Gas Plus

Investor Presentation • Apr 21, 2021

Gas Plus Group

Analyst Presentation FY 2020 Financial Results

April 21st, 2021*

0 * This document is updated on 6 months basis, occurring after 31 December and 30 June closing Agenda

Market Scenario

2

(*) source: BRM; in July 2020 the legal market framework in Romania routed towards a liberalization of the market

Agenda

Highlights

E&P Italian Activities

• ✓ Near break-even economic result in terms of EBITDA, despite the collapse in sales prices of natural gas (- 39%) and oil (- 43%) compared to 2019 due to the Covid-19 pandemic, the reduction of production volumes (- 11%), also due to the suspension of productions that have become uneconomical as effect of the lower prices , and the charge in FY 2020 of a royalty adjustment relating to FY 2019, following regulatory interpretations of the royalty regime cleared in FY 2020;
• ✓ Effects of the "non-cash" devaluation of E&P assets, common in this price environment to most international E&P operators, amplified by the estimated impact, which can be deduced from the consultation document regarding the PiTESAI (Plan for the Sustainable Energy Transition of Eligible Areas) of February 2021, on the Group's currently non-productive concessions and exploration potential; such effects are partially offset by the release of the deferred tax provision arising from the realignment of the tax values of E&P assets, with an effect on net profit of -€ 31.3 M.

E&P International Activities

✓ Romania: despite the continuing Covid-related health situation also in that country, the development of the MGD (Midia Gas Development) gas project in the Romanian Black Sea has now reached two-thirds of the work programme.

Retail

✓ The apparent contraction in the Business Unit's overall margin (EBITDA - 29.4%) derives almost entirely from the effects of nonrecurring opposite items in the two financial years (€ +1.6 M in the previous financial year and € -0.6 M in 2020). In any case, it should be noted that, in addition to the specifics of each year's climatic trend, the peculiarities of the period due to the effects of Covid on the consumption of certain types of customers, on the one hand, and of the sudden changes in gas prices on fixedprice contracts, on the other, led to an atypical performance of certain sales segments in terms of both volumes and margins.

Network & Transportation

✓ As in 1H 2020, FY2020 confirmed the positive contribution arising from the results of the entire year of RGF, the entity holding the concession for gas distribution in the municipality of Fidenza (Parma), enabling EBITDA to grow from € 6.9 million to € 7.6 million. The tax values of the assets of the business have also been realigned to the book values, allowing the release of the deferred tax provision, with a net effect of € +7.3 M.

Agenda

FY 2020 P&L - E&P contribution
-----------------------------------	--

E&P (MScme)	FY20	FY19	∆ (%)
Hydrocarbon Production	133.3	150.1	(11.2%)
of which natural gas	100.0	113.1	(11.6%)
of which oil and condensate	33.3	37.0	(9.9%)
EBITDA (M€)	(0.6)	10.3	n.a
Exploration Capex	0.3	0.5	(23.3%)
Development Capex	17.1	14.1	+21.2%

E&P Reserves
E&P (MScme)	Dec 31, 2020	Dec 31, 2019	∆ (%)
Hydrocarbon Reserves	4,476.2	4,931.2	(9.2%)
of which domestic	3,751.2*	4,206.2	(10.8%)
of which international	725.0	725.0	0%

* The Group has estimated the effects to its business from changes in the domestic legal framework related to the "Plan for the Sustainable Energy Transition of Appropriate Areas" ("PiTESAI") issued in February 2021 by the Italian Ministry of Economic Development (MISE); as a result of the assessment, the carrying amount of assets relating to approximately 400MScm of reserves has been entirely written down at December 31, 2020, assuming not to further deplete such reserves.

The Pitesai is a general planning instrument, introduced by Law No. 12/2019 converting Law Decree 135/2018 still pending approval, which aims to identify the areas of the national territory (both on land and at sea) that can be considered "suitable" to host hydrocarbon prospection, research and production activities.

➢ 2020 Results:

▪ Pandemic effect:

• ― actions taken, since the end of February, to implement special measures to protect our people and operational activities
• ― exceptionally drastic reduction of energy price scenario due to Covid-19 effects
• ― production decrease (≃11%) due to:
• The persistence of the negative energy price scenario even in the second half of the year resulting in the decision to suspend the production at the concessions that are now considered no longer profitable (≃6% of the total reduction)
• Natural decline in the productivity, (≃ 5% of the total reduction)
• non recurring items such as royalty adjustment of 2.4 M€ relating to FY 2019 paid in 2020, following regulatory interpretations of the royalty regime cleared in FY 2020

➢ Domestic activities:

• in line with the energy transition the actual share of gas is about 75% of total production, with a projected increase up to 100% within 5 years
• "Longanesi" project: continuation of procurement and engineering activities during 2020 and start of construction activities on site from July despite nonperformance by the non-operating partner, which does not currently affect the timing of the works programme.
• ➢ International activities in Romania - Offshore concession "Midia Shallow XV ":
• despite the persistence of Covid-19, continuation of development phase, reaching two thirds of the project; the gas-in expected for 1H of 2022. Due to the pandemic, the General Contractor has been granted price revisions for the period since last spring, which are currently within the amount of contingencies allocated when the project was budgeted.
• public data of the Romanian gas market platform show that the recovery of gas prices on international markets from 2H 2020 is determining an alignment of Romanian prices with those of the Western European market, leading to higher values compared to the forecast at project's start

Retail	FY20	FY19	∆ (%)
Sales (MScm)	74.7	80.6	(7.3%)
Residential	59.5	63.5	(6.4%)
Small Business/Multipod	7.6	9.5	(19.4%)
Industrial	7.7	7.6	0.3%
EBITDA (M€)	4.8	6.8	(29.5%)

• The EBITDA decreased as a consequence of:
• ‐ Sharp decline of gas prices between 2019 and 2020, partly mitigated by a carefully planned hedging strategy
• ‐ Non-recurring item affecting the results of the 2020 fiscal year: legal dispute regarding a tender in a municipality
• ‐ Lower volumes, mainly due to a negative thermal curve, especially in the first quarter of the year, and to costumer reduction during the course of the year;
• Despite the EBITDA decrease, there has been an increase of the overall unit margin (+6.8%), especially with regards to the Small Business segment (+31.4%)
• Limited impact of Covid-19 on Retail results thanks to the portfolio mix (~80% of residential customers) with limited impact on sales and on creditworthiness
• Constant attention to limit the switch rate providing customized offers to reliable customers (Residential and Small Business). Further commercial analysis will be assessed considering the planned ending of "Mercato Tutelato" on the 1st of January 2022

TTF Gas Price – Quarter Ahead FY 2020 P&L – Network Contribution (GP Infrastrutture – Rete Gas Fidenza)

	FY20	FY19	∆ (%)
Distributed Volumes (MScm)	207.9	208.9	(0.5%)
Direct end users (#K)	108.9	108.9	(0%)
Pipeline (Km)	1,777.5	1,772.6	0.3%
EBITDA (M€)	7.5	6.8	9.6%
Capex (M€)	2.8	13.9	(80.0%)

TTF Gas Price – Quarter Ahead FY 2020 P&L – Transportation Contribution (GP Infrastrutture Trasporto)

	FY20	FY19	∆ (%)
Transported Volumes (MScm)	9.0	9.2	(2.1%)
Direct end users (#K)	0.1	0.1	(0.9%)
Pipeline (Km)	41.8	41.8	0%
EBITDA (M€)	0.11	0.10	7.7%

• Increase in EBITDA from results of the entire year of the Rete Gas Fidenza Srl (RGF), the entity operating in the gas distribution in the Municipality of Fidenza, acquired at the end of March 2019.
• Limited impact of Covid-19 on BU Network: secured the essential activities during lockdown period with a recovery of other activities from May 5th ,2020. No significant impact on collection from customers
• Large Capex decrease, as FY19 included extraordinary capex for the acquisition of RGF (March 2019)
• The installation of the new G4-G6 smart meters is ongoing: 35% of the total was installed as of December 31st 2020, in line with the deadline set by the Authority (85% by 31/12/2023)
• No ATEM tenders involving Group concession have been launched to date. The Group intends to evaluate the new ATEM tenders in order to maintain the same perimeter of activities as a minimum

Group (M€)	FY 20	FY 19	∆ (%)
Revenues	75.5	93.5	(19.3)
Operating Costs	65.4	71.8	(8.8)
EBITDA	10.1	21.8	(53.9)
EBIT	(107.7)	2.5	n.a
EBT	(113.2)	(1.0)	n.a
Net Result	(34.2)	(0.6)	n.a
EPS (€)	(0.79)	(0.01)	n.a.

