Ascopiave Group ______

Annual Financial Report

as of 31 st December 2014

______Ascopiave Group – Annual Financial Report as at 31 st December 2014 1 Ascopiave Group ______

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Table of contents GENERAL INFORMATION ...... 6 Directors, Officers and Company information ...... 6 Main economic and financial data of the Ascopiave Group ...... 7 REPORT ON OPERATION ...... 8 FOREWORD ...... 8 The structure of the Ascopiave Group ...... 11 The general economic context ...... 12 The gas market: the European scenario ...... 15 The gas market: the Italian scenario ...... 16 Gas sale ...... 18 Gas distribution ...... 18 Reference regulatory frameworks ...... 21 Provisions of the AEEGSI ...... 21 Update of the economic conditions of supply ...... 22 Other provisions of the Natural Gas Sector ...... 27 Other provisions of the Electricity Sector ...... 31 Resolutions pertaining to energy efficiency ...... 36 Efficiency and energy saving obligations ...... 36 Ascopiave S.p.A. share trend on the Stock Exchange ...... 38 Control of the Company ...... 40 Corporate Governance and Code of Ethics ...... 40 Transactions with related and affiliated parties ...... 41 Significant events during 2014 ...... 42 Company operations that took place during the year 2014 ...... 42 Other significant events ...... 43 Litigations ...... 58 Distribution of dividends ...... 65 Own shares ...... 65 Outlook for the Year ...... 65 Goals and policies of the group and risk description ...... 66 Quality ...... 69 Ascopiave Group's Quality Management System: ...... 70 Research and development ...... 74 Additional information ...... 75 Compensation given to the managing and controlling organs, managing directors and directors with strategic responsibilities and stakes held ...... 75 Safety of personal data ...... 75 List of company headquarters ...... 76 Owned offices ...... 76 Rented offices ...... 76 Performance Indicators ...... 77 Comments on the economic-financial results of the year 2014 ...... 78 General operational performance and indicators ...... 78 General operational performance – Financial situation ...... 83 General operational performance - Investments ...... 84 Schedule of reconciliation of the of individual net shareholders’ equity with the consolidated net Shareholders’ Equity ...... 86 Consolidated statement of financial position as of 31 st December 2014 and as of 31 st December 2013 ...... 88 Consolidated income statement ...... 89 ______Ascopiave Group – Annual Financial Report as at 31 st December 2014 3 Ascopiave Group ______

Consolidated statement of changes in shareholders’ equity as of 31 st December 2014 and as of 31 st December 2013 ...... 90 Consolidated financial statements of cash flow for the year 2014 and 2013 ...... 91 EXPLANATORY NOTES ...... 92 Company information ...... 92 The activities of the Ascopiave Group ...... 92 General drafting criteria and declaration of conformity with IFRS ...... 92 Financial statements representation ...... 93 Accounting principles, amendments and interpretations applied from 1 st January 2014 .... 93 Accounting principles, amendments and interpretations not yet applicable and not adopted ahead of time by the Group ...... 97 Use of estimates ...... 97 Consolidation principles ...... 98 Consolidation area as of 31 st December 2014 ...... 99 Assessment criteria ...... 101 COMMENTS ON THE MAIN CONSOLIDATED BALANCE SHEET ITEMS ...... 109 Current assets ...... 119 Non-current liabilities ...... 126 Current liabilities ...... 131 COMMENTS ON THE MAIN CONSOLIDATED INCOME STATEMENT ITEMS ...... 136 Revenues ...... 136 Costs ...... 137 Financial income and expense ...... 142 Taxes ...... 142 Non-recurrent items ...... 144 Transactions deriving from unusual and/or atypical operations ...... 144 OTHER COMMENTS ON THE ANNUAL FINANCIAL REPORT AS OF 31 st DECEMBER 2014 ...... 145 Business Combinations ...... 145 Commitments and risks ...... 147 Risk and uncertainty factors ...... 147 Seasonal nature of the activity ...... 149 Remuneration of Auditing Company ...... 151 Business segment reporting ...... 151 Earnings per share ...... 152 Transactions with related parties ...... 152 Significant events after the end of 2014 ...... 154 Goals and policies of the group ...... 154 Synthesis data as of 31 st December 2014 of jointly controlled companies consolidated through the equity method ...... 154

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Annexes:

- Individual Financial Statement of Ascopiave S.p.A. as of 31 st December 2014.

In-Company Control:

- Declaration by the Manager - Certification of the Consolidated Financial Statements in accordance with art. 81-ter of Consob regulation no. 11971; - Report on Corporate Governance and Company Structure.

Statutory Auditors:

- Report of the Board of Statutory Auditors on Financial Statements as of 31 st December 2014.

Auditing Company:

- Report of the statutory Auditor Companies on the Consolidated Financial Statements as of 31 st December 2014; - Report of the statutory Auditor Companies on the Financial Statements as of 31 st December 2014.

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GENERAL INFORMATION

Directors, Officers and Company information

Board of Directors and Board of Statutory Auditors Duration Name Office From To of office Zugno Fulvio Chairman of the Board of Directors* 2011-2014 28/04/2011 24/04/2014 Coin Dimitri Director 2011-2014 28/04/2011 24/04/2014 Bernardelli Giovanni Indipendent Director 2011-2014 28/04/2011 24/04/2014 Colomban Massimino Indipendent Director 2011-2014 28/04/2011 24/04/2014 Quarello Enrico Indipendent Director 2011-2014 14/02/2012 24/04/2014 Zugno Fulvio Presidente del Consiglio di Amministrazione e 2014-2017 24/04/2014 Amministratore delegato* Approval of budget 2016 Coin Dimitri Indipendent Director 2014-2017 24/04/2014 Approval of budget 2016 Pietrobon Greta Indipendent Director 2014-2017 24/04/2014 Approval of budget 2016 Piva Bruno Indipendent Director ** 2014-2017 24/04/2014 21/05/2014 Paron Claudio Indipendent Director ** 2014-2017 19/06/2014 Approval of budget 2016 Quarello Enrico Indipendent Director 2014-2017 24/04/2014 Approval of budget 2016 (*)Powers and attributions of ordinary and extraordinary administration, within the limits of the law and of the Charter and in observance of the reserves within the competence of the Shareholders’ Meeting and the Board of Directors, according to the resolutions of the Board of Directors. (**)Mr. Paron Claudio replaces Mr. Piva Bruno who has resigned.

Duration Name Office From To of office Zancopè Ogniben Giovanni President of the Board of Auditors 2011-2014 28/04/2011 24/04/2014 Papparotto Paolo Statutory Auditor 2011-2014 28/04/2011 24/04/2014 Alberti Elvira Statutory Auditor 2011-2014 28/04/2011 24/04/2014 Bortolomiol Marcellino President of the Board of Auditors 2014-2017 24/04/2014 Approval of budget 2016 Biancolin Luca Statutory Auditor 2014-2017 24/04/2014 Approval of budget 2016 Alberti Elvira Statutory Auditor 2014-2017 24/04/2014 Approval of budget 2016

In-Company Control Remuneration From To From To Committee Committee Coin Dimitri 28/04/2011 24/04/2014 Coin Dimitri 28/04/2011 24/04/2014 Bernardelli Giovanni 28/04/2011 24/04/2014 Bernardelli Giovanni 28/04/2011 24/04/2014 Colomban Massimino 28/04/2011 24/04/2014 Colomban Massimino 28/04/2011 24/04/2014 Coin Dimitri 29/04/2014 Approval of budget 2016 Coin Dimitri 29/04/2014 Approval of budget 2016 Piva Bruno 29/04/2014 21/05/2014 Piva Bruno 29/04/2014 21/05/2014 Quarello Enrico 29/04/2014 Approval of budget 2016 Quarello Enrico 29/04/2014 Approval of budget 2016 Paron Claudio 19/06/2014 Approval of budget 2016 Paron Claudio 19/06/2014 Approval of budget 2016

Independent Auditors Reconta Ernst & Young S.p.A.

Legal headquarters and Company data Ascopiave S.p.A. 1030 Verizzo street I-31053 Pieve di Soligo TV Italy Tel: +39 0438 980098 Fax: +39 0438 82096 Share Capital: Euro 234,411,575 fully paid in VAT ID 03916270261 e-mail : [email protected]

Investor relations Tel. +39 0438 980098 fax +39 0438 964779 e-mail : [email protected] ______Ascopiave Group - Annual Financial Report as at 31 st December 2014 6 Ascopiave Group ______

Main economic and financial data of the Ascopiave Group

Economic figures Restated (*) (Thousands of Euro) Financial year % of revenues Financial year % of revenues

Revenues 585,300 100.0% 667,837 100.0%

Gross operative margin 79,585 13.6% 86,276 12.9%

Operating result 52,667 9.0% 61,964 9.3%

Net result for the year 37,333 6.4% 41,040 6.1%

* The gross operating margin (EBITDA) is the result before amortisation/depreciation, financial management and taxes.

Assets figures

Restated (*) (Thousands of Euro) 31.12.2014 31.12.2013

Net working capital 66,547 43,832

Fixed assets and other non current assets 526,152 537,449

Non-current liabilities (excluding loans) (53,360) (54,792)

Net invested capital 539,340 526,489

Net financial position (129,673) (123,810)

Total Net equity (409,666) (402,679)

Total financing sources (539,340) (526,489)

* Please note that ‘Net working capital’ is intended as the sum of the inventories, trade receivables, tax receivables, other current assets, accounts payable, tax payables (within 12 months), and other current liabilities.

Monetary flow data

Riesposto (*) (thousands of Euro) Financial year 2014 Financial year 2013 Net income of the Group 35,583 38,678 Cash flows generated (used) by operating activities 56,164 69,934 Cash flows generated/(used) by investments (22,106) (13,345) Cash flows generated (used) by financial activities 55,052 (62,822) Variations in cash 89,110 (6,233) Cash and cash equivalents at the beginning of the year 11,773 18,006 Cash and cash equivalents at the end of the year 100,882 11,773

(*)Data restated following the application of IFRS 11 – Joint arrangements and IAS 28 – Investments in Associates and Joint Ventures. For further details, please see paragraph “Accounting principles and interpretations effective from 1 st January 2014” of the explanatory notes included in this interim financial report.

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REPORT ON OPERATION

FOREWORD

The Ascopiave Group closed 2014 with a net consolidated profit of Euro 37.3 million, (Euro 41.0 million as of 31 st December 2013).

The consolidated net assets at year end amount to Euro 409.7 million (Euro 402.7 million as of 31 st December 2013) and the net capital invested to Euro 539.3 million (Euro 526.5 million as of 31 st December 2013).

In 2014 the Group accomplished investments for Euro 21.1 million (Euro 18.9 million in 2013), mainly in the development, maintenance and modernization of the networks and plants of gas distribution.

Activities

Ascopiave mainly operates in the sectors of distribution and sale of natural gas, as well as in other sectors related to the core business, such as the sale of electric power, heat management and co-generation.

The Group currently holds concessions and direct assurances for the supply of the service in 208 municipalities (209 municipalities as of 31 st December 2013) and has a distribution network extending for over 8,200 km 1 (over 8,100 km as of 31 st December 2013), and providing a service to a catchment area bigger than 1 million inhabitants.

The activity of natural gas sale to end customers is carried out through subsidiaries of the parent company Ascopiave S.p.A., controlled exclusively or jointly with other shareholders. In the gas sale segment, Ascopiave is one of the main National operators with about 888 million cu.m 1 of gas sold in 2014.

Strategic objectives

Ascopiave aims to pursue a strategy focused on the creation of value for its stakeholders, by maintaining the level of excellence in the quality of services offered, in the respect of the environment and social groups, to increase the value of the field in which it operates.

The Group intends to consolidate its leadership position in the gas sector on a regional level and is looking to reach a prominent position also at the national level, taking advantage of the liberalization process currently underway.

1 The data specified as regards the length of the distribution network and the volumes of gas sold are obtained by adding each Group company’s data, previously pondering the data of the companies consolidated with the equity method according to the relevant share.

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In this respect, Ascopiave follows a development strategy whose main guiding principles are dimensional growth, upstream integration in the sector, diversification in other divisions of the energy sector in synergy with the core business and the improvement of operative processes.

Management trend

The volumes of gas sold in 2014 are equal to 888.4 million cubic metres (of which 26.4 million cubic metres due to the extension of the consolidation area, as better explained below), marking a decrease of 19.7% as compared to the same period of the previous year.

The volumes of electrical energy sold in 2014 were 459.6 GWh (of which 91.0 GWh due to the extension of the consolidation area), marking a decrease of 19.9% as compared to the previous year.

As to the activity of gas distribution, the volumes distributed through networks managed by the Group were 775.9 million cu.m., a decrease of 15.0% compared to 2013. The distribution network as of 31 st December 2014 has an extension of 8,227 km (8,121 km as of 31 st December 2013).

Economic results and financial situation

Consolidated revenues of 2014 of the Ascopiave Group equal Euro 585.3 million, compared to Euro 667.8 million of 2013. The decrease in the turnover is mainly due to the reduction in the revenues on gas sale (Euro -116.5 million). The revenues from electricity sale instead, marked an increase (Euro +33.2 million). The decrease in the revenues from gas sale is due to both the decrease in the volumes sold, mainly explained by the mild weather conditions recorded in 2014, and the decrease in average unit sale prices, connected, among other things, to the reform of price conditions applied to the protected market introduced by AEEGSI resolution no. 196/2013/R/gas, in force since 1 st October 2013.

The Operating Result of the Group equals Euro 52.7 million, marking a decrease compared to Euro 61.9 million in 2013. The decrease in the Operating Result is mainly connected to the decrease in the commercial margins on gas sale, due to the decrease in the volumes of gas sold.

The Net Result of the Group, equalling Euro 35.6 million, registers a decrease as compared to Euro 38.7 million of 2013 because of the worsening of the operating result, a lower result of the gas sale companies consolidated through the equity method, partially offset by a decrease in fiscal charges on income taxes.

The Net Financial Position of the Group as of 31 st December 2014 is equal to Euro 129.7 million, a decrease as compared to Euro 123.8 million as of 31 st December 2013. The increase in financial indebtedness (Euro +5.9 million) is determined by the cash flow of the fiscal year (Euro +64.3 million, given by the sum of the net result, allocations, amortization and depreciations) and by the management of the working capital, which has absorbed financial resources for 11.0 million Euro. The investment activity has generated a financial requirement of Euro 25.2 million, whereas the management of equity (distribution of dividends and dividends received by the companies consolidated with the equity

______Ascopiave Group - Annual Financial Report as at 31 st December 2014 9 Ascopiave Group ______method) has absorbed resources for Euro 22.5 million. The other changes in the Net Financial Position are due to the consolidation of the Net Financial Position of the company Veritas Energia S.r.l. for Euro 11.4 million, due to the change in the consolidation method, explained by the purchase of the remaining 49% stake of the investee. The ratio between Net financial position and Net equity as of 31 st December 2014 is equal to 0.32 (0.31 as of 31 st December 2013).

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The structure of the Ascopiave Group

The table below shows the company structure of the Ascopiave Group as of 31 st December 2014.

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The natural gas market The general economic context

In 2014, the global cyclical conditions remained heterogeneous. Among the developed countries, the economic activity has continued to show some weakness in the Euro area and Japan, whereas it has sharply accelerated in the United States and has remained strong in the United Kingdom. Among the emerging economies 2, in 2014 India seems to be the only country to have continued its robust growth. The Chinese market has in fact slowed down as compared to the growth of the previous years; Brazil, held back by weak investments, is still characterized by economic stagnation, whereas the Russian economy, as a result of the rapid deterioration of its economic and financial situation, has experienced a significant slowdown. As in recent years, due to persistent structural problems in some emerging economies and the uncertainty regarding the timing and intensity of the recovery in the Euro area, it is particularly difficult to outline accurate and reliable forecasts about the possible evolution scenarios of the world economy. A new escalation of tensions in international financial markets, linked to the evolution of the political situation in Greece and the crisis in Russia, and a weakening of the emerging economies may in fact have a negative effect on the performance of the economic activity. Some OECD projections estimate that in 2014 the global domestic product increased on average by 3.3% as compared to the previous year, and that in 2015 it may show a slight upward trend, growing by 3.7%. In the coming years, the economic expansion is expected to be increasingly differentiated in the developed countries, where against a slight growth in Europe (+1.1%) and in Japan (+0.8%) a faster expansion is expected in the United States (3.1%) and in the United Kingdom (+2.7%). Emerging economies showed different trends in 2014. In India, despite high inflation, growth has strengthened (+ 5.4%) whereas in China and Brazil the growth of domestic product has slowed down (respectively + 7.3% and + 0.3%). According to the latest OECD estimates, except India, in 2014 product dynamics have become weaker in the main emerging economies. Consumer price inflation, at the end of 2014, also because of the decrease in raw material prices, has dropped almost everywhere. In developed countries it remained very low and was weak in China and India as well. The dynamics of consumer prices, however, remain high in Brazil and continue to accelerate in Russia, driven by the sharp depreciation of the rouble and the increase in food prices following the ban on imports from the major developed countries. In 2014, the average annual inflation in the Euro area, measured by the harmonized index of consumer prices, was 0.4% (+1.4% in 2013). Within the Euro zone, the economic indicators have outlined a slight rise in 2014, albeit with persistent gaps between the major economies of the area. In 2014, in the Euro zone, the GDP is expected to increase by about 0.8% as compared to the previous year. With regard to the economic situation of the Italian economy , in 2014 the economic activity remained weak although in recent quarters consumptions have continued growing, in line with the trend of disposable income fostered by the measures adopted by the Government. In 2014, the GDP increased by 0.4% as compared to the previous year, reflecting the slow recovery in domestic demand and the weakness of investments. Interchange with foreign countries has continued to support GDP growth, highlighting an increase in exports as compared to the previous year (+ 2.0% in exports of goods and services compared to 2013) and at the same time a decrease in imports (-1.6% compared to 2013); the latter effect is mainly related to the strong decline in demand for energy products.

2 Brazil, China, India, Russia ______Ascopiave Group - Annual Financial Report as at 31 st December 2014 12 Ascopiave Group ______

Private consumption has continued to increase slightly. Consumer confidence declined in the second half of 2014, although it remained at levels way above the lows reached in 2012, and in December it almost reached the levels of January 2014. Despite a rise in propensity to save following the recovery of disposable income for households with medium-low income, also thanks to the measures included in the so-called Stability Law, significant uncertainties remain about the difficult conditions of the labour market and the economic situation of families. Business confidence, although to a limited extent, has continued its growth. The unemployment rate, net of seasonal factors, showed an increase in 2014 as well, reaching 12.9% in December (-0.4% compared to November and +0.3% in the 12 months). Average Italian inflation in 2014, measured by the harmonized index of consumer prices, recorded values in line with the Euro zone: +0.2% against +0.4% in the Euro area. Price dynamics, which have been decreasing since early 2014, have stabilized around zero in the last months of the year, reflecting in particular the weakness of costs, specifically those related to energy, and the intense and prolonged contraction of household expenditure .

Evolution of international energy prices In 2014, the Euro/Dollar exchange rate recorded an annual average equal to 1.33 USD per Euro (in line with the 2013 average), achieving a maximum of 1.39 USD per Euro (May 2014) and a minimum value of 1.21 USD per Euro (December 2013). After an increase in the Euro/U.S. Dollar exchange rate in the first months of 2014 (up to May), the EU currency started a slight depreciation with respect to the U.S. Dollar up to reach its minimum value in December 2014 .

Euro/Dollar exchange rate trend in 2013 and 2014

1,4 1,38 1,36 1,34 1,32

1,3 Euro/US$ 2013 1,28 Euro/US$ 2014 1,26 1,24 1,22 1,2

02/01 24/01 15/02 10/03 02/04 25/04 19/05 10/06 02/07 24/07 15/08 06/09 29/09 21/10 12/11 04/12 29/12 Source: Banca d’Italia, elaborated by Ascopiave S.p.A.

In 2014, the cost of crude oil decreased considerably. Since January 2014, the price of oil (Brent) has remained fairly stable between $ 105-115 per barrel until it reached its maximum value in mid-June ($ 115.19 per barrel). Subsequently, since summer, oil price has started to decrease and its value has almost halved and reached its lowest annual level in late December ($ 55.27 per barrel).

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As far as the Euro ratings are concerned, the decrease was more moderate because of the depreciation of the EU currency with respect to the U.S. Dollar. Quotations 2014 2013 2012 2011 Annual average brent quotation (Dollars per barrel) 98.97 108.56 111.63 111.29 Annual average Exchange rate Dollars / Euro 1.33 1.33 1.29 1.39 Annual average brent quotation (Euro per barrel) 74.50 81.74 86.88 79.95 Source: Banca d’Italia and EIA, elaborated by Ascopiave S.p.A.

Its performance, and especially its decline, much faster than other raw materials, is explained by the expansion of the offer and the weak demand. The offer has in fact continued to grow because production was higher than expected mainly in Iran, Iraq, Libya and the United States (shale gas). In this changed context of the offer in which new competitors (United States) have become stronger, some countries of the producers' cartel, especially Saudi Arabia and Iraq, have decided to keep their production high despite the excess offer on the market, so that the price of oil can swing stably below $ 100 per barrel and that the exploration of new crude oil shale reserves becomes less profitable (light tight oil, LTO). This strategy is aimed at challenging the considerable amount of oil released by the United States following the application of hydraulic fracturing techniques (fracking), through which the US production has increased by over 50 % in the last four years. Moreover, as concerns the demand, a limited growth below expectations for the Euro area, Japan and China has led operators to revise downward the estimated oil consumption for the next periods.

Brent trend 2014

Source: EIA, elaborated by Ascopiave S.p.A.

Gas sales prices applied to the protected market are determined based on the Dutch gas Stock Exchange (TTF) quotations. On the other hand, the purchase prices of Ascopiave Group's supply agreements are mainly adjusted to the trend of the above-mentioned market.

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Title Transfer Facility trend 2014

Source: Ascopiave S.p.A elaborations.

The gas market: the European scenario

The gas system in Europe: Natural gas is a cleaner fossil fuel than coal and oil, easy to control and efficient for distribution and use, and the current economic scenario offers a good alternative in the immediate path towards sustainability. Its use does not require new technological innovations and, at the same time, it is estimated that its conventional reserves can be a good source of energy for several years. Given the commitment undertaken by the EU to reduce greenhouse-effect gases by 80-95% with respect to the 1990 levels, in the context of the necessary reductions that the developed countries have to jointly implement (Energy Road Map 2050) and in the face of a progressive decrease in domestic production, Europe and Italy are continuing on their way to the development and enhancing of infrastructures for the import and storage of natural gas in search of a more diversified and flexible procurement. However, if until a few years ago the European scenario of the gas market based its development forecasts on a number of rather well-known elements, in recent years something unexpected has changed what was imagined in previous years. The economic downturn has caused a decline in demand in many areas: the boom of renewable energy sources, the decrease in domestic production and the increasingly important role of LNG, which was rather predictable, were all factors that had already been considered in the evolutionary scenarios developed in recent years. However, the recent evolution of the U.S. market in this area through the application of new extraction technologies and, subsequently, the strong competitiveness of coal in thermal power generation was not expected. Due to a sudden increase in the availability of gas from "unconventional" reserves (shale gas), the U.S. market has soon become a significant potential exporter of LNG at an international level, whereas before it was considered a possible large importer. The technological developments of the oil and gas extraction industry have enabled the production of large quantities of gas at competitive costs, further aggravating the situation of oversupply in the European market as a result of the economic crisis intervened since 2008.

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In the context of this change in the evolutionary scenario, Europe is continuing the integration of infrastructures and market, but at the same time it is also exploring the potential use of natural gas in fields in which it had not been traditionally used (for example, it is envisaged to use compressed natural gas -CNG- in the transport sector for urban mobility and to avail of LNG for the transport of heavy goods over long distances and in the maritime transport of passengers and goods). The strategy drawn up by the European Commission in relation to alternative fuels (Clean Power for Transport: A European alternative fuels COM, 2013), aimed at encouraging the diversification of energy sources used for transport, together with the unification and integration of the European gas market, falls within the scope of a project aimed at identifying a possible outlet for the use of surplus gas supply in Europe as a result of the decrease in demand for traditional uses (heat and electricity), a consequence of the economic crisis, and of the placing on the market of "unconventional" gas stocks.

The gas market: the Italian scenario

Gas demand in Italy and its coverage sources In the solar year 2014, the gross domestic consumption of gas in Italy recorded a decrease of 11.6% as compared to 2013, reaching 61.91 billion cubic metres (source: Ministry of Economic Development.) Demand highlights a reduction as compared to the previous year with a decrease of 8.12 billion cu.m., significantly influenced by the indirect effect of the economic crisis and the fall in demand for electricity. The coverage of gas demand was performed mainly through the recourse to import sources that in 2014 achieved a level of 55.76 billion cu.m., with a decrease of 6.21 billion cu.m. compared to 2013 (-10.0%). With respect to 2013, the quantities traded are recording a recovery only at the interconnection point connected to Russia (Tarvisio -13.6%) and Northern Africa (Gela +14.2% and Mazara del Vallo -45.6%). The volumes of gas imported from the entry point in Cavarzere (coming from the LNG terminal commissioned in the second half of 2009) reduced (-17.3% as compared to 2013), whereas the volumes coming from the LNG in Panigaglia are increasing (+78.3% as compared to 2013).

National production of natural gas In 2014, Italian production of gas, equal to 7.15 billion cubic metres, recorded a decrease of 7.6% as compared to 2013, covering approximately 11.55% of the national consumption. The gas supplies in Italy are running out, and the contribution of national production to cover requirements will become ever more marginal.

Development prospects for Gas Demand in Italy Given the great uncertainty surrounding the outlook for demand, both in terms of the evolution of economic growth and the new fierce competition of other energy sources, there are now several scenarios about the future evolution of the Italian gas demand. The International Energy Agency (IEA), within the "New Policies Scenario", forecasts that in Italy gas consumption will be substantially stable until 2020. In recent years, our Country has shown a downward trend in natural gas consumption, due to the influence of both the economic downturn and the fiercer competition of renewable sources in the electricity generation sector. This decline in demand, together with the regulatory and infrastructural interventions undertaken in recent years at both national and European level, have led to a substantial alignment of Italian gas prices with European prices. The actions aimed at

______Ascopiave Group - Annual Financial Report as at 31 st December 2014 16 Ascopiave Group ______market organization and enhancement of the structures in Italy, continued throughout 2013 and promoted the integration of the gas sector in the EU context. In the future, an important contribution to integration and competitiveness of the Italian gas market is expected with the completion and commissioning of new projects for the supply of gas. Although Italy has shown a decrease in gas consumption in recent years, because of its strong dependence on this commodity, it is included among the European countries most associated with gas consumption, so that it can still be defined as a "Gas Country". Thanks to the presence of a well diversified portfolio of supplies from various regions (mainly North Africa, Norway, Russia and The Netherlands), featuring an already high level of competition and a large storage potential, the Italian market has all the necessary characteristics to truly become a reference market in Europe. If the country continues to invest in infrastructure development, particularly with regard to the interconnections with the rest of the European gas network and the reverse flows, in order to create a single integrated network not affected by congestions, and if it proves that it has a flexible system capable of systematically meeting peaks in demand, it will be highly possible for the Italian gas market to become a reference market in Europe as the main South-European hub.

The gas system in Italy: import and re-gasification infrastructures The situation of infrastructural lack that characterized our country in recent years can be considered solved, at least for the immediate future and given the current economic situation. Nevertheless, several infrastructure development projects intended for the enhancement of the system capacity are being examined or are already approved.

Infrastructures Italy - Methane Pipelines Italy

As confirmed by the "Rating of new infrastructures for importing gas in Italy", published by Nomisma Energia at the end of 2014, many of the new pipelines that would boost gas supplies in Italy have been authorized and are awaiting investment decisions for their effective implementation by the subjects which proposed them.

Pipeline (company) Capacity Details (Trans Adriatic Pipeline), pipeline that will connect Greece to Puglia through Albania and the Adriatic Sea, will provide access to natural gas TAP (Trans Adriatic Pipeline Company) 10 - 20 mld mc / year reserves located in the region of the Caspian Sea, in Russia and the Middle East. (Italy Greece Interconnector) pipeline that through Greece and Turkey will allow Italy to import quantities of natural gas from the Caspian Sea

In Project In IGI - POSEIDON (Edison, DEPA) 8.8 mld mc / year (Azerbaijan in particular) and the Middle East (especially Iran and Iraq) where there are the largest global reserves. GALSI 8 mld mc / year Gas pipeline that will link Algeria to Italy via Sardinia. Source: NE Nomisma, Ministry for the Economic Development. Elaborated by Ascopiave S.p.A.

Infrastructures Italy - Re-gasification Plants

Over the past few y ears, re-gasification has become a seriously competitive supply alternative to methane pipelines. Apart from cost competitiveness, many national and international operators of the sector see the recourse to the re- gasification infrastructure as the most efficient way to directly access the end user market, bypassing the obstacles presented by the limited shipment capacity available on the import gas pipelines networks.

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Besides the current plants (Panigaglia - La Spezia, Porto Levante - Rovigo and Livorno Offshore - Livorno), our Country has at its disposal at least a dozen of projects regarding the realization of new LNG terminals. Because of the bureaucratic difficulties, the litigations filed by the local bodies, the technical setbacks and, above all, the decisions taken by the potential investors following the development prospects of the industry and the profitability of the investments, we believe that not all of them can be realised. GNL (Site) Company Porto Empedocle Nuove Energie Gioia Tauro (RC) LNG Med Gas Terminal Offshore Falconara (AN) API Zaule (TS) Gas Natural International Panigaglia (SP) (expansion) ENI FSRU offshore Gaz de France

In In Project Monfalcone (GO) Smart Gas Offshore Monfalcone (GO) Terminal Alpi Adriatico Rosignano Marittimo (LI) Edison, BP Taranto Gas Natural International

Source: NE Nomisma, Ministry for the Economic Development. Elaborated by Ascopiave S.p.A.

Gas sale

Gas sale is one of the most important activities of the Group in terms of contribution to company revenues. This is a liberalised activity, in which a competitive comparison has developed between the operators, which will become ever fiercer following further opening of the markets upstream of the chain (production and import). The majority of analysts foresee that, on the medium term, shares will be redefined between the strongest subjects, and there will be an overall reduction in the number of operators.

Gas distribution

Gas distribution is the second activity of the Group in terms of contribution to company revenues. This activity is carried out as a concession or direct allocation and, as such, is subject to strict regulation by the public authorities, with regards to both management methods and tariffs. As it is known, Legislative Decree no. 164/2000 introduced the compulsory allocation of the gas distribution service through a call for tenders, assuming that a competition mechanism involving the selection of the provider would allow for a limitation of costs for the end customer and an improvement in the quality of the service supplied. Law Decree 159/2007 (Law 222/2007) has introduced, for the first time, the concept of Territorial Tender, subsequently definitely adopted as a basic rule for the sector with Legislative Decree 93/2011 which has forbidden, commencing June 2011, the launch of invitations to tender in the single Municipalities, ratifying the obligation to launch tenders exclusively in minimum territorial areas. Therefore, as to the distribution activity as well, the majority of analysts foresee, in the medium term, a strong concentration in the offer, with a reduction in the number of operators and an enlargement of the average size of the companies.

______Ascopiave Group - Annual Financial Report as at 31 st December 2014 18 Ascopiave Group ______

From 2011, with special reference to calls for tenders in territorial areas, the regulatory framework of the industry was updated yet again through the issuance of a number of ministerial decrees. In particular : 1) the Decree dated 19 th January 2011 issued by the Ministry for economic Development in agreement with the Ministry for the Relationship with Regions and Territorial Cohesion, the territorial areas for issuing calls for tenders to entrust the gas distribution service were identified; 2) with subsequent Decree dated 18 th December 2011, the municipalities belonging to each territorial area were also identified (the so-called Territorial Areas Decree); 3) the Decree issued by the Ministry for Economic Development and the Ministry of Employment and Social Policies on 21 st April 2011 contained provisions ruling the social effects connected to the assignment of the new gas distribution concessions, thus implementing paragraph 6 of art. 28 of Legislative Decree no. 164 issued on 23 rd May 2000 (the so-called Workforce Protection Decree); 4) with the Decree issued by the Ministry for Economic Development on 12 th November 2011, the regulatory norms concerning the criteria to be applied to calls for tenders and the evaluation of the offer for assigning the gas distribution service were approved (the so-called Decree for Criteria). The issuance of ministerial decrees played a major role in giving certainty to the competitive environment within which operators will move in the coming years, thus laying the foundations for allowing the process of market opening - that started with the implementation of European directives - to produce the benefits hoped for. The Ascopiave Group - as indeed many other operators - favourably welcomed the emerging regulatory framework, believing that it actually creates important opportunities for investments and development to qualified operators of medium size, going in the direction of a positive rationalization of the offer. At the end of 2013, with Law Decree 23/12/2013, no. 145, converted with amendments into Law 9/2014, art. 15, paragraph 5 of Legislative Decree 164/2000 which provides for the determination of the reimbursement value of the plants due to the outgoing operator at the end of the so-called "Transitional Period" was substantially modified. In June 2014, the Decree of the Minister of Economic Development containing the “Guidelines for criteria and application procedures for the assessment of the reimbursement value of natural gas distribution networks” entered into force, which, although formally aimed at explaining the criteria to assess the value of plants pursuant to art. 5 of Ministerial Decree 226/2011, essentially establishes a peculiar framework, which implements only to a minimum extent art. 5 above. Subsequently, with Law Decree 91/2014, amended and converted into Law 116/2014, another substantial change was made to art. 15, paragraph 5 of Legislative Decree no. 164/2000. The contents of the revised text and its evolution are described in sections "National regulations" and "Goals and policies of the Group and description of risks" of this financial report.

The regulatory framework

National regulations

Legislative Decree no. 21 dated 21 st February 2014 - "Implementation of directive 2011/83/EU on Consumer rights, amending Directives 93/13/EEC and 1999/44/EC and repealing Directives 85/577/EEC and 97/7/EC.

______Ascopiave Group - Annual Financial Report as at 31 st December 2014 19 Ascopiave Group ______

On 21 st February 2014, through Legislative Decree 21/02/2014, no. 21, published in the Official Gazette no. 58 of 11.03.2014, the national law has implemented Directive 2011/83/EU on consumer rights with which European standards governing agreements finalized between professionals and consumers were simplified and harmonized. In particular, the measure has changed, limited to Articles 45 to 67, Chapter I - Title II - Part III of the Consumer Code. The new provisions came into force on 13 th June 2014 and apply to agreements entered into after that date. The main novelties are: - The revision of the minimum pre-contractual information to be provided to the consumer in the event of distance or off-premises agreements, including the possible existence of the right of withdrawal, and the terms and procedures for the exercise of this right; - The redefinition of the formal minimum requirements for agreements negotiated outside of business premises including the obligation to provide to the consumer, on paper or, if the latter agrees, on another durable medium, both compulsory pre-contractual information and the copy of the signed agreement or its confirmation; - The review of the regulations governing the right of withdrawal, which allows consumers, in the event of distance or off-premises agreements, to terminate the contract within 14 calendar days from the date of finalization of the agreement without providing any reasons and incurring any cost; - The introduction of the possibility for the consumer to ask that the supply starts during the available period to exercise the right of withdrawal, accompanied by the obligation for professionals to receive an explicit request on a durable medium; - The redefinition of the formal minimum requirements for distance agreements, including, in the event of telephone agreements, the obligation for the professional to obtain written confirmation of the offer or, if the consumer agrees, on another durable medium.

Law Decree no. 47 dated 28 th March 2014, converted with amendments into Law dated 23 rd May 2014, no. 80 - Urgent measures for the housing crisis, the construction market and for Expo 2015 (so-called House plan). With the above-mentioned decree, converted with amendments into Law dated 23rd May, no. 80 and published in the Official Gazette no. 73 of 27/05/2014, the Government has approved the so-called House plan which introduces provisions to fight the illegal occupation of buildings. Article 5 of the measure establishes, with effect from 28.05.2014, that electricity and gas connection services cannot be requested in the forms of conclusion, cadastral registration change, renewal, for individuals who are unable to provide the certificate attesting the ownership, regular possession or the regular occupation of the real estate unit for which they require the connection. The same article also provides that the deeds pertaining to the connection of these services are invalid, and cannot be signed or otherwise adopted, if they do not contain the identification data of the applicant and the certificate proving ownership, regular possession or regular occupation of the real estate unit for which they require the connection. The scope of this intervention therefore introduces the obligation for service providers to receive from customers, in order to verify the data and enter them in the agreement, either: - appropriate original documentation, or its certified copy, of the certificate that attests ownership, regular possession or regular occupation of the property; or:

______Ascopiave Group - Annual Financial Report as at 31 st December 2014 20 Ascopiave Group ______

- self-executed affidavit pursuant to art. 47 of the consolidated text in compliance with the decree of the President of the Republic dated 28 th December 2000, no. 445, certifying the ownership, regular possession or regular occupation of the real estate unit. Following a parliamentary question submitted by some members on 05.11.2014, the Ministry of Infrastructure and Transport, with response class. 2750 / CQC, clarified the application timeframe of the rule excluding its retroactive application. On this occasion, the Ministry expressed some considerations relating to the subjective and objective scope of the rule that seem to confirm the limitation of the regulations to household customers only, and that it also applies to switching.

Reference regulatory frameworks

Excise duties and VAT

Circular of Agenzia delle Dogane e dei Monopoli (Customs Agency) Prot. no. 77415 RU dated 30 th July 2014 - Tax treatment of natural gas used at hospitals. With this circular, Agenzia delle Dogane e dei Monopoli, on the basis of a reasoned opinion issued by Avvocatura di Stato (Government Legal Service), acknowledged that the hospital activity performed within the National Health System falls within the scope of productive industrial activities of healthcare and accommodation services. Following this interpretation, therefore, the tax provisions of art. 26 of Legislative Decree 504/1995 (Consolidated Law on excise duties - T.U.A.), shall be applied for the uses of natural gas for combustion in public hospitals. With subsequent Circular Prot. no. 121523 dated 14.11.2014, Agenzia delle Dogane clarified the objective scope and the timeframe for the application of the new tax regime and in particular that the tax treatment shall be applied both to uses intended for hospital services in the strict sense, and to those intended for activities connected to such services.

Law no. 190 dated 23 rd December 2014 - Provisions for the preparation of the annual and long-term budget of the State (2015 Stability Law). With Financial law no. 190 dated 23.12.2014, published in the Official Gazette no. 300 of 23.12.2014, the legislator has introduced into our system new "anti-evasion" methods. First of all, the so-called "reverse charge" mechanism whereby the VAT on the invoice issued is not collected by the vendor, but directly paid by the Customer to the Treasury, was extended to the energy sector as well. In the second place, starting from 01/01/2015, the mechanism of the so-called "split payment" was introduced, according to which, for the supply of goods and services rendered to the Public Administration, VAT, instead of being paid, as tax recovery, to the companies selling goods or providing services, shall be paid by Public Administrations directly to the Treasury, according to procedures and deadlines established by subsequent Decree of the Ministry of Economy and Finance. Following the introduction of this provision, therefore, the invoices sent to the Public Administration shall be prepared with the indication of VAT according to the ordinary method, but it shall be deducted within the same invoice.

Provisions of the AEEGSI

The main measures issued by the AEEGSI during 2014 are the following :

______Ascopiave Group - Annual Financial Report as at 31 st December 2014 21 Ascopiave Group ______

Update of the economic conditions of supply

1st quarter 2014

Natural gas

With Resolution 633/2013/R/gas dated 27 th December 2013 , the AEEGSI updated the values of compulsory tariff components for natural gas distribution, sale and metering in force since 1 st January 2014. These updates concern in particular the following components: τ1 (dis), τ1 (mis), τ1 (cot) and τ3 (dis). With resolution 639/2013/R/gas dated 27 th December 2013 , the Authority updated the economic conditions applicable to Customers in the protected market for the quarter January – March 2014. These updates concern in particular the following components:

- Cost of gas supply to the wholesale market (C MEM ), equal to 8.418603 Euro/GJ, as well as some elements which compose it, specifically:

o the element PFOR,t (ex QE t calculated only based on quarterly forward prices at TTF hub);

o the element QT PSV to cover transportation costs from the Italian border to the virtual trading point, equal to 0.142812 Euro/GJ; o the element to increase the variable fee CV applied in the transport service of volumes injected into the

network (QT MCV ), equal to 0.065447 Euro/GJ; - variable fee to cover the costs of transporting the self-consumption gas, the network losses and unaccounted for gas

(QTV t), equal to 0.017847 Euro/GJ; - Fee to cover the costs of transporting gas from the virtual trading point to the point of delivery of the transport

network (QTF i). With the same measure changes have been introduced to the TIVG, providing for the value replacement of the element

QT PSV , equal to 0.142812 Euro/GJ and element λ, equal to 0.002120 and introduced the obligation for Sellers to pay to

Cassa Conguaglio the amount coming from the application of CPR component to end customers served at economic conditions of protection. With Resolution 641/2013/R/com dated 27 th December 2013, tariff components were updated to cover the general costs of the system. The AEEGSI has estimated that, from 1 st January 2014, the reference price of gas was 86.27 Euro cents per cubic meter, taxes included. For the typical customer, that is a family with independent heating and annual consumption of 1.400 cubic meters, this implies a cost of about Euro 1,207.79 a year, divided as follows: 41.24% for natural gas supply and related activities; 35.25% for taxes including excise taxes (17.72%), the regional additional tax (2.35%) and VAT (15.18%); 13.67% for distribution and metering; 3.19% for transport; 0.98% for the gradual implementation of the economic condition reform of the protection service of natural gas and the mechanism of renegotiation of long-term supply contracts; 5.67% for retail sales. With Resolution 95/2014/R/gas dated 7th March 2014 , the AEEGSI, following the consultations pursuant to DCO (Consultation Document) 24/2014, defined the procedures for determining the economic conditions of the protection service of natural gas for the thermal year 2014/2015. In particular, the measure confirmed the calculation methods

______Ascopiave Group - Annual Financial Report as at 31 st December 2014 22 Ascopiave Group ______currently in use for the valuation of the component CMEM (component covering the procurement costs of wholesale markets) - quarterly OTC forward prices at the TTF hub and related logistics costs (art. 6.2 of TIVG); element QT PSV was re-parameterized commencing 1st January 2014; the value of the reduction, 0.75 Eurocent/scm, applied to the thermal year 2014/2015, is recognized, in the thermal year 2016/2017, regarding the component GRAD (component covering the gradual implementation of the reform), compared with the value previously established by Resolution 196/2013 (from 1.25 to 0.5 Eurocent/scm); it was established that the component CCR (component to cover the costs of activities related to the mode of procurement of wholesale natural gas and related risks), for the summer period (April- September 2015), has a value equal to 2.72 Eurocents/scm, while in the winter period (October 2014 - March 2015) the valuation of profile risks (RP) and winter weather events (RECI) is subject to the outcome of storage auctions.

