Galp Energia SGPS S A : Results release - 4Q - 2020

RESULTS

4th QUARTER & FULL YEAR 2020

22 FEBRUARY 2021

UNAUDITED

INDEX

Cautionary Statement

This document may include forward-looking statements, including, without limitation, regarding future results, namely cash flows, dividends, and shareholder returns; liquidity; capital and operating expenditures; performance levels, operational or environmental goals, targets or commitments and project plans, timing, and outcomes; production rates; developments of Galp's markets; and impacts of the COVID-19 pandemic on Galp's businesses and results; any of which may significantly differ depending on a number of factors, including supply and demand for oil, gas, petroleum products, power and other market factors affecting them; the outcome of government policies and actions, including actions taken to address COVID-19 and to maintain the functioning of national and international economies and markets; the impacts of the COVID-19 pandemic on people and economies; the impact of Galp's actions to protect the health and safety of its employees, customers, suppliers and communities; actions of Galp's competitors and commercial counterparties; the ability to access short- and long-term debt markets on a timely and affordable basis; the actions of consumers; other legal and political factors, including changes in law and regulations and obtaining necessary permits; unexpected operating events or technical difficulties; the outcome of commercial negotiations, including negotiations with governments and private entities; and other factors discussed in Galp's Management Report & Accounts filed with the Portuguese Securities Market Commission (CMVM) for the year ended December 31, 2019 and available on our website at galp.com. This document may also contain statements regarding the perspectives, objectives, and goals of Galp, including with respect to energy transition, carbon intensity reduction or carbon neutrality. An ambition expresses an outcome desired or intended by Galp, it being specified that the means to be deployed may not depend solely on Galp. All statements other than statements of historical facts are, or may be deemed to be, forward-looking statements. Forward-looking statements express future expectations that are based on management's expectations and assumptions as of the date they are disclosed and involve known and unknown risks and uncertainties that could cause actual results, performance or events to differ materially from those expressed or implied in such those statements. Forward-looking statements include, among other things, statements concerning the potential exposure of Galp to market risks and statements expressing management's expectations, beliefs, estimates, forecasts, projections, and assumptions. These forward-looking statements may generally be identified by the use of the future or conditional tense or the use of terms and phrases such as "aim", "ambition", "anticipate", "believe", "consider", "could", "envision", "estimate", "expect", "goals", "intend", "may'', "objectives", "outlook", "plan", "probably", "project", "risks", "schedule", "seek", "should", "target", "think", "will" or the negative of these terms and similar terminology.

Financial information by business segment is reported in accordance with the Galp's management reporting policies and shows internal segment information that is used to manage and measure the Group's performance. In addition to IFRS measures, certain alternative performance measures are presented, such as performance measures adjusted for special items (adjusted earnings before interest, taxes, depreciation and amortisation, adjusted earnings before interest and taxes, and adjusted net income), return on equity (ROE), return on average capital employed (ROACE), gearing ratio, cash flow from operations and free cash flow. These indicators are meant to facilitate the analysis of the financial performance of Galp and comparison of results and cash flow among periods. In addition, the results are also measured in accordance with the replacement cost method, adjusted for special items. This method is used to assess the performance of each business segment and facilitate the comparability of the segments' performance with those of its competitors. This document also contains non-financial performance indicators, including a carbon intensity indicator for energy products sold by Galp, that measures the amount of greenhouse gas emissions of those products, from their production to their end use, per unit of energy delivered. This indicator covers the direct GHG emissions of production and processing facilities (scope 1) and their indirect emissions associated with energy purchased (scope 2), as well as the emissions associated with the use of products by Galp's costumers (scope 3). The same emissions are considered for products purchased from third parties and sold or transformed by Galp. For a complete definition of scopes 1, 2 and 3 and the methodology used by Galp for this indicator please refer to Galp's website at galp.com.

Galp and its respective representatives, agents, employees or advisers do not intend to, and expressly disclaim any duty, undertaking or obligation to, make or disseminate any supplement, amendment, update or revision to any of the information, opinions or forward-looking statements contained in this document to reflect any change in events, conditions or circumstances. This document does not constitute investment advice nor forms part of and should not be construed as an offer to sell or issue or the solicitation of an offer to buy or otherwise acquire securities of Galp or any of its subsidiaries or affiliates in any jurisdiction or an inducement to engage in any investment activity in any jurisdiction.

INDEX

Table of Contents

• 1. Results highlights __________________________________________________________________________________________________________ 4

• 2. Upstream ________________________________________________________________________________________________________________ 10

• 3. Commercial ______________________________________________________________________________________________________________ 15

• 4. Refining & Midstream _______________________________________________________________________________________________________ 17

• 5. Renewables & New Businesses_________________________________________________________________________________________________ 21

• 6.Financial Data____________________________________________________________________________________________________________ 23

• 6.1Income Statement_________________________________________________________________________________________________________24

• 6.2Capital Expenditure_________________________________________________________________________________________________________26

• 6.3Cash flow________________________________________________________________________________________________________________ 27

• 6.4Financial position__________________________________________________________________________________________________________ 29

• 6.5Financial debt____________________________________________________________________________________________________________ 30

• 6.6IFRS consolidated income statement____________________________________________________________________________________________34

• 6.7Consolidated financial position________________________________________________________________________________________________35

• 7.Basis of reporting__________________________________________________________________________________________________________ 37

• 8. Definitions _______________________________________________________________________________________________________________ 39

1. RESULTS HIGHLIGHTS

Fourth quarter 2020

Cash flow from operations (CFFO) was down 48% YoY, to €231 m, reflecting the weaker market environment. FCF amounted to €68 m, while net debt at the end of the period was €2,066 m.

RCA Ebitda of €410 m, with the following highlights:

• • Upstream: RCA Ebitda was €319 m, down 36% YoY, following the decline in oil prices and lower production, as well as the USD depreciation against the Euro.

  Working interest (WI) production was down 10% YoY to 122.8 kboepd, impacted by a concentration of planned maintenance activities and operational constraints, resulting primarily from the pandemic circumstances.

• • Commercial: RCA Ebitda of €71 m, down 30% YoY, following the lower market demand and decline in oil products and natural gas sales.

• • Refining & Midstream: RCA Ebitda was €17 m, a 68% decrease YoY, with the negative Refining performance reflecting the harsh refining margin environment, only partially offset by a resilient contribution from the Midstream segment.

• • Renewables & New Businesses: The solar portfolio currently under production (Spain) is not consolidated in Group's accounts, so it has no contribution to Ebitda.

RCA Ebit was down YoY to €159 m, mostly driven by the weaker operational performance.

RCA net income was €3 m. IFRS net income was -€35 m, with an inventory effect of €22 m and non-recurring items of -€60 m.

Full year

CFFO was €1,025 m, 46% lower YoY, while RCA Ebitda amounted to €1,570 m, 34% lower YoY, both reflecting the impact of the significantly weaker macro conditions resulting from the pandemic.

Net capex, considering the proceeds from the unitisation processes, stood at €830 m, including the €325 m payment for the solar PV acquisition made in 3Q20. Upstream accounted for 36% of total investments, whilst the downstream activities represented 23% and Renewables & New Businesses 39%.

Free cash flow (FCF) was €42 m, during one of the most challenging years for the industry and considering the relevant strategic acquisition executed in the renewables division.

Net debt increased to €2,066 m, considering the €544 m in dividends paid to shareholders and to minorities during the period, as well as €129 m of other effects, mostly related with impacts from the BRL and USD devaluations.

