here

M&A TRACK RECORD

DYNAMIC M&A TRACK RECORD

To view the current and historical track record of A2A acquisitions and disposals

Sustainable Growth

Sustainability leads A2A New Strategy at 2030

HIGHLIGHTS

A2A will achieve carbon neutrality on direct and indirect emissions by 2040

-30%
Group Emission Factor1
(216 gCO2/kWh @2030)

+3.9GW
New RES Installed Capacity1

+4.5Mt
Waste Not Landfilled1

31Mt
CO2 Avoided by the Group in 2021-302

~90%
Capex related to UN SDGs

18€B
10-years Cumulative Capex

~2.9€B
EBITDA @ 2030

9%
Net Income3 CAGR 2020-30

2.6x
NFP / EBITDA @2030

7k
Direct Hirings 2021-30

Notes:
(1) Comparison vs 2020A (BP 2021-30 base year)
(2) Emissions avoided through RES, energy efficiency, district heating, electric mobility
(3) Recurring Net Income

STRATEGY

A2A Strategy designed around 2 main sustainability pillars
 

CIRCULAR ECONOMY
7 €B of cumulated investments in 2021-2030

  • Mission: enabling circular economy to preserve the planet's resources and protect the environment
  • Actions: boosting material recovery, strengthening energy recovery, reduction of waste develop green solution such as green hydrogen and biomethane, reduce water losses


ENERGY TRANSITION
11 €B of cumulated investments in 2021-2030

  • Mission: guaranteeing the production and use of clean energy by speeding up decarbonization and enabling the electrification of consumption
  • Actions: accelerating RES growth, ensuring system flexibility, supporting customers energy choices, rebalancing energy networks, develop electric mobility


KEY STRATEGIC ENABLERS - SOCIAL AND GOVERNANCE

  • Our people, the most important resources
  • Diversity & Inclusion, what we believe in
  • Sustainable Supply Chain, value for our territory and community
  • Innovation in order to actualize our transformation from multi-utility to life company

 

TARGETS

Robust growth over the entire plan period ensuring high returns and great financial soundness

  2020 2021 2022 2023 2026 2030
Ordinary EBITDA(€B) (CAGR ‘20 – ’30: >8%) 1.20 1.43 1.40-1.45 ~1.60 ~2.08 ~2.90
Ordinary Net Profit (€M) 335 400 330-370 >400 ~500 ~780
NFP/EBITDA (x) 2.9 2.9 3.0 - 3.4 2.6
Dividend per share (€c)​ 8.0 9.04​ ≥8.5​ ≥8.7​ CAGR ≥ 3%

 

Ordinary EBITDA
ENERGY BU
| €B
Ordinary EBITDA
WASTE BU
| €B
Ordinary EBITDA
SMART INFRASTRUCTURES BU
| €B

FINANCIAL STRATEGY

A2A defines a transformative investment plan maintaining solid credit indicators

FUNDING NEEDS: 11.1 €B
Use of the capital markets to refinance existing and incremental debt, exploiting the most suitable instruments to provide diversification of sources and investors

AVERAGE EXPEXTED DEBT COST: <1.7%
Expected reduction in the average cost of debt, thanks to the persistence of a context of low interest rates and a «greenium» effect  (Values based on the current curve of forward market rates).

AVERAGE LT DEBT DURATION: >7.0 years
Increase in the average maturity of the debt thanks to longer maturities on new issues

SUSTAINABLE FINANCE
Investments aligned with the UN SDGs and EU taxonomy allow for new issues of sustainability-linked bonds / green bonds

FFO/NET DEBT | (%)
SOURCES AND USES | (€B)

2022 OUTLOOK

MARKET OUTLOOK

The ongoing conflict between Russia and Ukraine is further increasing the volatility of energy commodity prices, which were already at record levels before the outbreak of the war. In addition to the direct impacts on the production and sale of electricity and gas, such a price increase could lead to a general increase in inflation with particular reference to the prices of oil derivatives and foodstuffs, as well as tensions on financial markets, technological impacts and a possible increase in cyber-attacks.

FINANCIAL OUTLOOK

The A2A Group, as part of its industrial activity of generating energy carriers and marketing them on a wholesale basis, is managing the growing volatility of the price of gas both by monitoring the limits of exposure to commodity risk and by optimising its buying and selling strategies. It should also be noted that the Group, in its procurement activities, mainly operates on platforms. Should the supply situation become critical and in line with national energy policy choices, the reactivation of the Monfalcone coal-fired thermoelectric power plant and the possibility of interrupting, requested by the network operator, the supply of energy to specific industrial entities cannot be ruled out. It is also noted that recently the Law Decree 17/22 followed by the DM MITE Gas storage 2022-2023 and the Resolution ARERA 110/2022/R/GAS, required operators to bring the filling of storage to at least 90% of the available capacity.