Electricity

With Resolution 637/2013/R/eel dated 27 th December 2013 the AEEGSI introduced the update, with effect from 1 st

January 2014, of the values of the following tariff components: PCV, DISP BT , RCV. With Resolution 638/2013/R/eel dated 27 th December 2013 , for the quarter January-March 2014, the economic supply conditions applicable to protected customers were updated. The updates published include in particular: components PE and PD and the fees PED and PPE. With Resolution 641/2013/R/com dated 27 th December 2013 the AEEGSI introduced the update, with effect from 1 st January 2014, of the values of the tariff components for the coverage of general charges and further components (components A, UC, MCT). From 1 st January 2014, the AEEGSI fixed the reference price of electricity at Eurocents 19.189 per kilowatt hour (tax included) and forecast an average annual cost for an average family approximately equal to Euro 518 and broken down as follows: 51.25%, for the costs energy procurement and retail sales; 14.71% for network services (transmission, distribution and measurement); 20.75% for general system costs, fixed by law; 13.30% for taxes including VAT and excise duties.

2nd quarter 2014

Natural gas

With Resolution 133/2014/R/com dated 28 th March 2014 , from 1 st April 2014, the values of the tariff components for the coverage of general charges in accordance with the gas distribution mandatory tariff in force since 1 st January 2014 were confirmed. The values which were reconfirmed involved the following components: GS, RE, RS and UG1. With Resolution 134/2014/R/gas dated 28 th March 2014, for the quarter April to June 2014, the economic conditions of protection service provision, and in particular the following components, were updated: C MEM (Euro/GJ 7.381666), specifically the value of P FOR, t is equal to 6.711740 Euro/GJ; C PR (which has increased from 0.35 to 1.55

Eurocents/scm) and QTV t (Euro / GJ 0.015649). Commencing 1st April 2014, the AEEGSI fixed the reference price of gas at Eurocents 83.01 per cubic meter, including taxes. For the average customer, that is a family with independent heating and annual consumption of 1.400 cubic meters, this implied a cost of about Euro 1,162 a year, divided as follows: 37.89% for natural gas supply and related activities; ______Ascopiave Group - Annual Financial Report as at 31 st December 2014 23 Ascopiave Group ______

36.04% for taxes including excise taxes (18.42%), the regional additional tax (2.44%) and VAT (15.18%); 14.41% for distribution and metering; 5.89% for retail sales; 3.30% for transportation; 2,47% for the gradual implementation of the gas reform and the mechanism of renegotiation of long-term supply contracts..

Electricity

With Resolution 133/2014/R/com dated 28 th March 2014 , the AEEGSI introduced the update, with effect from 1 st April 2014, of the values of the tariff components (A, UC, MCT) for the coverage of general charges and further components of the electrical sector. With Resolution 136/2014/R/eel dated 28 th March 2014 , the AEEGSI introduced the update of the values of the tariff electrical components (and in particular the components RCV and DISP BT ) and, for the quarter April-June 2014, of the economic supply conditions applicable to protected customers (in particular the components PE and PD and the corresponding PED and PPE). Commencing 1 st April 2014, the AEEGSI fixed the reference price of electricity at Eurocents 18,975 per kilowatt hour (tax included) and forecast an average annual cost for an average family approximately equal to Euro 512 and broken down as follows: 49.43%, for the costs energy procurement and retail sales; 15.80% for network services (transmission, distribution and measurement); 21.43% for general system costs, fixed by law; 13.34% for taxes including VAT and excise duties.

3rd quarter 2014

Natural gas

With Resolution 311/2014/R/com dated 27 th June 2014 , the values of the tariff components for the coverage of general charges pursuant to the mandatory gas distribution tariff in force since 1 st January 2014 were confirmed again

(components: GS, RE, RS and UG 1). With Resolution 313/2014/R/gas dated 27 th June 2014 , the economic conditions of protection service provision were updated for the quarter July to September 2014.

The updates published, in particular, concern: the component C MEM (Euro/GJ 6.216480), specifically the value of the element P FOR,t is equal to 5.535417 Euro/GJ; the component QTV t (Euro/GJ 0.013179); the element QT MCV (Euro/GJ

0.076584) and the component UG 3 belonging to the mandatory tariff for distribution and measurement services. Commencing 1 st July 2014, the AEEGSI calculated a reference price of gas equal to Eurocents 77.76 per cubic meter, including taxes. For the typical customer, that is a family with independent heating and annual consumption of 1.400 cubic meters, this implied a cost of about Euro 1,088.70 a year, divided as follows: 34.67% for natural gas supply and related activities; 37.45% for taxes including excise taxes (19.66%), the regional additional tax (2.61%) and VAT (15.18%); 15,45% for distribution and metering; 3.51% for transportation; 2.63% for the gradual implementation of the gas reform and the mechanism of renegotiation of long-term supply contracts.; 6.29% for retail sales.

Electricity

______Ascopiave Group - Annual Financial Report as at 31 st December 2014 24 Ascopiave Group ______

With Resolution 311/2014/R/com dated 27 th June 2014 , the AEEGSI introduced the update, commencing 1 st July 2014, of the values of the tariff components for the coverage of general charges and further components of the electricity sector. The updates published concern, in particular: components A as well as general charges, additional st components and fee TS max . The resolution also confirmed the values, in force since 1 April 2014, of the component A6 and components UC and MCT. With Resolution 312/2014/R/eel dated 27 th June 2014 , the AEEGSI introduced the update of the values of electrical tariff components and, for the quarter from July to September 2014, of the supply economic conditions applicable to protected customers (PE and PD components and fees PED and PPE). From 1 st July 2014, the AEEGSI calculated a reference price of electricity equal to 18.975 Eurocents per kilowatt hour (tax included) and forecast an average annual cost for the average family of approximately 512 Euro and broken down as follows: 49.25%, for the costs of energy procurement and retail sales; 15.80% for network services (transmission, distribution and measurement); 21.61% for general system costs, fixed by law; 13.34% for taxes including excise taxes and VAT.

4th quarter 2014

Natural gas

With Resolution 162/2014/R/gas dated 4 th April 2014 , the AEEGSI amended the economic conditions of the protection service, defining the levels of the component relating to the costs and risks of wholesale procurement (CCR) for the thermal year 2014/2015 and identifying the source of the measurements for the determination of the raw material component. Specifically, this component has now a winter value (from 1 st October 2014 to 31 st March 2015) equal to 0.722248 Euro/GJ, whereas for the summer period (from 1st April 2015 to 30 th September 2015) the value of 0,707268 Euro/GJ is confirmed. With Resolution 458/2014/R/com dated 29 th September 2014 , also for the third quarter of 2014, the values of the tariff components for the coverage of general charges in accordance with the mandatory gas distribution tariff in force st since 1 January 2014 were confirmed (components: GS, RE, RS and UG 1). With Resolution 460/2014/R/gas dated 29 th September 2014 , the AEEGSI amended the economic conditions of the protection service related to the quarter October – December 2014.

The updates, in particular, concern: the component C MEM (equal to Euro/GJ 7.517823); the component QTV t (Euro/GJ

0.015938); the element QT MCV (equal to Euro/GJ 0.285566) and the C PR component (equal to 0.3500 Eurocent/scm, with a reduction of 1.22 Eurocent/scm as compared to the previous quarter). The AEEGSI calculated that, in the quarter, the higher expense for the average customer, that is a family with independent heating and annual consumption of 1,400 cubic meters, was about 19 Euro (+5.4% as compared to the previous quarter).

Electricity

With Resolution 458/2014/R/com dated 29 th September 2014 , the AEEGSI introduced the update, commencing 1 st October 2014, of the values of the tariff components for the coverage of general charges and further components of the electricity sector. The updates published concern, in particular: components A as well as general charges, additional ______Ascopiave Group - Annual Financial Report as at 31 st December 2014 25 Ascopiave Group ______

st components and fee TS max . The resolution also confirmed the values, in force since 1 April 2014, of the component A6 and components UC and MCT. With Resolution 459/2014/R/eel dated 30 th September 2014 , the AEEGSI introduced the update of electrical tariff components and, for the quarter October-December 2014, of the economic supply conditions applicable to protected customers (components PE and PD and fees PED and PPE). The AEEGSI calculated that, since 1 st October 2014, due to these adjustments, the higher expense for the average family was about Euro 2 (+1.7% as compared to the previous quarter).

1st quarter 2015

Natural gas

With Resolution 550/2014/R/gas dated 10 th November 2014 , the AEEGSI introduced provisions relating to the component of retail sale marketing (QVD) pursuant to art. 7 of TIVG; in particular, it updated the QVD component commencing 1 st January 2015 and its subsequent revision and structure. Compared to the QVD levels in force until 31 st December 2014, from 1 st January 2015 the values of the variable quota (0.7946 Eurocent/scm) are confirmed, whereas the fixed quota has increased by 0.41 Euro/Redelivery Point for households (from 57.35 to 57.76 Euro/Redelivery Point) and 0.54 Euro/Redelivery Point for condominiums (from 75.32 to 75.86 Euro/ Redelivery Point). In the same resolution, the AEEGSI, in order to valuate the QVD: recognizes a level of unpaid ratio of 1.99% (instead of 1.89%); postpones the possible introduction of a different ratio between fixed and variable quota, subsequent to an actual evaluation of the possible effects in terms of competition; postpones the review of credit management costs to the biannual update of QVD, that is from 1 st October 2015. With Resolution 672/2014/R/gas dated 29 th December 2014 , the AEEGSI updated the supply economic conditions of the protected service, for the quarter January-March 2015. The updates published with this resolution concern in particular: the component CMEM (fixing its value at 7.466763

Euro/GJ); the element P FOR,t (element to cover the costs of natural gas supply); the element QTV t; the element λ

(percentage recognized with reference to network leakage and gas not recognized); the element QTF i (fee to cover the costs of transportation of gas from the Virtual Trading Point to the transport network); the element QT MCV (CV variable coverage element applied within the transport service to the volumes placed on the network, upstream of the Virtual

Trading Point); the element QT PSV (element to cover the transportation costs from the Italian border to the Virtual Trading Point); UG3, belonging to the mandatory tariff for distribution and measurement services. With Resolution 675/2014/R/com dated 29 th December 2014 , the AEEGSI defined the values of the components for the coverage of general charges in accordance with the mandatory tariff of the distribution service and the values of the compensation of expenses incurred for the supply of natural gas. The updates published concern, in particular: the component GS; the component RE; the component RS and the component UG 1. From 2015, the components above are amended with two separate rates to be applied to annual consumption up to 200,000 standard cubic meters and higher than 200,000 scm. From 1 st January 2015, the AEEGSI calculated that a reference price of gas for the average customer, that is a family with independent heating and annual consumption of 1,400 cubic meters, is equivalent to 81.73 Eurocents per cubic meter, including taxes, divided as follows: 38.59% for natural gas supply and related activities; 36.36% for taxes including excise taxes (18.70%), the regional additional tax (2.48%) and VAT (15.18%); 14.19% for distribution and ______Ascopiave Group - Annual Financial Report as at 31 st December 2014 26 Ascopiave Group ______metering; 3.80% for transportation; 1.04% for the gradual implementation of the gas reform and the mechanism of renegotiation of long-term supply contracts; 6.02% for retail sales.

Electricity

With Resolution 670/2014/R/eel dated 29 th December 2014 , the AEEGSI approved the update, commencing 1 st January 2015, of the values of the electricity tariff components. The updates published concern, in particular: the component PCV, the component DISP BT and the component RCV. With Resolution 671/2014/R/eel dated 29 th December 2014 , the AEEGSI approved the update of the values of the electricity tariff components and, for the quarter January-March 2015, of the supply economic conditions applicable to protected customers (components PE and PD and fees PED and PPE). With Resolution 675/2014/R/com dated 29 th December 2014 , the AEEGSI approved the update, commencing 1 st January 2015, of the tariff components for the coverage of general charges and further components of the electricity sector. The updates published concern, in particular: components A, A6, UC and MCT, and general expenses, additional components and fee TS MAX . Following the implementation of Law Decree 91/14, the differentiation in fees related to system costs of non-household LV users is also planned for: • other LV users with available power up to 16.5 kW; • other LV users with available power higher than 16.5 kW. This diversification results in a reduction of fees related to components A3, A4 and UC3 for users with available power higher than 16.5 kW. Commencing 1 st January 2015, the AEEGSI calculated a reference price of electricity for the average Customer equal to 18.72 Eurocents per kilowatt-hour (including tax), broken down as follows: 45.78%, for the cost of procurement of energy and retail sales; 17.58% for network services (transmission, distribution and measurement); 23.24% for general system costs, fixed by law; 13.40% for taxes including excise taxes and VAT.

Other provisions of the Natural Gas Sector

With Resolution 40/2014/R/gas dated 6 th February 2014 as amended – Provisions on safety assessments of users' gas systems - amended and supplemented by Resolution 261/2014/R/gas dated 06.09.2014, the AEEGSI issued new provisions on safety assessments of users' gas systems, in force since 01.07.2014. In particular, the measure envisages: - The repeal of the regulations provided by Resolution 40/2004/R/gas and its annexes; - The update of the types of users subject to the regulations (the scope of which coincides with the gas systems fuelled through pipeline networks for non-technological use under TISG - Attachment A of Resolution 229/2012/R/gas, ie for heating, cooking food, production of hot water and air conditioning); - The increase in fees paid to the Distributor to cover the costs incurred for the assessment activity; - The adjustment of the thermal capacity intervals of gas systems; - The confirmation of the obligation for the Seller to send the Customer through the bill, by 30.06.2014 each year, information on the obligations regarding system safety;

______Ascopiave Group - Annual Financial Report as at 31 st December 2014 27 Ascopiave Group ______

- A review of the mandatory content of the information that the seller is required to publish in the section "post meter safety assessments" on its website; - The implementation of the regulations on safety of modified or transformed systems. With Resolution 64/2014/R/gas dated 20 th February 2014 - Control of the quality of distribution and gas metering services for the 2014-2019 regulatory period - the AEEGSI introduced an amendment, and the correction of some material errors, in Annex A of Resolution 574/2013/R/gas - Control of the quality of distribution and gas metering services for the 2014-2019 regulatory period. With Resolution 74/2014/E/gas dated 27 th February 2014 - Approval of telephone check programme and inspections at gas distribution companies as concerns emergency interventions - the AEEGSI launched the campaign of telephone checks and inspections in compliance with the regulations on gas emergency, for the year 2014. With Resolution 84/2014/R/gas dated 27 th February 2014 – Regulations on arrears and services of last resort: amendments and additions to the TIMG and the TIVG - in response to comments received during the consultation pursuant to paragraph 4.4 of Resolution 533/2013/R/gas, the AEEGSI amended and supplemented the provisions of the Gas Arrears Consolidated Text (TIMG) and the Gas Sales Integrated Text (TIVG) in order to : - Complete the regulatory framework as concerns requests for the closing and interruption of supply at redelivery points in arrears; - Integrate the regulatory framework on debt transfer of the default service provider; - Change the application procedures relating to legal action aimed at supply interruption. The main measures adopted with respect to the TIMG were as follows: - Increase, commencing 01.07.2014, of the attempts at suspension intervention that the Distributor is required to perform; - Obligation for the Distributor to perform further interruption attempts if the first intervention has failed; - Review of the procedures for submitting requests for power interruption, with the definition of a ceiling of interventions that the Distributor is required to perform in a given period; - Elimination of the obligation for the Seller to provide the Customer with information on the cost of the expenses incurred by the Distributor in relation to legal action aimed at obtaining enforcement of supply interruption at the redelivery point. The main measures adopted with respect to the TIVG were as follows: - Modification of the regulatory provisions regarding end Customers switching previously supplied by the default service provider, in order to limit any opportunistic behaviour on the part of Customers who switch supplier without paying one or more invoices; - Obligation for the new Seller to include in switching requests, under penalty of inadmissibility, the irrevocable offer to purchase a portion of any receivables to the default service provider from the end Customer. With Resolution 131/2014/R/gas dated 27 th March 2014 - Restatement of tariffs, for the years 2011 to 2013, for distribution and gas measurement services and recognition of higher charges arising from the presence of concession fees - the AEEGSI provided for the restatements of reference tariffs and tariff options for 2011-2013, based on requests for rectification and integration of the data reported for tariff purposes. With the same measure, the maximum amount of recognition of higher charges arising from the presence of concession fees pursuant to Article 45 of the RTDG was approved for three locations. With Resolution 132/2014/R/gas dated 27 th March 2014 - Determination of temporary reference tariffs for the services of distribution and measurement of natural gas and restatement of tariff options of different gases, for the year ______Ascopiave Group - Annual Financial Report as at 31 st December 2014 28 Ascopiave Group ______

2014 - the AEEGSI approved the temporary reference tariffs for the services of distribution and measurement of natural gas for the year 2014. The same provision envisaged the restatement of tariff options for the year 2014 and entrusted the Director of Infrastructure, Unbundling and Certification with the conduction of the necessary investigations with the distribution companies and their associations about the implications of the exercise of the option pursuant to Article 2 of Resolution 573/2013/R/GAS. With Resolution 246/2014/R/gas dated 29 th May 2014 - Valuation of natural gas picked up at the redelivery points to which the default distribution service is provided following the failure to physically disconnect them - the AEEGSI implemented the provisions pursuant to Resolution 241/2013/R/gas by defining the methods of quantification of the relative value of the supply of natural gas to be used for payments, by the distribution company, in accordance with Article 43 of the TIVG, in cases of failure to physically disconnect the redelivery points. Furthermore, in order to ensure the certain application of the rules related to these payments to the Cassa Conguaglio, the clarifications requested by the operators about the exact identification of the terms of the aforesaid payments were provided. With Resolution 296/2014/R/gas dated 19 th June 2014 - Provisions related to the phases of accreditation, first population and updating of the official central registry of the Integrated Information System for the natural gas sector - the AEEGSI regulated the phases of accreditation, first population and updating of the official register of the Integrated Information System (SII) for the natural gas sector. In particular, a requirement for Distribution and Transport companies was introduced to provide accreditation to the SII by the deadline of 31/10/2014 and for sales companies within the term of 31.12.2014. Regarding the population and update activities of the Official Central Registry, both phases are delegated to the distribution companies. With Resolution 310/2014/R/gas dated 26 th June 2014 - Provisions for determining the reimbursement value of natural gas distribution networks , the Authority for Electricity, Gas and Water approved provisions with respect to the determination of the reimbursement value of the gas distribution networks, in implementation of the provisions contained in Article 1, paragraph 16 of Law Decree dated 23 rd December 2013, no. 145, converted, with amendments, into Law dated 21 st February, 2014, no. 9. This provision requires the Granting Local Body to send the Authority, for verification purposes, the documentation with the detailed calculation of the reimbursement value (VIR), if this value is 10% higher than the local RAB. With Resolution 326/2014/R/gas dated 3 rd July 2014 - Methods for the refund, to the outgoing operators, of the amounts related to the one-off payment to cover the costs of tenders for the award of the natural gas distribution service - the AEEGSI defined the rules for the reimbursement to the outgoing operators of the amounts to cover tender expenses pursuant to Decree dated 12 th November 2011 no. 226, providing for the application of an interest rate equal to the rate of return on debt used for the determination of the WACC for the services of gas distribution and measurement in the fourth regulatory period and the adoption of the compound interest regime for the determination of interests. With Resolution 342/2014/E/gas dated 17 th July 2014 - Technical checks of gas quality for the period 1 st October 2014 - 30 th September 2015 - the AEEGSI ordered a programme of technical inspections of gas quality, for the period 1st October 2014 - 30 th September 2015. With Resolution 367/2014/R/gas dated 24 th July 2014 , regarding the tariff regulation of the gas distribution and measurement services for the regulation period 2014-2019 for territorial management and other tariff provisions, the Authority for Electricity, Gas and Water has completed the tariff regulation context for the fourth regulatory period of the natural gas distribution service (2014-2019), integrating the existing provisions (approved by Resolution 573/2014/R/gas and related to municipal management) with specific rules for territorial management. These provisions ______Ascopiave Group - Annual Financial Report as at 31 st December 2014 29 Ascopiave Group ______shall take effect from the start of territorial management, that is following the completion of the new tenders to award concessions at a supra-municipal level (Minimum Territorial Area). These provisions concern: (1) the value of local net fixed assets as a result of territorial concessions and criteria for the recognition of the difference between RIV and RAB. In particular, the Authority envisages different recognition assessments of net fixed assets for tariff purposes, distinguishing between the cases where the new operator is different from the outgoing operator and the cases in which the new operator is the same as the outgoing operator (so-called "asymmetric regulation"); (2) the compensations to cover the operating costs for the distribution and operation of the network infrastructures. In particular: the unit amounts recognized for territorial area management are different based on the size of the area itself (reduced unit compensations equal to those currently envisaged for municipal management performed by large enterprises). In addition, new criteria are introduced for gradual updates in the years of concession following the third year; (3) the compensations to cover tender charges: one-off and annual amount (equalling 1% of the sum of local capital return connected to distribution and measurement services and of the related annual depreciation expense); (4) the extension of the useful lives of fixed assets in order to determine depreciation upon transfer to territorial management; (5) the mandatory application of the contribution depreciation option upon transfer to territorial management; (6) the criteria for the re-evaluation of the so-called "depressed" RABs, lower than the average values recognized. In particular, RAB is considered to be "depressed" if its level is lower than 75% of a parametric evaluation defined by the Authority and the depressed RABs will be brought to a level equal to 75% of the parametric evaluation; (7) the redemption value, referred to in Article 14, paragraph 8, of Legislative Decree no. 164/00, at the end of the first territorial concession period. This value is calculated as the sum of: a) the residual value of the existing stock at the beginning of the concession period, assessed for all the fixed assets subject to transfer for consideration to the new operator in the second period of concession based on the redemption value, provided for in Article 5 of Decree 226/11, recognized to the outgoing operator in the first territorial concession, taking into account the depreciations and divestments recognized for tariff purposes in the concession period; b) the residual value of the new investments made in the concession period and existing at the end of the period, assessed based on the re-valued historical cost method for the period in which the investments are recognized in the final balance, as provided in Article 56 of the Tariff Regulation of Gas Distribution and Measurement Services, and as the average between the net value determined based on the revalued historical cost method and the net value determined based on standard cost assessment methods, pursuant to paragraph 3.1 of Resolution 573/2013/R/GAS, for the next period. With Resolution 418/2014/R/gas dated 7 th August 2014 - Public procedures for the identification of Lenders of Last Resort and Default Distribution Service Suppliers for the period 1st October 2014 -30 th September, 2016. Amendments to the TIVG and the TIMG - the AEEGSI has defined the public procedure and criteria by Acquirente Unico to identify the Lenders of Last Resort (FUI) and the Default Distribution Service Suppliers for the period 1 st October 2014 - 30 th September 2016. The innovative aspects introduced as compared to the previous requirements were as follows: - Two-year duration of the services; - Increase in the areas where the service is performed; - Change in the admission requirements of the procedures.

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The resolution has also introduced changes to the TIVG related to the review of the mechanism for covering the costs of default envisaged for FUI and FD D, in order to minimize the socialization burden of the system. Finally, the measure has introduced changes to the TIMG related to the standardization of the communication flows related to gas arrears. With Resolution 420/2014/R/gas dated 7 th August 2014 - Update of percentage values necessary for the definition of the standard pickup profiles for the thermal year 2014-2015 - the Authority for Electricity, gas and water approved the updating of the percentage values necessary for the definition of the standard pickup profiles for the thermal year 2014- 2015, as required by Resolution Del. 229/2012/R/gas (TISG - Consolidated Law on Gas Settlement). The daily percentage values, in addition to being used by the Distributor to determine the estimated readings, can be used by the Seller if the latter uses the pickup profiles methods for calculating consumption estimates billed in advance. With Resolution 532/2014/R/gas dated 30 th October 2014 – the AEEGSI determined, for the period 2014-2019, the starting levels and trends for the distribution companies falling under the scope of awards-penalties of the natural gas distribution service, according to the provisions of Resolution 574/2013/R/gas. With Resolution 634/2014/R/gas dated 18 th December 2014 - Update of tariffs for gas distribution and measurement services, for the year 2015 - the AEEGSI with the resolution above determined the mandatory tariffs for natural gas distribution and measurement services and other gas tariff options, for the year 2015. Consistent with the provisions of article 40, section 9 of the RTDG, the fixed components of the mandatory tariff relating to the distribution service and the metering service were divided into three categories, based on the class of the measurement group. In accordance with that decision, the maximum amount of recognition of higher charges arising from the presence of concession fees, pursuant to Article 59 of the RTDG, was approved. With Resolution 651/2014/R/gas dated 23 rd December 2014 - Provisions concerning the obligations of commissioning of gas smart meters - the Authority for Electricity, gas and water updated the guidelines on commissioning of gas smart meters.

Other provisions of the Electricity Sector

With Resolution 205/2014/R/eel dated 8 th May 2014 - Nationwide tariff experimentation intended for LV Household Customers that use electric heat pumps as the only heating system for their residence - the Authority for electricity, gas and water has implemented the provisions of art. 8 of Resolution 607/2013/R/com about tariff experimentation concerning the application of tariff D1 for low voltage household customers that use electric heat pumps as the only heating system for their residence. The introduction of an experimental tariff (Tariff D1) - applicable from 01.07.2014 and related to network services and general system expenses - allows Customers who apply for it, to pay a constant price for each kilowatt hour consumed, regardless of the total annual consumption. The possibility of offering customers the application of the experimental tariff is merely optional for the Sellers of the free market, whereas it is mandatory for the Sellers of the protected market. The resolution has described in detail the procedure that the Sellers have to follow for the management of the requests received by Customers and requires all Sellers (whether they have adhered or not) to include in the invoicing documents issued to each household end customer a standard communication about the experimentation. Finally, the measure envisages specific obligations for the Sellers who have joined the tariff experimentation (in particular, the publication on their website of a special disclosure, the obligation to provide customers with information ______Ascopiave Group - Annual Financial Report as at 31 st December 2014 31 Ascopiave Group ______about the convenience of joining the experimentation, the conditions which may entail a reduction in expenses and any extra costs applied).

With Resolution 398/2014/R/eel dated 31 st July 2014 - Provisions aimed at the acquisition of ownership of an active pickup point by an end Customer. Regulations for the registration of transfer in the electricity sector - the Authority for Electricity, gas and water introduced new provisions on the registration of transfer procedure in the electricity sector also making changes to the ARG/elt 42/08 "Regulations governing the dispatching service and transport service in cases of succession of a dispatching user to another on the same active pickup point or attribution to a dispatching user of a new or previously disabled pickup point (switching)". In particular, the following were regulated: - New ways of acquiring ownership of an active POD by an end Customer; - New disclosure requirements in case of acceptance or rejection by the existing commercial counterpart of the request of registration of transfer submitted by the end Customer; - The implementation procedures of the new registration of transfer procedure in the Integrated Information System (SII ).

With Resolution 518/2014/R/eel dated 23 rd October 2014 - First provisions on the reduction of electric bills in favour of Customers with medium and low voltage supply with available power higher than 16.5 kW - in accordance with the provisions established by art. 23 of Law Decree 91/2014 (so-called Competitiveness Decree), converted with amendments into Law 116/2014, the first provisions concerning the reduction of electricity bills that guarantee, in favour of certain categories of end Customers with supply contracts powered by medium voltage and low voltage with available power higher than 16.5 kW, a reduction of general system costs and more precisely of the components A and UC, were introduced. The so-called energy-intensive companies that already benefit from the reduction of certain charges were excluded from the scope of this framework.

Other provisions of the Natural Gas and Electricity Sector

With Resolution 176/2014/E/rht dated 17 th April 2014 - Review of the criteria and procedures for the surveillance of compliance with the ban on transferring the "Robin Hood Tax" additional tax - new criteria and procedures were identified for surveillance activities performed by the AEEGSI on the strict compliance with the ban on transferring the additional tax pursuant to Article 81, paragraph 18 of Law Decree 112/08 on consumer prices. In particular, the measure provides that, commencing 2013, the surveillance activities of the Authority are conducted through random checks and only towards those entities whose turnover is higher than the total turnover provided for by art. 16, paragraph 1, first hypothesis, of law dated 10 th October 1990 no. 287 (value equal to Euro 482 million for the year 2013 and Euro 489 million for 2014). The companies whose turnover is below this threshold are not subject to supervision by the Authority, and therefore since the year 2013 are not subject to any fulfilment.

With Resolution 231/2014/R/com dated 22 nd May 2014 - Provisions concerning unbundling obligations for the electricity and gas sectors - the Authority for Electricity, gas and water, following consultations pursuant to DCO ______Ascopiave Group - Annual Financial Report as at 31 st December 2014 32 Ascopiave Group ______

82/2013/R/com, approved the new Consolidated text concerning the obligations of accounting unbundling for companies operating in the electricity and gas sectors and the related communication obligations (TIUC). The most significant innovations were the following: - The review of activity structure and accounting unbundling sectors; - The separation of the reporting obligations of the statements of changes in fixed assets; - The simplification of the disclosure requirements relating to accounting unbundling and particularly the exemption for operators with less than 100,000 customers; - Concerning the gas sector, the introduction of the obligation for the Sellers, from 2014, to separate the accounts relating to protection and last resort and those relating to the free market .

With Resolution 266/2014/R/com dated 6 th June 2014 - Adaptation to Legislative Decree 21/2014, of the Code of Business Conduct and other provisions relating to the protection of consumers - because of the amendments made to the Consumer Code by Legislative Decree 21/2014, with which Directive 2011/83/EU is implemented, the AEEGSI has adjusted its provisions to the new regulations on consumer rights, which came into force on 13.06.2014. The main measures affected by the changes are Resolution ARG /com 104/2010 dated 08.07.2010 - Code of Business Conduct and Resolution 153/2012/R/com dated 19.04.2012 on the preventive and recovery measures in cases of unsolicited contracts and activations . The main amendments made to the Code of Business Conduct concern: - The increase in the number of data prior to the finalization of the contract, particularly in cases of contracts concluded at a distance or away from business premises; - The obligation for the Seller to provide the mandatory information in hard copy or, if the customer agrees, on a durable medium both during the pre-contractual phase and in the contract conclusion phase; - In the event of conclusion of a distance or off-premises agreement, the opportunity for the customer to withdraw without charges and without giving any reason within 14 calendar days from the date of conclusion of the contract, subject to the provisions of the Consumer Code. Regarding Resolution 153/2012/R/com, the measure, in particular, determined that the obligations for the Sellers in case of contracts concluded away from business premises or through forms of remote communication, provided by art. 5 of resolution 153/2014/R/com (confirmation letter or phone call), no longer find application for contracts concluded after 13.06.2014, as they are replaced by the new obligations for this type of Customers by the Consumer Code.

With Resolution 286/2014/R/com dated 19 th June 2014 - Measures for improving the effectiveness of the activities related to the handling of complaints by the Sportello per il consumatore di energia (Office for energy consumers). Amendments to the Regulations of the Sportello and to AEEGSI resolution 99/2012/R/ee - the Authority for Electricity, gas and water, changed the legal context of the "Regulations for the performance by the Sportello per il Consumatore di energia of the activities related to complaints handling", replacing, with effect from 01.01.2015, the Regulations introduced by resolution 548/2012/E/com. Compared with the previous rules, the new text is characterized by: - A review of the methods to manage the activities relating to the handling of complaints that, since the entry into force of the Regulation, will be transmitted through a single communication channel represented by Portale esercenti;

______Ascopiave Group - Annual Financial Report as at 31 st December 2014 33 Ascopiave Group ______

- The update of the overall score of quality and comprehensiveness of the responses of operators to the information requests of the Sportello.

With Resolution 501/2014/R/com dated 16 th October 2014 - 2.0 Bill: criteria for the transparency of bills for the consumption of electricity and/or gas distributed by urban networks - The "2.0 Bill" was approved, introducing the new regulations on transparency of the bills replacing Resolution ARG/com 202/09 "Guidelines for the harmonization and transparency of billing documents of consumption of electricity and gas distributed by urban network". In summary, the main changes introduced by the measure were: - The entry into force of the new provisions as of 01.09.2015; - The introduction of the obligation for all Sellers to draft a concise bill containing a series of minimum mandatory elements; - The obligation for the Seller to make available only upon Customer request (for protected regimes) or according to contractually agreed manners (for the free market), the detailed elements of the amounts invoiced; - The possibility for the Seller to issue electronic bills, unless otherwise notified by the end Customer if the latter belongs to the protection regime; - The introduction of the obligation for the Sellers to publish on their websites a guide to the reading of the bill containing a thorough description of the individual items that make up the amounts billed; - The obligation for the Sellers to inform their Customers about the new regulations on bill transparency at least 30 days before the entry into force of the provisions, specifying the manner in which the Customer can obtain the detailed elements.

With Resolution 505/2014/A dated 16th October 2014 - Approval of the supplementary draft memorandum of understanding in the field of consumer protection between the Autorità garante della concorrenza e del mercato (Antitrust Authority) and the AEEGSI - AEEGSI approves the "Supplementary Memorandum of Understanding in the field of consumer protection between the Autorità garante della concorrenza e del mercato (Antitrust Authority) and AEEGSI". The purpose of the new Memorandum, which integrates the previous one issued in 2012, is to implement the new legislation on consumer rights introduced by Legislative Decree dated 21 st February 2014, no. 21, through the identification of procedures to ensure effective coordination between the two Authorities. The Memorandum envisages that the AEEGSI and the AGCM cooperate while performing their official duties through the establishment of a permanent working group and the mutual exchange of information, data, documents and reports, also establishing precise terms to give the opinion required in this procedure. Finally, the measure has also envisaged that the AEEGSI notifies to the Antitrust authority the unsuccessful attempts of dispute settlement between companies and consumers in the event of agreements in the electricity and gas sectors concluded in breach of the provisions of the Code of Business Conduct, maintaining, in these cases, regulations aimed at settlement, through the use of recovery procedures .

With Resolution 580/2014/R/com dated 27 th November 2014 - Reform of the regulations governing the Quality of telephone services of companies selling electricity and natural gas TIQV - the AEEGSI, following consultations pursuant to DCO 224/2014/R/com and DCO 452/2014/R/com, approved the "Reform of the regulations governing the

______Ascopiave Group - Annual Financial Report as at 31 st December 2014 34 Ascopiave Group ______

Quality of telephone services of companies selling electricity and natural gas - TIQV" replacing, with effect from 1.1.2015, the TIQV approved by resolution ARG / com 164/08 and subsequent amendments and integrations. The new regulations, in particular, have redefined the specifications related to the quality of telephone services (Part III - TIQV), while leaving unchanged the regulations of Commercial Quality (Complaints, Requests for Information and Billing Corrections - Part II TIQV). The main actions taken with respect to the previous Text were the following: - The change in the scope of application of the regulation of call centres through the elimination of the obligation to increase the opening hours of the call centre service to 50 hours a week if a physical front-office is not present in each province; - The change in the Call Centre Quality Indicators levels, with an increase in the minimum quality level of the general standards for two indicators out of three (AS and TMA) commencing 01.01.2015, and a further increase for two indicators out of three (TMA and LS) commencing 01.01.2017. With regard to the substantial aspects of monitoring, the measure provides for: - The confirmation of the half-year customer satisfaction survey with call back; - The exemption of the half-year survey of Sellers whose call centres have received, in the previous six months, an average number of telephone calls lower than 400 / day; - The elimination of the half-year ranking of Sellers' call centres; - The annual publication within 31st May of each year of a report on the state of quality of telephone services, replacing the ranking.

With Resolution 3/2015/A dated 15 th January 2015 - Strategic framework of the Authority for electricity, gas and water for the four-year period 2015 - 2018 - taking into account the results of the consultation 528/2014 / A, and the tendencies emerged from the periodic hearings on 11th and 12 th November 2014 and the Third National Conference on the regulation of water services held on 24 th November 2014, the Regulator has approved the "Strategic Framework of the Authority for the four-year period 2015-2018", which illustrates the strategic and priority intervention measures that the AEEGSI intends to adopt for the next four years. With regard to the energy sector, the strategies adopted were four : - Tending towards more secure, efficient and integrated energy markets; - Increasing liquidity and flexibility of the gas market in a European perspective; - Enhancing the awareness of network operators for a selective development of local infrastructures; - Increasing competition in retail markets, also thanks to a more aware and active demand. With particular reference to sales and distribution, to achieve its objectives, the AEEGSI deems appropriate to: - Define the role and responsibilities of the different market players, through the completion of the regulations on debranding; - Assign to the Distributor the role of market facilitator; - Review the price protection scope; - Develop the Integrated Information System; - Enhance the awareness of energy operators in the event of delinquency, aimed at better credit management and allocation of responsibilities in the contractual relationship.

______Ascopiave Group - Annual Financial Report as at 31 st December 2014 35 Ascopiave Group ______

Resolutions pertaining to energy efficiency

Resolution 13/2014/R/efr dated 23 rd January 2014 - Definition of the tariff contribution to cover the costs incurred by the distributors subject to the obligations pertaining to energy efficiency certificates commencing 2013 - This measure defines the criteria for the quantification of the tariff contribution to cover the costs incurred by the distributors subject to the obligations relating to energy efficiency certificates.

Resolution 107/2014/R/efr dated 13 th March 2014 - Methods of application of the mechanism of energy efficiency certificates in the case of large projects and definition and procedures for the recognition of the constant value for the same certificates - This provision defines the procedures of application of the mechanism of energy efficiency certificates in the case of large projects and the criteria and procedures for the recognition of the constant value for the same certificates.

Resolution 412/2014/R/efr dated 7 th August 2014 - Commencement of the procedure for the adoption of measures to implement the provisions of Legislative Decree 102/2014 governing energy efficiency - this provision starts a procedure for the implementation of certain provisions of Legislative Decree 102/2014, as concerns energy efficiency.

Efficiency and energy saving obligations

The Letta Decree, in article 16, paragraph 4, states that natural gas distribution companies must pursue energy saving objectives and the development of renewable energy sources. The definition of the national quantitative objectives and the criteria for the assessment of the results obtained was requested from the Ministry for Economic Development, in agreement with the Ministry of the Environment and Land Protection, which led to the issue of the ministerial decree of 20 th July 2004. With the Decree dated 21 st December 2007, the Ministry for Economic Development reviewed and updated the Decree dated 20 th July 2004, on the following points: - the 2008 and 2009 objectives were reviewed in the light of an excess of offer of energy efficiency equities recorded on the market; - the objectives for the three-year period 2010 - 2012 were defined, taking into account the target of reduction of energy consumption fixed by the action plan as of 2016, equal to 10.86 MTOE; - the efficiency and energy saving obligations for each year following 2007 were extended to distributors who, as of 31 st December of two years prior to each year of obligation, connected more than 50,000 end customers to their distribution network.

The energy saving objectives, that count both for natural gas and electric energy distributors, set out by the Decree of 20 th July 2004, integrated by the Decree of 21 st December 2007, are equal to: - 0.10 Million TOE for the year 2005; - 0.20 Million TOE for the year 2006 - 0.40 Million TOE for the year 2007 - 1.00 Million TOE for the year 2008

______Ascopiave Group - Annual Financial Report as at 31 st December 2014 36 Ascopiave Group ______

- 1.40 Million TOE for the year 2009 - 1.90 Million TOE for the year 2010 - 2.20 Million TOE for the year 2011 - 2.50 Million TOE for the year 2012

The fulfilment of energy saving is attested through the distribution of energy efficiency certificates, the so-called 'White Certificates’. In order to fulfil the obligations as specified by the Decree dated 20 th July 2004, integrated by the Decree of 21 st December 2007, and to thus see their White Certificates recognised, distributors can: - carry out direct interventions to improve the Energy efficiency of technology installed or related methods of use; - acquire the White Certificates directly from third parties, by means of bilateral contracting or through negotiation in an appropriate market set up at the Electrical Market Administrator (GME).

With Decree dated 28 th December 2012, new objectives of annual primary energy savings were defined for the period 2013-2016 for the obliged distributors, and in particular: - 4.6 Mtoe in 2013; - 6.2 Mtoe in 2014; - 6.6 Mtoe in 2015; - 7.6 Mtoe in 2016; For natural gas distributors the quota of the above-mentioned obligations corresponds to the following white certificates: - 3.04 million white certificates to be achieved in 2014 - 3.49 million white certificates to be achieved in 2015 - 4.28 million white certificates to be achieved in 2016

For years 2013 and 2014, the obligor must deliver a quota at least higher than 50% of its annual obligation that must be compensated in the next two years in order to avoid penalties. For years 2015 and 2016 the minimum value is set at 60% of the obligation, and it is always possible to compensate in the next two years in order to avoid penalties.