FCF would have been €410 m and net debt €1,698 m if considering the GGND sale agreement established in October, with the proceeds of €368 m expected to be received soon.

2021 Outlook

Shareholder dividend proposal

Galp revised its 2021 outlook incorporating additional layers of prudency given the uncertain macro circumstances and its potential effects on the Company's operations and results. The key operational and financial guidance for 2021 is as follows:

The Board of Directors will propose at the Annual General Meeting in April, a dividend per share (DPS) of €0.35/share, related to the 2020 fiscal year, to be paid in May. The dividend cut reflects the impacts from unexpected and unprecedented market conditions.

2021 guidance

Macro
Brent ($/bbl) Galp refining margin ($/boe) Average exchange rate EUR:USD	50 2 -3 1.20
Operational Indicators
WI production (kboepd) Sines refining crude utilisation (%) Oil products sales to direct clients (mton) NG and power sales to direct clients (TWh) Renewable generation @100% (TWh)	125 - 135 90 7.0 - 8.0 26 - 27 1.1 - 1.4
Financial Indicators
RCA Ebitda (€ bn) CFFO (€ bn) Net capex1 (€ bn)	1.6 - 1.8 1.3 - 1.5 0.5 - 0.7

1 Considers divestments, such as the €368 m proceeds from GGND stake sale, expected to be received in 1Q21.

The Board also indicated a DPS target of €0.50/share related to the 2021 fiscal year, considering the foreseen macro scenario.

Other highlights

GGND stake sale

In October, Galp agreed with Allianz Capital Partners, acting on behalf of Allianz insurance companies and the Allianz European Infrastructure Fund, the sale of 75.01% of Galp Gás Natural Distribuição, S.A. (GGND) for a total consideration of €368 m. Completion is expected to occur in 1Q21, after which Galp will maintain a 2.49% stake in GGND. The full announcement related with this operation can be foundhere.

Given that the relevant customary regulatory conditions were met, the GGND sale has been recorded in Galp's financial statements, whereas it was previously classified as assets held for sale, with €99 m capital gain registered under the IFRS consolidated income statement. The upcoming cash consideration has been accounted for as other receivables.

Concentration of refining operations in Sines

Considering the structural changes in oil products demand patterns, driven by the regulatory context in Europe and the effects caused by the pandemic, Galp decided to concentrate its core refining activities in Sines, while discontinuing the refining operations in Matosinhos, from 2021. Galp will continue to supply the regional market by maintaining all key Matosinhos' import, storage and distribution facilities. The full announcement related with this decision can be foundhere.

Following this decision, using current best estimates, Galp registered restructuring costs of €35 m, as well as decommissioning impairments and provisions amounting to €247 m, all considered non-recurring items and totalling post-tax €200 m. The Company is currently performing a detailed decommissioning plan as well as evaluating alternative uses for the site, which should originate value options in the future.

Evolution of reserves and resources

In 2020, proven and probable reserves (2P), together with 2C contingent resources, remained stable YoY at 2.4 bn boe.

2P reserves decreased 5% YoY, to 700 mboe, mainly reflecting the production during the period, as no Final Investment Decisions (FID) were made in 2020. Natural gas reserves represent 21% of current 2P reserves.

2C contingent resources stand at 1,720 mboe, 2% higher YoY, mainly due to the incorporation of resources from the first exploration well in the Uirapuru block, in Brazil. Natural gas resources account for 51% of current 2C resources, mainly attributable to Mozambique.

Financial data

€m (IFRS, except otherwise stated)

Quarter Full Year

4Q19

3Q20

4Q20

Var. YoY

% Var. YoY

2019

2020

Var. YoY

% Var. YoY

653 401	410	(243) (37%) RCA Ebitda 2,381	1,570	(810) (34%)
500 302	319	(181) (36%)Upstream 1,751	1,111	(640) (37%)
102 105	71	(31) (30%)Commercial 410	325	(85) (21%)
52 (12)	17	(35) (68%)Refining & Midstream 207	113	(94) (45%)
(5) (2)	(3)	(2) (44%)Renewables & New Businesses (6)	(9)	4 67%
354 108	159	(195) (55%) RCA Ebit 1,387	427	(959) (69%)
332 133	161	(171) (52%)Upstream 1,189	407	(782) (66%)
63 81	47	(16) (25%)Commercial 304	232	(72) (24%)
(38) (108)	(51)	13 35%Refining & Midstream (109)	(210)	101 93%
(5) (2)	(1)	(4) (74%)Renewables & New Businesses (6)	(19)	13 n.m.
157 (23)	3	(154) (98%) RCA Net income 560	(42)	(603) n.m.
106 (106)	(35)	(141) n.m. IFRS Net income 389	(551)	(940) n.m.
(49) (85)	(60)	10 21%Non-recurring items (177)	(171)	(7) (4%)
(2) 2	22	24 n.m. Inventory effect 6	(338)	(344) n.m.
282 444	173	(109) (39%) Capex 856	898	42 5%
446 391	231	(215) (48%) Cash flow from operations 1,890	1,025	(865) (46%)
229 (79)	68	(161) (70%) Free cash flow 922	42	(880) (95%)
(25) (29)	(2)	(23) (92%) Dividends paid to non-controlling interests (132)	(225)	93 71%
- -	-	- n.m. Dividends paid to shareholders (559)	(318)	(240) (43%)
1,435 2,091	2,066	631 44% Net debt 1,435	2,066	631 44%
0.7x 1.3x	1.5x	0.8x - Net debt to RCA Ebitda1 0.7x	1.5x	0.8x -

1 Ratio considers the LTM Ebitda RCA (€1,380 m on 31 December 2020), which includes the adjustment for the impact from the application of IFRS 16 (€191 m on 31 December 2020).

Operational data

Quarter

Full Year

4Q19

3Q20

4Q20

Var. YoY

% Var. YoY

2019

2020

Var. YoY

% Var. YoY

136.9 133.8	122.8	(14.1) (10%)Average working interest production (kboepd) 121.8	130.0	8.3 7%
135.1 132.0	121.1	(14.0) (10%)Average net entitlement production (kboepd) 120.0	128.2	8.3 7%
(6.3) (4.4)	(5.0)	(1.4) (21%)Oil & gas realisations - Dif. to Brent (USD/boe) (7.3)	(5.6)	(1.7) (24%)
26.5 23.4	23.5	(3.0) (11%)Raw materials processed (mboe) 96.0	87.1	(8.9) (9%)
3.3 (0.7)	1.6	(1.7) (53%)Galp refining margin (USD/boe) 3.1	1.1	(2.0) (65%)
4.2 3.6	3.7	(0.5) (13%)Oil products supply1 (mton) 16.2	13.9	(2.3) (14%)
23.2 17.9	24.1	0.9 4%NG/LNG supply & trading volumes1 (TWh) 89.3	71.4	(17.9) (20%)
0.4 0.3	0.4	(0.0) (1%)Sales of electricity to the grid2 (TWh) 1.3	1.4	0.0 2%
2.0 1.5	1.5	(0.5) (24%)Oil Products - client sales (mton) 8.3	6.0	(2.3) (28%)
7.8 5.4	5.9	(1.8) (24%)Natural gas - client sales (TWh) 31.6	22.9	(8.7) (27%)
0.8 0.9	0.9	0.1 9%Electricity - client sales (TWh) 3.2	3.3	0.1 4%
11.2 142.7	169.8	158.6 n.m. Renewable power generation (GWh)3 31.3	327.2	295.9 n.m.
- 36.2	39.2	n.m. n.m. Galp solar captured price (EUR/MWh)4 -	30.3	n.m. n.m.

