ITALGAS: CONSOLIDATED RESULTS AS OF 30 JUNE 2021 APPROVED press-typology

ITALGAS: CONSOLIDATED RESULTS AS OF 30 JUNE 2021 APPROVED

Milan, 27 July 2021 - Italgas' Board of Directors, chaired by Alberto Dell'Acqua, met yesterday and approved the consolidated results for the first half of 2021.

Key figures

Consolidated economic and financial highlights:

• Total revenues: € 665.4 million (+2.9%)
• Gross operating margin (EBITDA): € 489.1 million (+5.9%)
• Operating profit (EBIT): € 279.4 million (+10.0%)
• Adjusted net profit attributable to the Group: € 176.1 million (+14.1%)
• Technical investments: € 420.4 million (+14.1%)
• Cash flow from operating activities: € 549.7 million
• Net financial debt: € 4,806.8 million
• Net financial debt (excluding the effects pursuant to IFRS 16): € 4,737.0 million

ESG - Scope I and Scope II highlights:

• Gas distributed: 4,868.39 million cubic meters (+6.2%)
• 35,193 km of network inspected (+36.6%)
• Fugitive emissions/gas distributed: 0.064%
• Fugitive emissions/km inspected: 87 Scm / km (-14.7%)
• Km traveled by operative vehicles: 22.055 million km (+23.5%)
• % Km traveled by vehicles powered by CNG: 92%
• Emissions in grams per km travelled by the fleet: NOX (-7.4%), particulate matter (-33.4%)

Operating highlights (including affiliates):

• Municipalities with gas distribution concessions: 1,888
• Number of active meters: 7.74 million
• Gas distribution network: around 73,590 Km

This press release is available on the following	Investor Relations Italgas [phone]
website: www.italgas.it	[e-mail]
	Italgas Press Office [phone]
	[e-mail]

In a scenario characterised by ongoing concerns regarding the evolution of the health emergency and the resulting constraints on economic activity, but also by the strong impetus given by the European Union towards meeting the net zero climate targets by 2050, Italgas has confirmed its ability to produce solid results with extremely positive performance in all the main economic and financial indicators.

At the same time, the Group's growing focus on sustainability objectives, on which it bases its strategic investment choices, enables it to actively contribute to the energy transition process, in line with EU guidelines, and to the recovery plan for the national economy.

This is demonstrated by the € 420.4 million of investments made in the period (+14.1% compared to the first half of 2020) devoted to the digital transformation, extension and repurposing of the networks to enable them to distribute renewable gases, such as biomethane, green hydrogen and synthetic methane.

Approximately 389 km of new grids were laid in the first six months of 2021, 52 km of which in Sardinia, where the construction of the distribution networks continued, with approximately 900 km completed overall out of a total of 1,100 km to be constructed.

The requirements related to net investments for the first half of 2021 were covered by the positive cash flow from operating activities, equal to € 549.7 million, with a Free Cash Flow of € 135.6 million.

The net financial position as of 30 June 2021 was € 4,806.8 million (€ 4,736.5 million as of 31 December 2020). The net financial position amounted to € 4,737.0 million (€ 4,660.2 million as of 31 December 2020), net of financial liabilities pursuant to IFRS 16 of € 69.8 million (€ 76.3 million as of 31 December 2020).

The EBITDA of the first half of 2021 amounted to € 489.1 million (+5.9% compared to 30 June 2020) and adjusted net profit attributable to the Group was € 176.1 million (+14.1% compared to the same period of the previous year).

Paolo Gallo, CEO of Italgas, commented:

"The results of the first half of 2021 and the level of investments achieved demonstrate Italgas' ability to combine the objectives of continuous and sustainable growth with the commitment to decarbonisation, providing an important boost for the restart of the Country's economy.

As of 30 June 2021, thanks to the acceleration of the digital transformation process, we have achieved an EBITDA of € 489.1 million, up 5.9% compared to the same period of 2020, and an

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adjusted net profit of € 176.1 million, with a double-digit increase of 14.1%, despite the continuing negative impact of Resolution no. 570.

We have exceeded € 420 million of investments mainly related to the digital transformation of the network and of the company as a whole, as well as the repurposing of the network and its further extension by more than 400 km.

Digital transformation, repurposing and extension of our networks are indeed enabling factors that will allow them to accommodate renewable gases, such as biomethane, hydrogen and synthetic methane, thereby confirming their strategic role for the energy transition.

In Sardinia, for the 50,000 current customers connected to our networks, natural gas has finally become a reality and with these grids - native digital - biomethane and hydrogen are no longer a remote opportunity. In the island our commitment continues to serve new customers with the aim of tripling them and to develop advanced innovation projects, such as the one located in Sestu.