In addition, Decree dated 28 th December 2012 gave effect to the provisions of Decree 28/2011 which sets that the activities of management, evaluation and savings certification related to energy efficiency projects undertaken as part of the mechanism of white certificates are transferred to the GSE - Gestore dei Servizi Energetici. The Decree also extended to parties other than distribution companies and the Energy Saving Company (so-called ESCO), the opportunity to present projects in order to obtain white certificates.

The companies of the Ascopiave S.p.A. Group and Unigas Distribuzione S.r.l., are subject to the obligations set out in Decrees dated 20 th July 2004, 21 st December 2007 and 28 th December 2012, and are obliged to meet the energy saving requirements established annually by the GSE. The GSE has the task of checking that each distributor is in possession of energy efficiency certificates that comply with the annual objective assigned him (increased by any additional shares for compensation or updated following the introduction of new national quantity objectives) and of informing the Ministry for Economic Development, the

______Ascopiave Group - Annual Financial Report as at 31 st December 2014 37 Ascopiave Group ______

Ministry for the Environment and the Protection of the Territory and the Electric Market Administrator, of all certificates received and the outcome of the inspections. If a distributor does not meet the agreed objective, it could be subjected to an administrative aim imposed by the Authority, implementing Law no. 481 dated 14 th November 1995 and to the indications of decree dated 28 th December 2012.

For further information on efficiency and energy saving relating to the companies of the Group, please see paragraph “Efficiency and energy saving”.

Ascopiave S.p.A. share trend on the Stock Exchange

As of 30 th December 2014, the Ascopiave share has registered a quotation of Euro 1.826 per share, with an increase of 2.5 percentage points as compared to the listing at the beginning of 2014 (Euro 1.781 per share, referred to the quotation of 2 nd January 2014). Capitalisation of the Stock Exchange as at 30 th December 2014 was equal to Euro 427.16 million 3.

During 2014, the quotation of the title shows a positive performance (+2.5%), still below the upward trends of indexes FTSE Italia Star (+ 8.5%) and the sector index FTSE Italia Servizi di Pubblica Utilità (+ 9.5%). The FTSE Italia All- Share on the contrary records a slight decrease in 2014 (-0.2%).

3 The Stock exchange capitalisation of the main listed companies active in the local public services (A2A, Acea, Acsm-Agam, Hera and Iren) as of 30 th December 2014 equalled 8.6 billion Euro. Borsa Italiana website (www.borsaitaliana.it). ______Ascopiave Group - Annual Financial Report as at 31 st December 2014 38 Ascopiave Group ______

In the following table we report the main shares and stock-exchange data as of 30 th December 2014:

Share and stock-exchange data 30th december 2014 30th december 2013

Earning per share (Euro) 0.16 0.17 Net equity per share (Euro) 1.73 1.70 Placement price (Euro) 1.800 1.800 Closing price (Euro) 1.826 1.791 Max. annual price (Euro) 2.326 1.820 Min. annual price (Euro) 1.708 1.100 Stock-exchange capitalization (Millions of Euro) 427.16 420.22 No. Of shares in circulation 222,216,361 222,216,361 No. Of shares in share capital 234,411,575 234,411,575 No. Of own share in portfolio 12,195,214 12,195,214

______Ascopiave Group - Annual Financial Report as at 31 st December 2014 39 Ascopiave Group ______

Control of the Company

As of 31 st December 2014, Asco Holding S.p.A. directly controls 61.562% of the Ascopiave S.p.A. share capital. The share composition of Ascopiave S.p.A., according to the number of shares held, is as follows:

Internal processing on information received by Ascopiave S.p.A. pursuant to art. 120 Consolidated Financial Law.

Corporate Governance and Code of Ethics

During 2014 Ascopiave S.p.A. continued its operating improvement process of the corporate governance planned during past years, introducing further improvements to the tools in order to defend investors’ benefits.

Internal audit

The Company has developed an Internal Audit structure, in order to improve the efficiency of the internal audit system and the company organization efficiency. The activities of internal audit control are defined in the audit plan, formulated before a risk assessment involving the main decisional processes, esp. with regard to the business areas deemed highly strategic.

Appointed Manager

The Appointed Manager, helped by the Internal Audit services, has reviewed the adequacy of the administrative and accounting procedures and has continued to monitor the important procedures for the drafting of financial information.

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To this end, the Company has adopted new tools of continuous auditing, allowing the automation of the control procedures.

Organizational, management, and controlling model pursuant to Leg. Decree 231/2001

Ascopiave S.p.A. and all of its subsidiaries have adopted an Organizational, management and controlling model; they have also adhered to the Code of Ethics of the Parent company Ascopiave. The Company, availing of the activity of the Supervisory Board, constantly monitors the efficiency and adequacy of the Model adopted. The Company has also continued its promotional, diffusion and understanding activity of the Code of Ethics as concerns all its interactions, esp. with business and institutional parties.

The 231 Model and the Code of Ethics can be read in the Investor Relations section at www.ascopiave.it.

Transactions with related and affiliated parties

Trade Other Trade Other Costs Revenues (Thousands of Euro) receivables receiva payables payable Goods Services Other Goods Services Other

Parent company ASCO HOLDING S.P.A. 10 3,717 1,028 0 12,542 0 23 265 Total parent company 10 3,717 0 1,028 0 0 12,542 0 23 265 Affiliated companies ASCO TLC S.P.A. 73 0 255 0 0 545 15 274 119 85 SEVEN CENTER S.R.L. 20 0 388 0 0 0 0 0 0 MIRANT ITALIA S.R.L. 0 0 0 0 0 0 0 Total affiliated companies 94 0 643 0 0 545 15 274 119 85 Subsidiary companies Estenergy S.p.A. 75 6,370 2,257 0 2,940 23 5 0 42 180 ASM SET S.R.L. 1,669 911 3 0 17 7 7 5,200 485 37 Unigas Distribuzione Gas S.r.l. 43 0 2,656 0 0 9,581 0 33 24 773 SINERGIE ITALIANE S.R.L. 35 12,015 0 73,979 58 0 77 285 Total subsidiary companies 1,821 19,296 4,915 0 76,936 9,611 61 5,232 627 1,276

Total 1,924 23,013 5,558 1,028 76,936 10,156 12,618 5,506 769 1,625

The Group has the following transactions with related parties with the following types of costs of ownership: V Purchase of IT services from subsidiary ASCO TLC S.p.A.; V Purchase of materials for the production process and maintenance services from the affiliate company SEVEN CENTER S.r.l.; V Credit transactions in favour of ASM Set S.r.l., jointly controlled company; V Administrative services for ASM Set S.r.l., jointly controlled company; V Purchase of gas from the affiliate company Sinergie Italiane S.r.l., in liquidation; V Administrative services and services of personnel of Unigas Distribuzione S.r.l.; V Purchase of electricity from Estenergy S.p.A., jointly controlled company.

The Group has the following transactions with related parties with the following types of revenues of ownership: V Leasing of owned real properties to the subsidiary ASCO TLC S.p.A.;

______Ascopiave Group – Annual Financial Report as at 31 st December 2014 41 Ascopiave Group ______

V Leasing of owned real properties to the affiliate Sinergie Italiane S.r.l. in liquidation; V Relations of active current accounts correspondence to Estenergy S.r.l. and ASM Set S.r.l. jointly controlled companies; V Administrative services and services of personnel of Ascopiave S.p.A. to ASM Set S.r.l., Unigas Distribuzione S.r.l., Sinergie Italiane S.r.l. in liquidation and SEVEN CENTER S.r.l.; V Sale of electricity to ASM Set S.r.l., jointly controlled company.

Relationships deriving from tax consolidation with Asco Holding S.p.A.: Ascopiave S.p.A., Ascotrade S.p.A., Asm DG S.r.l., Edigas Esercizio Distribuzione Gas S.p.A., Pasubio Servizi S.r.l., Blue Meta S.p.A. have also adhered to the consolidation of tax relations held by the Parent company Asco Holding S.p.A., highlighted in the current assets and liabilities.

We would like to point out that these relations are characterized by the highest transparency and by market conditions. As regards each relationship, please see the Explanatory Notes.

Significant events during 2014

Company operations that took place during the year 2014

Acquisition of 49% of Veritas Energia S.p.A. On 10 th February 2014, Ascopiave S.p.A. and Veritas S.p.A. completed the transaction of 49% of the share capital of Veritas Energia S.p.A., from Veritas S.p.A. to Ascopiave S.p.A., which already held a 51% stake in the company. As a consequence, Ascopiave S.p.A. holds 100% of Veritas Energia S.p.A.. The price paid for the acquisition, amounting to Euro 4 million, corresponds to an enterprise value of Veritas Energia S.p.A. amounting to Euro 16.4 million.

Merger through acquisition of the single-member subsidiary company Edigas Due S.p.A. - into the single- member subsidiary company Blue Meta S.p.A. The Boards of Directors of the subsidiary Edigas Due S.p.A. and the subsidiary Blue Meta S.p.A. approved, both on 10 th March 2014, the project of merger through acquisition of the company Edigas Due S.p.A. into Blue Meta S.p.A.. On 22 nd April 2014 the Meetings of the two companies were held, which approved the merger. It came into effect on 1 st October 2014, commencing 1 st January 2014 for accounting purposes.

Merger through acquisition of the single-member subsidiary company Ascoblu S.r.l. - into Ascopiave S.p.A. The Boards of Directors of the single-member subsidiary Ascoblu S.r.l. and the company Ascopiave S.p.A. approved, both on 19 th June 2014, the project of merger through acquisition of the company Ascoblu S.r.l. into the parent company Ascopiave S.p.A.. On 23 rd September 2014, the Board of Directors of Ascopiave S.p.A. and the Shareholders' Meeting of Ascoblu S.r.l. approved the resolution of merger, which came into effect on 15 th December 2014, commencing 1 st January 2014 for accounting purposes.

______Ascopiave Group – Annual Financial Report as at 31 st December 2014 42 Ascopiave Group ______

Other significant events

Appointment of Chief Technology Officer The Board of Directors of Ascopiave S.p.A., held on 14 th January 2014, appointed Mr. Antonio Vendraminelli as the new Chief Technology Officer of the Company. The appointment was effective from 1 st February 2014. The new Chief Technology Officer has replaced Mr. Giovanni Favaro who, retired in 2008, left the company after five additional years of collaboration at the helm of Ascopiave's Technical Department.

Shareholders’ meeting on 24 th April 2014 On 24 th April 2014, Fulvio Zugno presided Ascopiave S.p.A.’s Shareholders’ ordinary meetings which approved the fiscal year balance sheet, read the Group’s Consolidated Balance Sheet as at 31 st December 2013, and decided to distribute dividends for an amount equal to Euro 0.12 per share with dividend date on 12 th May 2014, record date on 14 th May 2014 and payment on 15 th May 2014. The Meeting has also appointed the new Board of Directors and Board of Auditors, for the period 2014 – 2016. From the list for the appointment of Directors, submitted by the majority shareholder Asco Holding S.p.A., which has obtained the highest number of votes, Mr. Dimitri Coin, Mr. Fulvio Zugno, Mr. Enrico Quarello and Ms. Greta Pietrobon were elected. From the list submitted by the shareholder Asm Rovigo S.p.A., ranked second for number of votes obtained, Mr. Bruno Piva was elected as director, first candidate of that list. In addition, the Meeting has appointed Mr. Fulvio Zugno as Chairman of the Board of Directors. The Board of Auditors appointed by the Meeting was elected based on the lists of candidates submitted by the Shareholders. From the list submitted by the majority shareholder Asco Holding S.p.A., which has obtained the highest number of votes, Ms. Elvira Alberti and Mr. Signor Luca Biancolin were elected as Statutory Auditors and Mr. Achille Venturato as Alternate Auditor. From the list submitted by the shareholder Asm Rovigo S.p.A., ranked second for number of votes obtained, Mr. Marcellino Bortolomiol was elected as Statutory Auditor and Chairman of the Board of Auditors and Mr. Dario Stella as Alternate Auditor. The Shareholders’ Meeting has also approved the Remuneration Policy, corresponding to Section I of the Report on Remunerations under Art. 123-ter of Leg. Decree 58/1998 and approved an 18-month purchase and disposition plan of own shares, on condition that the 23 rd April 2013 authorization was revoked.

Fulvio Zugno appointed as Managing Director. Establishment of Internal Committees, Supervisory Committee, Independent Manager. On 29 th April 2014 the Board of Directors of Ascopiave S.p.A. appointed its Chairman, Mr. Fulvio Zugno, as Managing Director, also entrusting him with proxies in order to implement the strategies of the Company and of the Ascopiave Group, effective immediately. In addition, the Board of Directors established an internal Control and Risks Committee and a Compensation Committee identifying its members: Mr. Dimitri Coin, independent director and Chairman, Mr. Enrico Quarello, non- executive director, and Mr. Bruno Piva, independent director. Moreover, the Board of Directors appointed the new members of the Supervisory Committee in compliance with the Organization, management and control model pursuant to Legislative Decree no. 231/2001: Ms. Elisa Pollesel (Chairwoman), Mr. Ruggero Paolo Ortica, external member, Mr. Cristiano Ceresatto, internal member. ______Ascopiave Group – Annual Financial Report as at 31 st December 2014 43 Ascopiave Group ______

The Board of Directors, in compliance with the directives issued by the Authority for Electricity, Gas and Water as concerns the separation of functions of the gas distribution activity from the other activities, has identified as Independent Manager the Board Member Enrico Quarello, who supports Antonio Vendraminelli in his role as Technical Manager of Ascopiave.

Resignation of Mr. Bruno Piva from the Board of Directors of Ascopiave S.p.A. and appointment of Mr. Claudio Paron as new Director of the company Mr. Bruno Piva, non-executive and independent member of Ascopiave S.p.A.'s Board of Directors as well as member of the Control and Risks Committee and Compensation Committee, resigned on 21 st May 2014. His resignation is connected to the redistribution of offices and duties within the Municipality Rovigo and to events pertaining to the Municipality itself. The Director was the Mayor of Rovigo. Mr. Piva had been appointed by the Meeting on 24 th April and his candidature had been proposed by ASM Rovigo S.p.A., a company controlled by the Municipality of Rovigo and minority shareholder of Ascopiave. On 19 th June 2014 Ascopiave S.p.A.'s Board of Directors appointed Mr. Claudio Paron as new Director of the company. Pursuant to art. 15.15 of Ascopiave's Charter, Mr. Claudio Paron replaces the director no longer in office, Mr. Bruno Piva, elected from the list presented by the minority shareholder ASM Rovigo S.p.A., which resulted second for number of votes obtained, following the Shareholders' Meeting held on 24 th April 2014. Mr. Claudio Paron is the first non elected candidate belonging to the same list. On the same day, the internal committees were reintegrated, appointing the Board member Mr. Claudio Paron as member of the Control and Risks Committee and the Compensation Committee, replacing Mr. Bruno Piva who had resigned.

Transfer of debt to Unicredit S.p.A. On 22 nd December 2014, coinciding with the change of the financial covenants envisaged in the loan contract between Ascopiave S.p.A. and Unicredit S.p.A., as specified in paragraph " 17. Medium - long term loans ", a notary deed which envisages the transfer to the bank of a share of future receivables arising from the reimbursement of the value of assets related to the gas distribution concessions was signed, as a guarantee of the obligations associated with the loan and the outstanding debt of Euro 20 million as of 31 st December 2014.

Sale of natural gas and electric power

The economic context The Government, in an initial drafting of the bill on competition, had envisaged the end of the protection regime of some segments of end customers to which electricity and gas are supplied respectively with effect from June 2016 for electricity and next July for the gas market. With a bill dated 19 th February 2015, the end of the protection regime was postponed with effect from 1st January 2018. With this latter approach, the Government seems to have embraced the concerns raised by the Authority for Electricity, gas and water. The root of these misgivings can be identified in the belief that the market is not ready yet for its complete liberalization. The main cause can be traced in the current lack of preparation of end customers (primarily for the lack of an adequate infrastructure to support their choice). To date, it is believed that end customers are not fully able to consciously evaluate the various offers that sales companies propose on the free market, as evidenced by the ______Ascopiave Group – Annual Financial Report as at 31 st December 2014 44 Ascopiave Group ______frequent choice of continuing the supply with the sales company which is already their supplier in the protection contract. A survey conducted by the Authority in this regard shows that the prices charged to the customers who have chosen to sign contracts in the free market are on average higher than those applied to the protected market. In particular for electricity, the differential on the raw material component is 15-20% higher than in the protected market (2013 data), demonstrating the inadequacy of the recognition given by the component "marketing and sale price" (PCV, which compensates management expenses). Looking at other more mature industries, such as telecommunications, one could state that if the protected market was eliminated, end customers could quickly improve their ability to evaluate the various tariff proposals, forcing sales companies to challenge each other on simpler offers (both in terms of complexity and understanding) and easier to compare than those currently proposed. However, even if offers were simplified and consequently their assessment was easier, in the energy sector the expectations of end customers could be undermined by the inability to obtain great benefits and the system may have much longer reaction times as compared to those of other sectors. In fact, given the fixed costs, taxes and the basic costs of energy production, the sales company do not have much operating radius. The component relating to the retail sale and the procurement of the raw material does not offer many possibilities of creating margins with respect to the provisions of the Authority, and for this reason, the savings will total at most a few percentage points on the final tariff.

Procurement The electricity and gas markets are increasingly integrating into the European context, thanks to the presence of transportation networks that allow capacity flexibility (actions aimed at enabling reverse flows are also being implemented). At a national level, the production capacity of electricity and the import capacity of gas and electricity are being enhanced. In addition, the production of renewable energy, also fostered by the construction of micro plants and incentives for actions aimed at saving energy, continues to increase. These activities have helped the market to rely on an increasingly high level of liquidity and at lower prices: the "single national price" (PUN), which is the reference price for electricity, from January 2014 to January 2015 decreased by about 8 Euro/MWh, whereas the reference price of gas at the "virtual trading point" (PSV) in the same period decreased by 0.05 Euro/scm. Gas, in particular in the various European "hubs", has always maintained very consistent prices with very similar differentials throughout the year. This phenomenon has prevented speculative research on transportation capacity to transfer the gas from a "hub" to another. This situation, which has been around for a few years and is meant to last over time, is gradually leading all sales companies to enter the upstream part of the supply chain, to better manage and meet their energy needs. However this activity, especially in a long market, in addition to entailing absolutely appreciable economic benefits, can also expose to risks that must be properly managed. In fact, approaching these processes requires great professionalism, attention and ability to manage the consequences that may result from the occurrence of external events that can have a major impact on price trend, such as: the sudden fall of oil price (in 2014 it halved in a few months); the presence and the evolution of geo-political tensions (the Ukrainian situation in 2014) and the variation in imports (in 2014 import from Holland stopped).

______Ascopiave Group – Annual Financial Report as at 31 st December 2014 45 Ascopiave Group ______

Long-term procurement seems obsolete: its strengths have always been evaluated in terms of security and flexibility of supply, but its prices are currently higher than those generated in the various European "hubs" and more and more liquid. In this situation, it is increasingly likely that the various producers sell directly on the various European platforms, since they do not find it convenient to deliver the gas with long-term contracts, at a price lower than that generated in the various European "hubs".

Commercial activity and market situation The year 2014 was characterized by an exceptionally mild weather as well as numerous interventions in favour of energy saving and the use of alternative energy promoted by the Government through the application of measures that have established tax benefits with values even higher than 50% of the investment. Examining the gas market, the combination of all these factors has led to a decrease in domestic consumption of around 12% over the previous year whereas, if we only consider the household gas segment, the decrease in consumption was even more significant (a reduction of about 20% in consumption compared to the year 2013). Moreover, despite the constant adjustments of the offer due to continuous production cuts for both electricity and natural gas, prices have continued their downward trend in continuity with the previous financial years. In order to diversify its visibility in the market, while trying to limit and control advertising and marketing costs, more and more companies are using electronic channels. The objective is to provide as many services as possible in a simple and intuitive way. This is the key to interpret the efforts of the sales companies of the Group. The corporate investments in this field were numerous and significant, and this strategy has enhanced the favourable opinion about the Group companies. The free energy market is still far from the maturity achieved by the telecommunications industry. Surely energy features a complexity of components that contribute to the determination of the final rate that may create obstacles to the simplification of the offers. The composition of the new 2.0 bill established by the Authority commencing October 2015 is undoubtedly an important step. The simplification envisaged, with the aggregation of the various components into four groups, will significantly improve the comprehensibility of the invoice and more generally the system. However, a clear definition of the criteria for determining the economic convenience of the offer is still essential. This aspect is particularly important and necessary in order to identify and consciously choose the commercial proposals available on the market.

Ascopiave Group: Management trend The volumes of gas sold to the final market in 2014 by 100% consolidated companies are equal to 763.1 million cu.m. (of which 53.9 million cubic metres due to the extension of the consolidation area to Veritas Energia S.p.A.), marking a decrease of -13.2% as compared to 2013. To these volumes we have to sum the volumes sold by the proportionally consolidated companies (Estenergy S.p.A. and ASM Set S.r.l.), which in 2014 totally sold 255.6 million mc of gas (- 44.5% as compared to 2013). With regard to the electricity sale activity, in 2014 the amount of electricity sold by the 100% consolidated companies was equal to 381.2 GWh (of which 181.4 due to the extension of the consolidation area to Veritas Energia S.p.A.), marking an increase of 104.5% as compared to 2013. To these volumes we have to sum the volumes sold by the proportionally consolidated companies (Estenergy S.p.A. and ASM Set S.r.l.), which in 2014 totally sold 160.0 GWh (- 79.4% as compared to 2013.

______Ascopiave Group – Annual Financial Report as at 31 st December 2014 46 Ascopiave Group ______

Distribution of natural gas

Ascopiave group: management trend

In 2014, the volumes distributed through the networks managed by the Group were 775.9 million cu.m. *, of which 613.9 million by Ascopiave S.pA., 40.9 million cu.m. by ASM DG S.r.l., 56.0 million cu.m. by Edigas Esercizio Distribuzione Gas S.p.A. and 65.1 million cu.m. by Unigas Distribuzione S.r.l. (proportionally consolidated company of which the Group owns a share equal to: 48.86%). The distribution network, as a consequence of new extensions in 2014 and considering the variations of managed concessions portfolio, as at 31 st December 2014 has an extension of over 8,200 km (8,100 km in 2013)*.

*(The data specified as regards the length of the distribution network and the volumes of gas sold are obtained by adding each Group company’s data, previously pondering the data of the companies consolidated with the equity method).

Activity of distribution of natural gas

The management of natural gas distribution is articulated in a number of elementary activities: − collection of gas that the User is entitled to put in the distribution plant and its transportation to the redelivery points (PDR) at which access is requested; − construction of the network and distribution systems as well as their management; − operation and maintenance of the adjustment equipment at physical Delivery points (Re.Mi. plants); − dispersion research; − cathodic protection of steel pipes; − odorising of gas and its control; − emergency service, emergency management and gas accidents; − gas measurement at the Delivery Points and the Redelivery Points; − collection, aggregation and transmission of data necessary for the daily balancing; − management of access for replacement in the supply to end customers (switching); − supply of provisions in addition to the main service, such as connections, activations, deactivations and reactivation of supply, meter and pressure checks etc.

The distribution companies of the Group must also guarantee that the conditions of service delivery ensure compliance with the minimum requirements set by the Authority for Electricity and Gas in terms of quality, safety and continuity of service.

Design, expansion and maintenance of the distribution network

Ascopiave S.p.A. Ascopiave S.p.A. manages gas distribution activities throughout a territory consisting of 149 municipalities in the Regions of Veneto, Friuli Venezia Giulia, Lombardy and Emilia Romagna. In 2014, awaiting the launch of territorial calls for tenders, a major reorganization of the structure and the main distribution processes was implemented, aimed at preparing Ascopiave for the imminent confrontation with its

______Ascopiave Group – Annual Financial Report as at 31 st December 2014 47 Ascopiave Group ______competitors in terms of efficient management. Efforts were focused in order to reduce operating costs by optimizing processes and to limit outsourcing by increasing the capacity to produce value with internal resources.

In this perspective, in late 2014, a Work Force Management system in support of the workforce for field activities came into full production. The Group hope that this system will allow them to pursue the optimization of operational resources, by minimizing travels in the territory in accordance with the timing envisaged for the execution of the works. The automatic scheduling of activities both as concerns appointments with users and maintenance of plants, allows better planning and saturation of the working day. With the final balance of the work orders directly from the tablet provided to the operating staff, it has been possible to launch a paperless process for the progressive elimination of paper documents, with significant savings in terms of back office activity, and even an improvement of the service offered to sales companies with the provision of the outcome of the activities, almost in real time. The continuous improvement through the constant monitoring of specific performance indicators was also possible with the introduction in 2014 of a new classification system for distribution activities, with the aim of improving the reporting system and the allocation of costs.

The workload required to meet the requests of the municipalities for the provision of the states of consistency of plants and the determination of the RIV (residual industrial values) was particularly significant. All the requests received were processed within the time limit allowed by laws in force.

In 2014 as well, all the design and project management activities for the construction of distribution networks and systems were performed by internal resources. In 2014 the computer tools for performing fluid-dynamics simulations of the networks were upgraded. This major upgrade resulted in a significant improvement in plant dimensioning in order to ensure better monitoring of the continuity of the service and to prepare the design and network verification activities necessary for the participation in Territorial calls for tenders. With reference to the activities of extension and enhancement of distribution networks and plants, over 66 km of network were laid, with an increase over the previous year amounting to about 30%. The interventions have affected as many as 85 plants in the municipalities managed. At the same time, scheduled extraordinary maintenance interventions were performed, necessary to overcome the gradual obsolescence of the equipment and improve the transport capacity of the networks. In 2014 as well, the schedule of operation and maintenance activities was respected, and performed almost exclusively by internal staff, only minimally using third-party companies. In 2014, the emergency service carried out over 4,000 interventions with times of arrival largely lower than the 60 minutes envisaged by the AEEGSI resolution. In 2014, 80% of the distribution network was inspected to reduce the risks deriving from uncontrolled gas leakages caused by damage to the plants. In this regard, with the aim to reduce outsourcing, in the last months of 2014, a vehicle equipped for the planned research of leakages was purchased. The inspection programme carried out largely meets the minimum standards required by the AEEGSI and reflects the particular attention paid to the issue of service security. The process of technological improvement of the installations continued as well, with an increase in the number of automatic systems for the electronic injection of the odorizer, the number of apparatuses for monitoring the pressure in the network and recording the cathodic protection measurements. ______Ascopiave Group – Annual Financial Report as at 31 st December 2014 48 Ascopiave Group ______

ASM DG S.r.l. ASM DG S.r.l. manages the gas distribution network in the municipality of Rovigo. The related activities are performed through the use of management tools made available to the Parent Company and of procedures in line with those of the Parent Company itself. In particular, important synergies were implemented in all administrative and technical activities, as well as in those regarding process control and HR management. In particular, a new model has been recently introduced in the organization of the sectors "Operations" and "Commercial": now Ascopiave's Function Managers directly coordinate the activities they are respectively in charge of, reporting to ASM DG S.r.l.'s Sole Director the activities performed. In each business sector (Operational, Commercial, Administrative) the management systems adopted by Ascopiave S.p.A. were implemented and the related IT platforms were unified.

The contracts for maintenance interventions and the execution of new works are managed directly by Ascopiave's competent office and assigned according to the same methods used by the territorial areas directly under the scope of the parent company. The management of a call-centre service for emergencies was entrusted by all the companies of the Ascopiave group to one single company at the same contractual conditions, with a clear and positive economic outcome and management uniformity. Activities concerning design, estimate calculation and project management for the implementation of new distribution systems are carried out centrally upon request of private customers or by the public administration.

In 2014 the investments for the extension, empowering and maintenance of the distribution network were significant: many segments of obsolete city network were replaced and dozens of outdated or deteriorated connections were rebuilt. The programme started in 2003 to replace cast ducts with hemp and lead joints was completed well ahead of the deadline set by AEEG’s total elimination programme.

The activity of maintenance of the distribution network and of the plants in order to maintain proper levels of safety, quality and continuity in the service, is partly performed through the intervention of internal personnel and partly using other companies.

The 24 hours on 24 hours monitoring of the main parameters of operation of the plants is carried out through: - the computerized control of all Re.Mi. Cabins and of all main final reduction plants signalling, in real time, functioning states non-compliant with set standards; - the remote monitoring and management of the electric systems of cathodic protection, with the constant maintenance in full efficiency of the active protection of the pipe from corrosion and the prompt and efficient execution of the necessary maintenance interventions.

The indicators of safety (time of arrival at the place of call for the emergency service, programmed inspection of the network and measurement of the level of odorizing) and continuity (service interruptions) have been maintained efficiently under control, with respect of the obligation of service prefixed by the AEEG.

______Ascopiave Group – Annual Financial Report as at 31 st December 2014 49 Ascopiave Group ______

In 2014, the company’s emergency intervention service carried out 1132 interventions; the arrival time was largely lower than 60 minutes. During the year, inspections of the distribution network were carried out, with the aim of reducing risks coming from the uncontrolled leaks of gas due to deterioration or damage to the systems. All the leaks detected were repaired within the standards deadlines set by the Authority. The inspection programme implemented in 2014 was even stricter compared to the requirements of the AEEG, thus clearly showing the commitment and attention paid by ASM DG S.r.l. to safety.

Proper odorization of the gas has been periodically monitored. All first stage gas pressure reduction stations use automatic injection systems that allow timely dosage of the odorization contents. Moreover, the checks on odorization amounted to at least twice as many as those provided for by the Service Standard Authority.

Edigas Esercizio Distribuzione Gas S.p.A. Edigas Esercizio Distribuzione Gas S.p.A. (hereinafter Edigas DG S.p.A.) manages the gas distribution activity in 27 municipalities in Lombardy, Piedmont and Liguria. In 2014, the investments for the extension, empowering and maintenance of the distribution network were significant. The investments in network extension were concentrated in the Municipality of Albenga and Viverone (BI), serving the hamlets along the lake, and the network was extended with railway crossing in the Municipality of Sandigliano. During the year, more than 3.5 km of distribution network were installed, with interventions in 5 municipalities. Moreover, three new stations for cathodic protection were commissioned with related wells, one in Canneto sull’Oglio and two in Marcaria, and the earthing system in Carisio was rebuilt. The company carries out the activity of maintenance of the distribution network and of the plants in order to maintain proper levels of safety, quality and continuity in the service, partly through the intervention of internal personnel and partly using other companies. On first stage decompression systems (so-called Re.Mi.), on final reduction groups (GRF) and on reduction and measurement stations (GRM), preventive and corrective maintenance activities required under the regulations in force are performed for the most part by personnel employed, but also by specialized third-party companies. The Eternit of first stage decompression systems was removed in the Municipalities of Albenga and Calvatone and replaced with eco-friendly fibre cement. In 2014, 7 final reduction groups underwent extraordinary maintenance, two new final reduction groups were installed to replace obsolete material and one new final reduction group for civil use was installed.

The indicators of safety (time of arrival at the place of call for the emergency service, programmed inspection of the network and measurement of the level of odorizing) and continuity (service interruptions) were maintained efficiently under control, in full compliance with the obligation of service set by the AEEG Deliberation.

In 2014 the company’s emergency intervention service, operative 365 days a year, 24/7, carried out over 556 interventions and the arrival time was on average largely less than 60 minutes.

In 2014 the network was inspected in order to reduce the risks arising from uncontrolled leakage of gas caused by deteriorations or damages to the equipment. The inspection programme performed (about 630 Km) largely meets and ______Ascopiave Group – Annual Financial Report as at 31 st December 2014 50 Ascopiave Group ______exceeds the minimum standards required by AEEG and this proves the particular attention paid by Edigas DG S.p.A. to the issue of service safety.

In 2014 over 160 measurements of the level of odorizing were made (with the gas chromatographic instrumental method) upon maximal and minimal period of supply, and all measurements were compliant with current technical regulations. Moreover, the Italian Finance Police and the AEEG performed checks on the emergency service, with results meeting the current regulatory requirements.

Unigas Distribuzione S.r.l. Unigas Distribuzione S.r.l. (hereinafter Unigas S.r.l.) manages the gas distribution activity in 32 municipalities of the district of Bergamo. Network development activities are planned and coordinated by the main headquarters located in Nembro. Activities of planning, prevention and employee management for the implementation of new distribution systems are carried out centrally on the request of private customers or by the public administration. The central technical structure has a cartography and calculation system, which, through the creation of a fluid-dynamic model of the network's functional parameters, calibrated on seasonal consumption progress, allows the constant prediction of the effects produced to the network of sudden thermal changes, anomalies, or the insertion of new delivery points.

In 2014 the investments for the extension, the empowering and maintenance of distribution network were significant, and in line with the previous years.

During 2014, about 13.9 km of distribution network were installed, and upgrading, renewals and extensions were also carried out.

Unigas Distribuzione S.r.l. performs maintenance activities on the distribution systems in order to maintain adequate safety levels, ensure quality and continuity of service, in part through the work of internal personnel, and in part using third-party services.

On the first stage decompression systems (so-called Re.Mi.), on final reduction (GRF) and on reduction and measurement stations (GRM), preventive and corrective maintenance required under the regulations in force are performed for the most part by internal staff.

With the aim of controlling the correct operation of plants and of reducing the probability of damage or malfunction, ordinary maintenance is carried out through operations of Programmed Preventive Maintenance (MPP), i.e. partial or total disassembly of the apparatus, cleaning, control of the component parts and replacement of the parts subjected to wear and tear and of Functional Verification (VF). In 2014, 34 VF's and 38 Inspections, and 4 Planned Maintenance Actions were performed (by internal personnel guided by the staff of a specialising third-party company). The Re.Mi. were controlled by the company staff totalling about 900 controls over the year. As regards to GRFs, 185 VFs, 189 Inspections and 25 planned maintenance actions were carried out.

In 2014, 6 new final reduction groups and 1 GRM were activated – at the same time, following the design inspections ______Ascopiave Group – Annual Financial Report as at 31 st December 2014 51 Ascopiave Group ______performed, 16 final reduction groups were removed because they did not affect the efficacy of distribution.

The indicators of safety (time of arrival at the place of call for the emergency service, programmed inspection of the network and measurement of the level of odorizing) and continuity (service interruptions) have been maintained efficiently under control, in full compliance with the obligation of service set by the AEEG Deliberation.

The company’s emergency intervention service can be contacted by means of the dedicated free-phone number, active 365 days a year, 24/7 and managed by Unigas Distribuzione S.r.l. In 2014, 935 interventions were performed, and the average arrival time was largely below the average time set by the Authority (60 minutes). In total the calls received by the call centre were 3,668 (slightly decreasing with respect to 3,732 of the previous year) of which 2,860 calls were handled and 1,690 did not concern reasons attributable to emergency intervention.

Over the course of 2014, inspection of 40% of the distribution network was carried out, with the aim of reducing risks coming from the uncontrolled loss of gas due to deterioration or damage to the systems. The inspection program carried out exceeds the minimum standards required by the AEEG for distribution systems, and demonstrates the attention paid by Unigas to the safety of its services. In particular, 95.68 Km of medium-pressure distribution network and 351.8 Km of low-pressure distribution network were inspected, and 42 leakages were removed.

Proper odorization of the gas is monitored on a monthly basis. Measurements of the level of odorizing were made (with the gas chromatographic instrumental method) in the moment of maximal and minimal period of supply; all measurements suited the current technical norms.

Metre activities

Ascopiave S.p.A. In 2014, in accordance with the provisions of the AEEGSI, the renewal process, implying the replacement of traditional meters with electronic meters (smart meters), which support remote reading and remote management functionalities, accelerated. During 2014, Ascopiave has taken steps to bring all active redelivery points with the highest consumption (class of meter higher than G40) into compliance, and to replace with internal staff most of the intermediate class metres (97% of G25/G16 and 98% of G10), anticipating significantly the deadlines prescribed by the AEEGSI. The process of renewal of the meters installed in industrial and commercial businesses and workshops is almost completed, whereas for mass market users Ascopiave has introduced the first electronic meters with the installation of approximately 7,000 smart meters. Another significant aspect is the adaptation of the Central Acquisition System (SAC) in support of reading for both point-to-point domestic smart meters and 169 MHz technology meters, necessary for the roll-out of mass replacement plans for the mass market.

ASM DG S.r.l. Interventions on meters, such as activations, transfers, cancellations, reactivations after delayed payment, to the service

______Ascopiave Group – Annual Financial Report as at 31 st December 2014 52 Ascopiave Group ______of the sales company were carried out in compliance with the standards specified by the company Service Charter, and in a lower time range than the one provided for by the Authority. As concerns the renewal of meters to conform to the AEEG’s standards as per resolution 155/08 and subsequent, in 2014, 92 G25 meters, 181 G16 meters and 17 G10 meters were brought into compliance, largely meeting the minimum percentages set by the Authority for Electricity and Gas for the year. Overall, 573 groups of measure have been adjusted to resolution 155/08.

Edigas Esercizio Distribuzione Gas S.p.A. Interventions on meters, such as activations, transfers, cancellations, reactivations after delayed payment, to the service of the sales company and were carried out in compliance with the standards specified by the company Service Charter. The average time for supply activation and deactivation has been much lower than the maximum national standard. By means of AEEG’s resolution no 155/08, Edigas DG S.p.A. has continued its change and normalization policy of the new directives, installing no.14 G25 with electronic readers, no. 71 G16 with the same kind of material and no. 21 G10, and expects to complete this replacement by next year.

Unigas Distribuzione S.r.l. The activities carried out on the counting metres, supplied exclusively by the accredited trading companies, are subject to the specific standards identified in the Service Charter and are the following: new activations, transfers, cancellations, reactivations. The services supplied in 2014 are in line with those supplied in the previous years. The services were carried out in accordance with the standards identified in the corporate Service Charter.

In 2014, the new activations were 800, recording an increase with respect to 2013.

The requests for supply cancellation were about 2,250 in line with 2013, whereas the average time for the above mentioned interventions was basically unchanged as compared to 2013.

In 2014, the activity performed in 2013 for arrearage is confirmed. In fact, about 1,000 supply reactivations were performed following 1,800 interruptions for arrearage. Qualitative parameters are in line with those of the previous year.

Over the year, the plan to adjust meters concerning resolution 631/13 by completing the replacement of G40 meters and 89% of G16 and G25 meters through the installation of remote-reading devices and systems with a dedicated modem and battery continued.

______Ascopiave Group – Annual Financial Report as at 31 st December 2014 53 Ascopiave Group ______

Information and publication through the corporate Website

Sections: Service Charter, Trade Quality The company Website includes two specific sections pertaining to “Commercial Standards” and “Charter of Service”. These documents are constantly updated according to purchases and sales in Municipalities and Locations (concession tenders), as well as according to amendments to the directives issued by the Authority for Electricity, Gas and Water (AEEGSI). Web software enables an efficient and effective consultation of the “Quality Standards” adopted by Ascopiave S.p.A. in each Municipality, in order to view specific “Personalized Documents” related to a Municipality or a Location: the service is intended for users which avail themselves of certain services, such as authorized sale companies, private customers (such as in the event of a new service connection), consumer organizations and/or simple citizens. Access modalities include a search interface that enables users to consult the aforementioned “documentation” for a specific municipality with a fly-over menu, for its entire territory or for specific locations (personalization). Since 1 st January 2014 all the reference documents have been amended (standard update), following the entry into force of the new AEEGSI directive, resolution AEEG 574/2013/r/gas “Consolidating act on Distribution Service Quality and Gas Measurement for the period 2014-2019”.

Section: Certification of Management Systems The company's website is constantly updated in its “Certifications” section pertaining to the subsidiaries of the Ascopiave Group/Asco Holding and the parent company Ascopiave (Environment and Safety): in this section it is possible to download and view all the updated certificates of the management systems adopted and, in particular, Ascopiave's “Policy for the environment, safety and health of workers ”. The remaining two companies (partially controlled) of the Group (Unigas S.r.l. and Asm Set S.r.l.) are linked in these sections, to access their respective websites.

Co-generation

In 2014 the co-generation activity of the Ascopiave Group S.p.A. was carried out by the Research and Development Department. As far as the activity of heat generation plants in co-generation is concerned, in 2014 four plants were managed. The plant "Le Cime" in Mirano (VE) has not been modified and its remote heating network has not been extended; Saturation of home utilities in unchanged. On the plant there is an on-going leasing agreement and it benefits from the incentives deriving from Green Certificates until 2014 included. The co-generation group has been operating at full capacity, working in winter to provide heating for connected clients and in summer to supply the absorber for the production of cooling for air conditioning of connected users. The plant "Bella Mirano" in Mirano (VE) has registered an increase in saturation for household clients connected to the network (from 89% to 105%). The saturation above 100% is due to the fact that, in addition to the original project, in 2014 two new condos were connected to the remote heating network, which did not belong to the initial project, but connected subsequent to a contribution which fully covers the costs, paid by the builders of the two new condominiums. The co-generation group has been operating at full capacity, working in winter to provide heating for connected clients.