• 1 Includes volumes sold to the Commercial segment.

• 2 Sales from cogeneration plants.

• 3 Full year renewables power generation only accounts for solar power generation from September to December, as per the completion of the transaction with ACS.

• 4 Galp solar price captured considers the full periods of 3Q20 and 2020, for comparison purposes with market indicators.

Market indicators

Quarter

Full Year

4Q19

3Q20

4Q20

Var. YoY

% Var. YoY

2019

2020

Var. YoY

% Var. YoY

1.11 1.17	1.19	0.09 8%Average exchange rate EUR:USD 1.12	1.14	0.02 2%
4.56 6.28	6.44	1.88 41%Average exchange rate EUR:BRL 4.41	5.89	1.48 33%
63.1 42.9	44.2	(18.9) (30%)Dated Brent price (USD/bbl) 64.2	41.8	(22.4) (35%)
(1.5) 0.1	(0.1)	(1.4) (93%)Heavy-light crude price spread1 (USD/bbl) (0.6)	(0.8)	0.2 28%
12.8 9.1	15.3	2.5 19%Iberian MIBGAS natural gas price (EUR/MWh) 15.4	10.2	(5.2) (34%)
12.7 7.8	14.8	2.1 16%Dutch TTF natural gas price (EUR/MWh) 13.5	9.5	(4.0) (30%)
5.8 3.6	7.9	2.1 37%Japan/Korea Marker LNG price (USD/mbtu) 5.5	3.1	(2.4) (43%)
41.0 37.5	40.1	(0.9) (2%)Iberian baseload pool price (EUR/MWh) 47.7	34.0	(13.7) (29%)
42.7 37.5	39.6	(3.0) (7%)Iberian solar captured price (EUR/MWh) 48.4	33.0	(15.4) (32%)
16.3 13.3	13.4	(2.9) (18%)Iberian oil market (mton) 65.7	51.9	(13.8) (21%)
122 109	114	(7) (6%)Iberian natural gas market (TWh) 466	427	(39) (8%)

Source: Platts for commodities prices; MIBGAS for Iberian natural gas price; APETRO and CORES for Iberian oil market; REN and Enagás for Iberian natural gas market; OMIE and REE for Iberian pool price and solar capture price. 1 Urals NWE dated for heavy crude; dated Brent for light crude.

1 Urals NWE dated for heavy crude; dated Brent for light crude.

2. UPSTREAM

€m (RCA, except otherwise stated; unit figures based on total net entitlement production)

Quarter

Full Year

4Q19

3Q20

4Q20

Var. YoY

% Var. YoY

2019

2020

Var. YoY

% Var. YoY

136.9 133.8	122.8	(14.1) (10%) Average working interest production1 (kboepd) 121.8	130.0	8.3 7%
121.8 120.0	111.1	(10.7) (9%)Oil production (kbpd) 108.0	116.9	8.9 8%
135.1 132.0	121.1	(14.0) (10%) Average net entitlement production1 (kboepd) 120.0	128.2	8.3 7%
13.3 11.8	11.3	(2.0) (15%)Angola 11.7	12.5	0.8 6%
121.8 120.2	109.8	(12.0) (10%)Brazil 108.3	115.8	7.5 7%
(6.3) (4.4)	(5.0)	(1.4) (21%) Oil and gas realisations - Dif. to Brent (USD/boe) (7.3)	(5.6)	(1.7) (24%)
4.8 3.5	3.7	(1.1) (23%) Royalties (USD/boe) 5.0	3.4	(1.6) (32%)
2.7 1.9	2.2	(0.5) (19%) Production costs (USD/boe) 3.6	2.3	(1.2) (34%)
15.2 16.3	15.9	0.7 5% DD&A2 (USD/boe) 14.4	14.7	0.3 2%
500 302	319	(181) (36%) RCA Ebitda 1,751	1,111	(640) (37%)
(168) (169)	(159)	(9) (5%)Depreciation, Amortisation and Impairments3 (561)	(701)	140 25%
(1) -	1	2 n.m. Provisions (1)	(3)	2 n.m.
332 133	161	(171) (52%) RCA Ebit 1,189	407	(782) (66%)
333 132	159	(173) (52%) IFRS Ebit4 994	468	(525) (53%)
(0) 4	(0)	(0) (39%) Net Income from Upstream Associates 36	7	(28) (79%)

• 1 Includes natural gas exported; excludes natural gas used or reinjected.

• 2 Includes abandonment provisions. 2020 figures exclude impairments of €101 m related with exploration assets.

• 3 Includes abandonment provisions.

• 4 Includes unitisation impacts.

Fourth quarter

Full year

Operations

Operations

WI production decreased 10% YoY to 122.8 kboepd, impacted by a concentration of planned maintenance and operational restrictions, resulting primarily from the pandemic circumstances, which continues to impact offshore logistic activities.

Natural gas amounted for 10% of Galp's total production.

In Brazil, production was 10% lower YoY, at 109.8 kboepd, whilst in Angola WI production decreased YoY, from 15.1 kbpd to 13.1 kbpd, following Block 14 natural decline and Kaombo efficiency decrease.

The Group's net entitlement production decreased 10% YoY to 121.1 kboepd.

Results

RCA Ebitda was €319 m, a 36% decrease YoY, reflecting the decline in oil prices and the lower production levels, as well as the USD depreciation against the Euro.

Production costs were €21 m, excluding costs related with IFRS 16 operating leases of €31 m, 33% lower YoY. In unit terms, and on a net entitlement basis, production costs were $2.2/boe.

Amortisation and depreciation charges (including abandonment provisions) were down YoY to €147 m. On a net entitlement basis, DD&A and Provisions are higher YoY, at $15.9/boe, reflecting the lower production dilution.

RCA Ebit was €161 m, down 52% YoY. IFRS Ebit amounted to €159 m.

Average WI production during 2020 was 130.0 kboepd, a 7% increase YoY, mostly supported by the continued development of the Brazilian projects, despite the impacts in all offshore activities from the pandemic.

In Brazil, the ramp-up stage from the units located in Tupi Extreme South and Tupi North was concluded, while the Berbigão/Sururu FPSO continued its ramp-up process. In June, a new FPSO started operations, in Atapu.

Angola maintained its supportive contribution, with the higher production from Block 32 more than offsetting Block 14 gradual decline.

Net entitlement production increased 7% YoY to 128.2 kboepd.

Results

RCA Ebitda was €1,111 m, down 37% YoY, as the lower oil price conditions experienced in the period and the USD depreciation against the Euro, more than offset the higher production.

Production costs were €97 m, excluding costs related with operating leases of €133 m. In unit terms, and on a net entitlement basis, production costs were $2.3/boe.

Amortisation and depreciation charges (including abandonment provisions) amounted to €701 m, up €140 m YoY, following the asset base increase and including impairments of €101 m related with exploration assets, mainly in the Potiguar basin. On a net entitlement basis, and disregarding impairments, unit DD&A was $14.7/boe.

RCA Ebit was €407 m, down from €1,189 m YoY. IFRS Ebit was €468 m.

Development of reserves and resources

In 2020, proven and probable reserves (2P), together with 2C contingent resources, remained stable YoY at 2.4 bn boe.

2P reserves decreased 5% YoY, to 700 mboe, mainly reflecting the production during the period, as no FID were made in 2020. Natural gas reserves represent 21% of current 2P reserves.

