Gas Plus

Investor Presentation • Apr 15, 2020

Gas Plus Group

Analyst Presentation FY 2019 Financial Results

April 15th, 2020*

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

Market Scenario

Agenda

Highlights

• ✓ Worsening 2H 2019 domestic E&P margins mainly as the effect of the 25-fold increase in the fees for the exploitation licenses of hydrocarbons (E&P EBITDA Euro -2.1 M€ vs FY 2018 compared to +2.8 M€ increase in license fee), vanished expectation of a positive result of the FY19. Although, the loss was very low (-0.6 M€)
• ✓ The amount relative to the license fee increase has been included in the 2019 financial statement, but Gas Plus appealed to the Lazio Regional Administrative Court (TAR Lazio) against these provisions
• ✓ Notwithstanding the above, further progress in the two main E&P development projects, accounting for almost 40% of the Group 2P hydrocarbon reserves (amounting to 1.863 MScme on a total of 4.931 MScme):
  • o In Italy: "Longanesi" project, after obtaining the authorization in Q4 2018, started the development phase, with the engineering of the project and the procurement of the first Long Lead Items
  • o In Romania: "Midia Development Project" (MGD Project), development phase started after NAMR approval of the Field Development Plan
• ✓ Positive results of the downstream Network & Transportation and Retail even if for this year in the Network the newly acquired RGF company accounts only from the end of Q1 2019
• ✓ NFP growth (+24 M€), mainly due to 28.6 M€ of Capex and impact of new accounting standard IFRS 16 on leasing contracts (included in NFP for 5.5 M€). New medium term financing in place both as corporate facilities and as capex lines for the domestic E&P and for the RBL based Romanian MGD Project.

Agenda

GROUP FINANCIAL RESULTS

COMPANY PROFILE

FY 2019 P&L TTF Gas Price - E&P – Quarter contribution Ahead

E&P (MScme)	FY19	FY18	∆ (%)
Hydrocarbon Production	150.1	128.3	17.0%
of which natural gas of which oil and condensate	113.1 37 .0	112.3 16.0	0.7% 130.3%
EBITDA (M€)	10.3	12.4	(16.9%)
Exploration Capex	0.5	3.3	(86.3%)
Development Capex	14.1	8.8	60.2%

▪ Domestic activities:

• ― "Longanesi" project: at the end of 2018 issued authorization decrees of the Ministry of Economic Development. Activities carried out in the 2019: planning & engineering of the project; procurement of project's Long Lead Items; set up of plant site
• ― Garaguso concession production ramp-up completed and stable from April (on yearly basis, ~25 MScm)
• ― Stable gas production as effect of 1Q19 reduced contribution of Garaguso and contingent interruption of another field
• ― Strong improvement of oil production of Cavone field after 2018 maintenance activities

▪ International activities:

Offshore concession "Pelican XIII and Midia Shallow XV Blocks" ongoing:

• ― Development phase started, after National Agency for Mineral Resources (NAMR) approval of the Field Development Plan. In December 2019, a financing agreement related to "Midia Gas Development Project" has been signed with a total amount of 200 M€ (Gas Plus amount for 20 M€)
• ― Executed 5% interest farmout and accounted the upfront and deferred price
• ― 2P reserves evaluated by an independent Reserves Auditor at 725 MScm for the 10% Gas Plus stake after farmout
• As of December 31st 2019, domestic and international 2P hydrocarbon reserves are 4.931 Mscme vs. 4.271
• Mscme at December 2018 (+15%)

Retail	FY19	FY18	∆ (%)
Sales (MScm)	80.6	85.8	(6.0%)
Residential	63.5	68.4	(7.1%)
Small Business/Multipod	9.5	11.2	(15.6)%
Industrial	7.6	6.2	23.7%
EBITDA (M€)	6.8	5.3	28.1%

• EBITDA increase as consequence of
  • ― a higher unitary margin despite an overall reduction of volumes mainly due to a negative thermal curve especially in the first quarter of the year
  • ― one-off revenue related to sales in Oct 2010 – Sept 2012 (according to ARERA resolution 32/2019/R/Gas), accounted in the second semester
• Constant attention to limit the switch rate providing customized offers to meet the needs of the customers (both Residential and Small Business) and focusing on the most interesting areas
• Further commercial analysis will be assessed considering the last postponement of "Mercato Tutelato" to 1st January 2022

TTF Gas Price – Quarter Ahead FY 2019 P&L – Network Contribution (GP Infrastrutture – Rete Gas Fidenza)