______Ascopiave Group – Annual Financial Report as at 31 st December 2014 54 Ascopiave Group ______

The saturation for the connected household clients of the plant "Ca’ Tron in Dolo" (VE) has increased from 26% to 29%. It is however specified that as of today only 50% of the new urban area envisaged in the agreement has been built. The co-generation group has been operating at full capacity, working in winter to provide heating for connected clients. The plant "Ponte Teresa" in Ponte Teresa (VA) did not register significant variations in saturation for the connected household clients. Among the extraordinary events we report the inclusion of no. 3 energy meters in order to effectively monitor the performance of the system, thanks to which the GSE has granted the "high efficiency cogeneration plant" qualification. This improvement, in terms of tax benefits, has entailed a 10% VAT on all the thermal energy transferred to public buildings (schools and gyms), with the exception of the town hall. The co-generation group has been operating at full capacity, working in winter to provide heating for connected clients. In August 2014, the plant in Vetrego, in Mirano (VE), was completed and commissioned. It is the first thermal plant supplied to the Division, completely powered by renewable sources, consisting of a thermal power plant equipped with a pellet boiler, which provides heat to a remote heating system that, at full capacity, will serve about 60 housing units. In the month of August the first condo was connected and the first 6 users were activated. On 01.12.2014 the business branch for the sale of electricity and heat to end users was sold to the subsidiary Veritas Energia S.p.A.. The production and distribution of heat and power are still under the scope of Ascopiave. As far as the activities on thermal plants are concerned, in 2014 Ascopiave S.p.A managed some ten plants.

Efficiency and energy saving

In order to meet the energy saving requirements specified by Decree dated 20 th July 2004, in 2006 and 2007 Ascopiave realised the following two projects (the second in several phases):

− The installation of thermoregulation and computerized management tools in public buildings; − Distribution of florescent light bulbs for electrical energy savings and a kit including a low-flow shower head and a low-flow tap to save hot water to all of its domestic clients.

The project on remote management was concluded in 2009, whereas the main one, relating to the distribution of the energy saving kit, ended in the first semester 2010, with the assignment of about 5,000 certificates. In order to fulfil its current and future need, Ascopiave S.p.A. will have to realize new projects of energy saving and buy certificates on the market. With Resolution AEEG EEN 9/11 issued on 27 th October 2011, the new guidelines for the energy efficiency market were established, which also provide for an adjustment of the certificates to the useful life of the project. In 2012, this should support the offer of certificates, which is still below the expectations of the targets set for distributors. The 2013 objective of 65,622 Energy Efficiency Certificates has been reached. As concerns 2014, Ascopiave S.p.A. received a communication from GSE which quantifies an obligation of 79,326 white certificates, to be delivered by 31 st May 2015.

The company Unigas Distribuzione S.r.l.. in 2013 as well had to purchase white certificates on the market or through bilateral transactions in order to fulfil its energy saving obligations equal to 13,076 EECs and submitted just over 50%. The GSE determined a 2014 target for Unigas Distribuzione S.r.l equal to 16,508 EECs.

______Ascopiave Group – Annual Financial Report as at 31 st December 2014 55 Ascopiave Group ______

Subscription, with the Municipalities involved, of a convention for the adoption of a shared procedure aimed at the agreed quantification of the "Residual Industrial Value" of the networks.

The regulatory amendments which have replaced each other over the past years and in particular the legislation which provided for the selection of the operator of the distribution service through the so-called "territorial calls for tenders" tool, have led to, among other things, the need to determine the Residual Industrial Value (RIV) of the plants owned by the Operators. Normally, in relation to this aspect, the concession agreements governed two "paradigmatic" situations, namely: - the early redemption (normally governed with reference to Royal Decree no. 2578/1925) and - the reimbursement from the (natural) expiration of the concession. The eventuality of a “force of law” expiration, preceding the effective date of the “contractual” expiration, (as a rule) was not envisaged (and therefore governed) in the concession deeds.

Substantially, the case in question (earlier termination imposed by law) represents a "third category", in some ways similar to the exercise of early redemption (from which, however, it differs significantly for the lack of a will independently formed to that effect by the Body) and in other ways similar to the expiration of the concession term (which however has not expired).

At least until Ministerial Decree 226/2011, there were no legislative and/or regulatory norms which precisely defined the methods and criteria to determine the R.I.V. of the plants and which could therefore complement the contractual clauses, often deficient.

Legislative Decree no. 164/2000 as well, until the recent amendment introduced in the first place with Law Decree 145/2013, and then Law 9/2014, merely referred to Royal Decree 2578/1925 which, however, ratified the method of the industrial estimate without setting precise assessment parameters.

The situation illustrated above entailed the necessity to define specific agreements with the Municipalities aimed at reaching a shared estimate of the R.I.V.. Just consider that the lack of such agreements in the past has often led to administrative and civil/arbitral litigations.

The situation of the Municipalities partners of Asco Holding S.p.A. was even more peculiar in the sense that, with the latter, there is not a real concession deed in "canonical" form, but various deeds of assignment to Companies ("Azienda Speciale", at the time). These deeds have ratified, at the same time, the continuation of the award of the service previously provided by the Bim Piave Consortium.

It is evident that, as deeds of assignment, a real regulation concerning the purchase and/or the termination of the management was not and could not be envisaged.

With the above-mentioned partner Municipalities, Ascopiave has signed a convention which implied hiring a renown independent competent professional in order for him to determine the fundamental criteria to apply to calculate the RIV of the gas distribution plants .

The related negotiated procedure performed adopting the criterion of the most economically advantageous tender ended on 29 th August 2011.

The expert has written a report on the “ Fundamental criteria to calculate the RIV of the natural gas distribution plants ______Ascopiave Group – Annual Financial Report as at 31 st December 2014 56 Ascopiave Group ______located in the Municipalities currently serviced by Ascopiave S.p.A. ” which was approved on 2 nd Dec. 2011 by Ascopiave’s Board of Directors and then by all 93 Local Bodies by City Council Resolution.

In 2013 Ascopiave submitted the state of consistency and the appreciation of the plants determined applying the criteria set in the Report, offering at the same time its willingness to perform the cross-examination with the Municipalities, aimed at analysing the documents.

To date, following the outcome of the technical cross-examination, 87 Municipalities (73 as of 31 st December 2013) have approved the residual value. Later, it will be formalized by Administrative Public Act pursuant to art. 11 of Presidential Decree 902/1986. As part of the above process, the reciprocal relations mostly connected to the management of the service were governed as well, since both the payment of “one-off” amounts (2010 – signature of supplementary deeds) for Euro 3,869, and (since 2011) real fees for variable amounts and equal to the difference, if positive, between 30% of the "restriction on revenues" recognized by the tariff regulation and the amount already received by the Municipality itself as a dividend in 2009 (financial statements 2008) are envisaged.

In particular: • Euro 3,869 thousand in 2010; • Euro 4,993 thousand in 2011; • Euro 5,253 thousand in 2012; • Euro 5,585 thousand in 2013; • Euro 5,268 thousand in 2014. were paid for a total amount of Euro 24,968 thousand.

______Ascopiave Group – Annual Financial Report as at 31 st December 2014 57 Ascopiave Group ______

Litigations

CLASS I – ADMINISTRATIVE LITIGATIONS

As of 31 st December 2014, as far as concessions are concerned, no administrative litigations are pending.

CLASS II – LITIGATIONS ON THE VALUE OF PLANTS - CIVIL LAW

As of 31 st December 2014, the following litigations are pending:

MUNICIPALITY OF CREAZZO: A trial is pending before the Civil Court of Vicenza between Ascopiave and the Municipality of Creazzo for the establishment of the industrial residual value of the distribution plants (delivered in 2005 to the new operator). With judgement dated 25 th August 2014, the Single Judge sentenced the Municipality to pay an amount of Euro 1,678 thousand and to reimburse two-thirds of the expenses validated in the same decision, whereas the other third is compensated among the Parties. On 18 th December 2014, the appointment of the lawyers was confirmed, so that the enforcement proceedings could start, without prejudice, if applicable, to the possibility of appealing, in order to recover an amount not lower than Euro 2,141 thousand. In order to identify the economic effects of the judgement, please see the explanatory notes of these financial statements.

CATEGORY III – LITIGATIONS ON THE VALUE OF PLANTS - ARBITRATIONS

As of 31 st December 2014, the following litigations are pending:

MUNICIPALITY OF COSTABISSARA: An arbitration is pending between Ascopiave and the Municipality of Costabissara for the establishment of the industrial residual value of the distribution plants (delivered in to the new operator during FY 2011). The Arbitration Commission held its first meeting on 16 th January 2012. Given the disagreement on this point between the parties, the Commission resolved to enforce a partial arbitral award aimed at verifying whether the arbitration clause provided for in the convention is valid (Ascopiave) or not (Municipality). This has confirmed the enforcement of the same clause. Subsequently, an investigation by a court-appointed expert was set. The court-appointed expert witness's report was submitted on 25 th November 2013. The Parties drew their conclusions on 16 th June 2014. The final briefs were submitted and the related replies were filed. We are awaiting the decisions of the Commission, whose deadline is postponed to 28 th May 2015.

MUNICIPALITY OF SANTORSO: An arbitration is pending between Ascopiave S.p.A. and the Municipality of Santorso for the establishment of the residual industrial value of the distribution plants (delivered in 2007 to the new operator). The start of the procedure was necessary as a result of the Judgment dated 4 th September 2013 by which the Judge declared that the Court of Vicenza has no jurisdiction for the validity of the arbitral clause set forth in the original Agreement. Noting the failure

______Ascopiave Group – Annual Financial Report as at 31 st December 2014 58 Ascopiave Group ______of attempts to amicable settlement, on 12 th November 2013, Ascopiave S.p.A. served the litigation notice with the appointment of the party Arbitrator. The Municipality, by resolution dated 26 th November 2013, appointed its Arbitrator. By decision of the President of the Court of Vicenza dated 31 st January 2014 (taken upon request by Ascopiave) the third Arbitrator and the Chairman of the Panel were appointed. The Municipality has contested this procedure (also set forth in the concession agreement) supporting the applicability of the new law dated 2012 which, amending the Public Contracts Code, introduced a peculiar regulation with respect to the arbitration proceedings with the Public Bodies which envisages, among other things, the appointment of the third Arbitrator by the Court of Arbitration of AVCP (Authority for the Supervision of Public Contracts for works, services and supplies). The Authority has adhered to the request, envisaging a retroactive application of the new rule and introducing a sort of supervening invalidity of the arbitral clauses. In this perspective it has scheduled the draw of the third Arbitrator on 17 th April. Ascopiave S.p.A. has always expressed its opposition to this formulation (most recently with the note to the AVCP dated 15 th April 2014) and therefore considers the Panel perfectly formed, which, moreover, at its meeting held on 14 th April 2014, confirmed its legitimacy. AVCP's Chamber of Arbitration has submitted the extract of the minutes of the meeting held on 17 th April 2014 which ratified the acknowledgement of Ascopiave S.p.A.'s communication. As a consequence, the proceeding was declared extinguished. The Municipality's defence has renewed its application to AVCP, while Ascopiave S.p.A.'s lawyer has reaffirmed the position of the Parent Company in another letter dated 12 th June 2014. The Panel, in hearings held on 26 th June and 7 th July dealt with the issue envisaging a partial award on the matter and establishing the deadlines for the Parties' briefs on 30 th September 2014 and 15 th October 2014. The recent Law Decree 90/2014, whose article 19 has abolished AVCP, could have a significant impact on the matter. The Parties have submitted their respective briefs (and replies) within the specified time limits. With a partial award dated 10 th January 2015, the Panel confirmed its jurisdiction and competence. The Proceedings, therefore, will continue with the current Panel.

CATEGORY IV – PENDING ADMINISTRATIVE LITIGATIONS - NOT CONCERNING CONCESSIONS

As of 31 st December 2014, the following litigations are pending:

ASCOPIAVE S.p.A. – HEADQUARTERS EXTENSION: An appeal before the Council of State filed by the company Setten Genesio S.p.A., for the tender involving the construction of the new company headquarters and aimed at obtaining the review of the sentence no. 6335/2010 issued by the Regional Administrative Court of Veneto that, despite admitting the appeal filed by the company and thereby annulling the tender acts, rejected the request for compensation for damage (for about Euro 1,300 thousand) against Ascopiave and the company Carron S.p.A.. The only important proceeding concerns the request for an appeal on 10 th May, 2011. Should none of the parties take any other action, the non-suit is scheduled in 2016.

AEEGSI – RESOLUTIONS ARG/GAS 99/11 – 207/11 – 166/12 – 352/12 – 241/2013 – 533/2013: An appeal promoted by AEEGSI in order to obtain the cancellation of judgement no. 3272 dated 28 th December 2012 through which the Regional Administrative Court of Lombardy based in Milan accepting the appeal from Local Distributors has cancelled the Default discipline, that is to say the original rules pursuant to which AEEGSI had intended to create and govern the so-called Last Resort Services in the gas sector. Through the appeal, AEEGSI has ______Ascopiave Group – Annual Financial Report as at 31 st December 2014 59 Ascopiave Group ______requested to stay the Regional Administrative Court Judgement by means of an emergency protective court order. That stay was granted by means of Single Judge Decree. The protective hearing was scheduled on 23 rd April 2013 but was postponed to 9 th July 2013 upon joint demand from the parties. On the same date, the Commission confirmed the protective court order, scheduling the substantive discussion in March 2014. The discussion was regularly held on 4 th March 2014. With Judgement filed on 12 th June 2014 the C.d.S. (Italian Council of State) accepted AEEGSI's appeal and therefore revoked the Judgement by the Regional Administrative Court of Lombardy. The decision was probably considerably affected by the amendment in the disputed regulations which are not in force anymore. However, the expenses were compensated.

An appeal to the Regional Administrative Court of Latium, which overrules Ministerial Decree dated 5 th February 2013 approving the agreement template for managing the service subsequent to the following calls, limiting to the last part of art. 21.3 where the manager “supplies the default service according to the methods defined by the Authority.” This is a merely precautionary measure aiming at avoiding the risk of lack of interest in the aforesaid main judgement. Given the merely instrumental nature of the need of avoiding the absence of legal interest and the above-mentioned final Judgement, the Proceedings will not be carried on.

In the meantime, on 6 th June 2013, the AEEGSI issued a new Resolution (241/2013) through which it granted the activities essentially concerning management and supply to a seller to be identified, at the end of the first period of service provision, following a public call for tenders announced by “Acquirente Unico”. The new discipline partly overcomes the objections raised in relation to the previous one. With appeal to the Regional Administrative Court of Lombardy Milan (filed before the above-mentioned Judgement of the Italian Council of State), Resolution 241/2013 was contested as well. The main reasons are: failure to envisage a compensation for the default service interventions in progress; the provisions concerning delay penalties or failure to implement power failure to be paid by the distributor even if the delay or the failure to implement depend on causes not attributable to the distributor. Finally, in connection with previous appeals, the “motivation” given to the provision was contested: according to the AEEGSI, this motivation only derives from the need to obviate a sort of “incompetence” of the distributors. To date, the proceeding is still to be scheduled.

AEEGSI further intervened on the matter, with Resolutions 533/2013 and 84/2014. On 21 st January 2014 an appeal was filed against Resolution 533/2013 before the Regional Administrative Court of Lombardy Milan. The reasons are similar to those that led to appeal Resolution 241/2013.

AEEGSI – RESOLUTIONS ARG/GAS 28/12 – 193/12 – 246/12 – 631/2013: An appeal before the Regional Administrative Court of Lombardy – Milan, against the Authority for Electricity and Gas for cancelling Resolution ARG/gas 28/12, relating to the change from traditional meters to electronic meters, remotely read and managed; in particular: for the failure to recognize the residual value of the replaced meters still having a valid seal; for the wrong (underestimated) indication/recognition of standard costs for the new appliances; for the obligation to use electronic meters only as from 1 st March 2012 in spite of the fact that the technology needed is not yet available at an industrial level.

______Ascopiave Group – Annual Financial Report as at 31 st December 2014 60 Ascopiave Group ______

Subsequently, as partial modifications to Resolution 28, the AEEGSI issued Resolutions 93/2012 and 246/2012, which, however, were not sufficient to withdraw the company's complaint. The deadline set on 1 st March 2012 was cancelled and postponed to 31 st December 2012. The company has filed an appeal against both resolutions with additional grounds. Similarly, Resolution 316/2012 through which the AEEGSI further intervened on the matter, has also been contested. With Resolution 631/2013 the AEEGSI further intervened on the matter, amending Resolution 28/2012. Therefore, the new stay request, submitted with reference to the previous rules, (also contested) was withdrawn. The proceedings are formally still in progress; however, by virtue of Resolution 631, they should/could be considered without further legal interest. Assessments are currently being performed.

GUIDELINES – MINISTERIAL DECREE 22 ND MAY 2014 An appeal to the Regional Administrative Court of Latium – Rome against the Minister of Economic Development for the cancellation of Ministerial Decree dated 22 nd May 2014 concerning the introduction of Guidelines for the determination of the residual industrial value. As part of the same proceedings, the issues of constitutional legitimacy and/or preliminary ruling as concerns Law 9 and 116 of 2014, in the section which has modified art. 15, paragraph 5 of Legislative Decree 164/2000 (retrospective deduction of private contributions and time limit of agreements' validity) were raised. The Regional Administrative Court, with reference to the appeals filed by other Distributors including an application for suspension, has scheduled the hearing on 27 th June 2015. Ascopiave S.p.A.'s lawyers will request that the proceedings are discussed during the same hearing, or another one to be scheduled.

AEEGSI Resolutions ARG/gas 310/2014 and ARG/gas 414/2014 An appeal to the Regional Administrative Court of Lombardy – Milan against the AEEGSI, for the cancellation of the Resolutions ARG/gas 310 and 414/2014 related to the methods for assessing the RAB RIV delta, pursuant to art. 15, paragraph 5 of Legislative Decree 164/2000 (current text) when the difference is higher than 10%. To date, there are no further procedural steps.

AEEGSI Resolution ARG/gas 367/2014 An appeal to the Regional Administrative Court of Lombardy – Milan against the AEEGSI, for the cancellation of Resolution ARG/gas 367/2014 related to the methods for recognizing the value of the RAB RIV delta in the section which envisages different regulations for incumbent (no reimbursement) and non-incumbent (full reimbursement) winners of the Territorial tender. To date, there are no further procedural steps.

CATEGORY V –CIVIL LITIGATIONS – NOT CONCERNING CONCESSIONS

As of 31 st December 2014, the following litigations are pending:

ASCOPIAVE – UNIT B: A civil judgment before the Court of Treviso (RG 6941/2013) following the pre-trial technical investigation, which ended with the report of the Expert witness (appointed by the Court), and started by Ascopiave (writ of summons dated 22 nd August 2013) in order to obtain compensation for damages to the entrance floor of the "Unit B", against: Bandiera Architetti S.R.L (Designers), Mr. Mario Bertazzon (Contract Manager) and Mr. R. Paccagnella Lavori Speciali S.R.L. ______Ascopiave Group – Annual Financial Report as at 31 st December 2014 61 Ascopiave Group ______

(Contractor). The compensation request refers to an assessment of damage between approximately Euro 127 thousand (Expert witness estimate for full restoration) and Euro 208 thousand (estimate of a Third party firm for full makeover). All the Parties regularly appeared before the Court. Following the third-party notice (Insurance Company and Site engineer) the first hearing is scheduled on 17 th April 2014. Upon its completion, the Judge granted the ordinary investigatory period and scheduled the next hearing on 15 th July 2014. The Court, by Order dated 22 nd December 2014, decided the complete renewal of the expert witness board, appointing an assessor. The hearing for the confirmation of the assignment and the oath of the expert witness is scheduled for 13 th March 2015. Ascopiave S.p.A., by that date, shall appoint its own defendant's expert. The possible candidates are currently being examined.

Relationships with Agenzia delle Entrate (Tax collection agency) During 2008, the subsidiary company Ascopiave S.p.A. was subject to tax audit by the Regional Inland Revenue Office. Following the audit, a report on findings with observations on the indirect and direct taxes was issued. During the month of July 2008, the local Internal Revenue Office issued a notice of assessment regarding the contents of the report on findings. The company, on 5 th February 2010, filed an appeal to the Provincial Tax Commission and paid the sum of Euro 243 thousand following the entry in taxpayers' list while the judgment is pending. On 30 th September 2010 the Tax Commission of the Province of Treviso with judgement 131/03/10 filed on 14 th December 2010 accepted the appeal and acknowledged the good tax behaviour of the company. Later, Agenzia delle Entrate filed an appeal against the decision of the Commission of the Province of Treviso. On 24 th September 2012, the Regional Provincial Tax Commission issued judgement no. 109/30/12, filed on 20 th December 2012 which rejected the appeal submitted by Agenzia delle Entrate. On 26 th June 2013, the company Ascopiave S.p.A. was notified about the appeal in Cassazione (Court of Cassation) by the Inland Revenue Agency and joined proceedings because of the result of previous judgements. The directors, encouraged by the opinion of the professionals consulted, are confident about a positive result of the litigation. On 19 th June 2014 the Inland Revenue Office of Venice performed an inspection on the 2009 tax period at the company Veritas Energia S.p.A. aimed at collecting accounting and non-accounting data, information and documents related to the application of the VAT rate reduced to 10% pursuant to section no. 103 (concerning operations involving the supply of “electricity and gas for mining, agricultural and manufacturing companies including printing, publishing firms and the like”) of the III Part of Table A of Presidential Decree 633/1972. On 15 th October 2014 the company received the Assessment Notice by the Local Agenzia delle Entrate and integrally defined the tax claim paying the amounts due to the tune of Euro 110 thousand, including reduced penalties and interests.

Territorial areas In 2011, the issuance of a number of ministerial decrees further defined the regulatory framework of the sector, regarding in particular the territorial calls for tenders. Specifically:

1) the Decree dated 19 th January 2011 issued by the Ministry for economic Development in agreement with the Ministry for the Relationship with Regions and Territorial Cohesion, the territorial areas for issuing calls for tenders to entrust

______Ascopiave Group – Annual Financial Report as at 31 st December 2014 62 Ascopiave Group ______the gas distribution service were identified; with subsequent Decree dated 18 th December 2011, the municipalities belonging to each territorial area were also identified (the so-called Territorial Areas Decree); 2) the Decree issued by the Ministry for Economic Development and the Ministry of Employment and Social Policies on 21 st April 2011 contained provisions ruling the social effects connected to the assignment of the new gas distribution concessions, thus implementing paragraph 6 of art. 28 of Legislative Decree no. 164 issued on 23 rd May 2000 (the so- called Workforce Protection Decree); 3) with the Decree issued by the Ministry for Economic Development on 12 th November 2011, the regulatory norms concerning the criteria to be applied to calls for tenders and the evaluation of the offer for assigning the gas distribution service was approved (the so-called Decree for Criteria).

The issuance of ministerial decrees played a major role in giving certainty to the competitive environment within which operators will move in the coming years, thus laying the foundations for allowing the process of market opening - that started with the implementation of European directives - to produce the benefits hoped for. The Ascopiave Group - as indeed many other operators - has substantially appreciated the new regulatory framework, believing that it can create important opportunities of investment and development for medium-sized qualified operators, rationalising the offer. At the end of 2013, the Government issued Law Decree 23/12/2013, no. 145, making changes to the regulatory framework with regard to the determination of the reimbursement value of the plants due to the outgoing operator at the end of the so-called "Transitional Period". The Decree was converted with amendments into Law no. 9/2014, which substantially changed the original provisions of the Decree on that aspect. The Law Decree - changing the content of Article 15 of Legislative Decree no. 164/2000, provided that the reimbursement value paid to the outgoing operators of the service, who held the existing assignments and concessions in the transitional period, should be calculated in compliance with the provisions of the agreements or contracts and, even if not established by the parties, no longer through the criteria referred to in points a) and b) of Article 24 of Royal Decree dated 15 th October 1925 no. 2578, but pursuant to the provisions of Article 14, paragraph 8, of Legislative Decree no. 164/2000, as subsequently amended and supplemented. In any case, private contributions related to local assets (assessed in accordance with the methodology of tariff regulation in force) had to be deducted from the reimbursement value . The conversion into Law of the Decree (Law no. 9 / 2014) has made substantial changes to the original content, providing that the new operators shall pay a reimbursement to the holders of assignments and concessions existing in the transitional period, calculated in compliance with the provisions of the agreements or contracts and, even if not inferable by the will of the Parties and for aspects which are not envisaged in those agreements or contracts, based on guidelines on operating criteria and methods for the assessment of the reimbursement value as per article 4, paragraph 6, of Law Decree dated 21 st June 2013, no. 69, converted, with amendments, by Law dated 9 th August 2013, no. 98. In any case, private contributions related to local assets (assessed in accordance with the methodology of tariff regulation in force) have to be deducted from the reimbursement value. If the reimbursement value is higher than 10% of the value of local assets calculated as per tariff regulation, net of public capital contributions and of private ones for local fixed assets, the granting local body submits the related evaluations detailing the reimbursement value to the Authority for Electricity and Gas and Water Supply System so that it can be checked before publishing the invitation to tender. In addition, Law no. 9 / 2014 has established that the deadlines envisaged in paragraph 3 of article 4 of Law Decree dated 21 st June 2013, no. 69, converted, with amendments, by Law dated 9 th August 2013, no. 98, are extended by four ______Ascopiave Group – Annual Financial Report as at 31 st December 2014 63 Ascopiave Group ______months and that the deadlines illustrated in Attachment 1 to the regulations of the Minister for Economic Development Decree dated 12 th November 2011, no. 226 (so-called "Decree for Criteria"), related to dispositions contained in the third grouping of Attachment 1 itself, and the deadlines illustrated in article 3 of the regulations, are extended by four months.

On 6 th June 2014 the Decree of the Minister of Economic Development dated 22 nd May 2014 was published in the Official Gazette, which approved the “Guidelines for criteria and application procedures for the assessment of the reimbursement value of natural gas distribution networks” pursuant to Article 4, paragraph 6, of Law Decree no. 69 / 2013, converted with amendments by Law no. 98 / 2013 and article 1, paragraph 16, of Law Decree no. 145 / 2013, converted with amendments into Law no. 9 / 2014. Pursuant to Law no. 9 / 2014, the “Guidelines for criteria and application procedures for the assessment of the reimbursement value of natural gas distribution networks” define the criteria to be applied to the valuation of reimbursement of facilities in order to integrate those aspects that are not already provided for in the agreements or contracts and what cannot be deduced from the will of the parties.

The “Guidelines ” feature several critical issues not only as concerns the resulting valuations, but also in terms of application scope, extremely extended by the Ministry, to the extent that all the agreements regarding the valuations of the facilities entered into by the operators and the Municipalities after 12 th February 2012 (date of entry into force of Ministerial Decree 226/2011) are believed to be ineffective.

Furthermore, these Guidelines contrast with the provisions of art. 5 of Ministerial Decree 226/2011 itself. This is in non-compliance with the provision of law which refers to art. 4, paragraph 6 of Law Decree 69/2013, which, in turn, makes explicit reference to Article. 5 of Ministerial Decree 226/2011. Considering such illegitimacies, Ascopiave S.p.A. has appealed the Ministerial Decree dated 21 st May 2014 (and as a consequence the Guidelines) before the administrative court (Regional Administrative Court of Latium). As part of the said proceedings, the issue of constitutional legitimacy and/or preliminary ruling was raised relating to the interpretation (mainly retrospective) of the new rules on the deduction of private contributions set forth by Law 9/2014.

Lastly, by Resolution 310/2014/R/gas - “Provisions for determining the reimbursement value of natural gas distribution networks”, published on 27 th June 2014, the Authority for Electricity, Gas and Water approved provisions for determining the reimbursement value of the gas distribution networks, implementing the provisions of Article 1, paragraph 16 of Law Decree dated 23 rd December 2013, no. 145, converted with amendments by Law dated 21 st February 2014, no. 9.

That provision states that the granting Local Authority shall send the Authority the verification documents containing a detailed calculation of the reimbursement value (RIV), if this value is 10% higher than the local RAB. The Authority performs the checks set forth in Article 1, paragraph 16 of Law Decree no. 145/13 within 90 days from the date of receipt of the documentation by the Awarding entities, ensuring priority based on the deadlines for the publication of the calls for tenders.

With Law no. 116/2014 dated 11 th August 2014 (converted with amendments to law decree 24 th June 2014 no. 91) the Legislator has envisaged a further extension of deadlines for the publication of invitations to tender. Specifically, for the areas belonging to the first group referred to in Annex 1 of Ministerial Decree 226/2011, the time limit was extended by eight months; for the areas belonging to the second, third and fourth groups the deadline was postponed by six months and lastly for the areas of the fifth and sixth groups the extension is four months. However, these postponements do not apply to those areas which, although they belong to the first six groups, are affected by earthquakes, because over 15% of the redelivery points are in the municipalities affected by the earthquakes ______Ascopiave Group – Annual Financial Report as at 31 st December 2014 64 Ascopiave Group ______of 20 th and 29 th May 2012, in compliance with the annex to the Decree of the Minister of economy and finance dated 1 st June 2012. The same law, further amending Article 15, paragraph 5 of Legislative Decree 2000, has finally determined that the redemption value is to be calculated in compliance with the provisions of the agreements or contracts, provided that the latter were entered into before the date of entry into force of Ministerial Decree dated 12 th November 2011 no. 226, that is to say before 12 th February 2012, thus affirming the principle of retroactive application of the Guidelines, which had already been appealed during the court action against the Guidelines.

Distribution of dividends

On 24 th April 2014, the Shareholders’ Meeting approved the yearly statement and decided the distribution of dividends for an amount equal to Euro 0.12 per share with dividend date on 12 th May 2014, record date on 14 th May 2014 and payment on 15 th May 2014.

Own shares

In accordance with Art. 40 of Legislative Decree 127 2 d), as of 31 st December 2014, the value of own shares held by the company is equal to Euro 17,660 thousand (Euro 17,660 thousand as of 31 st December 2013), accounted for as a reduction from the other reserves, as can be seen in the Net Equity variations.

Outlook for the Year

As for the distribution segment, in 2015 the Group will be involved in the enhancement of its portfolio of concessions and in the agreed definition with local grantors, of the industrial value of the networks and distribution systems. During the year, if the time frames envisaged by law are respected, the first tenders for the awarding of the gas distribution service will be launched with territorial procedure. Most municipalities currently managed by the Ascopiave Group belong to Minimum Territorial Areas for which the deadline of publication of the invitation to tender is beyond 31st December 2015. Nevertheless, since the awarding entities can anticipate the deadlines prescribed by the regulations, it is possible that some municipalities might be interested in tenders already in 2015. Even if this should occur, however, even if there is no absolute certainty about the time required for the award, it is reasonably deemed that, for the first invitations to tender, any transfer of management to new contractors can be completed only after the end of fiscal year 2015. As a result, the business perimeter of the Group should not be subject to changes as compared to the current situation. The Group may also consider participating in one or more tenders that will be published in 2015, implementing its strategy of growth and consolidation in the industry. With regard to profitability, assuming a normal operating condition of the plants and the certainty of tariff levels, defined in compliance with the new regulations which came into force in 2014, the distribution activity should essentially confirm the results achieved in 2014.

As far as the sale segment is concerned, commercial margins in 2015 are expected to be slightly higher than in 2014, mainly due to an expected recovery of gas consumption, since 2014 was characterized by particularly mild, and therefore unfavourable, temperatures. ______Ascopiave Group – Annual Financial Report as at 31 st December 2014 65 Ascopiave Group ______

As concerns the activity of electricity sale, in 2015 it is expected that margins will be lower than those recorded in 2014, characterized by particularly advantageous market conditions.

These results may obviously be affected, in addition to any new measures concerning tariffs taken by the Authority for Electricity, Gas and Water - which cannot be estimated as of today - also by the evolution of the more general competitive scenario and the procurement strategy of the Group.

The actual results of 2015 may differ from those predicted in relation to several factors including: the evolution of demand, supply and gas prices; actual operating performance; the general macroeconomic conditions; the effect of regulations in the energy and environment sectors; the successful development and implementation of new technologies; changes in stakeholders' expectations and other changes in business conditions.

Goals and policies of the group and risk description

Credit and liquidity risk

The main financial instruments in use by our Group are represented by trade payables and receivables, liquidity, bank debt and other forms of financing. It is maintained that the Group is not exposed to credit risks greater than the product sector average, considering the numerous customers and the low physical risk in the service of gas delivery. To keep residual credit risks under control, there is in any case a fund for the devaluation of credit equal to approximately 21.3% (14.3% in 2013) of the total gross credit of third parties. Significant commercial operations take place in Italy. With reference to the company financial management, the administrators consider it appropriate to generate a cash flow suitable for covering its needs. The main payment obligations opened as of 31 st December 2014 are associated with contracts for natural gas supply.

Risks relating to bids for the award of new concessions for the distribution of gas

As of 31 st December 2014, the Ascopiave Group holds a portfolio of 208 (209 in 2013) natural gas distribution concessions located throughout the country. In compliance with the regulations in force governing the concessions held by the company, the calls for tenders for the new awards of the gas distribution service will be no longer announced for every single Municipality but exclusively for the territorial areas determined with Ministerial Decrees dated 19 th January 2011 and 18 th October 2011, and pursuant to the deadlines illustrated in Annex 1 attached to the Ministerial Decree on tender criteria and bid assessment standards, issued on 12 th November 2011. With new tenders being launched, Ascopiave S.p.A. may not be able to obtain one or more new concessions, or it could obtain them at less advantageous conditions than the current ones, with possible negative impacts on the operative activity and the economic, equity and financial situation, it being understood that, if the company is not awarded with a new concession, limited to the Municipalities previously managed by the company, it will obtain a reimbursement value envisaged for the outgoing operator.

Risks relating to the possible claim by the Municipalities for the acquisition of property of the gas distribution networks and to the amount of reimbursement paid by the new operator

______Ascopiave Group – Annual Financial Report as at 31 st December 2014 66 Ascopiave Group ______

With regard to the concessions under which the Ascopiave Group also owns the gas distribution networks, Law no. 9 / 2014 establishes that the new operator shall pay a reimbursement calculated in compliance with the provisions of the agreements or contracts and, even if not inferable by the will of the Parties and for aspects which are not envisaged in those agreements or contracts, based on guidelines on operating criteria and methods for the assessment of the reimbursement value as per article 4, paragraph 6, of Law Decree dated 21 st June 2013, no. 69, converted, with amendments, by Law dated 9 th August 2013, no. 98. In any case, private contributions related to local assets (assessed in accordance with the methodology of tariff regulation in force) have to be deducted from the reimbursement value. In addition, if the reimbursement value is higher than 10% of the value of local assets calculated as per tariff regulation, net of public capital contributions and of private ones for local fixed assets, the granting local body submits the related evaluations detailing the reimbursement value to the Authority for Electricity and Gas and Water Supply System so that it can be checked before publishing the invitation to tender. The Minister for Economic Development Decree dated 12 th November 2011 no. 226 establishes that the new operator acquires the property of the plant by paying the redemption value to the outgoing operator, except for any portion of it owned by the municipality. In the periods following the first, transitional one, the reimbursement value to the outgoing operator shall be equal to the local net intangible assets, net of public capital contributions and of private ones for local fixed assets, calculated with reference to the criteria used by the Authority to determine the distribution tariffs (RAB). As far as this point is concerned, it should be noted that the Authority has recently intervened with Resolution 367/2014/R/gas, providing that the redemption value, referred to in Article 14, paragraph 8, of Legislative Decree no. 164/00, at the end of the first period of concession is determined as the sum of: a) the residual value of the existing stock at the beginning of the concession period, assessed for all the fixed assets subject to transfer for consideration to the new operator in the second period of concession based on the redemption value, provided for in Article 5 of Decree 226/11, recognized to the outgoing operator in the first territorial concession, taking into account the depreciations and divestments recognized for tariff purposes in the concession period; b) the residual value of the new investments made in the concession period and existing at the end of the period, assessed based on the re-valued historical cost method for the period in which the investments are recognized in the final balance, as provided in Article 56 of the Tariff Regulation of Gas Distribution and Measurement Services, and as the average between the net value determined based on the re-valued historical cost method and the net value determined based on standard cost assessment methods, pursuant to paragraph 3.1 of Resolution 573/2013/R/GAS, for the next period. The Group intends to protect its financial performance and standing with respect to regulatory changes as described in the terms set out in the section “Territorial areas” of this report.

______Ascopiave Group – Annual Financial Report as at 31 st December 2014 67 Ascopiave Group ______

Human resources As of 31 st December 2014, Ascopiave Group had 610 employees 4, divided between the various companies of the Group as outlined below:

Companies consolidated with full consolidation method 31/12/2014 31/12/2013 Var. Ascopiave S.p.A. 263 271 -8 Ascotrade S.p.A. 81 78 3 ASM DG S.r.l. 20 20 0 Edigas Distribuzione S.p.A. 27 31 -4 Pasubio Servizi S.r.l. 19 19 0 Etra Energia S.r.l. 6 6 0

Veritas Energia S.p.A. (*) 31 0 31 Blue Meta S.p.A. 20 18 2 Amgas Blu S.r.l. 7 7 0 Total 474 450 24

Companies consolidated with net equity consolidation method 31/12/2014 31/12/2013 Var. Estenergy S.p.A. 79 82 -3 ASM Set S.r.l. 9 9 0 Unigas Distribuzione S.r.l. 48 45 3

Veritas Energia S.p.A. (*) 0 33 -33 Total 136 169 -33

Ascopiave Group 610 619 -9

(*) In 2014 following the acquisition of 100% of Veritas Energia S.p.A., the company has changed consolidation method

Compared to 31 st December 2013, the workforce of the Ascopiave Group was reduced by 9 units. The main variations concern the following companies: - Ascopiave: -8 employees, with 2 new people hired and 10 people laid-off, which partly relate to the transfer of some employees to the subsidiary company Ascotrade S.p.A.; - Ascotrade: + 3 employees, following the transfer of some employees from the parent company Ascopiave S.p.A.; - Edigas Distribuzione Gas S.p.A.: -4 employees; - Estenergy S.p.A.: -3 employees, due to the transfer to AcegasApsAmga S.p.A. of originally outsourced resources; - Veritas Energia S.p.A.: -2 employees, with 2 new people hired and 4 people laid-off; - Unigas Distribuzione S.r.l.: +3 employees, with 5 new people hired and 2 people laid-off.

The following table illustrates the division of the staff complement by skill level/grade:

4 The data concerning the proportionally consolidated companies, i.e. Estenergy (48.999%), ASM Set (49%), Unigas Distribuzione (48.86%) and Veritas Energia (51%), are represented at 100%. ______Ascopiave Group – Annual Financial Report as at 31 st December 2014 68 Ascopiave Group ______

Companies consolidated with full consolidation method 31/12/2014 31/12/2013 Var. Managers 17 19 -2 Office workers 351 322 29 Manual workers 106 109 -3 Total 474 450 24

Companies consolidated with net equity consolidation method 31/12/2014 31/12/2013 Var. Managers 3 4 -1 Office workers 114 147 -33 Manual workers 19 18 1 Total 136 169 -33

Ascopiave Group 31/12/2014 31/12/2013 Var. Managers 20 23 -3 Office workers 465 469 -4 Manual workers 125 127 -2 Total 610 619 -9

Quality

Management Systems and related certifications Quality, Safety, Environment

Certifications of Management Systems Quality, safety and environment (QSE), are a guarantee of a reliable organization, a shared work culture, based on excellent professional skills, for the Ascopiave Group. The certifications of the management systems, such as Quality, Safety and Environment, confirm that the organization is reliable and has a shared working culture, marked by professionalism and efficiency. Each certification is also synonymous with "continuous improvement" towards its shareholders, its employees and the environment, the community and the customers/users of the services provided. Compared to its subsidiaries, only the parent company Ascopiave has adopted and certified an integrated "QSE" system that combines the organizational efficiency and effectiveness of a long-term certified quality system, with the compliance and full applicability of a management system for safety at work and environmental protection.

Certification of Quality Management System The Quality certification (ISO 9001), bestowed upon every company of the Group herein, represents a tangible award of the entrepreneurial skills of a company able to optimize its organization, adopting an efficient and effective management, adequate and constantly upgraded skills, in full compliance with laws/regulations and Authority issued norms (AEEGSI), availability of useful indicators and reference objectives, both economic and performance-wise, of the relevant business processes and activities.

______Ascopiave Group – Annual Financial Report as at 31 st December 2014 69 Ascopiave Group ______

Ascopiave Group's Quality Management System:

Ascopiave Group's Quality Management System (ISO 9001:2008) The certification of the Quality Management System involves Parent Company (two certificates) as well as eight other subsidiary companies. All ten management systems are certificated with the reference European norm, UNI EN ISO 9001:2008, through four different certification agencies: Kiwa italia S.p.A., Cersa S.r.l., Kiwa Cermet Italia S.p.A., Di.qu. S.r.l.. Ascopiave has confirmed to “delegate” to only one function within the Group the role of manager responsible for the quality management of these companies, as illustrated below: - Ascopiave : two different certified management systems, one for the “ Methane gas distribution ” and one for the “Energy/Remote heating management service ”; - Sales Energy Group : an integrated management system for six different companies, Ascotrade S.p.A., Pasubio Servizi S.r.l., Blue meta S.p.A., Amgas Blu S.r.l., Veritas Energia S.p.A., Etra Energia S.r.l., concerning “ Methane gas trading via urban grid ”. For the two jointly controlled companies (Asm Set S.r.l. and Unigas S.r.l.) two different managers are the internal representatives of the Quality System.