2C contingent resources stand at 1,720 mboe, 2% higher YoY, mainly due to the incorporation of resources from the first exploration well in the Uirapuru block, in Brazil. Natural gas resources account for 51% of current 2C resources, mainly attributable to Mozambique.

Reserves (mboe)	2019	2020	Change
1P 2P 3P 404 739 982 385 -5% 700 -5% 923 -6%
Contingent resources (mboe)	2019	2020 Change
1C 2C 3C 498 1,680 3,394 525 6% 1,720 2% 3,471 2%
Prospective resources (mboe)	2019	2020 Change
Unrisked Risked 4,530 766 4,910 8% 861 12%

Note: All figures are based on DeGolyer and MacNaughton report as of 31.12.2020. Reserves figures on a net entitlement basis. Contingent resources and prospective resources on a working interest basis. Reserves economic evaluation performed with 2020 average oil price ($41.8/bbl).

3. COMMERCIAL

€m (RCA, except otherwise stated)

Quarter

Full Year

4Q19

3Q20

4Q20

Var. YoY

% Var. YoY

2019

2020

Var. YoY

% Var. YoY

Commercial sales to clients

2.0 1.5	1.5	(0.5) (24%)Oil products (mton) 8.3	6.0	(2.3) (28%)
7.8 5.4	5.9	(1.8) (24%)Natural Gas (TWh) 31.6	22.9	(8.7) (27%)
0.8 0.9	0.9	0.1 9%Electricity (TWh) 3.2	3.3	0.1 4%
102 105	71	(31) (30%) RCA Ebitda 410	325	(85) (21%)
(28) (24)	(25)	(3) (12%)Depreciation, Amortisation and Impairments (95)	(94)	(1) (1%)
(11) (0)	1	12 n.m. Provisions (11)	1	12 n.m.
63 81	47	(16) (25%) RCA Ebit 304	232	(72) (24%)
71 79	50	(22) (30%) IFRS Ebit 312	227	(86) (27%)
0 0	(1)	(2) n.m. Net Income from Commercial Associates 5	(2)	(7) n.m.

Fourth quarter

Operations

Results

Total oil products' sales decreased 24% YoY to 1.5 mton, impacted by the lower demand in Iberia, namely in segments such as aviation, marine bunkers and retail, as a result of the mobility restrictions and weaker economic environment.

RCA Ebitda for the Commercial business was €71 m, down 30% YoY, as a result of the lower oil products and natural gas sales, as well as slightly higher operational costs resulting from year-end adjustments from previous periods.

Natural gas volumes sold declined 24% YoY to 5.9 TWh, following the lower consumptions registered, mostly from the B2B segment in Spain.

Sales of electricity were 0.9 TWh, 9% up YoY, driven by a higher consumption from the B2B segment in Iberia.

RCA Ebit was €47 m, while IFRS Ebit was €50 m.

Full year

Operations

Results

Total oil products' sales were 6.0 mton, down 28% YoY, following the lower demand across most segments, resulting from the economic impact of the pandemic.

Natural gas volumes were 22.9 TWh, down 27% YoY, impacted by the challenging macro environment and lower contribution from the B2B segment.

Electricity sales were 3.3 TWh, 4% higher YoY, reflecting a higher consumption from the B2B segment.

RCA Ebitda decreased 21% YoY to €325 m, reflecting the lower volumes of oil products and natural gas sold to direct clients during the period.

RCA Ebit was €232 m, while IFRS Ebit was €227 m.

c

4. REFINING & MIDSTREAM

€m (RCA, except otherwise stated)

Quarter

Full Year

4Q19

3Q20

4Q20

Var. YoY

% Var. YoY

2019

2020

Var. YoY

% Var. YoY

26.5 23.4	23.5	(3.0) (11%) Raw materials processed (mboe) 96.0	87.1	(8.9) (9%)
24.3 21.0	20.8	(3.5) (14%)Crude processed (mbbl) 82.6	78.3	(4.3) (5%)
3.3 (0.7)	1.6	(1.7) (53%) Galp refining margin (USD/boe) 3.1	1.1	(2.0) (65%)
3.7 2.4	2.7	(1.1) (29%) Refining cost (USD/boe) 2.9	2.7	(0.2) (8%)
0.3 -	(0.0)	(0.3) n.m. Refining margin hedging1 (USD/boe) 0.1	0.2	0.1 n.m.
4.2 3.6	3.7	(0.5) (13%) Oil products supply2 (mton) 16.2	13.9	(2.3) (14%)
23.2 17.9	24.1	0.9 4%NG/LNG supply & trading volumes2 (TWh) 89.3	71.4	(17.9) (20%)
9.0 5.6	11.3	2.4 26%Trading (TWh) 34.3	26.0	(8.3) (24%)
0.4 0.3	0.4	(0.0) (1%) Sales of electricity to the grid3 (TWh) 1.3	1.4	0.0 2.2%
52 (12)	17	(35) (68%) RCA Ebitda 207	113	(94) (45%)
(93) (96)	(67)	(26) (28%)Depreciation, Amortisation and Impairments (321)	(323)	2 1%
4 0	0	(4) (98%)Provisions 5	(0)	(5) n.m.
(38) (108)	(51)	13 35%RCA Ebit (109)	(210)	101 93%
(46) (118)	(308)	263 n.m. IFRS Ebit (75)	(967)	892 n.m.
21 16	13	(8) (37%) Net Income from R&Mid. Associates 95	70	(25) (26%)

• 1 Impact on Ebitda

• 2 Includes volumes sold to the Commercial segment.

• 3 Sales from cogeneration plants.

Fourth quarter

Operations

Raw materials processed in the quarter were 23.5 mboe, 11% lower YoY, mostly reflecting the slowdown of the fuels unit in the Matosinhos refinery.

Total supply of oil products decreased 13% YoY to 3.7 mton, mainly impacted by the lower demand in Iberia, still reflecting the weak economic environment.

Supply & trading volumes of NG/LNG increased 4% YoY to 24.1 TWh, driven by increased network trading of natural gas.

Sales of electricity to the grid from the cogeneration plants were stable YoY at 351 GWh.

Results

RCA Ebitda for the Refining & Midstream business was €17 m, compared to €52 m one year ago.

Galp's refining margin was down YoY to $1.6/boe, given the depressed international refining environment.

Refining costs were €52 m or $2.7/boe, down YoY, as the fourth quarter of 2019 was impacted by planned maintenance activities.

Midstream contribution in the quarter decreased, mostly driven by gas trading activities lower performance, as a result of the weaker market environment.

Results from associated companies were €13 m, mainly related to Galp's equity interest in the international pipelines.

RCA Ebit was -€51 m. IFRS Ebit was -€308 m, including -€35 m of restructuring costs and -€247 m of pre-tax impairments and provisions related with the decision to concentrate the refining activities in Sines, discontinuing operations in Matosinhos.

Full year

Operations

Results

Raw materials processed were 87.1 mboe during the period, 9% lower YoY, amid planned maintenance activities and operational slowdowns of the refining system throughout the year, performed to cope with the weak demand and difficult refining environment.

Crude oil accounted for 90% of raw materials processed, of which 88% corresponded to medium and heavy crudes. Sweet crudes represented 89% of the total crudes processed.

Middle distillates (diesel and jet) accounted for 46% of production, gasoline for 20% and fuel oil for 18%. Consumption and losses accounted for 8% of raw materials processed.

RCA Ebitda for Refining & Midstream decreased €94 m YoY to €113 m, impacted by the weaker refining performance.