With reference to the activity of retail marketing of electricity and gas, the increase in the price of commodities causes an increase in credit exposures to customers (even in the event of constant volumes). This greater exposure naturally generates a greater risk of default by individual counterparties and a greater financial commitment in the event of late payment. The extent of these tensions, which have been modest so far, will depend on how the crisis develops and how long it lasts.

The other business units (Waste and Smart Infrastructures) are less exposed to commodity risk. The impacts of the Russia-Ukraine conflict are therefore estimated to be indirect and, essentially, related to the potential reduction in GDP and the rise in inflation.

In order to face possible scenarios of liquidity tension, it should be noted that the Group's solid liquidity position, also supported by committed and uncommitted back-up lines (€1.7Bn as at March 14, 2022), is enabling it to manage margining calls relating to the exposure on the commodities market as well as any temporary increases in working capital due to price increases. A2A has recently successfully issued a 500 million euro bond in a very complex market context in addition to subscribing to medium-term bilateral credit lines, demonstrating the Group's ability to access capital and credit markets.

Finally, in the presence of high alert for cyber-attacks, the Group has activated a channel with the National Security leadership to exchange information, accelerating the programme to secure endpoints with advanced malware protection tools.

MARKET OUTLOOK

The ongoing conflict between Russia and Ukraine is further increasing the volatility of energy commodity prices, which were already at record levels before the outbreak of the war. In addition to the direct impacts on the production and sale of electricity and gas, such a price increase could lead to a general increase in inflation with particular reference to the prices of oil derivatives and foodstuffs, as well as tensions on financial markets, technological impacts and a possible increase in cyber-attacks.

FINANCIAL OUTLOOK

The A2A Group, as part of its industrial activity of generating energy carriers and marketing them on a wholesale basis, is managing the growing volatility of the price of gas both by monitoring the limits of exposure to commodity risk and by optimising its buying and selling strategies. It should also be noted that the Group, in its procurement activities, mainly operates on platforms. Should the supply situation become critical and in line with national energy policy choices, the reactivation of the Monfalcone coal-fired thermoelectric power plant and the possibility of interrupting, requested by the network operator, the supply of energy to specific industrial entities cannot be ruled out. It is also noted that recently the Law Decree 17/22 followed by the DM MITE Gas storage 2022-2023 and the Resolution ARERA 110/2022/R/GAS, required operators to bring the filling of storage to at least 90% of the available capacity.

With reference to the activity of retail marketing of electricity and gas, the increase in the price of commodities causes an increase in credit exposures to customers (even in the event of constant volumes). This greater exposure naturally generates a greater risk of default by individual counterparties and a greater financial commitment in the event of late payment. The extent of these tensions, which have been modest so far, will depend on how the crisis develops and how long it lasts.

The other business units (Waste and Smart Infrastructures) are less exposed to commodity risk. The impacts of the Russia-Ukraine conflict are therefore estimated to be indirect and, essentially, related to the potential reduction in GDP and the rise in inflation.

In order to face possible scenarios of liquidity tension, it should be noted that the Group's solid liquidity position, also supported by committed and uncommitted back-up lines (€1.7Bn as at March 14, 2022), is enabling it to manage margining calls relating to the exposure on the commodities market as well as any temporary increases in working capital due to price increases. A2A has recently successfully issued a 500 million euro bond in a very complex market context in addition to subscribing to medium-term bilateral credit lines, demonstrating the Group's ability to access capital and credit markets.

Finally, in the presence of high alert for cyber-attacks, the Group has activated a channel with the National Security leadership to exchange information, accelerating the programme to secure endpoints with advanced malware protection tools.

Stakeholder engagement

Ongoing and pro-active engagement with the financial community

In particular, on 16 December 2021 A2A approved the Policy for Managing Dialogue with Shareholders and other Significant Stakeholders of the Company.

Dividend Policy

The Strategic Plan 2021-2030 Update, despite the increase in investments, confirms the targets of dividend distribution to shareholders:

  • At least 8.5 euro cents per share on the profit for 2022
  • At least 8.7 euro cents per share on the profit for 2023

For the following years, a minimum growth of 3% per year is expected.