• Revenues decline mostly due to exceptional drop of energy prices related to Covid-19 (in Italy gas price decreased by 35,5% in FY 2020 vs FY 2019 to 10,9 c€/smc)
• Operating costs decreased mainly due to the reduction of gas purchase costs (decreased by €7,6M due to the lower energy scenario) and of the increase in non recurring items costs related to B.U E&P (2,4M€) and B.U. Retail (0,6 M€)
• Reduction in EBITDA due to the strong impact on margin of BU E&P
• Strong increase in writedowns following the Impairment Test on the assets of B.U. E&P (95,5 M€)
• Net tax benefit driven by the realignment of tax bases of assets to book values (based on the option provided in the new tax rule - art. 110 of D.L. 104/2020) (+49M€) and the release of deferred taxes relates to the impaired assets (+ 26.6M€)
• Negative Net Result significantly affected by impairment loss of E&P assets, partially offset by tax benefit

Financial Results

December 31, 2020 TTF Gas Price –– Quarter Group Balance Sheet Ahead

Group (M€)	Dec 31, 2020	Dec 31, 2019	∆ (%)
Inventories	3.2	3.5	(8.6%)
Receivables	24.1	25.9	(6.9%)
Payables	(25.6)	(23.7)	8.0%
Other Working Credits/Debits	5.5	0.7	n.a.
Non Current Assets	360.7	454.3	(20.6%)
Taxes, Abandonment, Severance and
Other provision	(104.0)	(181.9)	(42.8%)
Net invested capital	263.9	278.8	(5.3%)
Net Financial Debt	86.0	66.0	30.3%
of which long term	55.3	52.3	5.7%
of which short term	30.7	13.7	n.A
Equity	177.9	212.8	(16.4%)
Total Sources	263.9	278.8	(5.3%)

• Limited investment in Working Capital broadly in line with FY2019
• Significant decrease in Non Current Asset mainly due to impairment loss in FY2020 on E&P assets
• Increase in Net Financial Debt due to the investments in FY 2020. After the end of the year the Group obtained additional loans for 20 M€ from its lending banks.
• Debt/equity ratio at 0.48 (vs 0.28 at 31/12/2019)

• NFP remains at low levels, with an increase in FY 2020 due to investments (from FY2019 onwards it also includes also the effects of IFRS 16 on leasing contracts amounting to -4,9 M€ at Dec 2020)
• Positive cash flow from operating activities in FY2020 (€3,3M), despite the Covid-19 pandemic
• Cash flows used in investing activities (€20,4) is the main contributors to increase in NFP

Company Profile

Davide Usberti	Chairman and CEO Gas Plus S.p.A.
Lino Gilioli	VP and Lead Independent Director Gas Plus S.p.A.
Cinzia Triunfo	Group General Manager and Director of Gas Plus S.p.A.
Germano Rossi	Group CFO
Massimo Nicolazzi	Executive VP Gas Plus International B.V. (E&P Int. Activities)
Regulated Activity - Network
Leonardo Dabrassi	Chairman – GP Infrastrutture S.r.l
Achille Capelli	Network Manager

(*) Gas Plus Group Structure as of 31 december 2020

Disclaimer

This presentation contains forward-looking statements concerning the financial condition, results of operations and businesses of Gas Plus. All statements other than statements of historical fact are, or may be deemed to be, forward-looking statements. Forward-looking statements are statements of future expectations that are based on management's current expectations and assumptions 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 these statements. Forward-looking statements include, among other things, statements concerning the potential exposure of Gas Plus to market risks and statements expressing management's expectations, beliefs, estimates, forecasts, projections and assumptions. These forward-looking statements are identified by their use of terms and phrases such as ''anticipate'', ''believe'', ''could'', ''estimate'', ''expect'', ''intend'', ''may'', ''plan'', ''objectives'', ''outlook'', ''probably'', ''project'', ''will'', ''seek'', ''target'', ''risks'', ''goals'', ''should'' and similar terms and phrases. There are a number of factors that could affect the future operations of Gas Plus and could cause those results to differ materially from those expressed in the forward-looking statements included in this Report, including (without limitation): (a) price fluctuations in crude oil and natural gas; (b) changes in demand for the Group's products; (c) currency fluctuations; (d) drilling and production results; (e) reserve estimates; (f) loss of market and industry competition; (g) environmental and physical risks; (h) risks associated with the identification of suitable potential acquisition properties and targets, and successful negotiation and completion of such transactions; (i) the risk of doing business in developing countries and countries subject to international sanctions; (j) legislative, fiscal and regulatory developments including potential litigation and regulatory effects arising from re-categorisation of reserves; (k) economic and financial market conditions in various countries and regions; (l) political risks, project delay or advancement, approvals and cost estimates; and (m) changes in trading conditions.

All forward-looking statements contained in this presentation are expressly qualified in their entirety by the cautionary statements contained or referred to in this section. Readers should not place undue reliance on forward-looking statements. Each forwardlooking statement speaks only as of the date of this presentation. Neither Gas Plus nor any of its subsidiaries undertake any obligation to publicly update or revise any forward-looking statement as a result of new information, future events or other information. In light of these risks, results could differ materially from those stated, implied or inferred from the forward-looking statements contained in this presentation.