Galp's refining margin was down YoY, from $3.1/boe to $1.1/boe, following the harsh international refining environment during the year.

Refining costs were $2.7/boe, lower YoY, considering the operational adjustments and cost optimisation measures implemented. Refining margin hedging had a positive impact on Ebitda of €16 m during the period.

Midstream Ebitda benefited from the market volatility, namely a positive swing in pricing lag effects in 1H20.

Total oil products supplied decreased 14% YoY to 13.9 mton, driven by the lower demand, particularly in Iberia.

Supply & trading volumes of NG/LNG were 71.4 TWh, decreasing 20% YoY, following the lower volumes directed to the Commercial segment and the decline in natural gas trading activities.

Sales of electricity to the grid were 1,355 GWh during the period, up 2% YoY.

Results from associated companies were €70 m.

RCA Ebit was -€210 m. IFRS Ebit was -€967 m reflecting a material negative inventory effect and the impairments and provisions related to Matosinhos refinery, registered this quarter.

5. RENEWABLES & NEW BUSINESSES

€m (RCA, except otherwise stated)

Quarter

Full Year

4Q19

3Q20

4Q20

Var. YoY

% Var. YoY

2019

2020

Var. YoY

% Var. YoY

Operational indicators on a 100% basis

12 926	926	914 n.m. Renewable generation installed capacity (MW) 12	926	914 n.m.
11 143	170	159 n.m. Renewable power generation (GWh)1 31	327	296 n.m.
-36.2	39.2	n.m. n.m. Galp solar captured price (EUR/MWh)2 -	30.3	n.m. n.m.
Consolidated indicators
(5) (2)	(3)	(2) (0.4)RCA Ebitda (6)	(9)	4 67%
(5) (2)	(1)	(4) (0.7)RCA Ebit (6)	(19)	13 n.m.
(5) (2)	(1)	(4) (0.7)IFRS Ebit (6)	(19)	13 n.m.
0 3	(4)	(4) n.m. Net Income from Renewables & NB Associates3 0	(2)	(2) n.m.

• 1 Full year renewables power generation only accounts for solar power generation from September to December, as per the completion of the transaction with ACS.

• 2 Galp solar price captured considers the full periods of 3Q20 and 2020, for comparison purposes with market indicators.

• 3 Includes sustainable vegetable oil joint venture (JV) in Brazil.

Full year

Results

Operations

Following the closing of the solar acquisition in September 2020, Galp generation capacity installed increased from 12 MW to 926 MW, on a 100% basis, including the legacy position in a 12 MW wind farm.

Renewable energy generation in 2020 was 327 GWh, with contribution from the solar PV projects since September. Power generation in 4Q20 reflected seasonal lower sunlight hours and an upset on transformers impacting the availability of c.375 MW.

Consolidated Renewables & New Businesses Ebitda includes general administrative and corporate expenses with associates results of -€2.3 m, from renewables and sustainable vegetable oil in Brazil joint venture (JV) in associates companies.

The Ebitda of Galp's solar PV joint venture with ACS, on a 100%, was €5 m, only considering the four month period which followed the completion of the acquisition and reflecting the low generation in the period, impacted by the upset on transformers. Galp solar capture price for the full 2020 of €30.3/MWh, pressured by baseload electricity prices in Iberia aligned with the low commodity prices environment. If only considering the last four months of the year, Galp solar capture price would have been €40/MWh.

FOURTH QUARTER & FULL YEAR 2020 RESULTS

February 2021

FINANCIAL DATA

6.

FINANCIAL DATA (UNAUDITED)

6.1 Income Statement

€m (RCA, except otherwise stated)

Quarter

4Q19	3Q20	4Q20	Var. YoY	% Var. YoY	2019	2020	Var. YoY	% Var. YoY
4,141	2,899	2,828	(1,312)	(32%)	Turnover	16,570	11,381	(5,189)	(31%)
(3,052)	(2,012)	(2,129)	(923)	(30%)	Cost of goods sold	(12,405)	(8,021)	(4,383)	(35%)
(452)	(370)	(298)	(154)	(34%)	Supply & Services	(1,650)	(1,473)	(177)	(11%)
(81)	(73)	(79)	(2)	(2%)	Personnel costs	(325)	(302)	(24)	(7%)
97	(38)	88	(9)	(9%)	Other operating revenues (expenses)	189	(6)	(195)	n.m.
1	(4)	(0)	(2)	n.m.	Impairments on accounts receivable	1	(8)	(9)	n.m.
653	401	410	(243)	(37%)	RCA Ebitda	2,381	1,570	(810)	(34%)
650	362	418	(232)	(36%)	IFRS Ebitda	2,219	1,113	(1,106)	(50%)
(291)	(294)	(253)	(38)	(13%)	Depreciation, Amortisation and Impairments	(986)	(1,131)	144	15%
(8)	1	2	10	n.m.	Provisions	(8)	(13)	5	62%
354	108	159	(195)	(55%)	RCA Ebit	1,387	427	(959)	(69%)
353	69	(80)	(434)	n.m.	IFRS Ebit	1,232	(282)	(1,514)	n.m.
21	23	8	(14)	(64%)	Net income from associates	136	73	(63)	(46%)
43	(93)	(19)	(62)	n.m.	Financial results	(54)	(182)	127	n.m.
(5)	(7)	(19)	15	n.m.	Net interests	(16)	(39)	23	n.m.
7	(1)	12	6	87%	Capitalised interest	24	22	(3)	(11%)
24	(25)	34	10	43%	Exchange gain (loss)	(10)	(78)	67	n.m.
66	(36)	59	(7)	(11%)	Mark-to-market of derivatives	81	(44)	(125)	n.m.
(22)	(20)	(19)	(3)	(15%)	Operating leases interest (IFRS 16)	(90)	(80)	(10)	(11%)
(26)	(3)	(86)	60	n.m.	Other financial costs/income	(43)	37	81	n.m.
418	37	147	(271)	(65%)	RCA Net income before taxes and minority interests	1,468	319	(1,150)	(78%)
(215)	(52)	(120)	(96)	(44%)	Taxes	(758)	(337)	(421)	(55%)
(251)	(80)	(72)	(180)	(72%)	Taxes on oil and natural gas production1	(610)	(301)	(309)	(51%)
(46)	(9)	(25)	(21)	(46%)	Non-controlling interests	(150)	(24)	(126)	(84%)
157	(23)	3	(154)	(98%)	RCA Net income	560	(42)	(603)	n.m.
(49)	(85)	(60)	10	21%	Non-recurring items	(177)	(171)	(7)	(4%)
108	(108)	(57)	(165)	n.m.	RC Net income	383	(213)	(596)	n.m.
(2)	2	22	24	n.m.	Inventory effect	6	(338)	(344)	n.m.
106	(106)	(35)	(141)	n.m.	IFRS Net income	389	(551)	(940)	n.m.

1 Includes income taxes and taxes on oil and natural gas production, such as SPT payable in Brazil and IRP payable in Angola.

Full Year

Fourth quarter

RCA Ebitda decreased 37% YoY to €410 m and RCA Ebit was down 55% YoY to €159 m, impacted by lower upstream and downstream contributions as a reflection of the weaker commodity prices and market conditions caused by the pandemic.

IFRS Ebitda amounted €418 m while IFRS Ebit was -€80 m, also including -€35 m of restructuring costs and -€247 m of impairments and provisions related with the discontinuity of the refining operations in Matosinhos, accounted for as non-recurring items.