The quality managers, in 2014 ensured the compliance with regulations and the continuity of certification of the aforementioned twelve Quality Management Systems, illustrated below:

- Ascopiave S.p.A. (gas distribution) - Ascopiave S.p.A. Ascopiave operates in the field of "Natural gas distribution" in four Italian regions and ten provinces. The service, certified since January 2001, has been constantly implemented over the past 13 years in order to upgrade it to the Authority's directives (business separation) and to the requirements set by the new reference regulation. The quality management system of the core business activity is now UNI EN ISO 9001:2008 certified, with the following field of application: " Management of methane gas distribution service; development, building, running and maintenance of methane gas distribution systems". Between 18 th March and 16 th April 2014 all the company processes and a significant sample of territorial units have undergone an “internal audit” by the Group's Quality Manager (as an Auditor), with a positive outcome. Between 18 th March and 16 th April 2014 all the company processes and a significant sample of territorial units have undergone an “internal audit” by the Group's Quality Manager (as an Auditor), with a positive outcome. The report, the criticalities, the indicators and the targets have been analysed and validated by the "Quality Committee". In the last week of May, the primary business processes, the operational headquarters and the main activities (a sample on a territorial basis and outsourcing), were subject to a "surveillance audit" by the certification body, Kiwa Italia S.p.A., based in San Vendemiano: the third party Audit was successful, and the validity of the certification and its continuity for the closing of two operational headquarters (Conegliano and Castelfranco Veneto) were confirmed. The UNI EN ISO 9001:2008 certificate is dated 26 th June 2014 and valid until 7th June 2016.

- Ascopiave S.p.A. “Management of heating, cogeneration and remote heating systems”

______Ascopiave Group – Annual Financial Report as at 31 st December 2014 70 Ascopiave Group ______

In October 2012 Ascopiave purchased the “company branch” Global Energy, through merger by incorporation with the company itself, for the activity of “ Management of heating, cogeneration and remote heating systems ”. The managed plants (co-generation and heat production plants) are located near Varese, Venice and Padua. The current certification is guaranteed by the certification agency Di.Qu. S.r.l. based in Marghera (VE). On 28 th and 31 st March 2014 all the primary business processes and outsourced activities underwent an internal audit (Ascopiave's qualified internal representative s), which was successful, confirming that the certificate could be renewed. On 5 th and 6 th May 2014, all processes and activities (a sample of outsourced activities) successfully underwent a "three-year re-evaluation" by the aforementioned certification body: both the validity of the certification and the renewal of the certificate were thus confirmed (with the change of operational headquarters); the current certificate is dated 14 th May 2014 and expires on 19 th May 2017.

The “sales group” quality system

The mission of the sales Group (Ascopiave) is the continuous improvement of its activities with the constant goal of optimizing productivity, efficiency, cost management and quality of the service provided to customers. For this reason, the organization of Ascopiave's "sales group" strongly hoped for a "management model" through a simple, efficient and effective operating structure, in order to ensure the achievement of the objectives aimed at profitability and customer satisfaction, able to integrate and rationalise the relevant processes centralizing them at the headquarters, delegating specific operations, such as "front-office" activity, to a widespread network of local and commercial offices for each individual business. Framework Certification: Ascotrade S.p.A., Pasubio Servizi S.r.l., Blue Meta S.p.A., Amgas Blu S.r.l., Etra Energia S.r.l., Veritas Energia S.p.A.. In May 2013, the three major companies ( Ascotrade S.p.A., Pasubio Servizi S.r.l., Blue Meta S.p.A. ) were certified by the issue of an "ISO 9001: 2008 compliance certificate " to the sales Group and three distinct certificates (ISO 9001). In 2014 the "project" was extended to three other investees: Amgas Blu S.r.l., Veritas Energia S.p.A. and Etra Energia S.r.l.. Between April and May 2014, all business processes, centralized (common processes), of operational headquarters and the activities of local offices (significant sample) were subject to an "internal audit" by internal qualified auditors (Quality Manager of the Group and "bodies/quality relationships " functions of Ascotrade S.p.A.: the report, which was analyzed and validated by the "Advisor Committee for Quality", was successful. In late-May, the six companies and their headquarters, branches and business processes, were subject to a "positive verification" by the certification body, which issued an update of the " UNI EN ISO 9001:2008 certificate " to the sales Group (framework) and an update of the three pre-existing sales certificates, with the issuance of three new certificates as "attachments" to the primary document (framework) for a total of seven "ISO 9001" certificates. Activities described in the scope of application “Methane gas trading via grid”.

Ascotrade S.p.A.: The Group's leading sales company, based in Pieve di Soligo, is well-established mainly in the twelve provinces in which the Parent company operates (Ascopiave Distribuzione).

______Ascopiave Group – Annual Financial Report as at 31 st December 2014 71 Ascopiave Group ______

Compared to other companies, Ascotrade has centralized in its organization the significant processes of the sales service such as marketing, operations, sales, operational control, entities/quality relationships, billing and receivables. The ISO 9001 certificate expires on 7 th June 2016 and certifies the "marketing of natural gas via distribution networks " (references common to all companies in the sales Group).

Pasubio Servizi S.r.l. and Blue Meta S.p.A. Pasubio Servizi S.r.l. is based in the Province of Vicenza, whereas Blue Meta in the Province of Bergamo. These “subsidiary” companies launched a “Group certification project” with Ascotrade, incorporating their “Documental Systems”, which have already been certified, and the management of each deadline into a new “Framework Agreement” with the certification body of the Group (Kiwa italia). Both certificates are valid until 7th June 2016 and certify the “marketing of natural gas via distribution networks”.

Etra Energia S.r.l., Amgas Blu S.r.l., Veritas Energia S.p.A. Etra Energia S.r.l. has its registered office in Cittadella (PD) and branches in the provinces of Vicenza and Padua. Amgas Blu S.r.l. is a sales company for energy products, active since 1 st July 2011, and serves the town of Foggia. Veritas Energia S.p.A. as well is an established company serving the province of Venice, with branches in Venice and Treviso. The three certificates issued on 10 th July 2014 are valid until 7 th June 2016 and certify the “ marketing of natural gas via distribution networks” .

Asm Set S.r.l. The company Asm Set S.r.l. deals in natural gas and electricity sale activities and operates in the Province of Rovigo and in the South part of the Province of Padua. It is currently ISO 9001:2008 certified by the accreditation body Kiwa Cermet Italia in the scope of application “Activities of purchase and sale of methane gas and electricity”. During the first half of 2014, all company processes underwent the three-year cycle of "certification renewal", and achieved the extension of the scope to the "sale of electricity." The two-day internal audit (consultant) and external audit (Kiwa Cermet), were successful. The certification body confirmed the appropriate management of the QMS and the processes, confirming the three-year validity of the certification at its expiration on 18 th May 2017 and extended to the "sale of electricity".

Unigas Distribuzione S.r.l. Unigas Distribuzione S.r.l. operates in the field of “Distribution of natural gas” in 32 Municipalities in the District of Bergamo. The quality management system, introduced in 2007, is now ISO 9001:2008 certified by Certification Agency Cersa S.r.l. of Milan, with the following field of application: “Design, construction, maintenance and management of methane gas distribution plants”, for the sectors EA26 (gas procurement) and EA28b (plant installation, operation and maintenance companies). Over the past seven years it has been improved on an ongoing basis in order to meet the requirements set by the reference rules and to adapt to the evolutions affecting structure, markets and processes. In 2014 an Internal Audit cycle was performed, in order to monitor the management of processes and the adequacy of the "Documental System".

______Ascopiave Group – Annual Financial Report as at 31 st December 2014 72 Ascopiave Group ______

In the period, audits on reading management activities and work execution, both entirely outsourced to qualified suppliers, were also performed. In November 2014, the certification body has performed a "surveillance visit" and found an appropriate management of the QMS and business processes, confirming the three-year validity of the certification, until its expiration on 27 th November 2016.

Ascopiave's Integrated Management System “Environment and Safety”:

Purpose and scope of the management system certification The implementation of an international norm BS OHSAS 18001 certified management system enables to monitor risks related to work activities, perfect performances and improve safety, respect and correctly comply with law obligations in this matter and ensuring conformity in case of verifications. The sensitivity to ecological issues, the evolution of dedicated laws at a European and national level, related to the indirect economic benefits of choices that limit the environmental impact of the activities and services provided, are significant elements of the company's decision to adopt and keep an environmental management system.

Adoption of the integrated system and certification updates Between 2010 and 2011 Ascopiave embraced a project of full compliance with a document management system on safety at work, according to BS OHSAS 18001 standard, and environmental protection, in accordance with UNI EN ISO 14001 standard, thus adopting an efficient and integrated "Quality, Safety and Environment" system, certifying it in October 2011. This enables the management to ascertain that the three certifications acquired combine the organizational efficiency and effectiveness of a long-term quality system, with the compliance and full applicability of a management system for safety at work and environmental protection, always monitored and compliant with current regulations: - Quality: interaction of company processes and activities carried out in strict compliance with mandatory laws and regulations, including those of the Authority for Electricity, Gas and Water (AEEGSI); - Environment/Safety : full integration of the two issues, at a "document level", and "regular monitoring" of activities and processes, in strict compliance with laws/regulations related to environment and safety at work. At first, the purpose of certification was common to quality (ISO 9001) "management of methane gas distribution service ", whereas in the second half of 2013 it was extended to the activity of " management of electricity service and cogeneration/remote heating ", recently acquired, managed by the operational unit in Mirano: the certificate dated 10 th December 2013 contained both the operational headquarters and the activities managed by the company in the new scope of application " management of methane gas distribution service . Design, construction, operation and maintenance of methane gas distribution systems. Management of energy service agreements, responsible third party and photovoltaic systems; design, installation, operation of thermal plants, cogeneration, remote heating and photovoltaic plants ". The compliance of the two management systems with the reference international standards is guaranteed: − by the certification agency, which systematically checks its consistency, through the "annual surveillance" and the "three-year re-evaluation", with methods which are similar to those of the proven quality management system; − by internal audit processes (each year), performed by external qualified auditors in collaboration with in-house staff.

______Ascopiave Group – Annual Financial Report as at 31 st December 2014 73 Ascopiave Group ______

The report, the criticalities, the indicators and targets were analysed and validated by the "Management Committee", on 19 th September 2014, which also updated the document " policy for the environment, safety and health of workers " at the expiry of the renewal of the two certifications. In 2014, the internal audits and those of the certification agency were successful; they confirmed the first "three-year renewal" of the two certifications: − the internal audit was performed in mid-June by qualified auditors (outsourcing: 13 man/days); − management committee: the audit report, the criticalities, the indicators and targets were analysed and validated during a “management review” on 19 th September 2014; the document " policy for the environment, safety and health of workers " was also updated at the expiry of the renewal of the two certifications; − the external audit was performed in early October (12 man/days) by three qualified auditors of the certification organization (Kiwa Italia): the report indicates only one “minor non-compliance ” (in the environment area) and totals 15 “ observations and opportunities for improvement ” as concerns the two management systems.

Research and development

IT Systems

In late 2014, a Work Force Management system was released to production in order to support the Technical Department of the Gas Distribution company which has substantially modified the processes by which field interventions are planned and executed.

The project, started in late 2013, has improved the process of implementation of field interventions, through the introduction of automatic systems to schedule operations and the optimization of the use of resources which envisage principles of saturation of the working day and minimization of paths. The resources operating in the area have been equipped with mobile devices for the assignment of tasks, the field consultation of information necessary to carry out the interventions and the final balance of the work performed. The status of the activities can then be monitored in real time, allowing better planning and communication of the results of the interventions and thus substantially improving the level of the service offered to customers.

In 2014, the Central Acquisition System (SAC) of readings already in use for meters above G6 was also extended to G4 meters. Moreover, in addition to the installations of point-to-point electronic meters, the first installations of point-to- multipoint smart meters with 169 MHz technology began as well. Both types of meters can be managed with the Central Acquisition System installed.

Also in support of the Gas Distribution companies of the Group, new functionalities have been introduced to the management systems and the Portal of the Distributor to comply with regulatory updates, the need of improving internal processes and the communications standards defined by the AEEG.

In support of the sales companies of the Group, during 2014 the innovation strategy of information systems in order to create new services for the end customer continued.

In particular, now all the sales companies of the Group are able to sign a gas and electricity supply agreement for household use via Web.

______Ascopiave Group – Annual Financial Report as at 31 st December 2014 74 Ascopiave Group ______

Also, the services performed in 2013 for the company Ascotrade S.p.A. were extended to all the sales companies: in particular, we refer to the Mobile Apps for smartphones and tablets equipped with Apple iOS and Android systems, the new online front-office and communication services via SMS.

Through Mobile App it is now possible to access gas and electricity contractual data, bills and the related payments, consumption, to enter self-readings, receive news and locate branches throughout the territory. The same services are also available on the online front-office, through which users can also enable communication services via SMS.

In 2014, the development and commissioning of software to support electricity dispatching activities and an ETRM (Energy Trading Risk Management) system also continued. The latter is now already developed and put into operation with regard to the segment of electrical energy, while it is still being developed for the gas field.

Also in 2014, following the merger of the single-member company Edigas Due S.p.A. into the single-member company Blue Meta S.p.A., a major project to convert and import data, which involved the management systems of the sales companies, was completed.

The functionalities to support the reporting management system based on SAP BPC, were expanded by heavily modifying the module supporting budget activities and by implementing a new module in support of gas distribution.

In addition, other significant projects have involved the introduction of the electronic bill for the Public Administration, the development of new software functionalities to support the legal management of disputes, the adoption of a tool to support the management, even massive, of certified email boxes and the improvement of the network infrastructure of the headquarters.

Additional information

Compensation given to the managing and controlling organs, managing directors and directors with strategic responsibilities and stakes held

For further information pertaining remuneration members of administration and auditing bodies, general directors and executives with strategic responsibilities and their share participation please refer to the Remuneration Report drafted pursuant to Art. 123 – third paragraph of the Legislative Decree 58/1998 (National Finance Law), approved by the Board of Directors on 16 th March 2015.

Safety of personal data

Ascopiave Group is attentive to the protection of personal data and the adoption of appropriate security measures. For a greater protection of these data, the Group also continues to update each year the DPS (Security Planning Document), although it is no longer required under Legislative Decree no. 196 dated 30 th June 2003 as a result of the amendments introduced by Law Decree 9th February 2012, no. 5, converted into Law no. 35 of 4 th April 2012.

Declaration in accordance with Legislative Decree no. 196 dated 30 th June 2003 The President of the Boards of Directors, as the person responsible for the treatment of the personal data of the Company, states the adequacy of the Privacy Policy set forth in Legislative Decree no. 196 dated 30 th June 2003 and

______Ascopiave Group – Annual Financial Report as at 31 st December 2014 75 Ascopiave Group ______subsequent amendments. The personal data protection system has been developed and implemented by Ascopiave, in its capacity as responsible for the databases, managed either with electronic or non-electronic systems.

List of company headquarters Owned offices

List of company headquarters Owner Location Intended use

Ascopiave S.p.A. Treviso - Piazza delle Istituzioni 32/1 Building leased to ASCOTRADE hosting offices Ascopiave S.p.A. Treviso - Piazza delle Istituzioni 32/1 Building hosting warehouse Ascopiave S.p.A. Pieve di Soligo (TV) - Via Verizzo 1030 Building hosting company offices and customer service center Ascopiave S.p.A. Pieve di Soligo (TV) - Via Verizzo 1030 Building hosting warehouse and workshop Ascopiave S.p.A. Pieve di Soligo (TV) - Via Verizzo 1030 Garage Ascopiave S.p.A. Pieve di Soligo (TV) - Via Verizzo 1030 Building leased to ASCOTRADE hosting offices Ascopiave S.p.A. Pieve di Soligo (TV) - Via Verizzo 1030 Building leased to ASCOTLC hosting warehouse Ascopiave S.p.A. Sandrigo (VI) - Via G.Galilei n° 27 Building leased to ASCOTRADE hosting offices Ascopiave S.p.A. Sandrigo (VI) - Via G.Galilei n° 27 Building hosting warehouse and workshop Ascopiave S.p.A. Castel San Giovanni (PC) - Via Borgonovo 44/A Building leased to ASCOTRADE hosting offices Ascopiave S.p.A. Castel San Giovanni (PC) - Via Borgonovo 44/A Building hosting warehouse and workshop Ascopiave S.p.A. San Vendemiano (TV) - Complesso "Quaternario" Building leased to ASCOTLC Ascopiave S.p.A. Milano - via Turati n. 6 Building hosting company offices Ascopiave S.p.A. Milano - via Turati n. 6 Building leased to SINERGIE ITALIANE hosting offices Ascopiave S.p.A. Cordovado (PN) - Via Teglio Building hosting warehouse + gas cabin

Rented offices Leased offices Owner Location Intended use

Ascopiave S.p.A. Castelfranco (TV)- Via della Cooperazione n° 8 Building hosting warehouse Ascopiave S.p.A. Portogruaro (VE) - Via Giotto n° 8 Building leased to ASCOTRADE hosting offices Ascopiave S.p.A. Marchirolo (VA) - Via Cavalier Busetti n° 7/H Building hosting company offices Ascotrade S.p.A. Casteggio (PV) - Via Anselmi n° 33 Building leased to ASCOTRADE hosting offices Ascotrade S.p.A. Casteggio (TV) - Via Anselmi n° 33 Building hosting warehouse Ascopiave S.p.A. Porto Viro (RO) - Via dell'Artigianato n° 9/A Building leased to ASCOTRADE hosting offices Ascotrade S.p.A. Conegliano (TV) - Via S. Giuseppe n° 38/A Building leased to ASCOTRADE hosting offices Ascotrade S.p.A. Castelfranco (TV) - Piazza Serenissima n° 20 Building hosting company offices Ascotrade S.p.A. Montebelluna (TV) - Schiavonesca Priula n° 86 Building leased to ATS hosting offices Ascotrade S.p.A. Oderzo (TV) -Cesare Battisti n° 7/A Building leased to ASCOTRADE hosting offices Ascotrade S.p.A. Portogruaro (VE) - Viale Trieste n° 31 Building leased to ASCOTRADE hosting offices Ascotrade S.p.A. Lentate sul Seveso (MB) - Via Padova n° 35 Building leased to ASCOTRADE hosting offices Ascotrade S.p.A. Vicenza - SS Felice e F. n° 203 Building leased to ASCOTRADE hosting offices

______Ascopiave Group – Annual Financial Report as at 31 st December 2014 76 Ascopiave Group ______

Performance Indicators

According to Consob communication DEM 6064293 dated 28 th July 2006 and by recommendation CESR/05-178b on alternative performance indicators, we specify that besides normal performance indicators fixed by International Accounting Principles IAS/IFRS, the Group considers useful for its business monitoring activity, the use of other performance indicators, which, even if they do not appear yet in the afore-stated principles, have a considerable importance. In particular we introduced the following indicators: - Gross operative spread (Ebitda) : defined by the Group as the result of amortisations, credit depreciation, financial managing and taxes; - Operating result : this indicator is accounted for by the accounting principles we refer to, and it is defined as operative spread (Ebit) minus the balance of costs and non-recurrent revenues. This last item includes extraordinary incomes and losses, appreciations and capital losses for alienation of assets, insurance reimbursements, taxes and others positive and negative components with less relevance. - Revenues from the tariff on the activity of gas distribution : defined by the Group as the amount of revenue realised by the distribution companies of the Group for the implementation of tariffs for distribution and measurement of natural gas to their end customers, net of amounts equalisation managed by the Cassa Conguaglio per il Settore Elettrico (Electricity Equalisation Fund); - First margin on gas sales : the Group defines it as the amount obtained from the difference between the sales proceeds (realised by the Group's sale companies to end customers or final market within the business of trading and selling as a wholesaler) and the sum of the following costs: the cost of transmission service (gross of amounts subject to elimination and distribution tariffs applied by the distribution companies) and the purchase cost of gas sold; - First margin on electric power sale : the Group defines it as the amount obtained from the difference between the proceeds of sale of electricity and the sum of the following costs: cost of transport services, dispatching and balancing cost and purchase of electricity sold.

______Ascopiave Group – Annual Financial Report as at 31 st December 2014 77 Ascopiave Group ______

Comments on the economic-financial results of the year 2014

General operational performance and indicators

NATURAL GAS DISTRIBUTION 2014 2013 Var. Var%

Companies consolidated with full consolidation method Number of concessions 176 177 -1 -0.6% Length of distribution network (km) 7,691 7,619 72 0.9% Volumes of gas distributed (scm/mln) 710.8 832.8 -122.0 -14.6%

Companies consolidated with net equity consolidation method Number of concessions 32 32 0 0.0% Length of distribution network (km) 1,095 1,026 69 6.7% Volumes of gas distributed (scm/mln) 133.2 163.1 -30.0 -18.4%

Ascopiave Group* Number of concessions 192 193 -1 -0.5% Length of distribution network (km) 8,227 8,121 106 1.3% Volumes of gas distributed (scm/mln) 775.9 912.5 -136.6 -15.0%

* Operating data of companies consolidated with net equity consolidation method are considered pro-quota

NATURAL GAS SALES TO FINAL MARKET 2014 2013 Var. Var%

Companies consolidated with full consolidation method Volumes of gas sold (smc/mln) 763.1 879.4 -116.3 -13.2%

Companies consolidated with net equity consolidation method Volumes of gas sold (smc/mln) 255.6 460.2 -204.6 -44.5%

Ascopiave Group* Volumes of gas sold (smc/mln) 888.4 1,106.5 -218.1 -19.7%

* Operating data of companies consolidated with net equity consolidation method are considered pro-quota

SALE OF ELECTRIC POWER 2014 2013 Var. Var%

Companies consolidated with full consolidation method Volumes of electricity sold (GWh) 381.2 186.4 194.8 104.5%

Companies consolidated with net equity consolidation method Volumes of electricity sold (GWh) 160.0 776.3 -616.4 -79.4%

Ascopiave Group* Volumes of electricity sold (GWh) 459.6 574.1 -114.5 -19.9%

* Operating data of companies consolidated with net equity consolidation method are considered pro-quota

In order to better understand the data shown in the table and the comments below, it should be noted that following the purchase by Ascopiave S.p.A. of the remaining 49% stake of Veritas Energia S.p.A. from Veritas S.p.A. finalized on 10 th February 2014, the subsidiary Veritas Energia S.p.A. was fully consolidated commencing 1 st January 2014.

Comments on the trend of the main operational indicators of the Group's activity are reported below. The value of each indicator is obtained by adding the values of the indicators of each consolidated company, weighting the data of the companies consolidated with the equity method according to the share of consolidation .

As far as the activity of gas distribution is concerned, in 2014 the volumes distributed through the networks managed by the fully consolidated companies of the Group totalled 710.8 million cubic metres, decreasing by 14.6% as compared to the previous year.

______Ascopiave Group – Annual Financial Report as at 31 st December 2014 78 Ascopiave Group ______

The company Unigas Distribuzione S.r.l., consolidated through the equity method, has distributed 133.2. million cubic metres, decreasing by 18.4% as compared to the previous year.

In 2014 the volume of gas sold by the 100% consolidated companies amounted to 763.1 million cubic metres (of which 53.9 million cubic metres sold by the company Veritas Energia S.p.A., which in the previous period is consolidated through the equity method) marking a decrease of 13.2% as compared to the previous year. In 2014 the companies consolidated through the equity method (Estenergy S.p.A. and ASM Set S.r.l.) globally sold 255.6 million cubic metres (-44.5% as compared to 2013). The reduction in volume is mainly due to the mild temperatures recorded in 2014.

In 2014 the volume of electricity sold by the fully consolidated companies is equal to 381.2 GWh (of which 181.4 GWh sold by the company Veritas Energia S.p.A., which in the previous period is consolidated through the equity method), marking an increase of 104.5% as compared to the previous year. In financial year 2014 the companies consolidated through the equity method (Estenergy S.p.A. and ASM Set S.r.l.) globally sold 160.0 GWh of electrical energy.

______Ascopiave Group – Annual Financial Report as at 31 st December 2014 79 Ascopiave Group ______

General operational performance - The Group's economic results

In order to better understand the data shown in the following tables, it should be noted that following the purchase by Ascopiave S.p.A. of the remaining 49% stake of Veritas Energia S.p.A. from Veritas S.p.A. finalized on 10 th February 2014, the subsidiary Veritas Energia S.p.A. was fully consolidated commencing 1 st January 2014. As concerns the comparative period, it is to be pointed out that the subsidiary Veritas Energia S.p.A., subject to joint control of Ascopiave S.p.A. and Veritas S.p.A. until 31 st December 2013, was assessed using the equity method, in compliance with IFRS 11.

Restated (*) Finacial year 2014 % of revenues Finacial year 2013 % of (Thousands of Euro) revenues

Revenues 585,300 100.0% 667,837 100.0% Total operating costs 505,714 86.4% 581,562 87.1% Gross operative margin 79,585 13.6% 86,276 12.9% Amortization and depreciation 20,099 3.4% 18,273 2.7% Provision for risks on credits 6,819 1.2% 6,039 0.9% Operating result 52,667 9.0% 61,964 9.3% Financial income 1,364 0.2% 2,656 0.4% Financial charges 2,957 0.5% 4,171 0.6% Evaluation of subsidiary companies with the net equity method 4,453 0.8% 6,468 1.0% Earnings before tax 55,527 9.5% 66,917 10.0% Taxes for the year 18,194 3.1% 25,807 3.9% Net result for the year 37,333 6.4% 41,040 6.1% Group's Net Result 35,583 6.1% 38,678 5.8% Third parties Net Result 1,750 0.3% 2,361 0.4%

In accordance with CONSOB communication DEM/6064293 dated 28 th July 2006, the alternative performance indicators are defined in paragraph "Performance Indicators " of the present report.

*Data restated following the application of IFRS 11 – Joint arrangements and IAS 28 – Investments in Associates and Joint Ventures. For further details please see paragraph “Accounting principles and interpretations effective from 1 st January 2014” of the explanatory notes included in this interim financial report.

In fiscal year 2014, the Group incomes amount to Euro 585,300 thousand, with a decrease of 12.4% as compared to the previous year. The following table reports the details of income.

Restated *

FY 2014 FY 2013 (Thousands of Euro) Revenues from gas transportation 21,697 24,161 Revenues from gas sale 473,641 590,182 Revenues from electricity sale 67,199 33,957 Revenues from connections 52 3,066 Revenues from heat supply 55 32 Revenues from distribution services 3,530 5,065 Revenues from billing and taxes 38 628 Revenues from services supplied to Group companies 842 1,069 Revenues from AEEG contributions 12,555 6,328 Other revenues 5,690 3,349 Revenues 585,300 667,837 *Data restated following the application of IFRS 11 – Joint arrangements and IAS 28 – Investments in Associates and Joint Ventures. For further details please see paragraph “Accounting principles and interpretations effective from 1 st January 2014” of the explanatory notes included in this interim financial report. ______Ascopiave Group – Annual Financial Report as at 31 st December 2014 80 Ascopiave Group ______

Revenues from gas sale decreased from Euro 590,182 thousand to Euro 473,641 thousand, thus recording a decrease of Euro 116,540 thousand (-19.7%). This variation was determined by: - reduction in gas sale revenues, consolidation method being equal and perimeter being equal for Euro 145,497 thousand, due to the decrease in the volumes of gas sold, mainly owing to the mild temperatures recorded in 2014, and sale average unit prices; - consolidation of gas sale revenues by the company Veritas Energia S.p.A. for Euro 28,957 thousand,

Revenues from electricity sales increased from Euro 33,957 thousand to Euro 67,199 thousand, marking an increase of Euro 33,241 thousand (+97.9%). This variation is determined by: - growth in electricity sale revenues, consolidation method being equal and perimeter being equal, for Euro 304 thousand; - consolidation of electricity sale revenues by the company Veritas Energia S.p.A. for Euro 32,937 thousand.

The operating result for 2014 amounts to Euro 52,667 thousand, thus recording a decrease of Euro 9,297 thousand (- 15.0%) as compared to the previous year. The decrease is due to several factors: - decrease in the tariff revenues on the activity of gas distribution for Euro 1,819 thousand; - decrease in the first margin on the activity of gas sales, equal to Euro 8,687 thousand; - increase in the first margin on the activity of electricity sale, equal to Euro 5,052 thousand; - decrease in other items of cost and revenues, equal to Euro 3,843 thousand.

The consolidation of Veritas Energia S.p.A. with the full consolidation method in 2014 contributed to forming the operating result for Euro 4,754 thousand.

The decrease in the revenues from tariffs in the gas distribution activity (decreasing from Euro 64,488 thousand to Euro 62,669 thousand) is due to the entry into force of the new tariff regulation for the period 2014-2019 (so-called fourth regulatory period) envisaged by AEEGSI resolution 367/2014/R/gas.

The decrease in the first margin on the activity of gas sale (from Euro 71,878 thousand to Euro 63,190 thousand) is mainly due to: - reduction of first sale margin in the gas sale activity, consolidation method and perimeter being equal for Euro 15,384 thousand, due to reduction in gas sold because of the mild temperatures recorded during 2014; - consolidation of the first margin in the gas sale activity of the company Veritas Energia S.p.A. for Euro 6,697 thousand.

The increase in the first margin on the activity of electricity sales , from Euro 290 thousand to Euro 5,342 thousand is due to the following factors: - increase in the first margin on the activity of electricity sale, consolidation method and perimeter being equal for Euro 895 thousand, due to higher amounts of electricity sold and higher unit margins;

______Ascopiave Group – Annual Financial Report as at 31 st December 2014 81 Ascopiave Group ______

- consolidation of the first margin on the activity of electricity sale of the company Veritas Energia S.p.A. for Euro 4,157 thousand.

The decrease in the item other costs and revenues , amounting to Euro 3,843 thousand, is due to: - higher other revenues for Euro 761 thousand, due to a decrease recorded in the previous consolidation perimeter for Euro 568 thousand and offset by the consolidation of other revenues of Veritas Energia S.p.A. for Euro 1,329 thousand; - higher material and service costs and other charges equalling Euro 2,093 thousand, due to a decrease recorded in the previous consolidation perimeter for Euro 1,288 thousand and offset by the consolidation of costs for materials, services and other charges of Veritas Energia S.p.A. for Euro 3,382 thousand; - lower personnel cost for Euro 96 thousand, due to a decrease recorded in the previous consolidation perimeter for Euro 1,824 thousand, mainly due to the higher capitalized cost of staff, and offset by the consolidation of Veritas Energia S.p.A. for Euro 1,729 thousand; - higher amortization of fixed assets for Euro 1,826 thousand, of which Euro 373 thousand due to the consolidation of Veritas Energia S.p.A.; - higher bad debts provisions for Euro 781 thousand, due to a decrease recorded in the previous consolidation perimeter for Euro 1,165 thousand and offset by the consolidation of bad debts provisions of Veritas Energia S.p.A. for Euro 1,945 thousand.

The net consolidated profit of 2014 amounts to Euro 37,333 thousand, thus recording a decrease of Euro 3,707 thousand (-9.0%) as compared to the previous year. The variation is due to the following factors: - a decrease in the operating result, as previously stated, for Euro 9,297 thousand; - lower result of companies consolidated through the equity method for Euro 2,015 thousand; - decrease in financial revenues for Euro 1,292 thousand; - decrease in financial charges for Euro 1,214 thousand; - decrease in taxes for Euro 7,613 thousand, due to the decrease in income and tax rates. The tax rate, calculated by normalizing the pre-tax result of the effects of consolidation of the companies consolidated using the equity method, decreases from 42.7% to 35.6%.

______Ascopiave Group – Annual Financial Report as at 31 st December 2014 82 Ascopiave Group ______

General operational performance – Financial situation

The table below shows the composition of the net financial position as requested in Consob communication no. DEM/6064293 dated 28 th July 2006:

Restated* 31.12.2014 31.12.2013 (Thousands of Euro) A Cash and cash equivalents on hand 16 18 B Bank and post office deposits 100,867 11,754 D Liquid assets (A) + (B) + (C) 100,882 11,773 E Current financial assets 8,234 16,865 F Payables due to banks (175,106) (79,587) G Current portion of medium-long-term loans (9,745) (9,784) H Current financial liabilities (280) (239) I Current financial indebtedness (F) + (G) + (H) (185,131) (89,610) J Net current financial indebtedness (I) - (E) - (D) (76,015) (60,972) K Medium- and long-term bank loans (53,456) (63,201) L Non current financial assets 3,124 916 M Non-current financial liabilities (3,327) (552) N Non-current financial indebtedness (K) + (L) + (M) (53,659) (62,838) O Net financial indebtedness (J) + (N) (129,673) (123,810) *Data restated following the application of IFRS 11 – Joint arrangements and IAS 28 – Investments in Associates and Joint Ventures. For further details please see paragraph “Accounting principles and interpretations effective from 1 st January 2014” of the explanatory notes included in this interim financial report.

The financial position increased from Euro 123,810 thousand as of 31 st December 2013 to Euro 129,673 thousand as of 31 st December 2014, reporting an increase of Euro 5,863 thousand.

Some figures relating to the financial flows of the Group are reported below:

restated (Thousands of Euro) 31.12.2014 31.12.2013

Net Income 37,333 41,040 Depreciations and amortizations 20,099 18,133 Provisions 6,819 6,039 (a) Self financing 64,251 65,211

(b) Adjustments to reconcile net profit of changes in financial position generated by operating activities: (11,011) (9,928)

(c) Change in financial position generated by operating activities = (a) + (b) 53,240 55,282

(d) Change in financial position generated by investing activities (25,156) (13,345)

(e) Other financial position changes (33,947) (22,109)

Net financial position changes = (c) + (d) + (e) (5,863) 19,828

______Ascopiave Group – Annual Financial Report as at 31 st December 2014 83 Ascopiave Group ______

The cash flow generated by the operating management (letters a + b), equal to Euro 53,240 thousand, was mainly due to self-financing for Euro 64,251 thousand and other financial negative variations amounting to Euro 11,011 thousand, mainly related to the management of the net circulating capital for Euro -8,327 thousand and to the assessment of companies consolidated through the equity method for Euro -4,453 thousand. Management of net circulating capital has absorbed financial resources amounting to Euro 8,327 thousand and was influenced mainly by a variation in the overall balance with the Technical Office for Taxation on Building and Regional Taxation, which has absorbed financial resources for Euro 32,338 thousand, by the variation in VAT allocation, which has generated financial resources for Euro 1,223 thousand, by the variation in the position towards the Inland Revenue for the accrual of IRES and IRAP taxes, which has absorbed financial resources for Euro 3,918 thousand, and the variation in the net operating capital, which has generated financial resources for Euro 29,112 thousand. The following table shows in detail the changes in the net working capital during the period: (Thousands of Euro) 31.12.2014 Inventories (435) Trade receivables and payables 24,671 Operating receivables and payables 4,876 Severance pay and other funds 752 Current taxes 18,194 Taxes paid (25,273) Tax receivables and payables (31,113) Change in net working capital (8,327)

Investment activities have generated a cash requirement of Euro 25,156 thousand, of which Euro 21,065 concern investments in tangible and intangible fixed assets net of divestments (for additional details on investments, please refer to the next paragraph) and Euro 4,000 thousand regard investments in stakes (Ascopiave S.p.A. has purchased 49% of Veritas Energia S.p.A.). Additional variations in the net financial position concern dividends received by the companies consolidated with the equity method, which have generated resources for Euro 6,519 thousand, distribution of dividends for Euro 29,093 thousand and the consolidation of the Net Financial Position of the company Veritas Energia S.p.A. for Euro 11,374 thousand, deriving from the modification of the consolidation method of the company. (Thousands of Euro) 31.12.2014 Dividends paid to Ascopiave S.p.A. shareholders (26,666) Dividends paid to minority interest (2,427) Dividends / (loss coverage) associated copanies 6,519 or jointly controlled companies Net change in short-term bank loans (11,374) Other changes in financial position (33,947)

General operational performance - Investments

During fiscal year 2014 the Group made investment for an amount of Euro 21,065 thousand. The costs incurred for the construction of infrastructures for the distribution of natural gas, amounting to Euro 19,731 thousand, relate to the creation of connections for Euro 4,598 thousand, the implementation and maintenance of the network and natural gas distribution systems for Euro 9,637 thousand and the installation/replacement of meters and the installation of correctors for Euro 5,497 thousand.

______Ascopiave Group – Annual Financial Report as at 31 st December 2014 84 Ascopiave Group ______

restated INVESTMENTS (thousands of Euro) 2014 2013

Connectrion of end customers to distribution network 4,598 3,596 Concessions 0 4,250 Extension, enhancement and upgrading network 7,047 5,745 Gas meters 5,497 1,570 Maintenance 2,590 1,755 Raw material (gas) investments 19,731 16,916

Lands and Buildings 361 812 Industrial and commercial equipment 126 12 Fornitures 51 179 Vehicles 396 206 Hardware and Software 319 551 Other assets 81 230 Other investments 1,334 1,990

Investments 21,065 18,906

During the reporting period, in addition to the investments shown which have generated cash outflows, higher values for client lists were recorded in intangible assets for Euro 2,920 thousand due to the combination of Veritas Energia S.p.A., explained in the paragraph “Business combinations” of these financial statements.

______Ascopiave Group – Annual Financial Report as at 31 st December 2014 85 Ascopiave Group ______

Schedule of reconciliation of the of individual net shareholders’ equity with the consolidated net Shareholders’ Equity

Prospetto di raccordo PN e Utile *Restated *Restated 31.12.2014 31.12.2014 31.12.2013 31.12.2013 31.12.2013 31.12.2013 Groups' Groups' Groups' Total net Total net Total net (Thousands of Euro) Operating Operating Operating equity equity equity Result Result Result

Net equity and results for the year as recorded in the statutory financial statements of the parent company 43,628 392,459 40,053 374,514 40,053 374,514

Elimination of the book value of the consolidated equity investments (58,007) (58,926) (98,573)

Results obtained by subsidiary companies 24,548 24,548 31,611 31,611 38,752 38,752

Variations

Goodwill 664 38,658 687 35,253 687 72,866

Trade relation value, net of tax effects (537) 8,228 (1,101) 6,922 (1,431) 7,419 Appreciation of gas distribution network, net of tax effects 182 13,621 (652) 13,439 (652) 13,439 Differences in traslation of IFRS of balance sheets with different accounting methods 217 (79) 175 (296) 175 (296) Elimination of infra-group dividends (29,726) (0) (30,144) (0) (35,202) (0) Effects of the evaluation of companies consolidated with the net assets method 1,228 (7,078) (262) (8,306) (262) (8,306) Effects of the evaluation of joint companies consolidated with the net assets method (3,294) (1,669) 1,672 9,114

Other effects 422 (1,015) (999) (646) (1,080) 2,864

Total variations, net of tax effects (30,843) 50,667 (30,625) 55,479 (37,765) 87,986 Net Shareholders' equity and resul t for the period as recorded in the consolidated financial statement 37,333 409,666 41,040 402,679 41,040 402,679 Minority interests and results 1,750 4,310 2,361 4,989 2,361 4,989 Operating result and net equity for the period as recorded in the consolidated financial statement 35,583 405,357 38,678 397,689 38,678 397,689

______Ascopiave Group – Annual Financial Report as at 31 st December 2014 86 Ascopiave Group ______

Ascopiave Group

Prospects of the consolidated financial statements as of 31 st December 2014

______Ascopiave Group – Annual Financial Report as at 31 st December 2014 87 Ascopiave Group ______

Consolidated statement of financial position as of 31 st December 2014 and as of 31 st December 2013

Restated (*) Restated (*) (Thousands of Euro) 31.12.2014 31.12.2013 01.01.2013

ASSETS Non-current assets Goodwill (1) 80,758 78,017 78,017 Other intangible assets (2) 313,772 309,484 312,594 Tangible assets (3) 36,614 37,840 38,992 Shareholdings (4) 65,453 72,421 70,749 Other non-current assets (5) 16,741 24,232 10,795 Non current financial assets (6) 3,124 916 Advance tax receivables (7) 12,814 15,455 14,747

Non-current assets 529,276 538,365 525,894 Current assets Inventories (8) 2,482 2,047 2,691 Trade receivables (9) 147,804 166,289 206,371 Other current assets (10) 73,973 34,588 46,206 Current financial assets (11) 8,234 16,865 30,556 Tax receivables (12) 4,837 1,142 934 Cash and cash equivalents (13) 100,882 11,773 18,006

Current assets 338,212 232,703 304,763 ASSETS 867,488 771,068 830,657 Net equity and liabilities Total Net equity Share capital 234,412 234,412 234,412 Own shares (17,660) (17,660) 17,109 Reserves 188,605 180,938 166,750 Net equity of the Group 405,357 397,689 384,053 Net equity of Others 4,310 4,989 4,765 Total Net equity (14) 409,666 402,679 388,819 Non-current liabilities Provisions for risks and charges (15) 8,496 8,323 10,360 Severance indemnity (16) 3,968 3,180 2,894 Medium- and long-term bank loans (17) 53,456 63,201 27,061 Other non-current liabilities (18) 17,221 13,762 13,648 Non-current financial liabilities (19) 3,327 552 613 Deferred tax payables (20) 23,675 29,527 30,762 Non-current liabilities 110,142 118,546 85,338 Current liabilities Payables due to banks and financing institutions (21) 184,851 89,371 164,335 Trade payables (22) 136,179 134,568 169,555 Tax payables (23) 205 446 2,337 Other current liabilities (24) 26,164 25,220 20,082 Current financial liabilities (25) 280 239 191 Current liabilities 347,679 249,844 356,500 Liabilities 457,821 368,390 441,839 Net equity and liabilities 867,488 771,068 830,657

(*)Following the retrospective application from 1 st January 2014 of the new principle IFRS 11, the data related to 2013 exposed for comparison purposes, have been redefined, pursuant to IAS 1.