Digitization, technological innovation, sustainability and efficiency will continue to be the cornerstones of Italgas' daily activities, to support the energy transition process also through the ambitious goals for reducing emissions and energy efficiency contained in our Strategic Plan.

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Italgas group structure as of 30 June 2021

The structure of the Italgas Group as of 30 June 2021 has changed compared to that of 31 December 2020, due to the merger of Toscana Energia Green into Seaside and the establishment of Bludigit.

Economic and financial highlights

This press release uses alternative performance indicators, including EBITDA (gross operating margin, calculated by subtracting operating costs from earnings), EBIT (operating income before taxes, calculated by subtracting operating costs, amortisation, depreciation and impairment from earnings) and Net financial debt (calculated as the sum of short- and long- term financial debt and financial liabilities pursuant to IFRS 16, net of cash and cash equivalents).

The NON-GAAP financial report must be considered complementary to and not replacing the reports prepared according to IAS - IFRS.

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Reclassified income statement

Financial		First half
year
2020	(€ million)	2020 (**)		2021		Abs.	Change %
		change
1,394.3	Gas distribution regulated revenue	626.0		642.2		16.2	2.6
1,183.7	of which distribution revenue	590.1		595.5		5.4	0.9
102.2	of which other distribution revenue	35.9		46.7		10.8	30.1
108.4	of which special items	-		-		-	-
1,285.9	Adjusted gas distribution regulated revenue	626.0		642.2		16.2	2.6
47.9	Other revenues	20.8		23.2		2.4	11.5
1,442.2	Total revenues (*)	646.8		665.4		18.6	2.9
1,333.8	Adjusted total revenues	646.8		665.4		18.6	2.9
(414.3)	Operating costs (*)	(185.0)		(176.3)		8.7	(4.7)
(51.9)	of which special items	-		-		-	-
(362.4)	Adjusted operating costs	(185.0)		(176.3)		8.7	(4.7)
1,027.9	EBITDA	461.8		489.1		27.3	5.9
971.4	Adjusted EBITDA	461.8		489.1		27.3	5.9
(424.6)	Amortisation, depreciation and impairment	(207.8)		(209.7)		(1.9)	0.9
603.3	EBIT	254.0		279.4		25.4	10.0
546.8	Adjusted EBIT	254.0		279.4		25.4	10.0
(49.2)	Net financial expense	(26.4)		(31.8)		(5.4)	20.5
-	of which special items	-		(6.4)		(6.4)	-
1.5	Net income from equity investments	1.0		1.1		0.1	10.0
555.6	Gross profit	228.6		248.7		20.1	8.8
499.1	Adjusted gross profit	228.6		255.1		26.5	11.6
(152.0)	Income taxes	(65.0)		(68.7)		(3.7)	5.7
(16.9)	taxation related to special items	-		1.5		1.5	-
(135.1)	Adjusted income taxes	(65.0)		(70.2)		(5.2)	8.0
403.6	Net profit	163.7		180.0		16.3	10.0
383.0	Net profit attributable to the Group	154.3		171.2		16.9	11.0
20.6	Net profit attributable to minority interests	9.4		8.8		(0.6)	(6.4)
364.0	Adjusted net profit	163.7		184.9		21.2	13.0
345.4	Adjusted net profit attributable to the Group	154.3		176.1		21.8	14.1
18.6	Adjusted net profit attributable to minority	9.4		8.8		(0.6)	(6.4)
	interests

1. Unlike the legal statement, the reclassified income statement requires the listing of Total revenues and Operating costs net of the impact of IFRIC 12 "Service concession agreements" (€ 373.6 and € 322.6 million respectively in the first half of 2021 and 20 20), of connection contributions (€ 9.6 and € 9.8 million respectively in the first half of 2021 and 2020) and other residual components (0.2 and 1.3 respectively in the first half of 2021 and 2020).
   (**) As of 30 June 2021, the Group stated the expenses relating to the legally required periodic checks of volume conversion devices under operating costs, where such devices are present in the meters installed at the re -delivery points. In order to ensure comparability with the income statement items, the items relating to Operating costs (-€ 0.9 million), Amortisation, depreciation and impairment (+€ 2.1 million) and Income taxes (-€ 0.4 million) were adjusted as of 30 June 2020.

The total revenues of the first half of 2021 amounted to € 665.4 million, up by € 18.6 million compared to the corresponding period of 2020 (+2.9%), and refer to natural gas distribution regulated revenues (€ 642.2 million) and other revenues (€ 23.2 million).

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