	FY19	FY18	∆ (%)
Distributed Volumes (MScm)	208.9	204.1	2.3%
Direct end users (#K)	108.9	96.1	13.3%
Pipeline (Km)	1,772.6	1,566.8	13.1%
EBITDA (M€)	6.8	6.7	2.4%
Capex (M€)	13.9	3.3	> 300%

TTF Gas Price – Quarter Ahead FY 2019 P&L – Transportation Contribution (GP Infrastrutture Trasporto)

	FY19	FY18	∆ (%)
Transported Volumes (MScm)	9.2	9.5	(3.5%)
Direct end users (#K)	0.1	0.1	0%
Pipeline (Km)	41.8	41.8	0%
EBITDA (M€)	0.1	0.1	(13.0%)

• Stable EBITDA, since the acquisition in March of Rete Gas Fidenza Srl (RGF), a company operating in the gas distribution in the Municipality of Fidenza,
• Strong Capex increase mainly due to the acquisition of RGF
• Thanks to the acquisition of RGF:
  • ― Direct end users increase (+13.3%)
  • ― Pipeline length increase (+13.1%)
• Evaluation of the new ATEM tenders in order, at least, to maintain the same perimeter of activities.

Three projects located in Central Italy, characterized by few storage sites, and in the same area allowing for operational synergies:

SAN BENEDETTO (84,7% Gas Plus - Operator)

▪ EIA* obtained in June 2014, application for EIA duration extension ongoing.

POGGIOFIORITO (100% Gas Plus)

▪ EIA obtained in June 2014, application for EIA duration extension ongoing.

SINARCA (60% Gas Plus - Operator)

▪ Final authorization obtained. Technical and economic evaluation ongoing

(*) Administrative claims related to the EIA issuing; refer to 2019 financial report for more information

Group (M€)	FY 19	FY 18	∆ (%)
Revenues	93.5	88.6	5.6%
Operating Costs	71.7	65.9	8.9%
EBITDA	21.8	22.7	(3.9%)
EBIT	2.5	3.1	(18.2%)
EBT	(1.0)	(2.5)	n.a.
Net Result	(0.6)	(1.8)	n.a.
EPS (€)	(0.01)	(0.04)	n.a.

▪ Growth in:

• ― Revenues thanks to higher E&P sales (resulting from an increase in oil production) and to higher Network distributed volumes (resulting from the acquisition of Rete Gas Fidenza, RGF). The 2019 amount also includes 2.7 M€ of non-recurring items related to E&P and Retail activities
• ― Operating costs due to higher costs related to BU E&P (2.8 M€ resulting from the increase in the concession fees defined by new legislation) and to the expansion of Network activities due to consolidation of RGF
• Reduction in EBITDA due to decrease of margin of BU E&P in the second semester
• Slightly negative Net Result, but significantly lower than in FY2018, mainly due to the reduction of financial charges and to the positive impact of the transfer of the 5% stake in the Midia Project.

Financial Results

December 31, 2019 TTF Gas Price –– Quarter Group Balance Sheet Ahead

Group (M€)	Dec 31, 2019	Dec 31, 2018	∆ (%)
Inventories	3.5	3.5	(0.1%)
Receivables	25.9	26.9	(3.7%)
Payables	(23.7)	(29.6)	(19.9%)
Other working Credits/Debits	0.6	(1.2)	n.a.
Non current Assets	454.3	436.0	4.2%
Taxes, Abandonment, Severance and
Other provision	(181.9)	(180.6)	0.7%
Net invested capital	278.8	255.0	9.3%
Net Financial Debt	66.0	42.0	57.0%
of which long term	52.3	25.5	105.2%
of which short term	13.7	16.6	(17.1%)
Equity	212.8	213.0	(0.1%)
Total Sources	278.8	255.0	9.3%

• Increase in Working Capital due to mainly lower payables
• Increase in Non Current Asset above all for the investments in E&P and Network (acquisition of RGF) activities
• Growth in Net Financial Debt vs 31 December 2018 exclusively due to higher investments related to E&P and Network BUs and the new accounting standard IFRS 16 on leasing contracts
• Debt/equity ratio at 0.31

• NFP remained at low levels but affected by both the higher investments in E&P and Network BUs and the effects of the new accounting standard IFRS 16 on leasing contracts
• Thanks to the positive cash flows from operating activities, the NFP growth is lower than investments
• After the end of 1H19 the signing of a new loan agreement enabled the Group to extend the existing debt duration and increase available cash resources for investments

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 2019

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.