______Ascopiave Group – Annual Financial Report as at 31 st December 2014 88 Ascopiave Group ______

Consolidated income statement

(Thousands of Euro) Finacial year 2014 Finacial year 2013

Revenues (26) 585,300 722,396

Total operating costs 512,533 639,419 Purchase costs for raw material (gas) (27) 333,335 452,902 Purchase costs for other raw materials (28) 26,032 46,755 Costs for services (29) 107,740 96,170 Costs for personnel (30) 22,726 23,820 Other management costs (31) 22,733 20,918 Other income (32) 32 1,146 Amortization and depreciation (33) 20,099 18,392 Operating result 52,667 64,585 Financial income (34) 1,364 2,651 Financial charges (34) 2,957 4,445 Evaluation of subsidiary companies with the net equity method (34) 4,453 5,268 Earnings before tax 55,527 68,059 Taxes for the period (35) 18,194 26,948 Result for the period 37,333 41,111 Net result from transer/disposal of assets (36) 71 Net result for the period 37,333 41,040 Group's Net Result 35,583 38,678 Third parties Net Result 1,750 2,361 Consolidated statement of comprehensive income 1. Components that can be reclassified to the income statement 2. Components that can not be reclassified to the income statement Actuarial (losses)/gains from remeasurement on defined-benefit obligations (253) (12) Total comprehensive income 37,080 41,028 Group’s overall net result 35,333 38,672 Third parties’ overall net result 1,747 2,355 Base income per share 0.160 0.174 Diluted net income per share 0.160 0.174

(*)Following the retrospective application from 1 st January 2014 of the new principle IFRS 11, the data related to fiscal year 2013 exposed for comparison purposes, have been redefined, pursuant to IAS 1.

______Ascopiave Group – Annual Financial Report as at 31 st December 2014 89 Ascopiave Group ______

Consolidated statement of changes in shareholders’ equity as of 31 st December 2014 and as of 31 st December 2013

(thousands of Euro) Reserves IAS Net result and Share Legal Own Other Net result for Group's net Total net 19 actuarial net equity of capital reserve shares reserves the year equity equity differences others

Balance as of 1 st January 2014 234,412 46,882 (17,660) (35) 95,413 38,678 397,692 4,989 402,679

Result for the year 35,583 35,583 1,750 37,333

IAS 19 TFR actualization for the year (251) (251) (3) (253) Total result of overall income statement (251) 35,583 35,333 1,747 37,080

Allocation of 2013 result 38,678 (38,678) (0) (0)

Dividends distributed to Ascopiave S.p.A. shareholders’ (26,666) (26,666) (26,666)

Dividends distributed to third parties shareholders (0) (2,427) (2,427)

Change in reserves on business combinations (1,000) (1,000) (1,000)

Balance as of 31 th December 2014 234,412 46,882 (17,660) (286) 106,426 35,583 405,357 4,309 409,666

(thousands of Euro) Reserves IAS Net result and Share Legal Own Other Net result for Group's net Total net 19 actuarial net equity of capital reserve shares reserves the year equity equity differences others

Balance as of 1st January 2013 234,412 46,882 (17,109) (29) 92,003 27,894 384,055 4,765 388,818

Result for the year 38,678 38,678 2,361 41,040

IAS 19 TFR actualization for the year (6) (6) (6) (12) Total result of overall income statement (6) 38,678 38,672 2,355 41,028

Allocation of 2012 result 27,894 (27,894)

Dividends distributed to Ascopiave S.p.A. shareholders’ (24,484) (24,484) (24,484)

Dividends distributed to third parties shareholders (2,132) (2,132)

Purchase of own shares (551) (551) (551)

Balance as of 31th December 2013 234,412 46,882 (17,660) (35) 95,413 38,678 397,692 4,989 402,679

______Ascopiave Group – Annual Financial Report as at 31 st December 2014 90 Ascopiave Group ______

Consolidated financial statements of cash flow for the year 2014 and 2013

Restated(*) (thousands of Euro) Financial year 2014 Financial year 2013 Net income of the Group 35,583 38,678 Cash flow s generated (used) by operating activities Adjustments to reconcile net income to net cash Third-parties operating result 1,750 2,361 Amortization 20,099 18,133 Bad debt provisions 6,819 6,039 Variations in severance indemnity 547 286 Net variation of other funds 205 (2,298) Evaluation of subsidiaries w ith the net equity method (4,453) (6,468) Depreciation of fixed assets 0 371 Losses / (gains) on disposal of fixed assets 666 (678) Interests paid (2,273) (2,298) Taxes paid (25,273) (30,546) Interest expense for the year 2,560 2,742 Taxes for the year 18,194 25,807 Variations in assets and liabilities Inventories (435) 644 Accounts payable 45,125 34,132 Other current assets (33,844) 11,618 Trade payables (20,454) (34,987) Other current liabilities (1,760) 5,834 Other non-current assets 11,376 541 Other non-current liabilities 1,731 24 Total adjustments and variations 20,580 31,255 Cash flow s generated (used) by operating activities 56,164 69,934 Cash flows generated (used) by investments Investments in intangible assets (19,750) (17,109) Realisable value of intangible assets 3 5,284 Investments in tangible assets (1,315) (1,797) Realisable value of tangible assets 160 290 Disposals / (Acquisition) of investments and advances (951) 0 Other net equity operations (253) (13) Cash flows generated/(used) by investments (22,106) (13,345) Cash flow s generated (used) by financial activities Net changes in debts due to other financers 2,774 (61) Net changes in short-term bank borrow ings 87,467 (74,963) Net variation in current financial assets and liabilities (2,583) (1,385) Interest expense (287) (444) Purchase of ow n shares 0 (551) Net changes in medium and long-term loans (9,745) 36,140 Dividends distributed to Ascopiave S.p.A. shareholders’ (26,666) (24,484) Dividends distributed to other shareholders (2,427) (2,132) Dividends distribuited from subsidiary companies 6,519 5,058 Cash flow s generated (used) by financial activities 55,052 (62,822) Variations in cash 89,110 (6,233) Cash and cash equivalents at the beginning of the year 11,773 18,006 Cash and cash equivalents at the end of the year 100,882 11,773

(*)Following the retrospective application from 1 st January 2014 of the new principle IFRS 11, the data related to fiscal year 2013 exposed for comparison purposes, have been redefined, pursuant to IAS 1.

______Ascopiave Group – Annual Financial Report as at 31 st December 2014 91 Ascopiave Group ______

EXPLANATORY NOTES Company information

The publication of the Ascopiave S.p.A. consolidated financial statements as of 31 st December 2014 was authorised by resolution of the Board of Directors dated 16 th March 2015. Ascopiave S.p.A. is a public limited company incorporated and established in Italy.

The activities of the Ascopiave Group

Ascopiave mainly operates in the sectors of distribution and sale of natural gas, as well as in other sectors related to the core business, such as the sale of electrical energy, heat management and co-generation. The Group owns concessions and direct entrusting for the management of the activity of gas distribution in 208 municipalities (209 municipalities in 2013), supplying the service to more than one million users. The group is the owner of the distribution network managed that is extended for more than 8,600 kilometres. The activity of natural gas sale to end customers is carried out through different companies, some of which are controlled with majority shares, others are shared with other partners and on them the Group exercise a joint control with other shareholders. In the Gas sale sector Ascopiave is one of the main National operators, featuring approximately 890 million cubic meters of gas sold.5

General drafting criteria and declaration of conformity with IFRS

The Ascopiave S.p.A. Consolidated Financial Statements as of 31 st December 2014 have been prepared in accordance with International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB) and adopted by the European Commission in accordance with the procedure set forth in Art. 6 of EC Directive no. 1606/2002 issued by the European Parliament and Council on 19 th July 2002 as well as with the provisions issued for the implementation of Art. 9 of Legislative Decree no. 38/2005. The consolidated financial statements are based on the principle of historical cost, taking into account the adjustments as appropriate, with the exception of the budget items that under IFRS must be recognized at fair value as described in the evaluation criteria and according to the principle of going-concern.

The accounting principles adopted are consistent with those used as of 31 st December 2013, except as described in the following paragraph Accounting principles, amendments and interpretations effective from 1 st January 2014.

These consolidated financial statements of Ascopiave S.p.A. Group were prepared on the basis of the accounting record as of 31 st December 2014. They are accompanied by the report of Ascopiave S.p.A. trend. The financial statements of the Ascopiave Group as of 31 st December 2014 are subject to auditing procedure by the auditing company Reconta Ernst & Young S.p.A.. For comparative purposes, the consolidated profiles present the comparison with balance sheet figures as of 31 st December 2013 and with profit and loss figures at the beginning of the previous financial year. The economic data are compared with those of the previous year restated following the application of the new IFRS 11 standard.

5 The data specified as regards the volumes of gas sold are obtained by adding each Group company’s data, previously pondering the data of the companies consolidated with the equity method according to the relevant share. ______Ascopiave Group – Annual Financial Report as at 31 st December 2014 92 Ascopiave Group ______

The consolidated financial statements are expressed in Euro, rounded off to the thousands unless otherwise stated and includes the consolidated assets and liabilities statement, the consolidated income statement and overall consolidated income statement, the consolidated statement of changes in shareholders’ equity, the consolidated financial statement and the following explanatory notes. The values used for consolidation were gathered from income statements and balance sheets prepared by the Directors of the individual subsidiaries. These data have been adjusted and reclassified, where necessary, to ensure compliance with international accounting standards and with the classification criteria applied throughout the Group.

Financial statements representation

The items of the balance sheet are classified into "current" and "non-current"; those in the income statement are classified by their nature; suspended result items are highlighted within the overall income statement.

The statement of changes in shareholders' equity presents the opening and closing balances of each net equity item reconciling them through the profit or loss for the period, any operation with shareholders (if applicable) and other variations in the net equity.

The financial statement has been defined according to the "indirect" method, by adjusting operating income of non- monetary components. We believe that these patterns adequately represent the economic situation and financial position.

Accounting principles, amendments and interpretations applied from 1 st January 2014

The Group has adopted IFRS 11 “Joint arrangements” for the first time, which led to the restatement of the previous financial statements Below are the nature and impact of the retrospective application of the new principle:

IFRS 11 Joint arrangements and IAS 28 (2011) Investments in Associates and Joint Ventures

IFRS 11 replaces IAS 31 Investments in Joint Ventures and SIC-13 Jointly Controlled Entities – Non-Monetary Contributions by Venturers and removes the option to record the jointly controlled companies using the proportional consolidation method. The jointly controlled entities that fall under the definition of joint venture instead, should be entered using the equity method.

The application of IFRS 11 has affected the accounting treatment adopted by the Group with reference to the jointly controlled shareholdings Estenergy S.p.A., Asm Set S.r.l., Unigas Distribuzione S.r.l. and Veritas Energia S.p.A. (as far as the latter is concerned, in February 2014 the Group obtained 100% control as illustrated in the section “Business Combinations” of this interim report). Before adopting IFRS 11, these companies were classified as jointly controlled entities and the related share of assets, liabilities, revenues and costs was proportionally consolidated in the Group's financial statements. The Group has established that these entities should be classified as jointly controlled companies and, pursuant to IFRS 11, recognized through the equity method. IFRS 11 was applied retroactively as requested by the principle and, as a result, the comparative information for the previous period was restated. As of 31 st December 2013 the Group held the following stakes:

______Ascopiave Group – Annual Financial Report as at 31 st December 2014 93 Ascopiave Group ______

Companies Group interest type control Activity Estenergy S.p.A. 48.999% Joint control Sales of natural gas and electric power Asm Set S.r.l. 49.000% Joint control Sales of natural gas and electric power Unigas Distribuzione S.r.l. 48.860% Joint control Management of the natural gas distribution network Veritas Energia S.p.A. (*) 51.000% Joint control Sales of natural gas and electric power (*) It is to be pointed out that the percentage shown refers to 31 st December 2013, given that on 10 th February 2014 Ascopiave S.p.A. purchased the 49% stake of Veritas Energia S.p.A. by Veritas S.p.A., thus acquiring total control.

The impact of the application of IFRS 11 on the Group's interim report as of 31 st December 2013 is as follows:

(Thousands of Euro) IFRS 11 FY 2013 FY 2013 adoption restated

Revenues (854,334) 186,496 (667,837) Total operating costs 748,430 (166,780) 581,562 Gross operative margin (105,904) 19,716 (86,275) Amortization and depreciation 20,570 (2,297) 18,273 Bad debt provisions 8,548 (2,509) 6,039 Operating result (76,787) 14,910 (61,964) Financial income (3,049) 393 (2,656) Financial expenses 6,923 (2,840) 4,170 Evaluation of associated companies with equity method 262 (6,730) (6,468) Income before taxes (72,651) 5,734 (66,917) Taxation for the period 31,541 (5,734) 25,807 Result for the year 41,111 (0) 41,111 Net result from discontinued operations/assets held for sale 71 (0) 71 Income/losses for the year (41,040) (0) (41,040)

Impact on Income/losses fore the year

(Thousands of Euro) Total effect of Unigas Veritas Estenergy S.p.A. Asm Set S.r.l. adopting IFRS 11 Distribuzione S.r.l. Energia S.r.l. FY 2013 Revenues 115,174 14,962 1,801 54,559 186,496 Total operating costs (103,809) (13,581) 516 (49,905) (166,780) Gross operative margin 11,365 1,381 2,317 4,653 19,716 Amortization and depreciation (1,038) (104) (1,035) (119) (2,297) Bad debt provisions (264) (329) (3) (1,913) (2,509) Operating result 10,063 948 1,279 2,621 14,910 Financial income 307 27 65 5 393 Financial expenses (2,538) 1 (29) (274) (2,840) Evaluation of associated companies with equity method (4,195) (533) (802) (1,199) (6,730) Income before taxes 3,636 443 514 1,141 5,734 Taxation for the period (3,636) (443) (514) (1,141) (5,734) Impact on result for the year 0 0 0 0 0

The application of the new principle had no significant impact on the other components of the overall profit and loss statement or on the basic or diluted earnings per share.

Impact on shareholders' equity as of 31 st December 2013

______Ascopiave Group – Annual Financial Report as at 31 st December 2014 94 Ascopiave Group ______

Adoction of 31.12.2013 31.12.2013 (Thousands of Euro) IFRS 11 Restated ASSETS Non-current assets Goodwill 115,630 (37,613) 78,017 Other intangible assets 332,268 (22,785) 309,484 Tangible assets 39,277 (1,437) 37,840 Shareholdings in other companies 1 72,421 72,421 Other non-current assets 25,304 (1,073) 24,232 Other current assets 916 0 916 Deferred tax assets 19,047 (3,591) 15,455 Non-current assets 532,442 5,922 538,365 Current assets Inventories 2,354 (307) 2,047 Trade receivables 228,549 (62,260) 166,289 Other current assets 42,985 (8,398) 34,588 Current financial assets 10,030 6,835 16,865 Tax receivables 1,977 (835) 1,142 Cash and cash equivalents 30,102 (18,329) 11,773 Current assets 315,996 (83,292) 232,703 Assets 848,438 (77,370) 771,068 NET EQUITY AND LIABILITIES Total net equity Share capital 234,412 0 234,412 Own shares (17,660) 0 (17,660) Reserves 180,938 0 180,938 Net equity of the Group 397,689 0 397,689 Net equity of Others 4,989 0 4,989 Total Net equity 402,679 0 402,679 Non-current liabilities Provisions for risks and charges 9,300 (977) 8,323 Severance indemnity 3,684 (504) 3,180 Medium- and long-term bank loans 64,849 (1,648) 63,201 Other non-current liabilities 16,863 (3,101) 13,762 Non-current financial liabilities 552 (0) 552 Deferred tax payables 31,279 (1,752) 29,527 Non-current liabilities 126,528 (7,982) 118,546 Current liabilities Payables due to banks and financing institutions 94,161 (4,790) 89,371 Trade payables 178,950 (44,382) 134,568 Tax payables 1,602 (1,157) 446 Other current liabilities 31,434 (6,214) 25,220 Current financial liabilities 13,084 (12,845) 239 Current liabilities 319,232 (69,388) 249,844 Liabilities 445,759 (77,370) 368,390 Net equity and liabilities 848,438 (77,370) 771,068

______Ascopiave Group – Annual Financial Report as at 31 st December 2014 95 Ascopiave Group ______

(Thousands of Euro) Estenergy S.p.A. Asm Set S.r.l. Unigas Veritas Elision Totale effect of Distribuzione Energia S.p.A. adoction IFRS 11 at S.r.l. 31 dicembre 2013 Non-current assets Goodwill 32,463 2,380 889 1,881 (37,613) Other intangible assets 3,584 385 18,349 467 (22,785) Tangible assets 100 18 1,217 102 (1,437) Shareholdings in other companies (44,796) (3,632) (20,329) (3,663) 72,421 Other non-current assets 24 0 176 873 (1,073) Deferred tax assets 1,324 312 489 1,466 (3,591) Non-current assets 7,302 538 792 1,126 (5,922) Inventories 0 0 307 0 (307) Trade receivables 42,202 3,040 1,171 16,750 903 (62,260) Other current assets 2,586 232 2,754 2,826 (8,398) Current financial assets 0 0 0 194 7,030 (6,835) Tax receivables 122 640 38 35 (835) Cash and cash equivalents 13,347 2,307 1,120 1,555 (18,329) Current assets 58,258 6,218 5,389 21,360 7,933 (83,292) Assets 50,956 5,681 6,181 22,486 7,933 (77,370) Provisions for risks and charges 79 288 0 610 (977) Severance indemnity 93 97 192 123 (504) Medium- and long-term bank loans 0 0 1,648 0 (1,648) Other non-current liabilities 2,216 0 4 881 (3,101) Deferred tax payables 1,405 147 3 196 (1,752) Non-current liabilities 3,794 532 1,847 1,810 (7,982) Payables due to banks and financing institutions 7 0 696 4,087 (4,790) Trade payables 27,424 3,410 3,150 11,026 628 (44,382) Tax payables 0 0 123 1,034 (1,157) Other current liabilities 2,380 270 2,069 1,494 (6,214) Current financial liabilities 11,372 0 0 1,473 (12,845) Current liabilities 41,183 3,680 6,039 19,114 628 (69,388) Liabilities 44,977 4,212 7,885 20,924 628 (77,370) Elision effect 5,979 1,468 1,705 1,562 7,305 Net equity effect 0 0 0 0 0 0

Impact on the statement (increase/(decrease)) of cash flows for the period 2013: Restated (Thousands of Euro) FY 2013 Effect of IFRS 11 FY 2013 Net income of the Group 38,678 0 38,678 Cash flows generated by operating activities 96,351 (26,417) 69,934 Cash flows used by investments (16,087) 2,742 (13,345) Cash flows used by financing activities (77,154) 14,332 (62,822) Cash flow for the year 3,110 (9,343) (6,233) Cash and cash equivalents at the beginning of the year 26,992 (8,985) 18,006 Cash and cash equivalents at the end of the year 30,102 (18,329) 11,773

The application of this standard has affected the financial position of the Group for Euro 9,343 thousand as a result of the elimination of the proportional consolidation of the joint ventures listed in the table above (Estenergy S.p.A., ASM Set S.r.l., Unigas Distribuzione S.r.l. and Veritas Energia S.p.A.) now booked using the equity method.

Other new standards and amendments entered into force commencing 1 st January 2014, however they had no particular impact on the consolidated financial statements of the Group, as they relate to matters that are not present, or they only affect financial reporting:

IFRS 10 “Consolidated Financial Statements” and IAS 27 “Separate financial statements”

______Ascopiave Group – Annual Financial Report as at 31 st December 2014 96 Ascopiave Group ______

IFRS 10 partially replaces IAS 27 and SIC 12 interpretation, providing a new unified definition of the concept of control. An investor has control over another company when the investor has simultaneously the power to direct relevant decisions, is exposed to the future returns of the investee and has the ability to use its power to affect the returns of the investee. IAS 27 has been revised following the introduction of IFRS 10 and provides a comprehensive guide on the preparation of individual financial statements only.

IFRS 12 “Disclosure of Interests in Other Entities” The principle regulates disclosures in the financial statements relating to subsidiaries and associates, joint operations and joint ventures, as well as to unconsolidated structured entities not included in the consolidation area.

IAS 32 "Financial Instruments" IAS 32 and the amendments to IFRS 7 establish, respectively, the criteria to be adopted for the offsetting of financial assets and liabilities and the related disclosure requirements. In particular, the amendments to IAS 32 require that: (i) in order to offset, the right to set-off must be legally enforceable in all circumstances, that is in the normal course of business and in the event of insolvency, default or bankruptcy of one of the contractual parties; and (ii), upon the occurrence of certain conditions, the simultaneous settlement of financial assets and liabilities on a gross basis with the consequent elimination or significant reduction of credit and liquidity risks, may be considered equivalent to settlement on a net basis.

IAS 36 "Impairment of Assets" The standard reflects the principles contained in IFRS 13, introducing the obligation to disclose additional information in cases where a loss is recognized or cancelled and the recoverable amount of assets or CGUs corresponds to its fair value net of divestment costs.

Accounting principles, amendments and interpretations not yet applicable and not adopted ahead of time by the Group

Please find below the standards and interpretations which, at the date of the consolidated financial statements, had already been issued but were not yet effective. The Group intends to adopt these standards when they become effective.

IFRIC 21 Levies IFRIC 21 clarifies that an entity recognizes a liability at the earliest when the event related to the payment occurs, in accordance with applicable law. For payments that are due only above a certain minimum threshold, the liability is recognized only when this threshold is reached. IFRIC 21 requires retrospective application. This interpretation is to be applied mandatorily in financial statements beginning on 17 th June 2014 or later.

Use of estimates

The preparation of the financial statements and related explanatory notes in application of the IFRS requires the management to provide estimates and assumptions based on complex and/or subjective judgments, estimates based on past experience and assumptions deemed to be reasonable and realistic on the basis of information available at the time

______Ascopiave Group – Annual Financial Report as at 31 st December 2014 97 Ascopiave Group ______of estimate. This affects the values of the assets and liabilities reported on the consolidated financial statements, as well as costs and revenues and information relating to potential assets and liabilities as of that date. Estimates are used to report: - Duration and residual value of the goods in concession: the gas distribution activity is carried out as a concession, i.e. the local public bodies entrust the supply of the service to the company. Regarding the duration of concessions, Legislative Decree no. 164/00 (Letta Decree) stated that all concessions should be put to tender by the end of the "transitional period" (for the Ascopiave Group, between 31 st December 2010 and 31 st December 2012) and that the new term of the concessions will not exceed twelve years. On expiry of the concessions, the operator, upon the sale of its distribution networks, except for assets to be relinquished, receives compensation as defined by the criteria of the industrial estimate. In relation to the estimates made by management for determining the depreciation method, the net book value of assets at the expiration of the concession should not be higher than the above mentioned industrial value. Estimates are also used to assess the effects of disputes on the application of distribution and/or sale tariffs, and those with the municipalities for the acknowledgement of the redemption value of assets as under the concession, returned upon its expiry; - Permanent reductions in the value of non-financial assets: At each balance sheet date, the Group assesses whether there are permanent reductions in the value of all non-financial assets. In particular, goodwill is tested for possible reductions in value at least annually and during the year if such indicators exist; this requires an estimate of use value of the cash-generating unit to which goodwill is assigned, in turn based on the estimated cash flows expected from the unit and their discounting on the basis of a suitable discount rate. As of 31 st December 2014, the book value of goodwill amounts to Euro 80,758 thousand (2013: Euro 78,017 thousand). Further details can be found under Note 1; - The valuation of the revenues from gas consumption for which the actual reading is not yet available; - Provisions for risks on receivables, obsolete inventories, the useful lives of intangible and tangible fixed assets and related amortization, employee benefits and payment plans based on stock options (so-called phantom stock option), taxes and provisions for risks and charges. The estimates and assumptions are reviewed periodically, and the variations are immediately reflected in the income statement. In applying the Group accounting principles, the Directors have taken decisions based on the stated discretional evaluations, with a significant effect on the values reported on the statements. However, the uncertainty surrounding these assumptions and estimates may determine results that, in the future, will need to be significantly adjusted at the book value of such assets and/or liabilities.

Consolidation principles

The consolidated financial statements comprise the balances Ascopiave S.p.A. and those of the subsidiaries prepared as of 31 st December every year. The subsidiary companies are integrally consolidated from the date of acquisition or the date that the group acquires control, and they cease to be consolidated on the date in which control is transferred outside of the group. The statements of the subsidiary companies have been prepared, adopting the same accounting principles as the parent company, for each accounting period.

______Ascopiave Group – Annual Financial Report as at 31 st December 2014 98 Ascopiave Group ______

All balances and infra-group transactions, including any profits or losses that have not been realised, deriving from relations between companies of the group, have been entirely eliminated. Fractions of shareholders' equity and of revenues of third-party interests are recorded in dedicated items of the shareholders' equity and income statement. In case non-total control is acquired, the share of net assets of third-party interests is determined on the basis of the portion attributable to the current value assigned to assets and liabilities as of the date of acquisition of control, excluding any goodwill attributable to them (so-called partial goodwill method ). Otherwise, if non-total control is acquired, the total amount of goodwill ( negative goodwill ) generated from the acquisition is recorded considering, therefore, the share attributable to third-party interests (so-called full goodwill method ); in this respect, the interests of other parties are expressed at their total fair value, including, therefore, goodwill (negative goodwill). In the presence of additional interests acquired subsequent to the takeover (acquisition of third-party interests), any positive difference between purchase price and the corresponding percentage of net assets acquired is recorded in the equity; similarly, the effects resulting from the sale of minority interests without losing control are also recorded in the equity. Associated companies and jointly controlled companies are accounted for using the net equity method with separate indication in the consolidated financial statement of the profit attributable to the Group. The most recent financial statements available of the affiliate company are used in applying the net equity method. When the financial statements of an affiliate company used in applying the net equity method refer to a date different from the one of the parent company, the appropriate adjustments are made for the significant transactions or events that occurred between that date and year end.

Consolidation area as of 31 st December 2014

The companies included in the consolidation area as of 31 st December 2014 and consolidated through the line-by-line, proportional method or net equity method are the following:

Direct Indirect Paid-up Group Company name Registered offices controlling controlling capital interest interest interest Parent company Ascopiave S.p.A. Pieve di Soligo (TV) 100% consolidated companies Ascotrade S.p.A. Pieve di Soligo (TV) 1,000,000 89.00% 89% 0% Etra Energia S.r.l. Cittadella (PD) 100,000 51.00% 51% 0% ASM DG S.r.l. Rovigo (RO) 7,000,000 100.00% 100% 0% Edigas Esercizio Distribuzione Gas S.p.A. Cernusco sul Naviglio (MI) 1,000,000 100.00% 100% 0% Amgas Blu S.r.l. Foggia (FG) 10,000 80.00% 80% 0% Blue Meta S.p.A. Bergamo (BG) 606,123 100.00% 100% 0% Pasubio Servizi S.r.l. Schio (VI) 250,000 100.00% 100% 0% Veritas Energia S.p.A. Venezia 1,000,000 100.00% 100% 0%

Companies under joint control consolidated with net equity method ASM Set S.r.l. (1) Rovigo (RO) 200,000 49.00% 49% 0% Estenergy S.p.A. (2) Trieste (TS) 1,718,096 49.00% 49% 0% Unigas Distribuzione S.r.l. (3) Nembro (BG) 3,700,000 48.86% 48.86% 0%

Subsidiary companies consolidated with net equity method Sinergie Italiane S..r.l. in liquidazione Milano (MI) 1,000,000 30.94% 30.94% 0%

(1) Joint control with ASM Rovigo S.p.A.; (2) Joint control with AcegasApsAmga S.p.A.; (3) Joint control with Anita S.p.A.. ______Ascopiave Group – Annual Financial Report as at 31 st December 2014 99 Ascopiave Group ______

In terms of consolidation area as compared to 31 st December 2013, it should be pointed out, as better explained in the section “Business combinations” of the Explanatory Notes, that on 10 th February 2014 the control of the company Veritas Energia S.r.l. was acquired and therefore the subsidiary is fully consolidated from the beginning of fiscal year 2014. In the previous financial year, the subsidiary was subject to joint control with Veritas S.p.A. and therefore, in accordance with IFRS 11, it was evaluated using the equity method. Other changes, however neutral for the purposes of the consolidated financial statements, concern the merger of the subsidiary Edigas Due S.p.A. into the subsidiary Blue Meta S.p.A. (retroactive effect as of 1st January 2014) and the merger of the subsidiary Ascoblu S.r.l. into the parent company Ascopiave S.p.A. (retroactive effect as of 1 st January 2014). During the year, an agreement was signed between Ascopiave S.p.A. and Ascotrade S.p.A. on the one hand and Anita S.r.l. and Unigas Distribuzione S.r.l. on the other, in order to settle the dispute arisen with regard to the alleged breach, by Unigas Distribuzione S.r.l., of the representations and warranties contained in the agreement of acquisition by Ascotrade S.p.A. of the share capital of Blue Meta S.p.A. following a specific tender called by Unigas Distribuzione S.r.l. for the selection of an industrial partner. This agreement was signed by Ascotrade S.p.A., Unigas Distribuzione S.r.l. and Ascopiave S.p.A., as the controlling shareholder of Ascotrade S.p.A. and the winner of the tender, and Anita S.r.l. ("Anita"), as the controlling shareholder of Unigas Distribuzione S.r.l., and envisaged a commitment by Unigas Distribuzione S.r.l. and Anita to respectively indemnify the assignee and the contractor (in the percentage of its stake in Unigas Distribuzione S.r.l.) for any unstated exceptional write downs of assets and/or capital losses, extraordinary liabilities and/or liabilities with regard to the financial statements at 30 th June 2010. In particular, Ascopiave S.p.A. and Ascotrade S.p.A. formally asked Unigas Distribuzione S.r.l. and Anita to apply the contractual provisions regarding compensation for the existence of a capital loss consisting of receivables from Agenzia delle Dogane (Customs Agency) (for higher payments made in 2007) and extraordinary liabilities resulting from adjustments for the purchase of electricity for the period 2006-2008. After Unigas Distribuzione S.r.l. and Anita contested such communications, the Parties agreed to settle amicably the potential litigation against the payment, by Anita to Ascopiave S.p.A., of an amount of Euro 1,250,000. The settlement agreement envisages that Ascopiave S.p.A. ensures that Blue Meta S.p.A. implements some actions defined and agreed between the parties in order to try to recover, at least in part, the damage in dispute, envisaging that whatever will be paid or cashed in by Blue Meta S.p.A. as a result of these actions, and in any case up to an amount equal to that paid by Anita, will be ceded from Ascopiave S.p.A. to Anita. As of 31 st December 2014, none of the actions taken has resulted in receipts or payments in favour of Blue Meta S.p.A..

______Ascopiave Group – Annual Financial Report as at 31 st December 2014 100 Ascopiave Group ______

Synthesis data of fully consolidated companies and jointly controlled companies consolidated through the equity method:

Revenues from Reference Net financial position Description sales and service Net result Net equity accounting (liquid assets) supply principles Amgas Blu S.r.l. 18,674 1,362 1,628 869 Ita Gaap Ascopiave S.p.A. 80,404 43,628 392,459 121,396 IFRS Ascotrade S.p.A. 346,467 13,595 27,634 (2,264) IFRS Blue Meta S.p.A. 77,990 3,272 8,114 (3,138) Ita Gaap Edigas Esercizio Distribuzione Gas S.p.A. 5,507 950 8,552 862 Ita Gaap Estenergy S.p.A. 153,735 4,961 16,602 23,326 IFRS Etra Energia S.r.l. 7,654 7 185 (90) Ita Gaap Pasubio Servizi S.r.l. 35,528 1,772 4,652 (2,385) Ita Gaap ASM DG S.r.l. 4,781 862 11,693 1,483 Ita Gaap ASM Set S.r.l. 26,803 800 1,660 (3,501) Ita Gaap Unigas Distribuzione S.r.l. 12,852 1,684 39,263 4,793 Ita Gaap Veritas Energia S.p.A. 92,425 2,290 4,212 13,624 Ita Gaap

Assessment criteria

The evaluation principles adopted by the Group are reported below:

Non-current assets

Goodwill : the goodwill obtained from the acquisition of business branches operating in the supply and sale of gas is initially booked at cost and represents the excess of the purchase price compared to the portion pertaining to the purchaser for the net fair value referred to values identifying the current and potential assets and liabilities.

After the initial booking, goodwill can no longer be amortized and is reduced by any losses of value.

Goodwill is subjected to an annual recoverability analysis, or a more frequent one if events or changes in circumstances occur which can lead to the emergence of possible losses of value.

With the intent of analysing the recoverability, the goodwill acquired through groups of company is allocated, as of the acquisition date, to each of the units (or groups of units) that generate financial flows with the Group that it is held would benefit from the synergy effects of the acquisition, without regard to the allocation of other assets or liabilities of these units (or groups of units).

Units generating financial flows:

(i) represent the lowest level, within the Group, to which the goodwill is monitored for internal management purposes;

(ii) are no greater than one sector, as defined in the primary or secondary indication scheme of the Group in accordance with IFRS 8 "Product information sector". Loss of value is determined by defining the recoverable value of a unit which generates flows (or groups of units) to which the goodwill is allocated. When the recoverable value of a unit which generates flows (or group of units) is inferior to the book value, a loss of value is indicated. In cases in which the goodwill is attributed to a unit which generates financial flows (or group of units) which is activated through partial abandonment the goodwill associated with the transferred profit is considered in order to determine the positive or negative change derived from the operation. Goodwill transferred in such cases is calculated on the basis of the values relative to the asset transferred with respect to the asset still held with reference to the same unit.

______Ascopiave Group – Annual Financial Report as at 31 st December 2014 101 Ascopiave Group ______

Other intangible assets : intangible assets mainly include assets pertaining concessions between the public and the private sectors (so-called service concession agreements) related to development, financing, management and maintenance of infrastructures in concession, of which: (i) the lessor controls or regulates the services supplied by operator through the infrastructure and their prices; (ii) the lessor controls through property, ownership of benefits or in other ways any significant remaining profit-sharing at the end of the concession. Other intangible assets also include the recognition of the fair value of customer lists resulting from the acquisition of companies operating in the sale of natural gas and electricity that occurred in previous years and in the current year (Veritas Energia S.p.A.) rather than, the recognition of charges paid to the awarding entities (Municipalities) and/or the outgoing operators subsequent to the assignment and/or the renewal of the relevant invitation to tender to award the service of natural gas distribution. As concerns the write-off period: (i) the customer lists are amortized on a straight-line basis, based on the estimate of the benefits that will have effects in future years and determined during the Purchase Price Allocation. In particular, the Directors have established that the useful life associated with customer lists is ten years, due to the low turnover rate of customers, represented mainly by civil users; (ii) the concessions for the service of natural gas distribution are amortized on a straight-line basis, based on the duration of the concession period. In particular, the amortization period of the concessions acquired by the Ascopiave Group is equal to twelve years in accordance with the regulatory framework. After the initial reporting, as they have a defined useful life, intangible assets are booked net of the accumulated relevant amortization operations and net of any losses in value, determined with the same basis indicated below for tangible assets. The useful life is then re-examined on an annual basis, and any changes, if necessary, made prospectively. Assets acquired under financial leases are booked at fair value, net of taxes due by the lessee or, if lower, at the current value of the minimum lease payments, including any sum payable for the exercise of the option to purchase, in intangible assets offsetting the financial debt to the lessor. Any profits or losses deriving from the sale of an intangible asset is determined as the difference between the disposal value and the book value of the asset, and are reported on the income statement at the time of the sale. Duration and residual value of assets under concession: The gas distribution activity is carried out as a concession, i.e. the local public bodies entrust the supply of the service to the company. Regarding the duration of concessions, Legislative Decree n. 164/00 (so-called Letta Decree) stated that all concessions should be put to tender by the end of the "transitional period" (for the Ascopiave Group, after 31 st December 2012) and that the new term of the concessions will not exceed twelve years. On expiry of the concessions, the operator, upon the sale of its distribution networks, except for assets to be relinquished, receives compensation as defined by the criteria of the industrial estimate. In relation to the estimates made by management for determining the depreciation method, the net book value of assets at the expiration of the concession should not be higher than the above mentioned industrial value.

Tangible fixed assets : tangible assets are booked at their historic cost, including accessory costs directly ascribable to the putting into operation of the asset for the use for which it was acquired.

Lands - both free of constructions and annexed to civil and industrial buildings - were generally accounted for separately and are not depreciated since they are elements with an unlimited useful life.

______Ascopiave Group – Annual Financial Report as at 31 st December 2014 102 Ascopiave Group ______

Maintenance and repair costs that are not subject to valuing and/or extending the residual useful life of assets, are spent in the year in which they are borne. Otherwise, they are capitalised.

Tangible assets are presented net of the relevant accumulated depreciation, and any losses of value determined according to the basis described below. Amortisation is calculated in uniform instalments on the basis of the estimated useful life of the asset for the company, which is re-examined annually, and any changes, if necessary, are made prospectively. The main economical-technical rates used are as follows:

Buildings 2% Equipment 8.5% - 8.3% Furniture 8.80% Electronic equipment 16.20% Basic hardware and software 20% Motorcars, motor vehicles and similar 20%

The book value of tangible fixed assets is subject to verification in order to report any loss of value, should events or changes of situation suggest that the book value may not be recovered. Should there be an indication of this type and, in the event that the book value should exceed the presumed realisation value, the assets are devalued so as to reflect their realisation value. The realisation value of the tangible fixed assets is represented by the greater of the net sales price and the value of use.

Losses of value are reported on the income statement with the costs for amortizations and write downs. Such losses of value are restored should the reasons for their cause cease to exist.

When the asset is sold or if there are no future economic benefits expected from the use of the asset, it is eliminated from the financial statements and any loss or profit (calculated as the difference between the sale value and the book value) is entered in the income statement of the year of the above mentioned elimination. Shareholdings in joint companies: The shareholdings in affiliate companies, i.e. in which the Group has a significant influence, are accounted for using the net equity method. The income statement shows the share of the Group in the operating profit of the affiliate. If an affiliate company detects adjustments directly attributable to the net equity, the Group recognizes its share and includes it, where applicable, in the statement of changes in the net equity. In the event that the loss attributable to the Group exceeds the book value of the shareholding, the latter is cancelled and any excess is recognized in a special fund to the extent that the Group has legal or constructive obligations towards the subsidiary to cover its losses or, however, to make payments on its behalf. If, at a later stage, the loss does no longer exist or has decreased, a reversal of an impairment loss is booked in the income statement, up to its cost. Shareholdings in other companies: The financial assets consisting of shareholdings in other companies, if their fair value at the date of the balance sheet cannot be determined because the related shares are not listed, are valued at their cost of purchase or subscription, minus any repayment of principal, and are subsequently adjusted for losses in value determined in the same manner previously described for the tangible assets.

______Ascopiave Group – Annual Financial Report as at 31 st December 2014 103 Ascopiave Group ______

Other assets and non-current financial assets: other assets and non-current financial assets (as well as non-current financial liabilities), other than investments, as well as current financial assets and current financial liabilities, are booked in compliance with IAS 39 - Financial instruments: Recognition and Measurement. Current assets

Inventories : inventories are booked at whichever of the following is lower: purchase and/or manufacturing cost, determined in accordance with the weighted average cost basis, or the estimated realizable net value. The net realisation value is determined on the basis of the estimated sales price in normal market conditions, net of direct sales costs.

Obsolete and/or slow to realise inventories are written down in relation to their presumed possibility of use or future realisation. The write down is eliminated in the following years, should the reasons for its cause cease to exist. Trade receivables and other current assets: trade receivables, whose expiry is within normal commercial trading terms, are not discounted back and are booked at cost (identified by their par value) net of the relevant value losses. These are suited to their presumed realisation value through the reporting in a specific adjustment fund, which is constituted when there is objective evidence that the Company will be unable to receive credit for the original value. Provisions to the reserve for doubtful accounts are reported on the income statement. Transfer of financial assets The Group sells some of its trade receivables through sale operations of receivables ("factoring"). Factoring transactions may be with recourse or without recourse. These kinds of transactions, if they meet the requirements of IAS 39, are removed from the financial statements since the risks and benefits associated with their collection were transferred, otherwise, the receivables sold under these circumstances remain in the Group's financial statements and a financial liability of equal amount is recognized under Asset-backed financing.

Cash and cash equivalents : they include cash values, values with the following requirements: availability at sight or in a very short term, good outcome, and no collection expenses . They are accounted at nominal value.

Own shares : Re-acquired own shares are taken as a decrease in the assets. The original cost of own shares, revenues from sales and any other subsequent variation are recognized under the net equity. Non-current liabilities

Benefits for employees : benefits guaranteed to employees, paid when or after employment ceases, by means of programs with defined benefits (Employees' leaving indemnities) or with other long-term benefits (retirement indemnity) are recognized in the period when the right accrues. The Group's obligations are separately determined for each plan, by estimating the present value of future benefits that employees have accrued during the current year and in previous financial periods. This calculation is performed using the projected unit credit method. The components of the defined benefits are recognized as follows: • the re-measurement components of liabilities, which include actuarial gains and losses, are recognized immediately in Other comprehensive income (loss); • costs related to the provision of services are recognized in the profit and loss statement; • net financial charges in the defined benefit liability are recognized in the income statement; The re-measurement components recognized in Other comprehensive income (loss) are never reclassified in the profit and loss statement of the following years. Compensation plans

______Ascopiave Group – Annual Financial Report as at 31 st December 2014 104 Ascopiave Group ______

Compensation plans based on Ascopiave S.p.A.'s shares and settled through the delivery of shares (stock option plans, long-term incentive plans) are recognized as liabilities and measured at fair value at the end of each accounting period and up to the time of payment. Any subsequent change in fair value is recognized in the profit and loss statement. Group employees (and in particular certain Directors) receive part of their salaries in the form of options that can only be sold for cash. The cost of cash operations is evaluated initially at the fair value as of the date of allocation, using an evaluation formula better explained in the note. This fair value is spent in the period until maturation with reporting of a corresponding payable. The liability is re-calculated upon each closure of the period, until the date of regulation, with all changes made to the fair value reported on the income statement. Reserves for risks and charges: The reserves for risks and charges concern costs and charges of a given type, and of certain or probable existence, which on the closing date of the financial year are undetermined in terms of amount or due date. Provisions are reported when: (i) there is a current obligation (legal or implicit) that derives from a past event; (ii) an outlay of resources is likely in order to meet the obligation; (iii) a reasonable estimate can be made as to the amount of the obligation.