Financial results were -€19 m, also considering FX adjustments related to previous periods. Additionally, a reclassification was registered between mark-to-market and the others caption, with no impact on financial results.

During the quarter, RCA taxes decreased YoY from €215 m to €120 m, following the lower operating results, namely from Upstream.

Non-controlling interests of -€25 m, mostly attributed to Sinopec's stake in Petrogal Brasil.

RCA net income was €3 m and IFRS net income was -€35 m, including non-recurring items of -€60 m, mainly reflecting the post-tax effects from the impairments and provisions related with the Matosinhos refinery, partially offset by the capital gains from the GGND sale.

Full year

RCA Ebitda of €1,570 m, 34% lower YoY, impacted by the much weaker market conditions. RCA Ebit was €427 m, down 69% YoY, also including the impairments registered in 2Q20 related to Upstream.

IFRS Ebitda and IFRS Ebit of €1,113 m and -€282 m, respectively, reflecting the material inventory effect and the impairments and provisions registered in relation to Matosinhos.

Financial results were -€182 m, impacted by FX variations of -€78 m, mostly from the USD and BRL depreciation, and a -€44 m negative swing on mark-to-market, mostly from derivatives hedges. Financial results also included the loss registered in 2Q20 from CO2 licences derivatives, as well as the realised gains in 1Q20 and 2Q20 from Brent derivatives and the unwind of the outstanding refining hedges for the year, respectively.

RCA taxes decreased YoY from €758 m to €337 m, following the lower production taxes and operating results.

Non-controlling interests of -€24 m, related with Petrogal Brasil results.

RCA net income was negative at -€42 m, while IFRS net income was -€551 m, with non-recurring items of -€171 m and a large inventory effect of -€338 m.

6.2 Capital Expenditure

€m

Quarter

Full Year

4Q19

3Q20

4Q20

Var. YoY

% Var. YoY

2019

2020

Var. YoY

% Var. YoY

184 71	69	(114) (62%)Upstream 600	326	(274) (46%)
(4) -	-	4 n.m. Exploration and appraisal activities 115	0	(114) (100%)
188 71	69	(119) (63%)Development and production activities 485	325	(160) (33%)
34 28	49	15 42%Commercial 83	127	43 52%
60 15	25	(34) (57%)Refining & Midstream 142	76	(65) (46%)
(0) 328	20	20 n.m. Renewables & New Businesses 16	350	333 n.m.
5 3	10	5 n.m. Others 15	19	5 31%
282 444	173	(109) (39%)Capex1 856	898	42 5%

1 Capex figures based in change in assets during the period.

Fourth quarter

Full year

Capex totalled €173 m during the quarter.

Investments in Upstream were mostly directed to appraisal and development activities in the Brazilian pre-salt.

Investments in Commercial activities were mainly directed to the retail segment in Portugal, whilst in the Refining & Midstream capex was allocated towards recurrent maintenance activities and efficiency improvement initiatives.

Investments within the Renewables & New Businesses segment were mostly deployed towards the execution of the solar PV projects' pipeline.

Capex was €898 m, of which 39% allocated to the Renewables & New Businesses and mostly related to the 2.9 GW Spanish solar PV transaction during 3Q20, amounting to €325 m.

Upstream accounted for 36% of Group capex and were mostly related with the execution of the BM-S-11/11A projects and Bacalhau in Brazil, as well as Area 4 projects, in Mozambique.

Investments in downstream activities were mostly allocated to the Commercial business, including the enhancement of the retail segment in Portugal and logistic assets in Mozambique, and to efficiency improvements in the refining system.

6.3 Cash Flow

€m (IFRS figures)

Quarter

Full Year

4Q19
354	69
289	294
32	17
(112)	103
(117)	(93)
446	391
(170)	(432)
1	(3)
-	17
(48)	(47)
-	(3)
229	(79)
(25)	(29)
-	-
7	(51)
(210)	159

3Q20

4Q20

2019

2020

(80)	Ebit1 1,405	(282)
407	Depreciation, Amortisation and Impairments 979	1,289
38	Dividends from associates 146	90
(60)	Change in Working Capital (129)	346
(74)	Taxes (512)	(417)
231	Cash flow from operations2 1,890	1,025
(117)	Net capex2 (734)	(909)
(1)	Net financial expenses (45)	(43)
2	Realised Income from derivatives -	80
(46)	Operating lease payments (IFRS 16)3 (189)	(191)
-	Equalisation related with unitisation processes2 -	80
68	Free cash flow 922	42
(2)	Dividends paid to non-controlling interests4 (132)	(225)
-	Dividends paid to shareholders (559)	(318)
(41)	Others5 71	(129)
(25)	Change in net debt (302)	631

• 1 2019 adjusted for the non-cash unitisation non-recurring item.

• 2 2020 cash flow adjusted for the effects related with Lula, Atapu and Sépia equalisation processes, namely -€137 m on the CFFO caption and €220 m on net capex, leading to a net receivable position of €83 m.

• 3 Includes both interest and capital payments, which in 4Q20 amounted to €19 m and €27 m, respectively, and 2020 full year of €82 m and €104 m, respectively.

• 4 Mainly dividends paid to Sinopec.

• 5 Others include carries related to Sonangol and exchange rate variations on cash positions.

Full yearFourth quarter

CFFO was down 48% YoY, to €231 m, reflecting the weaker market environment.

CFFO was €1,025 m, 46% lower YoY, while RCA Ebitda amounted to €1,570 m, 34% lower YoY, both reflecting the impact of the significantly weaker macro conditions.

Net capex includes €26 m partial receipt from the sale of FPSO P-71 to Petrobras, as per Galp's announcement on October 27, 2020 (find ithere).

FCF was €68 m. Change in net debt was also impacted by cash balances depreciation following the weaker U.S. Dollar and Brazilian real against the Euro (registered under Others).

Net capex, considering the proceeds from the unitisation processes, stood at €830 m, including the €325 m payment for the solar PV acquisition made in 3Q20. Upstream accounted for 36% of Group capex, whilst the downstream activities represented 23% and Renewables & New Businesses 39%.

FCF was €42 m, during one of the most challenging years for the industry and considering the relevant strategic acquisition executed in the renewables division.

Net debt increased to €2,066 m, considering the €544 m in dividends paid to shareholders and to minorities during the period, as well as €129 m of other effects, mostly related with impacts from the BRL and USD devaluation.

6.4 Financial Position

€m (IFRS figures)

31 Dec. 2019

30 Sep. 2020

31 Dec. 2020

Var. vs 31 Dec. 2019

Var. vs 30 Sep. 2020

Net fixed assets1 7,358 6,786	6,308	(1,050) (478)
Rights of use (IFRS 16) 1,167 1,077	1,002	(165) (75)
Working capital 943 537	597	(346) 60
Other assets/liabilities1 (1,152) (1,048)	(653)	500 396
Assets held for sale - 221	-	- (221)
Capital employed 8,316 7,573	7,254	(1,062) (319)
Short term debt 278 559	539	261 (20)
Medium-Long term debt 2,616 3,218	3,204	588 (14)
Total debt 2,895 3,777	3,743	849 (34)
Cash and equivalents 1,460 1,687	1,678	218 (9)
Net debt 1,435 2,091	2,066	631 (25)
Leases (IFRS 16) 1,223 1,147	1,089	(135) (58)
Equity 5,657 4,335	4,100	(1,558) (236)
Equity, net debt and leases 8,316 7,573	7,254	(1,062) (319)

1 Net fixed assets and other assets/liabilities include the estimated impact from unitisations.

On December 31, 2020, net fixed assets were €6,308 m, a €478 m reduction QoQ, reflecting the impairments related with the discontinuity of the refining operations in Matosinhos and the USD depreciation against the Euro.