Dividend per share

Dividend per share

For more information

A2A believes that the issuance of Green Financing Instruments – including Green Bonds and Sustainability-Linked Bonds under EMTN Programme – could contribute to enabling energy transition and circular economy projects (existing or new ones), giving financial backing to them, with a positive impact in terms of sustainability​

In May 2021 A2A adopted a new Sustainable Finance Framework that combines Use of Proceeds and Sustainability-linked instruments. The Framework was updated in 2022, in line with the new objectives of the 2021-2030 Strategic Plan.
The Framework gives investors:

  • The transparency to better allocate their funds and measure their contribution to sustainability with the green use of proceeds format
  • well-defined targets to measure the strong engagement of A2A in ESG management and continuous improvement at corporate level (sustainability-linked format)
Bonds issued
  Outstanding amount (€M) Annual coupon Issue date(1)
Euro Sustainability-Linked Bond 2028 500 1.500% 16/03/2022
Euro Green Bond 2031 500 1.000% 2/11/2021
Euro Sustainability-Linked Bond 2033 500 0.625% 15/07/2021
Euro Bond 2032 500 0.625% 28/10/2020
Euro Green Bond 2029​ 400 1.000% 16/07/2019
Euro Bond 2027 300 1.625% 19/10/2017
Euro Bond 2025 300 1.750% 25/02/2015
Private Placement 2024 300 1.250% 16/03/2017
Private Placement 2023 300 4.000% 04/12/2013
Euro Bond 2022 500 3.625% 13/12/2013

Notes: (1) Date from which interest is paid

For more information about all A2A Bonds, current ratings  and the new Sustainable Finance Framework clik here

A2A launched a new web page dedicated to ESG investors, where you may find information on some relevant ESG themes:

  • ENVIRONMENT – Circular Economy, Energy Transition
  • SOCIAL – Human Capital Development and Diversity, Cyber Security and Data Protection
  • GOVERNANCE – Key Governance Reporting, Risk Management

Moreover, the page has been enriched with some significant case studies (The Corporate Venture Capital programme, Banco dell'Energia Onlus, risks on electricity networks and impact on communities) that show A2A commitment towards Sustainability

On these page you can also find other in-depths regarding Sustainable Finance, Innovation, Covid-19 Initiatives and information about engagement

In 2021 has been also published a new ESG Database, an Excel file that includes a set of historical KPIs for each of the three dimensions of Sustainability to support investors and analysts on ESG themes.

Discover more

Dividend Policy

The Strategic Plan 2021-2030 Update, despite the increase in investments, confirms the targets of dividend distribution to shareholders:

  • At least 8.5 euro cents per share on the profit for 2022
  • At least 8.7 euro cents per share on the profit for 2023

For the following years, a minimum growth of 3% per year is expected.

Dividend per share

Dividend per share

For more information

A2A believes that the issuance of Green Financing Instruments – including Green Bonds and Sustainability-Linked Bonds under EMTN Programme – could contribute to enabling energy transition and circular economy projects (existing or new ones), giving financial backing to them, with a positive impact in terms of sustainability​

In May 2021 A2A adopted a new Sustainable Finance Framework that combines Use of Proceeds and Sustainability-linked instruments. The Framework was updated in 2022, in line with the new objectives of the 2021-2030 Strategic Plan.
The Framework gives investors:

  • The transparency to better allocate their funds and measure their contribution to sustainability with the green use of proceeds format
  • well-defined targets to measure the strong engagement of A2A in ESG management and continuous improvement at corporate level (sustainability-linked format)
Bonds issued
  Outstanding amount (€M) Annual coupon Issue date(1)
Euro Sustainability-Linked Bond 2028 500 1.500% 16/03/2022
Euro Green Bond 2031 500 1.000% 2/11/2021
Euro Sustainability-Linked Bond 2033 500 0.625% 15/07/2021
Euro Bond 2032 500 0.625% 28/10/2020
Euro Green Bond 2029​ 400 1.000% 16/07/2019
Euro Bond 2027 300 1.625% 19/10/2017
Euro Bond 2025 300 1.750% 25/02/2015
Private Placement 2024 300 1.250% 16/03/2017
Private Placement 2023 300 4.000% 04/12/2013
Euro Bond 2022 500 3.625% 13/12/2013

Notes: (1) Date from which interest is paid

For more information about all A2A Bonds, current ratings  and the new Sustainable Finance Framework clik here

A2A launched a new web page dedicated to ESG investors, where you may find information on some relevant ESG themes:

  • ENVIRONMENT – Circular Economy, Energy Transition
  • SOCIAL – Human Capital Development and Diversity, Cyber Security and Data Protection
  • GOVERNANCE – Key Governance Reporting, Risk Management

Moreover, the page has been enriched with some significant case studies (The Corporate Venture Capital programme, Banco dell'Energia Onlus, risks on electricity networks and impact on communities) that show A2A commitment towards Sustainability

On these page you can also find other in-depths regarding Sustainable Finance, Innovation, Covid-19 Initiatives and information about engagement

In 2021 has been also published a new ESG Database, an Excel file that includes a set of historical KPIs for each of the three dimensions of Sustainability to support investors and analysts on ESG themes.

Discover more