On the other hand, where it is not possible to carry out a probable estimate as to the obligation, or alternatively, it is deemed that the outlay of financial resources is only possible and not probably, the relevant potential liability is not marked in the financial statements, but rather mentioned appropriately in the explanatory notes. Provisions are reported at the representative value of the best estimate of the amount that the company would pay to extinguish the obligation, or to transfer it to third parties upon period end. If the effect of discounting is significant, the allocations are determined by discounting back the expected future financial flows at a pre-tax rate which reflects the market's current valuation in relation to time. When discounting is carried out, the increase in the allocation due to the passing of time is reported as a financial charge.

Medium/Long-term loans : loans are initially booked at fair value, net of any transaction costs and, subsequently, are valued at amortization cost, calculated by applying the actual interest rate. When a condition of a long-term financing contract is violated, on or before the date of the financial statements, causing the liability to become payable on demand, the liability is classified as current, even if the lender has agreed - after the reference date of the financial statements and before the authorization for its publishing - not to require the payment as a result of the breach. The liability is classified as current because, as of the date of the financial statements, the entity does not have an unconditional right to defer its settlement for at least twelve months after that date.

Current liabilities

Trade payables and other payables : trade payables, whose expiry is within normal commercial trading terms, are not discounted back and are booked at cost (identified by their par value).

Payables in a currency differing from the account currency are booked at the exchange rate of the day of the operation and, subsequently, are converted at the exchange rate as of the date of financial statements. Any profit or loss deriving from conversion is reported on the income statement.

Other payables are reported at cost (identified from the face value).

Current financial liabilities : current financial liabilities are stated at their fair value. Revenues and costs: revenues and costs are booked on an accrual basis.

______Ascopiave Group – Annual Financial Report as at 31 st December 2014 105 Ascopiave Group ______

The revenues from sales and service performance are recognized to the extent to which it possible to determine their fair value, and it is likely that the connected economic benefits will be enjoyed upon transfer of the risks and advantages typical of the property or upon performance of the service. Depending on the type of operation, revenues are entered on the basis of the following specific criteria: • the revenues from natural gas transportation are recognized at the time when the supply or the service are provided - although not yet invoiced - and are determined by combining estimates with the values recorded during the financial year on the basis of the so-called reference tariffs, in order to determine the restriction on total revenues as provided for by the regulations issued by the Authority for Electricity, Gas and Water; • the revenues for gas sales are recognized at the moment of disbursement and also depend on the type of customer. In particular, the product sector norms hold that, in relation to customers that have not chosen to utilize the right to directly negotiate the conditions for supplies with the company that sells the gas, mainly consisting of domestic users, the tariffs for natural gas sales are regulated and updated quarterly on the basis of deliberations made by the Authority for Electrical Energy, Gas and Water ("AEEGSI"). • the contributions received by users for connection services or for parcelling works, if not in relation to costs incurred into for network extension, are reported in the Income statement; • the revenues for service performance are recognized with reference to the level of completion of the activity, based on the same criteria applied to works performed upon order. In case it is impossible to determine their value, the revenues will not be not booked until the amounts of the costs incurred into are deemed recovered; • Revenues are entered net of all discounts, rebates and premiums, as well as the taxes directly connected; As concerns the quantification of consumption, commencing 1 st January 2013, the AEEGSI has amended, by resolution 229/2012/R/GAS dated 31 st May 2012, the Network Code appointing Snam Rete Gas S.p.A. as the entity in charge of allocating natural gas to the sales companies. The resolution has also amended the deadlines for the publication of the temporary and definitive allocations, which, up to the previous financial year, were performed by local distributors in the three months subsequent to those of consumption, at the end of which the final allocation was definitive. Commencing 1 st January 2013, the allocation methods envisage the publication of a first allocation during the month following that of consumption which will be subject to a first adjustment session within the month of May of the following financial year, and undergo further refinement as part of the multi-year adjustment sessions to be carried out in the following years up to the limit of five years. The adjustment sessions modify the first allocations by considering the further information received by local distributors and transmitted to Snam Rete Gas S.p.A.. The regulatory changes described above, therefore, generate a scenario in which it is possible that the amounts allocated in the first phase are adjusted after the terms of approval of the draft financial statements. For the purpose of valuation of revenues for the supply of natural gas to end-customers, given the regulatory change and the adjustments that occur during the following year, the Group has deemed it reasonable, in order to determine the revenues, to balance the cubic meters sold (except the cubic meters consumed by customers subject to monthly reading) with the cubic meters allocated by Snam Rete Gas S.p.A.. The physical quantities allocated during adjustment sessions are subject to valuation in the following year subsequent to the publication of the data made available by Snam Rete Gas S.p.A.. By resolution 250/2014/R/GAS dated 29 th May 2014, the AEEGSI approved the request submitted by Snam Rete Gas S.p.A. to perform the 2013 annual session adjustment by the month of May 2015 as part of the first multi-year adjustment session that will affect the financial years 2013 and 2014. ______Ascopiave Group – Annual Financial Report as at 31 st December 2014 106 Ascopiave Group ______

At the end of financial year 2014, as in 2013, the amounts of natural gas valued at purchase and sale may be less than the amounts of gas actually sold. Public contributions: public contributions are reported when there is a reasonable certainty that they will be received and all relevant conditions are met. When public contributions are linked to costs components, they are reported as income, but are systematically divided up over the periods, so as to be measured to the costs they are intended to offset. In case the contribution is related to an asset, the asset and the contribution are recorded at their nominal value and their recording into the income statement is accounted for progressively along the useful life of the reference asset, with constant shares. Private contributions : it should be noted that private contributions received up to 31 st December 2013 for the construction of connections to users were fully entered in the income statement when the costs for their construction were incurred and the work was commissioned. The contributions received for the construction of these works that were not related to the costs incurred for their construction were suspended in liabilities and recognized in the income statement when the conditions were fulfilled. The private contributions received for the construction of connections to users are recorded from 1 st January 2014 in liabilities at the moment of payment and recorded to the income statement from the date of connection construction, consistent with the recognition of costs to which the works refer and their useful life. The new regulatory framework entails a different recognition of private contributions as compared to the previous context. However, they do not alter the value of the assets contributed. The new method of recognition is not considered a change in the accounting standard in accordance with IAS 8.16 a) and is adopted prospectively commencing the current year.

Financial income and expenses : income and costs are booked by competence according to the interest accrued on the net value of the relevant financial assets and liabilities, using the actual interest rate.

Income taxes : current taxes are calculated based on an estimate of the income before tax and are entered at the amount that is expected to be recovered or paid to the tax authorities. The rates and tax regulations used to calculate the amount are those issued or basically issued upon year end. Current taxation relating to elements reported directly under assets are reported directly as assets and not on the income statement.

As far as the Tax on Company Revenue is concerned (IRES), Ascopiave and the almost entirety of its subsidiaries benefited for a three-year period 2013 -2015 of the national fiscal consolidation regime pursuant to art. 117/129 of the Single Reference Text on Revenue Taxes (TUIR). This option enabled the calculation of IRES based on a taxable amount equalling to the mathematical sum of the positive and negative taxable amounts of the single companies that comprise the consolidation. AscoHolding S.p.A. acts as consolidating company and determines a single taxable amount for the entire group of companies that are part of the national consolidation regime.

Each of the participating companies (Ascopiave S.p.A., Ascotrade S.p.A., Asm Dg S.r.l., Pasubio Servizi S.r.l., Edigas Distribuzione Gas S.p.A., Blue Meta S.p.A.) transfers its income tax (taxable income or tax loss) to the consolidating company recognizing therefore in the income statement the item "tax consolidation charges" or "tax consolidation income" for an amount equal to the current IRES rate for the financial year (or the loss transferred), that will be paid or used by the parent company Asco Holding S.p.A.. Deferred tax assets are reported against all deductible temporary differences and for tax assets and liabilities brought forward, in the amount in which the existence of suitable future tax income is probable that can make the use of the deductible temporary differences and tax assets and liabilities brought forward applicable, with the exception of the following:

______Ascopiave Group – Annual Financial Report as at 31 st December 2014 107 Ascopiave Group ______

• when deferred payable tax assets connected with deductible temporary differences derive from the initial reporting of an asset or liability in a transaction that is not a company merger and that, at the time of the transaction itself, has no effect on the profit of the year calculated for the purposes of the statements, nor on the profit or loss calculated for tax purposes;

• with reference to taxable temporary differences associated with holdings in subsidiaries, associated companies and joint ventures, the deferred tax assets are reported only in the amount in which it is probable that the deductible temporary differences will reverse in the immediate future and that there are suitable tax income against which the temporary differences can be used. Earnings per share : Earnings per share are calculated by dividing the net income for the period attributable to the Company's shareholders by the weighted average number of shares net of own shares. For the purposes of the calculation of the basic earnings per share, we specify that the numerator is the economic result for the period less the share attributable to third parties. There are no preference dividends, conversions of preferred shares or similar effects that would adjust the results attributable to the holders of ordinary shares in the Company. Diluted profits for shares result as equal to those for shares in that ordinary shares that could have a dilutive effect do not exist and no shares or warrants exist that could have the same effect. Net result from discontinued assets : this represents the result of sold or discontinued assets and/or the economic result of said sale.

______Ascopiave Group – Annual Financial Report as at 31 st December 2014 108 Ascopiave Group ______

COMMENTS ON THE MAIN CONSOLIDATED BALANCE SHEET ITEMS

Non-current assets

1. Goodwill

Goodwill, equal to Euro 80,758 thousand as of 31 st December 2014, marks an increase of Euro 2,742 thousand as compared to 31 st December 2013. This increase is due to the joint effect of the purchase of 49% of Veritas Energia S.r.l., (51% was held until 31 st December 2013) and the change in the consolidation method of that company, which is no longer the equity method (31 st December 2013, restated) but the full method. For further details in relation to the new combination, see the section "Business combinations" of the Explanatory Notes. The remaining amount recognized on 31 st December 2014 refers in part to the surplus value created by the delivery of the gas distribution networks by partner municipalities in the period between 1996 and 1999, and in part to the surplus value paid during the acquisition of some company branches related to the distribution and sale of natural gas. In order to determine the recoverable value, goodwill was allocated to the natural gas distribution CGU and to the natural gas sale CGU. The composition of the goodwill for the two CGUs described above is the following:

(Thousands of Euro) 31.12.2013 Increase Decrease 31.12.2014 Distribution of natural gas 24,396 24,396 Sales of natural gas 53,621 2,742 56,362 Total goodwill 78,017 2,742 0 80,758

In accordance with International Accounting Standard 36, goodwill is not subject to depreciation, but its impairment is verified at least annually. The depreciation audit on goodwill has been carried out by comparing the recoverable value of the activities of natural gas distribution and sale with their accounting value, including the goodwill allocated to them. As no reliable criteria exist to evaluate the sale value between the aware and available parties in the activity of gas sale and distribution, other than the criteria put forward in literature to evaluate the branches of a company, the recoverable value of the audited asset is defined by its use value.

The recoverable value of gas sale and distribution financial flow-generating units has been estimated using the Discounted Cash Flow method, discounting back the operating financial flows generated by the assets themselves at a discount rate representative of the cost of capital. The financial flows used to calculate the recoverable value are those of the Multi-annual Plan for the gas sale and distribution financial flow-generating units, which cover the forecasts formulated by the management in the Economic and Financial Plan for the period 2015-2017 approved with resolution of the Board of Directors dated 24 th February 2015.

The current sector legislation establishes that the natural gas distribution service is awarded by means of tender procedures in the minimum territorial areas within pre-established time limits. The tenders for the award of the service in the territorial areas where the Group currently holds the municipal concessions – if the deadlines illustrated in the so-called Criteria Decree (Ministry for Economic Development Decree 226/2011) are respected – will mainly take place during the three-year period 2015-2017. Although it is reasonable to

______Ascopiave Group – Annual Financial Report as at 31 st December 2014 109 Ascopiave Group ______believe that some tenders will be launched and awarded before 31 st December 2017 – even assuming that the duration of tender procedures is sufficiently extended – the Economic and Financial Plan - and consequently also the assessment methods adopted to determine the use value of the gas distribution CGU - is based on the assumption that the Group, during the three-year period 2015-2017, will maintain the management of the current portfolio of concessions. In March 2015, Law 11/2015 provided for an extension of the time limits for the issue of invitations to tenders of the territorial areas belonging to the first batch.

With reference to the activity of gas distribution, it was hypothesised that in the period 2015-2017 the management would generate financial flows in line with those envisaged in the Economic and Financial Plan 2015-2017 while, considering the uncertainty that bears on the renewal of concessions, it has been decided to estimate the final value of the gas distribution CGU by hypothesising two alternative scenarios:

• scenario 1: the Group obtains in 2017 the renewal of all the concessions and credits in effect on 31 st December 2014; • scenario 2: the Group ends the activity of gas distribution in 2017, realising the return value of the plants as per Art. 15 of Legislative Decree no. 164/2000, as amended by the new regulations (Law 9/2014 and Law 116/2015);

With reference to scenario 1, the terminal has been estimated as an estimate of perpetuity as from the last year specified in the financial forecasts, and considering the economic terms and conditions of the renewals. The growth factor (g) used for the purpose of calculating the terminal value, has been estimated at 1.5%, in line with the inflation rate forecasts elaborated by the International Monetary Fund for 2019.

The cost of capital (WACC) of the gas distribution CGU was calculated assuming:

a) an average beta unlevered sector coefficient, as indicated by the AEEG in Resolution 573/2013/R/GAS dated 12 th December 2013; b) the level of financial leverage (ratio between financial debt and own means) is in line with the financial structure of reference presumed by the AEEG to the end of tariff regulation in Resolution 573/2013/R/GAS dated 12 th December 2013; c) the market risk equal to 5%, in line with previous year; d) the Risk-Free Rate adopted - equal to net yields on 10-year government bonds recorded as peak value as of 31 st December 2014. e) the cost of debt equal to the annual average of 10-year Euro-Swap, calculated on 31 st December 2014 and increased by a 3% spread.

On the basis of these elements, the average weighted cost of the post-tax capital is equal to 5.21%. These rates have been used for updating cash flows in the period provided for by the Plan 2015-2017. The cost of capital used to determine the value of the perpetuity and the rate of discounting of the terminal value is equal to 5.84% and was calculated on the basis of the above parameters and providing for an "additional risk premium

______Ascopiave Group – Annual Financial Report as at 31 st December 2014 110 Ascopiave Group ______

"for the calculation of the cost of equity (Ke) of 1.0%, to take into account the uncertainty on the possible renewal of the concessions and their conditions of renewal.

On the basis of these elements, for both scenario (i) and (ii), the recoverable value of the gas distribution CGU is higher than the accounting values and therefore the conditions are not met to proceed to devaluing the goodwill for depreciation.

The results obtained have undergone sensitivity tests, in order to find out how the result of this assessment process might vary depending on the change of profitability parameters assumed in future cash flows, of the growth rate considered upon determining the terminal value or of the discount rate to discount the cash flows. This analysis has led the Directors to evaluate that the expected cash flows can absorb normal variations of the parameters highlighted with respect to the sensitivity analyses generally performed in assessment practice.

The Directors have identified - in scenario 1 - which discount rate value and which variation in EBITDA considered upon performing the impairment test could result in a use value equal to the book value of the net assets associated with the Distribution CGU. This additional sensitivity analysis has led to identify the breakeven point of the CGU with a discount rate of 6.4%, or an average decrease in EBITDA equal to 9%.

The Directors have finally identified - in scenario 2 - which discount rate value and which variation in plants reimbursement values considered upon performing the impairment test could result in a use value equal to the book value of the net assets associated with the Distribution CGU. This additional sensitivity analysis has led to identify the breakeven point of the CGU with a discount rate of 10.3%, or an average decrease in reimbursement values equal to 18%.

The estimate of the recoverable value of the cash generating units requires discretion and the use of estimates by the management. Several factors related to the evolution of the difficult regulatory context could require a reassessment of any impairment losses. The circumstances and events that could cause a further verification of impairment losses are constantly monitored by the Company.

With reference to the activity of natural gas sale, cash flows used to calculate the recoverable value implement the forecasts made by management for the period 2015-2017. The terminal value has been estimated as an estimate of a perpetuity based on results expected for 2018, year in which a reduction in margins in line with the tariff regulation is expected. The growth factor (g) used for the purpose of calculating the terminal value, has been estimated at 1.5%, in line with the inflation rate forecasts elaborated by the International Monetary Fund for 2019.

The cost of capital (WACC) of the gas sale CGU was calculated assuming:

a) a coefficient beta unlevered determined on the basis of beta unlevered related to a sample of comparable companies (listed local utilities);

______Ascopiave Group – Annual Financial Report as at 31 st December 2014 111 Ascopiave Group ______

b) the level of financial leverage (ratio between financial debt and own means) in line with the financial structure of reference (Italian multi-utility companies); c) a market risk equal to 5%, in line with market practice; d) the Risk-Free Rate equal to the annual average of the gross rate of return on 10-year Italian government bonds recorded as of 31 st December 2014; f) the cost of debt equal to the annual average of 10-year Euro-Swap, calculated on 31 st December 2014 and increased by a 3% spread. e) an additional risk premium for the cost of equity (Ke), equal to 2.0%, to account for the specific risks of the business, the negative phase of the economic cycle and the fiercer competition on the market.

On the basis of these elements, the average weighted cost of the post-tax capital is equal to 6.00%. These rates have been used for updating cash flows in the period provided for by the Plan 2015-2017. The cost of capital used to determine the value of the perpetuity and the rate of discounting of the terminal value is equal to 6.46% and was calculated on the basis of the above parameters and providing for a further "additional risk premium" or the calculation of the cost of equity (Ke) of 1.0%, to take into account the uncertainty about future changes in the regulatory framework and their impact on marginality.

Considering the other hypotheses described, the recoverable value of financial flow-generating units for gas sales is higher than the accounting values and therefore the conditions are not met to proceed to devaluing the goodwill for depreciation.

The results obtained have undergone sensitivity tests, in order to find out how the result of this assessment process might vary depending on the change of profitability parameters assumed in future cash flows, of the growth rate considered upon determining the terminal value or of the discount rate to discount the cash flows. This analysis has led the Directors to evaluate that the expected cash flows can absorb normal variations of the parameters highlighted with respect to the sensitivity analyses generally performed in assessment practice.

The Directors have finally identified which discount rate value and which variation in EBITDA considered upon performing the impairment test could result in a use value equal to the book value of the net assets associated with the Distribution CGU. This additional sensitivity analysis has led to identify the breakeven point of the CGU with a discount rate of 16.7%, or an average decrease in EBITDA equal to 64%.

The estimate of the recoverable amount of the cash generating units requires discretion and the use of estimates by the management. Several factors could require a reassessment of any impairment losses. The circumstances and events that could cause a further verification of impairment losses are constantly monitored by the Company.

2. Other intangible fixed assets

The changes in the historical cost and accumulated amortization of other intangible assets at the end of the period under examination are shown in the following table:

______Ascopiave Group – Annual Financial Report as at 31 st December 2014 112 Ascopiave Group ______

31.12.2014 31.12.2013 Historic Accumulated Accumulated Net value Historic cost Net value (Thousands of Euro) cost depreciation depreciation Industrial patent and intellectual property rights 4,706 (4,129) 577 4,618 (3,914) 703 Concessions, licences, trademarks and similar rights 9,933 (3,356) 6,577 9,933 (2,605) 7,327 Other intangible assets 25,632 (12,341) 13,291 22,698 (9,836) 12,862 Tangible assets under IFRIC 12 concession 500,850 (216,958) 283,892 484,662 (203,434) 281,228 Intangible assets in progress under IFRIC 12 concession 9,435 0 9,435 7,363 0 7,363 Other intangible assets 550,556 (236,784) 313,772 529,274 (219,790) 309,484

The changes in the inventory allowance for intangible assets in the year under examination are shown in the following table:

31.12.2013 31.12.2014

Change for Amortizations Net value Decrease Depreciations Net value the year during the year (Thousands of Euro) Industrial patent and intellectual property rights 703 40 0 166 0 577 Concessions, licences, trademarks and similar rights 7,327 0 0 751 0 6,577 Other intangible assets 12,862 2,926 0 2,498 0 13,291 Tangible assets under IFRIC 12 concession 281,228 17,498 1,368 14,255 (789) 283,892 Intangible assets in progress under IFRIC 12 concession 7,363 2,101 29 0 0 9,435 Other intangible assets 309,484 22,565 1,396 17,669 (789) 313,772

The investments made during the financial year amount to Euro 22,565 thousand and they mainly refer to costs incurred for the realization of the infrastructures for natural gas distribution for a total amount of Euro 19,599 thousand which include fixed assets under construction at the end of the period and the variation of the other intangible fixed assets for Euro 2,926 thousand.

Industrial patents and intellectual property rights During the period considered, the item “Industrial patents and intellectual property rights” shows an increase equal to Euro 40 thousand. The investment mainly relates to costs incurred for software implementation and purchase.

Concessions, licences, trade-marks and similar rights This item includes costs paid to awarding entities (Municipalities) and/or outgoing operators after the award and/or the renewal of the relevant tenders for the assignment of the natural gas distribution service, rather than the costs incurred for the acquisition of licenses. During the year, the item did not register increases and the variation is explained by amortization. The assignments obtained, following the implementation of Legislative Decree no. 164/00 (Letta Decree), are amortized with a useful life of 12 years in compliance with the period provided for by the decree.

Other intangible fixed asset

This item includes the fair value of customer lists that result from the acquisition of companies operating in the sale of natural gas and electricity that occurred in previous years. The increase recorded during the year pertains to the fair value of Veritas Energia S.p.A.,'s customer list, for Euro 2,920 thousand, following the acquisition of the remaining shares as described in section "Combinations" of this annual financial report. The analysis of customers switching performed at the end of the year has not highlighted any switch-out percentages above the expected depreciation percentage, and therefore its useful life (10 years) has not required any changes or impairments.

Leased plants and machinery The item reports the costs incurred into for the construction of facilities and distribution network of natural gas, the ______Ascopiave Group – Annual Financial Report as at 31 st December 2014 113 Ascopiave Group ______related connections as well as for the installation of measurement and reduction groups. The investments for the construction of infrastructure suitable for the distribution of natural gas, including the reclassification of intangible assets under construction, amount to Euro 17,498 thousand, and mainly relate to the construction of the distribution plants for natural gas for Euro 2,442 thousand, to the construction of the distribution network for natural gas for Euro 4,585 thousand, the creation of connections for Euro 4,629 thousand and the installation of meters for Euro 5,366 thousand. The latter are mainly related to the campaign to replace of the so-called traditional meters with electronic meters, in compliance with AEEGSI resolution 155, as well as the net divestures during the year which amount to Euro 789 thousand. It should be noted that the activity of implementing the network of natural gas has involved the installation of 40.4 km of pipelines. The infrastructures located in Municipalities in which the invitation to tender for the distribution of natural gas has not been launched, are depreciated by applying the lower amount between the technical life of plants and the useful life indicated by the AEEGSI in tariff regulations. The technical life of plants has been assessed by an independent external expert who has determined the technical obsolescence of the infrastructures. The analysis carried out at the end of the fiscal year as concerns the distribution CGU, performed in order to verify the recoverability of the entire capital invested, has shown no indicators of impairment of the assets recorded.

Intangible assets in progress under concession The item includes the costs incurred into for the building of the natural gas distribution plants and systems constructed partially on a time and materials basis and not completed at the end of the period considered. The item involved investments amounting to Euro 2,101 thousand.

3. Tangible assets

The changes in the historical cost and accumulated amortization of tangible assets at the end of the period under examination are shown in the following table:

31.12.2014 31.12.2013 Accumulated Accumulated Historic cost Depreciation Net value Historic cost Depreciation Net value (Thousands of Euro) depreciation depreciation Lands and buildings 36,575 (7,535) 0 29,040 36,728 (6,566) 0 30,161 Plant and machinery 4,576 (1,622) 0 2,954 4,799 (1,481) 0 3,318 Industrial and commercial equipment 3,051 (2,361) 0 690 2,932 (2,185) 0 747 Other tangible assets 14,721 (11,297) 0 3,424 13,868 (10,444) 0 3,424 Tangible assets in progress and advance payments 506 0 0 506 331 0 (140) 191 Other tangible assets 59,428 (22,815) 0 36,614 58,658 (20,677) (140) 37,840

The changes in the inventory allowance for tangible assets in the year under examination are shown in the following table:

31.12.2013 31.12.2014

Change for the Amortizations Net value Decrease Revaluation Depreciations Net value year during the year (Thousands of Euro) Lands and buildings 30,161 314 467 1,099 0 (130) 29,040 Plant and machinery 3,318 9 233 282 0 (142) 2,954 Industrial and commercial equipment 747 184 8 239 0 (6) 690 Other tangible assets 3,424 963 268 944 0 (249) 3,424 Tangible assets in progress and advance payments 191 177 2 0 140 0 506 Other tangible assets 37,840 1,647 978 2,564 140 (528) 36,614

Land and buildings This item is mainly made up of the buildings owned in relation to company offices, peripheral offices and warehouses. At the end of the period, the item recorded investments equal to Euro 314 thousand made for the modernization and

______Ascopiave Group – Annual Financial Report as at 31 st December 2014 114 Ascopiave Group ______extraordinary maintenance of the corporate headquarters. The net decreases recorded, amounting to Euro 467 thousand, are explained by the sale by the subsidiary Blue Meta S.p.A. of the methane gas distribution plant located in a service area in the Municipality of Nembro.

Plants and machinery The item "Plants and machinery" decreases from Euro 3,318 thousand in the previous year, to Euro 2,954 thousand as of 31 st December 2014. The decreases recorded in the reference period are explained by the sale by the subsidiary Blue Meta S.p.A. of the methane gas distribution plant located in a service area in the Municipality of Nembro.

Industrial and commercial equipment The item “Industrial and commercial equipment” in the period considered has registered investments equal to Euro 184 thousand. The item includes costs incurred for the purchase of equipment for the maintenance service of the distribution plants and for measurement activity.

Other assets The investments made during financial year 2014, increased the item “Other assets” by Euro 963 thousand and they mainly relate to the costs incurred for the purchase of hardware for Euro 316 thousand, corporate vehicles for Euro 396 thousand and furniture for Euro 51 thousand.

Tangible assets in progress and advance payments The item essentially includes the costs concerning the construction of cogeneration plants built partially on a time and materials basis. The write-ups, amounting to Euro 140 thousand, are explained by the recovery of the fixed assets recorded for the construction of a cogeneration plant located in the province of Venice which had been written down in the previous year. The finalization of the agreements, which occurred during the period, allowed the resumption of the works necessary to complete the construction.

4. Shareholdings

The following table shows the changes in the shareholdings in joint companies and in other companies at the end of each period considered:

31.12.2013 31.12.2014

Net value Increase Decrease Net value (Thousands of Euro) Shareholdings in jointly controlled companies 72,421 3,225 (10,193) 65,453 Shareholdings in subsidiary companies 0 0 Shareholdings in other companies 1 1 Shareholdings 72,421 3,225 (10,193) 65,453

Investments in jointly controlled companies

As of 31 st December 2013, the Group held four investments in joint ventures: - Estenergy S.p.A.; - ASM Set S.r.l.;

______Ascopiave Group – Annual Financial Report as at 31 st December 2014 115 Ascopiave Group ______

- Unigas Distribuzione S.r.l.; - Veritas Energia S.p.A..

As of 31 st December 2014, as already mentioned in the previous paragraphs, following the acquisition of the remaining 49% stake of Veritas Energia S.p.A., the Group only holds three joint ventures, because Veritas Energia S.p.A. is fully consolidated. In accordance with IAS 31 Interests in Joint Ventures (before the transition to IFRS 11), the shares of assets, liabilities, income and expenses of these companies attributable to the Group were proportionally consolidated until 31 st December 2013. With the adoption of IFRS 11, they were accounted for using the equity method. The economic and financial effects on the interim financial statements at 31 st December 2013 and on the consolidated financial statements at 31 st December 2013, restated following the adoption of the new IFRS 11, are highlighted in the description of the new accounting standards and interpretations adopted by the Group. Interests in Joint Ventures decrease from Euro 72,421 thousand to Euro 65,453 thousand marking a net decrease of Euro 6,968 thousand. In particular, the decrease of Euro 10,193 thousand is explained for Euro 3,663 thousand by the line-by-line consolidation of Veritas Energia S.p.A. and for Euro 6,520 by the distribution of dividends by Estenergy S.p.A. (Euro 4,656 thousand), by Unigas Distribuzione S.r.l. (Euro 1,271 thousand), by ASM Set S.r.l. (Euro 593 thousand). The increase of Euro 3,225 thousand is related to the results of the jointly controlled entities in 2014. The valuation of investments in joint ventures using the equity method and the economic and financial data of these companies are shown in the section "Synthesis data as of 31 st December 2014 of jointly controlled companies consolidated using the equity method" of the Explanatory Notes.

Shareholdings in affiliate companies

Sinergie Italiane S.r.l. in liquidation

The Group has shareholdings in the affiliate Sinergie Italiane S.r.l., company in liquidation, which meets part of the needs for natural gas amounting to 30.94%. The associate closes its financial year on 30 th September. The scope of activity of the associate company during the financial year 2013-2014 only included the import of Russian gas and its transfer to the sales companies in which shareholders hold a stake as well as the management of agreements, transactions and disputes concerning the regulation of contractual relations, finalised before to the liquidation. It should be noted that during the month of August 2013, the associate completed the renegotiation of natural gas purchase prices envisaged by the "Take or pay" agreements with the supplier "Gazprom Export LLC"; the economic benefit resulting from the renegotiation will be extended to the two-year periods 2013-2014 and 2014-2015. Based on the results of the financial statements for the year 2013-2014, as approved by the Shareholders' meeting on 26 th February 2015 and on preliminary operating data of financial year 2014-2015 restated in accordance with international accounting principles, considering the associate on a going concern basis, the accumulated capital deficit amounts to Euro 22,119 thousand attributable to the Ascopiave Group. Given that the capital deficit of the affiliate company as of 31 st December 2013 amounted to Euro 26,089 thousand, of which Euro 8,072 thousand attributable to the Ascopiave Group, the Directors have adjusted the related provision for risks and charges allocated against the capital deficit of the affiliate company for Euro 1,228 thousand with a positive impact on the profit and loss statement.

______Ascopiave Group – Annual Financial Report as at 31 st December 2014 116 Ascopiave Group ______

The essential data of the shareholdings in the subsidiary as of 31 st December 2014, 30 th September 2014 and 31 st December 2013 are reported below:

(Values referred to pro-rata partecipation gross of consolidation 31/12/2014 30/09/2014 31/12/2013 adjustments in Million of Euro )

Non-current assets 3.83 3.89 5.27 Current assets 9.12 10.11 27.36 Net equity (6.67) (7.14) (7.88) Non-current liabilities 0.00 0.91 0.46 Current liabilities 18.83 20.23 40.06

Revenues 11.67 95.57 28.68 Costs (11.11) (91.59) (27.57) Gross operative margin 0.56 3.98 1.11 Amortization and depreciation (0.06) (2.12) (1.46) Operating result 0.50 1.95 (0.35) Net result 0.47 0.46 (0.30)

NFP 3.98 4.12 15.06

The Directors point out that, compared to the provisional data presented in the interim report for year ended 30 th September 2014, the net profit of the associate as of 30 th September 2014 marks a decrease of Euro 5,956 thousand of which 1,843 thousand attributable to the Ascopiave Group. The change is mainly explained by the write-down of burdensome assets related to the import capacity on international pipelines due to the current oversupply of gas to the national market and to the release of Euro 3,908 thousand of deferred tax receivables that have no counterpart in the allocation of additional receivables because of the expiration on 30 th September 2015 of the mandate of the liquidation committee. The operating management of the subsidiary in the reporting period was positive for Euro 6,015 thousand, allowing the recovery of the significant effort due to write- downs and taxes.

5. Other non-current assets

31.12.2014 31.12.2013 (Thousands of Euro) Security deposits 12,779 18,104 Other receivables 3,963 6,128 Other non-current assets 16,741 24,232

The item is mostly made up of security deposits that the companies selling natural gas have issued for the monthly payments due for the import of gas from Russia. Other non-current assets decrease from Euro 24,232 thousand to Euro 16,741 thousand marking a decrease of Euro 9,203 thousand net of the consolidation effect of Veritas Energia S.p.A. for Euro 1,712 thousand. This change is primarily due to the collection of part of the security deposit that the subsidiary Ascotrade S.p.A. had paid Sinergie Italiane S.r.l. in liquidation; in particular, Ascotrade S.p.A. collected Euro 5,515 thousand as compared to the payment made by way of security deposit on 31 st December 2013. The other items in "Other receivables" are made up of: - Receivables from the Municipality of Creazzo, for a value of Euro 1,678 thousand, corresponding to the net book

______Ascopiave Group – Annual Financial Report as at 31 st December 2014 117 Ascopiave Group ______

value of the distribution plants delivered in June 2005 to the above-mentioned local authority. The delivery of said infrastructures occurred following the date of expiry of the concession. The value of the receivables from the municipality corresponds to what the municipality of Creazzo has been asked to retrocede, as per the 'Letta' legislative decree, article 15, paragraph 5, as indemnification of the industrial value of the network, in line with the estimations outlined in a suitable appraisal. During the financial year the litigation with the municipality, aimed at defining the reimbursement value of the distribution plant delivered, ended with the judgment of the Court of Vicenza, which established that the reimbursement value amounts to Euro 1,678 thousand, following which Euro 463 thousand were written down. The Company expects to recover the write-down with the evolution of the successive stages of the dispute. - Receivables from the Municipality of Santorso, for Euro 748 thousand. The value corresponds to the net book value of the distribution plants delivered in August 2007 to the same municipality; the delivery of said infrastructures occurred following the date of expiry of the concession, on 31 st December 2006. The value of the receivables from the municipality corresponds to what the municipality of Santorso has been asked to retrocede as per the 'Letta' legislative decree, article 15, paragraph 5, as indemnification of the industrial value of the network, in line with the estimations outlined in a suitable appraisal. - Receivables from the municipality of Costabissara, for Euro 1,537 thousand. This amount corresponds to the net book value of the distribution systems delivered on 1 st October 2011.

As of 31 st December 2014, there are on-going litigations with the municipalities mentioned above in order to define the value of compensation of the delivered distribution systems. The Group, also following the opinion of its legal advisors, believes that the result of the litigation and arbitration procedures is uncertain.

6. Non-current financial assets

The following table shows the breakdown of Non-current financial assets at the end of each period considered:

31.12.2014 31.12.2013 (Thousands of Euro) Long-term bonds, securities and financial deposits 2,838 Other financial receivables more than 12 months 286 916 Non-current financial assets 3,124 916

As of 31 st December 2014, in the item are recorded non-current financial assets for Euro 3,124 thousand, marking an increase of Euro 2,208 thousand as compared to 31 st December 2013. Long-term bonds, securities and financial deposits are related to the purchase of two-year repurchase agreements through the cash deposited by Veritas S.p.A. as a security deposit envisaged as a guarantee on trade receivables of Veritas Energia S.p.A. when Ascopiave S.p.A. purchased 49% of Veritas Energia S.p.A. for Euro 2,838 thousand. As concerns this guarantee, as of 31 st December 2014, Veritas Energia S.p.A. wrote off Euro 901 thousand. Financial receivables beyond 12 months for Euro 286 thousand relate to Ascopiave's receivables from the Municipality of San Vito Leguzzano, due by 30 th June 2016.

______Ascopiave Group – Annual Financial Report as at 31 st December 2014 118 Ascopiave Group ______

The change, compared to 31 st December 2013, is explained by the reclassification of receivables, whose due date is 30 th June 2015, that Ascopiave S.p.A. should collect from the Municipality of San Vito Leguzzano and that the subsidiary Amgas Blu S.r.l. should collect from Amgas S.p.A., recognized in current financial receivables.

7. Advance tax receivables

The following table highlights the balance of advance tax receivables at the end of each period considered:

31.12.2014 31.12.2013 (Thousands of Euro) Advance tax receivables 12,814 15,455 Advance tax receivables 12,814 15,455

Advance taxes decrease from Euro 15,455 thousand to Euro 12,814 thousand, marking a decrease of Euro 5,253 thousand net of the consolidation effect of Veritas Energia S.p.A. for Euro 2,612 thousand. The decrease recorded in this item was due to the following effects: - The evolution of the regulatory framework governing tax deductibility of minimum receivables pursuant to Law Decree dated 22 nd June 2012 no. 83; this regulatory change resulted in a re-absorption of advance tax receivables allocated to the value - exceeding the quota fiscally recognized - of the bad debts provision for an amount equal to Euro 3,095 thousand; - The effect of the judgment of the Constitutional Court filed on 13 th February 2015 which declared unenforceable commencing 2015 the IRES tax surcharge on energy companies. As a result of this change, the Group has adjusted the value of deferred taxes also calculated in the IRES surcharge, posting Euro 1,919 thousand to the income statement due to the fact that, when the temporary differences will be carried forward, the tax effect previously hypothesized for this higher tax rate will no longer be recoverable. The total value of the temporary differences and the related amounts on which advance tax assets were recognized are as follows:

31/12/2014 31/12/2013 Temporary Temporary Description Tax rate Total effect Tax rate Total effect differences differences Allocation of bad debt provisions 8,196 27.5% 2,254 11,574 34.0% 3,935 Allocation of inventory write-down 27 31.7% 9 413 38.2% 158 Other - IRES 27.5% + IRAP 4.2% 2,529 31.7% 802 3,619 31.7% 1,147 Risks fund 250 31.7% 79 0 42.2% - Exceeding amortizations within 2013 12,842 31.7% 4,071 12,496 38.2% 4,773 Other 0 27.5% 0 383 38.2% 146 Concessional canons deductible in future period 746 27.5% 205 1,870 34.0% 636 Phatom stock opt ion+risks fund 214 31.4% 67 72 34.0% 24 Customer lists - goodwill 1,166 27.5% 321 395 37.9% 150 Other - IRES 27,5% 728 27.5% 200 943 27.5% 259 IRES exceeding amortizations 16,761 27.5% 4,609 11,803 34.0% 4,013 Other - gas sale IRES 27,5% + IRAP 3,9% 627 31.4% 197 563 37.9% 213 Total advance taxes 44,086 12,814 44,130 15,455

Current assets

8. Inventories

______Ascopiave Group – Annual Financial Report as at 31 st December 2014 119 Ascopiave Group ______

The following table shows how the items are broken down for each period considered:

31.12.2014 31.12.2013 Gross Bad debt Net Gross Bad debt Net value provision value value provision value (Thousands of Euro) Fuels and warehouse materials 2,509 (27) 2,482 2,460 (413) 2,047 Fuels and warehouse materials 2,509 (27) 2,482 2,460 (413) 2,047

As of 31 st December 2014, inventories are equal to Euro 2,482 thousand and show an overall increase equal to Euro 435 thousand as compared to 31 st December 2013. The warehouse materials are used for maintenance works or for the construction of distribution plants. In the latter case materials are reclassified as Tangible Fixed Assets once installation is complete. Inventories are shown as net values under the devaluation inventory fund and are equal to Euro 27 thousand, in order to adapt their value to the opportunity of their use or realization of the assets. The analyses performed on rotation of codes and their residual usability, but especially the effects of warehouse centralized management, have resulted in the ability to determine a new and lower bad debt provision, entailing a post to the income statement equal to Euro 386 thousand.