Net fixed assets were down €1,050 m YoY. The changes were mainly driven by the USD devaluation during the period, the adjustments related with the completion of the three unitisation processes in 2Q20, and the 75.01% stake sale of GGND. Work-in-progress, mainly related to the Upstream business, stood at €1,501 m.

Given that the relevant customary regulatory conditions were met, the GGND sale has been booked in Galp's financial statements, whereas it was previously classified as assets held for sale, with the capital gain registered under the IFRS consolidated income statement. The cash proceeds have been accounted for under other assets/liabilities.

Equity was down €1,558 m YoY, reflecting the IFRS net income of the period of -€551 m and the distributions made to shareholders and minority interests of €544 m, as well as the impacts from the depreciation of the USD and the BRL against the Euro.

6.5 Financial debt

€m (except otherwise stated)

31 Dec. 2019

30 Sep. 2020

31 Dec. 2020

Var. vs 31 Dec. 2019

Var. vs 30 Sep. 2020

Cash and equivalents 1,460 1,687	1,678	218 (9)
Undrawn credit facilities 1,163 1,263	1,262	99 (1)
Bonds 1,822 2,910	2,904	1,082 (7)
Bank loans and other debt 1,073 867	840	(233) (27)
Net debt 1,435 2,091	2,066	631 (25)
Leases (IFRS 16) 1,223 1,147	1,089	(135) (58)
Average life (years)1 2.9 3.0	2.8	(0.1) (0.2)
Average funding cost1 1.8% 1.7%	1.7%	- n.m.
Debt at floating rate1 60% 52%	52%	- n.m.
Net debt to RCA Ebitda 2 0.7x 1.3x	1.5x	0.8x 0.2x

• 1 Debt does not include IFRS 16 leases.

• 2 Ratio considers the LTM Ebitda RCA (€1,380 m on 31 December 2020), which includes the adjustment for the impact from the application of IFRS 16 (€191 m on 31 December 2020).

Debt maturity profile (€ m)

On December 31, 2020, net debt was €2,066 m, down €25 m QoQ, with net debt

to RCA Ebitda standing at 1.5x. Considering the €368 m proceeds related with GGND stake sale, expected to be received in 1Q21, net debt would have been €1.7 bn at year-end and net debt to RCA Ebitda 1.2x.

At the end of the period, Galp had unused credit lines of approximately €1.3 bn, of which c.75% were contractually guaranteed.

A Eurobond of €500 m was repaid in January 2021, with no material redemptions due until mid-2022.

1,000

400

800

600

200

0

2021

@31 dec 2020

2022

2023

2024@30 sep 2020

2025

2026+

Reconciliation of IFRS and RCA figures

Ebitda by segment

€m

Fourth Quarter

2020

Full Year

IFRS Ebitda

Inventory effectRC Ebitda

Non-recurring items

RCA EbitdaIFRS Ebitda

Inventory effectRC Ebitda

Non-recurring items

RCA Ebitda

418 (23) 396 14 410	Galp	1,113 469 1,582 (12) 1,570
318 - 318 1 319	Upstream	1,177 (0) 1,177 (66) 1,111
74 1 74 (3) 71	Commercial	320 8 328 (2) 325
6 (24) (18) 34 17	R&Mid.	(396) 462 65 48 113
(3) - (3) - (3)	R&NB	(9) - (9) - (9)
24 - 24 (17) 6	Others	21 - 21 8 30

Ebit by segment

€m

Fourth Quarter

2020

Full Year

IFRS Ebit

Inventory effect

RC Ebit

Non-recurring items

RCA EbitIFRS Ebit

Inventory effect

RC Ebit

Non-recurring items

RCA Ebit

(80) (23) (103) 262 159	Galp	(282) 469 187 240 427
159 - 159 1 161	Upstream	468 (0) 468 (61) 407
50 1 50 (3) 47	Commercial	227 8 234 (2) 232
(308) (24) (332) 281 (51)	R&Mid.	(967) 462 (505) 295 (210)
(1) - (1) - (1)	R&NB	(19) - (19) - (19)
20 - 20 (17) 3	Others	8 - 8 8 17

Non-recurring items

€m

Quarter

Full Year

4Q19

3Q20

4Q20

2019

2020

(2) 42	14	Non-recurring items impacting Ebitda 174	(12)
(1) 1	0	Margin (Change in production) - Unitisation 200	(30)
(21) -	-	Gains/losses on disposal of assets (47)	-
21 41	13	Headcount restructuring charges 21	54
- 1	1	Exchange rate differences related with Brazil unitisation processes -	(36)
(2) (0)	248	Non-recurring items impacting non-cash costs (7)	252
- -	94	Provisions for environmental charges and others (Matosinhos Refinery) -	94
(2) (0)	0	Depreciations and Amortisations - Unitisation (7)	5
- -	153	Asset impairments (Matosinhos Refinery) -	153
2 11	(99)	Non-recurring items impacting financial results 35	(142)
3 0	(99)	Gains/losses on financial investments (GGND)1 14	(91)
- 10	1	Gains/losses on financial investments - Unitisation -	(56)
(1) (0)	(0)	Financial costs - Unitisation 20	5
69 53	(114)	Non-recurring items impacting taxes 36	81
(12) (12)	(82)	Taxes on non-recurring items (72)	(75)
12 58	(35)	BRL/USD FX impact on deferred taxes in Brazil -	119
59 -	-	SPT adjustments from previous years 59	-
9 7	4	Energy sector contribution taxes 49	36
(17) (21)	10	Non-controlling interests (Unitisation and FX on deferred taxes Brazil) (60)	(8)
49 85	60	Total non-recurring items 177	171

1Includes adjustments from the correspondent CESE, previously booked at GGND.

6.6 IFRS consolidated income statement

€m

Quarter

Full Year

4Q19

3Q20

4Q20

2019

2020

3,989 2,747	2,701	Sales 15,962	10,771
152 152	128	Services rendered 608	610
170 46	28	Other operating income 368	187
4,311 2,944	2,856	Operating costs 16,938	11,567
(3,056) (2,009)	(2,107)	Inventories consumed and sold (12,592)	(8,461)
(452) (370)	(298)	Materials and services consumed (1,650)	(1,473)
(101) (114)	(92)	Personnel costs (346)	(356)
1 (4)	(0)	Impairments on accounts receivable 1	(8)
(52) (85)	60	Other operating costs (132)	(156)
(3,660) (2,582)	(2,438)	Total operating costs (14,719)	(10,454)
650 362	418	Ebitda 2,219	1,113
(289) (294)	(407)	Depreciation, Amortisation and Impairments (979)	(1,289)
(8) 1	(92)	Provisions (8)	(106)
353 69	(80)	Ebit 1,232	(282)
18 12	106	Net income from associates 121	220
44 (93)	(19)	Financial results (74)	(186)
9 9	(6)	Interest income 37	18
(14) (16)	(14)	Interest expenses (53)	(56)
7 (1)	12	Capitalised interest 24	22
(22) (20)	(19)	Operating leases interest (IFRS 16) (90)	(80)
24 (25)	34	Exchange gain (loss) (10)	(78)
66 (36)	59	Mark-to-market of derivatives 81	(44)
(25) (3)	(86)	Other financial costs/income1 (64)	33
416 (12)	7	Income before taxes 1,279	(248)
(272) (99)	(3)	Taxes2 (742)	(242)
(9) (7)	(4)	Energy sector contribution taxes3 (58)	(45)
135 (118)	0	Income before non-controlling interests 479	(535)
(29) 12	(35)	Income attributable to non-controlling interests (90)	(16)
106 (106)	(35)	Net income 389	(551)

• 1 2019 amounts mostly related with the unitisation process of Tupi.

• 2 Includes SPT payable in Brazil and IRP payable in Angola.

• 3 Includes €12 m, €24 m and €9 m related to CESE I, CESE II and FNEE, respectively, during full year 2020.

6.7 Consolidated financial position

€m

31 Dec. 2019	30 Sep. 2020	31 Dec. 2020
Assets
Tangible fixed assets	5,671	5,239	4,878
Goodwill	85	86	85
Other intangible fixed assets	577	563	532
Rights of use (IFRS 16)	1,167	1,077	1,002
Investments in associates	870	709	483
Receivables	259	251	267
Deferred tax assets	367	468	509
Financial investments	169	206	402
Total non-current assets	9,167	8,598	8,157
Inventories1	1,055	745	708
Trade receivables	980	982	781
Other receivables	935	443	877
Financial investments	174	150	190
Current Income tax recoverable	-	73	101
Cash and equivalents	1,460	1,687	1,678
Subtotal current assets	4,603	4,080	4,335
Non-current assets held for sale	-	221	-
Total current assets	4,603	4,301	4,335
Total assets	13,770	12,899	12,492
1Includes €35 m of stocks made on behalf of third parties on 31 December 2020

€m

Equity

Share capital

Share premium

Reserves

Retained earnings

Net income

Total equity

Liabilities

Bank loans and overdrafts

Bonds

Operating leases (IFRS 16)

Other payables

Retirement and other benefit obligations

Deferred tax liabilities

Other financial instruments

Provisions

Total non-current liabilities

Bank loans and overdrafts

Bonds

Operating leases (IFRS 16)

Trade payables

Other payables

Other financial instruments

Income tax payable

Total current liabilities

Total liabilities

Total equity and liabilities

30 Sep. 2020
829	829	829
82	82	82
1,356	1,158	967
1,764	1,833	1,832
389	(516)	(551)
Total equity attributable to equity holders of the parent	4,420	3,385	3,160
Non-controlling interests	1,237	950	940
5,657	4,335	4,100
795	808	801
1,822	2,410	2,404
1,042	973	923
121	110	111
332	356	381
299	502	479
5	16	37
819	865	1,008
5,234	6,040	6,144
278	59	39
-	500	500
182	173	166
852	740	650
1,343	939	763
84	111	130
141	-	0
2,879	2,523	2,248
8,113	8,564	8,392
13,770	12,899	12,492

31 Dec. 2019

31 Dec. 2020

FOURTH QUARTER & FULL YEAR 2020 RESULTS

February 2021

BASIS OF REPORTING

7. BASIS

OF REPORTING

Galp's consolidated financial statements have been prepared in accordance with IFRS. The financial information in the consolidated income statement and in the consolidated financial position is reported for the quarters ended on December 31 and September 30, 2020 and December 31, 2019. The presented financial information is still unaudited.

Galp's financial statements are prepared in accordance with IFRS, and the cost of goods sold is valued at weighted-average cost. When goods and commodity prices fluctuate, the use of this valuation method may cause volatility in results through gains or losses in inventories, which do not reflect the Company's operating performance. This is called the inventory effect.

Another factor that may affect the Company's results, without being an indicator of its true performance, is the set of non-recurring material items considering the Group's activities.

For the purpose of evaluating Galp's operating performance, RCA profitability measures exclude non-recurring items and the inventory effect, the latter because the cost of goods sold and materials consumed has been calculated according to the Replacement Cost (RC) valuation method.

With regards to risks and uncertainties, please read Part I - C. III Internal control and risk management of Corporate Governance Report 2019.

8. DEFINITIONS

Replacement cost (RC)

According to this method of valuing inventories, the cost of goods sold is valued at the cost of replacement, i.e. at the average cost of raw materials of the month when sales materialise irrespective of inventories at the start or end of the period. The Replacement Cost Method is not accepted by the IFRS and is consequently not adopted for valuing inventories. This method does not reflect the cost of replacing other assets.

Replacement cost adjusted (RCA)

In addition to using the replacement cost method, RCA items exclude non-recurrent events such as capital gains or losses on the disposal of assets, extraordinary taxes, impairment or reinstatement of fixed assets and environmental or restructuring charges which may affect the analysis of the Company's profit and do not reflect its operational performance.

Acronyms

%: Percentage

ACS: Actividades de Construccion Y Servicios SA

APETRO: Associação Portuguesa de Empresas Petrolíferas (Portuguese association of oil companies)

B2B: Business to business B2C: Business to consumer bbl: barrel of oil bn: billion boe: barrels of oil equivalent BRL: Brazilian real c.: circa

CO2: Carbon dioxide Capex: Capital expenditure

CESE: Contribuição Extraordinária sobre o Sector Energético (Portuguese Extraordinary Energy Sector Contribution)

CFFO: Cash flow from operations

COFINS: Contribution for the Financing of Social Security CMVM: Portuguese Securities Market Commission CORES: Corporación de Reservas Estratégicas de Produtos Petrolíferos (Spain)

d: day

DD&A: Depreciation, Depletion and Amortisation Ebit: Earnings before interest and taxes

Ebitda: Ebit plus depreciation, amortisation and provisions EMPL: Europe Magreb Pipeline, Ltd

EUR/€: Euro

FCF: Free Cash Flow

FID: Final Investment Decision FLNG: Floating liquified natural gas

FNEE: Fondo Nacional de Eficiência Energética (Spain) FPSO: Floating, production, storage and offloading unit

Galp, Company or Group: Galp Energia, SGPS, S.A., subsidiaries and participated companies

GGND: Galp Gás Natural Distribuição, S.A. GSBV: Galp Sinopec Brazil Services

GW: Gigawatt

GWh: Gigawatt hour

IAS: International Accounting Standards IRC: Income tax

IFRS: International Financial Reporting Standards IRP: Oil income tax (Oil tax payable in Angola) ISP: Payments relating to tax on oil products kboepd: thousands of barrels of oil equivalent per day kbpd: thousands of barrels of oil per day

LNG: liquefied natural gas

LTM: last twelve months

m: million

MIBGAS: Iberian Market of Natural Gas mbbl: million barrels of oil mboe: millions of barrels of oil equivalent mbtu: million British thermal units mm³: million cubic metres mton: millions of tonnes MW: Megawatt

MWh: Megawatt-hour NB: New Businesses NG: natural gas n.m.: not meaningful

NWE: Northwestern Europe PV: photovoltaic p.p.: percentage point Q: Quarter

QoQ: Quarter-on-quarter R&Mid: Refining & MidstreamR&NB: Renewables & New Businesses REN: Rede Eléctrica Nacional

RC: Replacement Cost

RCA: Replacement Cost Adjusted SPA: Sale and purchase agreement SPT: Special participation tax ton: tonnes

TTF: Title transfer facility TWh: Terawatt-hour

UA: Unitisation Agreements U.S.: United States

USD/$: Dollar of the United States of America Var.: Variation

WI: working interest YoY: year-on-year

Otelo Ruivo, Head Inês C. Santos João Antunes João G. Pereira Teresa Rodrigues