9. Trade receivables

The following table shows how the items are broken down for each period considered:

31.12.2014 31.12.2013 (Thousands of Euro) Receivables from customers 85,612 89,057 Receivables for invoices to be issued 80,758 90,002 Bad debt provisions (18,566) (12,770)

Trade receivables 147,804 166,289

Trade receivables decreased from Euro 166,289 thousand to Euro 147,802 thousand marking a decrease of Euro 51,390 thousand net of the consolidation effect of Veritas Energia S.p.A. for Euro 32,905 thousand. The decrease is mainly explained by the unfavourable thermal conditions recorded during the months of November and December 2014 which have affected, by reducing them, the consumptions of the household market; this effect was partially offset by the consolidation of receivables of the company Veritas Energia S.p.A.. Receivables from customers are owed from national debtors and are expressed net of the billing down payments and are payable within the following 12 months. As of 31 st December 2014, the Group recognizes trade receivables due after the end of the year sold without recourse for Euro 6,837 thousand, of which Euro 2,310 thousand relating to the sales of the subsidiary Veritas Energia S.p.A., Euro 3,863 thousand relating to sales performed by the subsidiary Ascotrade S.p.A. and Euro 664 thousand for the sales of the subsidiary Blue Meta S.p.A.. During financial year 2014, non-recourse loans were sold for a total amount of Euro 11,857 thousand, of which Euro 7,330 thousand implemented by Veritas Energia S.p.A., Euro 3,863 thousand performed by Ascotrade S.p.A. and Euro 664 thousand carried out by Blue Meta S.p.A.. ______Ascopiave Group – Annual Financial Report as at 31 st December 2014 120 Ascopiave Group ______

The balance, equal to Euro 147,804 thousand, includes Euro 80,758 thousand (Euro 90,002 thousand as of 31 st December 2013) of receivables relating to invoices to be issued for consumption not measured at closure on 31 st December 2014. The adjustment of the nominal value of receivables to the break-up value was achieved by means of the corresponding receivable devaluation fund. The provision increase, equal to Euro 5,796 thousand, is mainly explained by the significant demand for instalment payments by customers, the seasonal nature of business cycle and the increase in provision uses for Euro 4,968 thousand, mainly due to the recent tax law on mini-loans which has entailed a change in debt collecting, with the consequent elimination from the financial statements of receivables which have the characteristics required to obtain the deduction provided for by that law. The higher provisions with respect to 2013 are mainly due to the extension of the consolidation area and the increase in the provision uses, partially offset by the effect of the reduction in turnover recorded in 2014 as compared to 2013, which resulted in a reduced need for writing down the most recent receivables. The changes in the provision for doubtful accounts are shown in the following table:

31.12.2014 31.12.2013 (Thousands of Euro) Bad debt provisions 12,770 10,963 Bad debt provisions from acquisitions 6,435 Provisions 6,819 6,039 Use (7,459) (2,491) Final bad debt provision 18,566 12,770

The following table highlights the composition of accounts receivables for invoices issued based on ageing, highlighting the capacity of the allowance for doubtful accounts as compared to receivables with higher ageing:

(Thousands of Euro) 31 st December 2014 31 st December 2013 Gross trade receivables for invoices issued 85,612 89,057 - allowance for doubtful accounts 18,566 12,770 Net trade receivables for invoices issued 67,046 76,287

Aging of trade receivables for invoices issued: - to expire 53,068 66,041 - expired within 6 months 10,789 8,859 - overdue by 6 to 12 months 6,707 5,815 - expired more than 12 months 15,049 8,342

10. Other current assets

The following table shows the composition of the other current assets at the end of the period considered:

______Ascopiave Group – Annual Financial Report as at 31 st December 2014 121 Ascopiave Group ______

31.12.2014 31.12.2013 (Thousands of Euro) Tax consolidation receivables 3,723 3,149 Annual pre-paid expenses 822 433 Advance payments to suppliers 5,878 3,070 annual accrued income 235 Receivables due from Conguaglio Settore Elettrico 25,560 16,280 VAT Receivables 4,289 5,654 UTF and Provincial/Regional Additional Tax receivables 33,360 5,709 Other receivables 104 292 Other current assets 73,973 34,588

Other current assets increased from Euro 34,588 thousand to Euro 73,973 thousand marking an increase of Euro 33,844 thousand net of the effect of consolidation of Veritas Energia S.p.A. for Euro 5,541 thousand. The variation is mainly explained by the increase in receivables for the tariff and equalisation components towards the Cassa Conguaglio Settore Elettrico for Euro 9,280 thousand, the increase in receivables from the Agenzia delle Dogane (Customs Office) for Euro 20,707 thousand (Euro 2,515 thousand - Veritas Energia S.p.A.), the increase in receivables for tax consolidation for Euro 571 thousand (Euro 3 thousand – Veritas Energia S.p.A.) from the parent company Asco Holding S.p.A. with reference to the companies of the Group which have adopted this option and the increase in prepaid expenses for Euro 310 thousand (Euro 111 thousand – Veritas Energia S.p.A.) relating to insurance and maintenance, partially offset by the decrease in VAT receivables for Euro 2,460 thousand (Euro 71 thousand - Veritas Energia S.p.A.). The variation of UTF (Customs Office) and Regional/provincial surtax receivables is related to the modality of payment of taxes on consumption based on the monthly billings to end users as opposed to monthly advances envisaged by the tax returns in the first months of the year and based on the consumption of previous year.

11. Current financial assets

The following table shows the composition of the other current assets at the end of the period considered:

31.12.2014 31.12.2013 (Thousands of Euro) Jointly controlled companies 7,281 14,228 Affiliated companies 953 2,637 Current financial assets 8,234 16,865

The current financial assets decrease from Euro 16,865 thousand to Euro 8,234 thousand marking a decrease of Euro 10,016 thousand net of the effect of consolidation of Veritas Energia S.p.A. for Euro 1,385 thousand. The decrease in receivables from jointly controlled companies related to current accounts, is equal to Euro 6,947 thousand and is attributable for Euro 2,902 thousand to the full consolidation of Veritas Energia S.p.A., for Euro 3,430 thousand to the decrease in the balance towards Estenergy S.p.A. and for Euro 615 thousand to the decrease in the exposure to Asm Set S.r.l.. The changes in the item Other current financial assets are related to the receivables due to the Parent Company and the ______Ascopiave Group – Annual Financial Report as at 31 st December 2014 122 Ascopiave Group ______subsidiary Amgas Blu S.r.l. from the Municipality of San Vito Leguzzano and Amgas S.p.A. as described in the paragraph "Other non-current assets" of this document.

12. Tax receivables

The following table shows the composition of tax receivables at the end of each period considered:

31.12.2014 31.12.2013 (Thousands of Euro) Receivables related to IRAP 1,041 263 Receivables related to IRES 3,444 542 Other tax receivables 352 338 Tax receivables 4,837 1,142

Tax receivables increased from Euro 1,142 thousand to Euro 4,837 thousand, marking an increase of Euro 3,627 thousand net of the effect of consolidation of Veritas Energia S.p.A. for Euro 68 thousand. The item includes the residual credit, minus the taxes for 2014, of the IRAP advances paid and the IRES advances for the companies that do not adhere to the Group tax consolidation system.

13. Cash and cash equivalents

The following table shows how the items are broken down for each period considered:

31.12.2014 31.12.2013 (Thousands of Euro) Bank and post office deposits 100,867 11,754 Cash and cash equivalents on hand 16 18 Cash and cash equivalents 100,882 11,773

The cash and cash equivalents increased from Euro 11,773 thousand to Euro 100,882 thousand, marking an increase of Euro 86,060 thousand net of the effect of consolidation of Veritas Energia S.p.A. for Euro 3,049 thousand and they mainly refer to the bank accounting balance and to the company funds. The significant increase in bank and postal deposits is mainly due to arbitrage transactions on interest rates performed by the Parent company at the end of the period of reference, through which excess of liquidity and short-term lines of credit were used with sight deposits at major banks featuring high ratings, benefitting from the interest rate differential. For a better understanding of the variations of cash flows in the period, please refer to the consolidated financial statement.

Net financial position At the end of the periods considered, the net financial position of the Group is the following:

______Ascopiave Group – Annual Financial Report as at 31 st December 2014 123 Ascopiave Group ______

31.12.2014 31.12.2013 (Thousands of Euro)

Cash and cash equivalents 100,882 13,328 Current financial assets 8,234 15,579 Current financial liabilities (217) (1,652) Payables due to banks and financing institutions (184,851) (93,458) (64) (61)

Net short-term financial position (76,015) (66,263)

Non current financial assets 3,124 916 Medium and long-term bank loans (53,456) (63,201) Non-current financial liabilities (3,327) (552)

Net medium and long-term financial position (53,659) (62,838)

Net financial position (129,673) (129,101)

For comments on the main dynamics that caused changes in the net financial position, please refer to the analysis of the Group's financial data reported under the paragraph "Comments on the economic and financial results of financial year 2014" of the report on management and under the paragraph "Medium- and long-term loans" of these Interim financial statements .

______Ascopiave Group – Annual Financial Report as at 31 st December 2014 124 Ascopiave Group ______

Consolidated shareholders’ equity

14. Net shareholders' equity

Ascopiave S.p.A.'s share capital as of 31 st December 2014 is made up of 234,411,575 ordinary shares, fully subscribed and paid, with a par value of Euro 1 each. The shareholders' equity at the end of the periods considered is analysed in the following table:

31.12.2014 31.12.2013 (Thousands of Euro)

Share capital 234,412 234,412 Legal reserve 46,882 46,882 Own shares (17,660) (17,660) Reserves 106,139 95,377 Group's Net Result 35,583 38,678

Net equity of the Group 405,357 397,689

Net equity of Others 2,560 2,628 Third parties Net Result 1,750 2,361

Net equity of Others 4,310 4,989

Total Net equity 409,666 402,679

In 2014, the variations in the consolidated net equity, excluding the result achieved in the period, were due to the business combination of Veritas Energia S.p.A. which generated lower reserves for Euro 1,000 thousand, as explained in the section “Business Combinations” of this interim report, the distribution of dividends by the Parent company for Euro 26,666 thousand and the distribution of dividends to Third-party Shareholders by the subsidiary companies Ascotrade S.p.A. and Amgas Blu S.r.l. respectively for Euro 2,059 thousand and Euro 368 thousand. In addition, we specify a negative variation for Euro 253 thousand related to actuarial losses on defined benefits plans following the application of IAS 19R.

Net equity of minority interests

This item includes the net assets and the result not attributable to the Group, and refers to third party shares of the subsidiaries Ascotrade S.p.A., Etra Energia S.r.l., Amgas Blu S.r.l..

______Ascopiave Group – Annual Financial Report as at 31 st December 2014 125 Ascopiave Group ______

Non-current liabilities

15. Reserves for risks and charges

The following table shows how the items are broken down for each period considered:

31.12.2014 31.12.2013 (Thousands of Euro) Other reserves for risks and charges 8,496 8,323 Provisions for risks and charges 8,496 8,323

Reserves for risks and charges increased from Euro 8,323 thousand to Euro 8,496 thousand marking a decrease of Euro 1,022 thousand net of the consolidation effect of Veritas Energia S.p.A. for Euro 1,195 thousand. The variation is mainly explained by the decrease in the provisions for risks related to Sinergie Italiane S.r.l. in liquidation for Euro 1,228 thousand and the use of the provision for contractual risks of Blue Meta S.p.A. for Euro 80 thousand following the sale of the distribution plant in Nembro, partially offset by the Euro 250 thousand provision of the Parent Company related to litigations with managers and/or ex managers of the Group and a provision of Euro 39 thousand for litigations with employees.

The changes in the period under examination are shown in the following table:

(Thousands of Euro) Reserves for risks and charges as of 1 st January 2014 8,323 Values from newly acquired companies 1,195 Provision for risks hedging losses for joint companies consolidated with the net equity method (1,228) Provisions for risks and charges 319 Use of provisions for risks and charges (114) st Provisions for risks and charges as of 31 December 2014 8,496

16. Severance indemnity

Severance indemnity increases from Euro 3,180 thousand as of 1st January to Euro 3,968 thousand as of 31 st December 2014 with an increase equal to Euro 70 thousand net of the consolidation effect of Veritas Energia S.p.A. for Euro 243 thousand.

(Thousands of Euro) st Severance indemnity as of 1 January 2014 3,180 Values from newly acquired companies 240 Retirement allowance (1,298) Payments for current services and work 1,462 Actuarial loss/(profits) in Financial Year 2014 (*) 384 st Severance indemnity as of 31 December 2014 3,968 * including the interest cost booked in the income statement

______Ascopiave Group – Annual Financial Report as at 31 st December 2014 126 Ascopiave Group ______

The liabilities for employee severance indemnities are measured using an actuarial method, its value is therefore sensitive to changes in assumptions. The main assumptions used in the measurement of severance indemnities are the discount rate, the annual average percentage of outgoing employees and the maximum retirement age of employees. The discount rate used for the measurement of the liability resulting from employee severance indemnity is determined with reference to the market yields of high quality fixed-income securities for which the due dates and amounts correspond to the due dates and amounts of future payments envisaged. For this plan, the average discount rate that reflects the estimated due dates and amounts of future payments relating to the 2014 plan is 1.49%. The main hypotheses of the model are: • mortality rate: survival table ANIA IPS55 • invalidity rate: INPS tables year 2000 • personnel rotation rate: 3.00% • increase in remuneration rate: 3.00% • inflation rate: 1.50% • anticipation rate: 2.00%

The current cost related to work performed is booked under Personnel costs, whereas, the interest cost, equal to Euro 97 thousand, is recognized in the item Financial income and expenses.

17. Medium- and long-term loans

The following table shows how the items are broken down for each period considered:

31.12.2014 31.12.2013 (Thousands of Euro) Loans from Prealpi 828 898 Loans from European Investment Bank 38,000 41,500 Loans from Cassa DD.PP. With direct guarantee 127 327 Loans from Cassa DD.PP. With guarantee from municipalities 215 476 Loans from Unicredit S.p.A. 14,286 20,000 Medium and long-term bank loans 53,456 63,201 Current portion of medium and long-term loans 9,745 9,784 Medium and long-term bank loans 63,201 72,985

Medium and long term loans, mainly represented as of 31 st December 2014 by the payables of the Parent Company to the European Investment Bank for Euro 41,500 thousand and Unicredit for Euro 20,000 thousand, decrease from Euro 72,985 thousand to Euro 63,201 thousand, marking a decrease of Euro 9,784 thousand, explained by the payment of the loan instalments during the year. Concerning the loan issued by the European Investment Bank, paid in two tranches in 2013 equalling Euro 45,000 thousand, its outstanding debt as of 31 st December 2014 is equal to 41,500 thousand, with Euro 3,500 thousand classified in due to banks and short-term loans. The first loan tranche, whose original amount was Euro 35,000 thousand, will be reimbursed in 18 constant six-month instalments between 27 th February 2015 and 28 th August 2023; an interest rate equal to the six-month Euribor plus a 95.5 basis points spread will be applied. The second loan tranche, whose original amount was Euro 10,000 thousand,

______Ascopiave Group – Annual Financial Report as at 31 st December 2014 127 Ascopiave Group ______will be reimbursed in 16 constant six-month instalments, the first expiring on 27 th February 2018 and the last expiring on 27 th August 2025; an interest rate equal to the six-month Euribor plus a 71.5 basis points spread will be applied, in addition to the annual cost of 135 basis points related to the guarantee issued by Cassa Depositi e Prestiti S.p.A.. As a guarantee of the fulfilment of the obligations associated with the loan agreement, the Parent Company has sold to the European Investment Bank a share of future receivables arising from the reimbursement of the value of assets related to gas distribution concessions. The loan agreement envisages the fulfilment of the following covenants applied to consolidated data and to be checked twice a year: a) Ebitda / net financial expenses ratio higher than 5; b) Net financial position / Ebitda ratio lower than 3.5. In addition, the bank is entitled to request a reimbursement before the deadlines envisaged by the amortization schedule, in the following cases: a) decrease in project cost below the amount originally envisaged by the contract; b) anticipated reimbursement of non-EIB loans (except revolving lines of credit); c) change in the control of Ascopiave S.p.A. or Asco Holding S.p.A.; d) changes in the regulatory framework, which could jeopardize Ascopiave S.p.A.'s ability to fulfil its obligations; e) loss of concessions, if determining a value for consolidated RAB lower than Euro 300 million. At the end of 2014, the covenants envisaged by the contract were respected since: a) the Ebitda / net financial expenses ratio was equal to 49.96, calculated as the ratio between the Ebitda consolidated on that date, amounting to Euro 79,585 thousand, and the consolidated net financial expenses, amounting to Euro 1,593 thousand; b) the net financial position / Ebitda ratio was 1.63, calculated as the ratio between the net financial position consolidated on that date, amounting to Euro 129,673 thousand, and the consolidated Ebitda, amounting to Euro 79,585 thousand.

The medium long term loan with Unicredit S.p.A. was signed by the Parent Company in 2011, to finance important company aggregation operations. The original amount of the loan was Euro 40,000 thousand and the loan has a seven- year duration. The prepayment of the loan is set on six-month postponed instalments, from 31 st December 2011 to 30 th June 2018. During 2014 two instalments of said loan have been paid for Euro 2,857 thousand each, leading to a decrease in the loan itself for Euro 5,714 thousand and to an outstanding debt amounting to Euro 20,000 thousand at the end of the financial year. The interest rate is variable, and it involves a three-month indexation parameter provided for in EURIBOR and a fixed margin to be added to the "spread" parameter. The value of the fixed margin is apt to increase on the basis of the value of the ratio between the consolidated net financial position and the consolidated gross operative margin at the end of each financial year, as reported in the following table:

Value of N.F.P./G.O.M. ratio Spread value Index>2.5 125 basis point 2

______Ascopiave Group – Annual Financial Report as at 31 st December 2014 128 Ascopiave Group ______

Along with the terms and conditions provided for to calculate the interest rate to be applied to the financed capital, the continuation of the loan agreement is subject to the following financial and operating terms and conditions: a) the value of the index described above cannot be higher than 3.5 (covenant modified with notary deed dated 22 nd December 2014, this limit was previously equal to 2.75); b) R.A.B.'s value (Regulatory Asset Base, i.e. the value of the gas network) cannot be lower than Euro 270,000 thousand; c) the stake of ASCOHOLDING S.p.A. in ASCOPIAVE S.p.A. cannot be lower than 51%. As mentioned among the significant events during the year, with a notary deed dated 22 nd December 2014, the Parent Company entered into the sale agreement, in favour of the bank, as a guarantee of the fulfilment of the obligations associated with the loan, of a share of future receivables arising from the reimbursement of the value of assets related to gas distribution concessions. The financial covenant stated under letter a), annually reviewed based on the Group's consolidated financial statements in compliance with IFRS as the ratio between net financial position and gross operative margin, entails advance reimbursements or spread modification. As of 31 st December 2014, having complied with the index under letter a), equal to 1.63 and with the ratio under letter b), the spread applied as from 1 st January 2015 will be 75 basis points. The following table shows the deadlines of medium- and long-term loans:

31.12.2014 (migliaia di Euro) Financial year 2015 9,745 Financial year 2016 9,628 Financial year 2017 9,287 Financial year 2018 7,681 After 31 st December 2018 26,860 Total medium and long-term loans 63,201

18. Other non-current liabilities

The following table shows how the items are broken down for each period considered:

31.12.2014 31.12.2013 (Thousands of Euro) Security deposits 12,351 10,973 Multi-annual passive prepayments 4,870 2,789 Other non-current liabilities 17,221 13,762

Other non-current liabilities increased from Euro 13,762 thousand to Euro 17,221 thousand, marking an increase of Euro 1,731 thousand net of the consolidation effect of Veritas Energia S.p.A. for Euro 1,728 thousand. Security deposits refer to deposits of gas and electricity users. Long-term deferred income was recognized against revenues on connections to the gas network and related to the useful life of the gas distribution plants, against revenues on cogeneration plants/heat supply and against revenues on contributions for the construction of distribution network. The suspension of revenues is explained by the content of

______Ascopiave Group – Annual Financial Report as at 31 st December 2014 129 Ascopiave Group ______

Law no. 9/2014 which envisages the full deduction of contributions from private individuals from the value of technical assets held under concession within the scope of gas distribution.

19. Non-current financial liabilities

The following table shows how the items are broken down for each period considered:

31.12.2014 31.12.2013 (Thousands of Euro) Payables due to leasing companies (over 12 months) 489 552 Other's non-current financial liabilities 2,838 Non-current financial liabilities 3,327 552

Non-current financial liabilities increased from Euro 552 thousand as of 31 st December 2013 to Euro 3,327 thousand, marking an increase of Euro 2,775 thousand in relation to the payment by Veritas S.p.A. to Ascopiave S.p.A. of a security deposit as a guarantee of trade receivables of Veritas Energia S.p.A.. Please see the paragraph “Business Combinations” of this interim report for the explanation. The table below shows the due dates of the financial lease instalments:

31.12.2014 (Thousands of Euro) Financial year 2016 67 Financial year 2017 70 Financial year 2018 74 Financial year 2019 78 Financial year 2020 82 Financial year 2021 86 Financial year 2022 32 Total non-current financial liabilities 489

20. Deferred tax payables

The following table shows how the item is broken down for each period considered:

31.12.2014 31.12.2013 (Thousands of Euro) Deferred tax payables 23,675 29,527 Deferred tax payables 23,675 29,527

Payables for deferred taxation decrease from Euro 29,527 thousand to Euro 23,675 thousand, marking a decrease of Euro 6,801 thousand net of the consolidation effect of Veritas Energia S.p.A. for Euro 949 thousand. The decrease in this item was mainly due to the judgement of the Constitutional Court filed on 13 th February 2015, which declared the IRES additional tax on energy companies unenforceable commencing 2015.

______Ascopiave Group – Annual Financial Report as at 31 st December 2014 130 Ascopiave Group ______

As a result of this change, the Group has adjusted the value of deferred taxes also calculated in the IRES surcharge, posting Euro 104 thousand to the income statement due to the fact that, when the temporary differences will be carried forward, the tax effect previously hypothesized for this higher tax rate will no longer be recoverable. The total value of the temporary differences and the related amounts on which liabilities for deferred tax were recognized are as follows:

31/12/2014 31/12/2013 Temporary Total Temporary Total Description Tax rate Tax rate differences effect differences effect Exceeding amortizations 33,538 27.5% 9,223 34,005 34.0% 11,562 Exceeding amortizations 031.7% 0 238.2% 1 Severance indemnity 31 27.5% 9 66 34.0% 22 Exceeding amortizations 17,716 31.7% 5,616 18,253 42.2% 7,703 Goodwill deductibility for tax purposes - gas sale 1,807 31.4% 567 1,623 37.9% 615 Customer lists within 2014 0 42.2% 0 1,765 42.2% 745 Gas sales uncollected interest on late payments 110 27.5% 30 0 37.9% 0 Customer lists after 2014 11,980 31.7% 3,798 9,435 38.2% 3,604 Goodwill deductibility for tax purposes 17,637 31.7% 5,591 17,637 38.2% 6,737 Other operations 87 27.5% 24 331 34.0% 113 Total deferred tax payables 23,675 29,527

Current liabilities

21. Amounts due to banks and current portion of medium / long-term loans

The following table shows how the item is broken down for each period considered:

31.12.2014 31.12.2013 (Thousands of Euro) Payables due to banks 175,106 79,587 Current portion of medium-long-term loans 9,745 9,784 Payables due to banks and financing institutions 184,851 89,371

Payables to banks increase from Euro 89,371 thousand to Euro 184,851 thousand, marking an increase of Euro 87,467 thousand net of the consolidation effect of Veritas Energia S.p.A. for Euro 8,013 thousand and include debtor accounting balance to credit institutions and the short-term quota of loans. The significant increase in due to banks as compared to 31 st December 2013 is mainly connected to the arbitrage transactions on interest rates performed by the Parent company, as mentioned above (please refer to the section on cash and cash equivalents). The following table shows the allocation of Group’s credit lines used and available and related rates applied as of 31 st December 2014.

______Ascopiave Group – Annual Financial Report as at 31 st December 2014 131 Ascopiave Group ______

Credit lines Interest rate Debt Banks Type 31 dec 2014 31 dec 2014 31 dec 2014 Banca Europea per gli Investimenti Bank loan 10,000 0.99% 10,000 Banca Europea per gli Investimenti Bank loan 31,500 1.23% 31,500 Banca Intesa Bank credit for overdraft 40,000 0.76% 20,029 Banca Intesa Bank credit for derivatives 7,000 n.d. - Banca Nazionale del Lavoro Bank credit for overdraft 10,000 1.50% - Banca Nazionale del Lavoro Short-term financing 40,000 0.80% 40,000 Banca Popolare di Verona Short-term financing/guarantees 20,000 n.d. - Banca Popolare di Verona Guarantees 10,000 0.40% 3,965 Banca Popolare di Vicenza Short-term financing 52,000 n.d. - Banca Prealpi Bank credit for overdraft 5,000 n.d. - Banca Prealpi Unsecured loan 898 2.10% 898 Banca Sella Bank credit for overdraft 5,000 0.71% 1,954 Cassa di Risparmio del Veneto Bank credit for overdraft 13,000 0.76% 12,930 Credem Bank credit for overdraft 25,000 0.80% 25,000 Friuladria Crédit Agricole Bank credit for overdraft 10,000 0.88% 9,950 Friuladria Crédit Agricole Guarantees 5,000 n.d. - Monte dei Paschi di Siena Bank credit for overdraft 5,000 0.70% 5,000 Monte dei Paschi di Siena Guarantees 8,000 0.30% 7,906 UBI - Banco di Brescia Bank credit for overdraft 30,000 0.71% 30,000 Unicredit Short-term financing 48,700 0.70% 30,000 Unicredit Bank loan 20,000 1.05% 20,000 Unicredit Guarantees 12,400 0.30% 9,167 Unicredit Credit cards 605 n.d. - Banca Popolare di Verona Guarantees 10,000 0.40% 515 Banca Popolare di Vicenza Guarantees 2,000 n.d. - Cassa di Risparmio del Veneto Bank credit for SDD 20,000 n.d. - Friuladria Crédit Agricole Bank credit for SDD 5,000 n.d. - Unicredit Guarantees 10,800 0.30% 3,649 Unicredit Credit cards 24 n.d. - Unicredit Credit cards 15 n.d. - Banca Popolare di Bergamo Guarantees 50 n.d. - Banca Popolare di Verona Bank credit for overdraft/guarantees 500 n.d. - Banca Popolare di Verona Trade discount 500 n.d. - Unicredit Credit cards 30 n.d. - Banca Sella Guarantees 200 n.d. - Banca Sella Bank credit for cheque 75 n.d. - Banca Sella Bank credit for overdraft 55 n.d. - Unicredit Guarantees 120 0.30% 120 Banca Popolare di Vicenza Bank credit for overdraft 500 n.d. - Unicredit Bank credit for overdraft 1,100 n.d. - Unicredit Guarantees 1,410 0.30% 1,385 Banca Ifis Factoring 2,620 n.d. 2,310 Banca Nazionale del Lavoro Guarantees 3,850 1.60% 3,584 Banca Popolare di Verona Guarantees 2,000 n.d. - Banca Popolare di Verona Short-term financing 3,000 n.d. - Cassa di Risparmio di Venezia Bank credit for overdraft 100 n.d. - Cassa di Risparmio di Venezia Guarantees 1,500 n.d. 1,085 Claris Factor Factoring pro-solvendo 2,500 n.d. 214 Ifitalia Factoring pro-solvendo 9,500 n.d. 175 Unicredit Bank credit for derivatives 700 n.d. - Unipol Banca Guarantees 2,000 1.40% 122 Total 489,252 271,457 Note: The total of uses does not match the total of the Amounts due to banks as the use of the line for advances without recourse does not cause ignition of bank debt

22. Trade payables

The following table shows how the item is broken down for each period considered:

31.12.2014 31.12.2013 (Thousands of Euro) Payables to suppliers 58,400 48,244 Payables to suppliers for invoices not yet received 77,779 86,324 Trade payables 136,179 134,568

Trade payables go from Euro 134,568 thousand to Euro 136,179 thousand, a decrease of Euro 20,192 thousand net of

______Ascopiave Group – Annual Financial Report as at 31 st December 2014 132 Ascopiave Group ______the consolidation effect of Veritas Energia S.p.A. for Euro 21,803 thousand. The change is mainly explained by the different payment terms on natural gas supplies for Euro 19,800 thousand and the full consolidation of Veritas Energia S.p.A. that has entailed the entry of higher payables.

23. Payables to tax authorities

The following table shows how the item is broken down for each period considered:

31.12.2014 31.12.2013 (Thousands of Euro) IRAP payables 86 IRES payables 205 360 Tax payables 205 446

Tax payables decrease from Euro 446 thousand to Euro 205 thousand marking a decrease of Euro 241 thousand and include payables accrued at the end of 2014 for IRES, for the surcharge related to the companies selling gas which do not fall within the scope of the Group's tax consolidation system and for IRAP, and the IRES payable related to the companies which do not adhere to Asco Holding S.p.A.'s tax consolidation system.

24. Other current liabilities

The following table shows how the item is broken down at the end of each period considered:

31.12.2014 31.12.2013 (Thousands of Euro) Advance payments from customers 1,152 856 Amounts due to parent companies for tax consolidation 1,040 464 Amounts due to social security institutions 1,404 1,214 Amounts due to employees 3,675 3,854 VAT payables 965 1,107 Payables to revenue office for withholding tax 887 843 Annual passive prepayments 721 711 Annual passive accruals 931 734 UTF and Provincial/Regional Additional Tax payables 1,149 5,836 Other payables 14,239 9,600 Other current liabilities 26,164 25,220

Other current liabilities increased from Euro 25,220 thousand to Euro 26,164 thousand, marking an increase of Euro 1,986 thousand net of the consolidation effect of Veritas Energia S.p.A. for Euro 2,930 thousand.

Advances from clients Advances from clients represent the amounts paid by the customers as a contribution for works of allotments and connection and realisation of thermal plants in progress as of the end of the financial period as of 31 st December 2014.

______Ascopiave Group – Annual Financial Report as at 31 st December 2014 133 Ascopiave Group ______

Tax consolidation payables This heading includes the accrued payables to parent company Asco Holding S.p.A., as part of the National Consolidation regime contracts signed by the Group companies with Asco Holding S.p.A.. The balance of the IRES payables accrued for taxation up to 31 st December 2014 is Euro 1,040 thousand, with an increase of Euro 576 thousand.

Amounts due to employees The amounts due to employees include holidays not taken, deferred remuneration and bonuses earned as of 31 st December 2014 but not paid out on that date; The change as compared to FY 2013 is mainly explained by payables accrued at year-end and related to Phantom Stock Option (connected to Ascopiave's share performance) and incentive plans. The Group recognizes additional benefits to certain employees holding prominent positions, through remuneration plans based on financial instruments (so-called "phantom stock option plan" and "long-term incentive plan 2012-2014"). In particular, the plans adopted by the Group include the awarding of rights involving an extraordinary remuneration linked to the achievement of pre-set objectives, and whose financial regulation is based, among other indicators, on share performance.

VAT payables VAT payables decreased by Euro 728 thousand (Euro 585 – Veritas Energia S.p.A.) as compared to 31 st December 2013. The decrease in VAT payables is explained by the quarterly compensation of the tax, granted to the subsidiaries selling natural gas, in that they fall within the category of the subjects billing a high number of end customers.

Annual deferred income The change in the item is mainly related to the reclassification from other payables of deferred income on revenues from cogeneration/heat supply.

Annual accrued liabilities Accrued liabilities refer mainly to State fees and the fees granted to local licensing bodies for the extension of the concession for the distribution of natural gas, awaiting the territorial calls for tenders.

UTF payables and Additional Regional/Provincial Tax They relate to amounts payable to the technical department of finance and to the payment of excise duty and additional taxes on natural gas. The balance is explained by the different timing of billing gas consumption to users, in contrast with the monthly payments carried out by the sales company with reference to the previous year. As of 31 st December 2014 the Group's total amount of payables is Euro 1,149 thousand it should be noted that this figure is significantly lower than the datum reported in 2013 since the two periods feature different thermal and turnover profiles. Consequently, this had a negative effect in terms of financial flow.

Other payables These figures increased by Euro 4,111 thousand (Euro 528 thousand – Veritas Energia S.p.A.) as compared to 31 st December 2013 and mainly include payables to the Authority for Electricity and Gas and Water regarding the new tariff ______Ascopiave Group – Annual Financial Report as at 31 st December 2014 134 Ascopiave Group ______components of transport, payables for family allowances and payables for incentive plans.

Benefits based on financial instruments The Group grants additional benefits to some employees in strategic positions within the Group. These benefits are based on financial instruments (so-called “long term incentive plan 2012-2014”). In particular, the plans adopted by the Group include the allocation of rights including acknowledgement in favour of the beneficiaries of an extraordinary payment linked to the reaching of pre-set objectives, the financial regulation of which is based on the trend of the share title.

25. Current financial liabilities

The following table shows how the items are broken down for each period considered:

31.12.2014 31.12.2013 (Thousands of Euro) Financial payables within 12 months 217 178 Payables to leasing companies within 12 months 64 61 Current financial liabilities 280 239

______Ascopiave Group – Annual Financial Report as at 31 st December 2014 135 Ascopiave Group ______

COMMENTS ON THE MAIN CONSOLIDATED INCOME STATEMENT ITEMS

Revenues

26. Revenues

The following table shows the composition of the item by type of activity in the fiscal years considered:

FY 2014 FY 2013 (Thousands of Euro) Revenues from gas transportation 21,697 24,161 Revenues from gas sale 473,641 590,182 Revenues from electricity sale 67,199 33,957 Revenues from connections 52 3,066 Revenues from heat supply 55 32 Revenues from distribution services 3,530 5,065 Revenues from billing and taxes 38 628 Revenues from services supplied to Group companies 842 1,069 Revenues from AEEG contributions 12,555 6,328 Other revenues 5,690 3,349 Revenues 585,300 667,837

At the end of the period considered, the Ascopiave Group's revenues amounted to Euro 585,300 thousand, with a decrease of Euro 82,538 thousand as compared to the previous period. The full consolidation of Veritas Energia S.p.A., following the purchase of the remaining stake (equalling 49%) has partially offset the decrease in global revenues for Euro 92,425 thousand. The revenues from natural gas sale, equalling Euro 473,641 thousand, record a decrease as compared to the same period of the previous financial year totalling Euro 116,540 thousand mainly explained by a lower quantity of cubic metres traded. In 2014 the activities of natural gas sale to end users involved the sale of 763.1 million cu. m., showing a decrease of 170.2 million as compared to 2013. The decrease was partially offset for Euro 29,300 by the full consolidation of Veritas Energia S.p.A. involving the sale of 53.9 million cu. m. It is to be pointed out that in 2014 no trading activities were performed.

The transportation of natural gas to the distribution network generated revenues for Euro 21,697 thousand, with a decrease of Euro 2,465 thousand as compared to the same period of the previous year, involving the transport of 710.8 million cubic meters, a decrease of 122 million. The Restriction on total revenues is determined, year after year, on the basis of the number of redelivery points the Company actually served during the reference period, as well as on the reference price, whose values are established and published by the Authority for Electricity and Gas by 15 th December of the year before that in which the price becomes effective. At the end of the first nine months of 2014, the revenues from electricity sales amounted to Euro 67,199 thousand, showing an increase over the previous year of Euro 33,241 thousand. The KWhs sold in 2014 amount to 381.2 million, an increase of 186.4 as compared to the previous year; due to the full consolidation of Veritas Energia S.p.A. as

______Ascopiave Group – Annual Financial Report as at 31 st December 2014 136 Ascopiave Group ______compared to the same period of the previous year; due to the full consolidation of Euro 61,406 thousand which involved the sale of 357.2 million KWhs. At the end of 2014, revenues from connection services to the distribution network are equal to Euro 52 thousand, with a decrease of Euro 3,014 thousand as compared to the Euro 3,066 thousand at the end of 2013. The decrease is mainly explained by the modification of the accounting method of those revenues, which are fully recognized among the non- current liabilities posted to the profit and loss statement based on the useful life of the plants built. The revenues derived from services provided by distributors show a decrease of Euro 1,535 thousand, from Euro 5,065 thousand in 2013 to Euro 3,530 thousand in 2014. The revenues from contributions made by the Authority for Electricity, Gas and water amount to Euro 12,555 thousand recording an increase of Euro 6,227 thousand as compared to the previous financial year. The contributions are paid for the achievement of objectives set by the Authority itself in terms of energy saving and published by resolution, which defines the specific obligations of primary energy savings by the obligated distributors. The increase registered is mainly explained by a higher specific target set by the Authority for Electricity and Gas, as well as by a higher contribution granted for the delivery of the certificates purchased or produced in order to achieve such target. Other revenues increased from Euro 3,349 thousand in 2013, to Euro 5,690 thousand in 2014, showing an increase of Euro 2,341 thousand. The increase in other revenues is mainly explained by the bonuses paid by the Authority for Electricity, Gas and Water under the scope of safety recoveries for Euro 762 thousand, as well as by higher contingent assets recognized during the period for Euro 547 thousand. The latter are mostly attributable to the effects of tax assets related to mini-loans.

Costs

27. Purchase costs for raw material (gas)

The following table reports the costs relating to the purchase of gas over the relevant financial periods:

FY 2014 FY 2013 (Thousands of Euro) Costs for gas purchase 333,335 438,912 Costs for gas purchase 333,335 438,912

At the end of the fiscal year, the costs incurred for the supply of natural gas amount to Euro 333,335 thousand, showing a decrease of Euro 105,577 thousand net of the consolidation effect of Veritas Energia S.r.l. as compared to 2013. During the period, the procurement activity involved the purchase of 763.1 million cubic metres, a decrease equal to 170.2 million as compared to 2013. The decrease was partially offset by the full consolidation of Veritas Energia S.p.A. c that led to the recognition of costs for the purchase of 53.9 million cubic meters for a total amount of Euro 17,322 thousand. It is to be noted that, in 2014, no trading activities were performed and that the most significant amounts of natural gas for the supply to end customers were provided to the Group Ascopiave by the company Eni Gas & Power S.p.A..

28. Purchase cost of other raw materials

______Ascopiave Group – Annual Financial Report as at 31 st December 2014 137 Ascopiave Group ______

The following table reports on costs relating to the purchase of other raw materials during the relevant financial periods:

FY 2014 FY 2013 (Thousands of Euro) Diesel fuel and LPG purchase 0 13 Purchase of electricity 24,660 33,064 Purchase of other raw material 1,372 1,480 Purchase costs for other raw materials 26,032 34,557

At the end of 2014, the costs incurred for the purchase of other raw materials register a decrease equal to Euro 8,526 thousand, from Euro 34,557 thousand in 2013 to Euro 26,032 thousand in the reference period. The decrease was partially offset by the full consolidation of Veritas Energia S.p.A. that led to the recognition of higher costs totalling Euro 20,053 thousand. The costs incurred for the purchase of electricity showed a decrease of Euro 8,404 thousand as compared to the previous financial year, from Euro 33,064 thousand to Euro 24,660 thousand in the reference period. The decrease is mainly explained by the decrease in the average prices of the raw material, which was partially offset by the increase in kilowatt-hour sold (+194.8 million). The costs incurred for the purchase of other raw materials register a decrease equal to Euro 108 thousand, from Euro 1,480 thousand in 2013 to Euro 1,372 thousand in 2014. This item mainly includes costs related to the purchase of materials for the construction of natural gas distribution plants.

29. Costs for services

Costs for services for the relevant periods are analysed in the following table:

FY 2014 FY 2013 (Thousands of Euro) Costs of conveyance on secondary networks 72,986 39,013 Costs for counting meters reading 1,019 1,363 Costs for mailing bills 458 567 Mailing and telegraph costs 1,025 1,408 Maintenance and repairs 2,960 3,650 Consulting services 4,527 4,463 Commercial services and advertisement 1,900 1,926 Sundry suppliers 2,273 2,152 Directors' and Statutory Auditors' fees 1,104 1,164 Insurances 989 1,002 Personnel costs 831 786 Other managing expenses 5,762 5,273 Costs for use of third-party assets 11,906 10,985 Total costs for services 107,740 73,751

The costs for services incurred during the year showed an increase of Euro 33,989 thousand, from Euro 73,751 thousand in 2013, to Euro 107,740 thousand in 2014. This variation is mainly explained by the higher costs totalling ______Ascopiave Group – Annual Financial Report as at 31 st December 2014 138 Ascopiave Group ______

Euro 33,973 thousand related to the carriage costs on the secondary networks, and Euro 921 thousand for costs connected to use of third party assets, partially offset by the overall reduction in other cost components of which Euro 690 thousand for maintenance and repairs, Euro 344 thousand for costs of meter reading and Euro 492 thousand for postal and telegraph expenses and invoice dispatching. The increase recorded in the item "Transportation costs on secondary networks" is mainly explained by the full consolidation of Veritas Energia S.p.A. and the resulting recognition of the costs incurred by the company for the transmission of electricity; at the end of the year, the cost incurred by Veritas Energia S.p.A. totalled Euro 37,094 thousand. The increase was partially offset by lower costs incurred for natural gas distribution primarily attributable to the decrease in the volume of natural gas consumed by end customers.

30. Costs for personnel

The following table shows the breakdown of personnel costs in the years considered:

FY 2014 FY 2013 (Thousands of Euro) Wages and salaries 18,895 17,287 Social security contributions 5,872 5,664 Severance indemnity 1,307 1,235 Current severance indemnity actualization (0) 16 Other costs 317 221 Total personnel costs 26,391 24,422 Capitalized personnel costs (3,664) (1,600) Personnel costs 22,726 22,822

The cost for staff is net of costs capitalized by the companies of natural gas distribution in comparison with increases in intangible assets for works performed on a time and material basis, which are directly attributed to the implementation of facilities for the distribution of natural gas and recorded as an asset. Costs for staff increase from Euro 24,422 thousand in 2013 to Euro 26,391 thousand in the reference period, marking an increase of Euro 1,968 thousand, mainly due to the full consolidation of Veritas Energia S.p.A for Euro 1,729 thousand and wage increases paid during the reference fiscal period due to personal rewards and increases provided for by contract. It should be noted that incentive compensations have accrued to the tune of Euro 792 thousand during the financial year (long-term incentive plans and stock options). The increase in staff cost was partially offset by higher capitalizations performed in 2014 for Euro 2,064 thousand. The increase in hours capitalized during the financial year is mainly explained by the internal reorganization process which has affected many areas of the technical department, from the staff structure, to the streamlining of existing procedures and the subsequent requalification of activities performed by the personnel.

The table below shows the average number of Group employees by category at the end of the indicated periods:

______Ascopiave Group – Annual Financial Report as at 31 st December 2014 139 Ascopiave Group ______

Type FY 2014 FY 2013 Variation

Executives 19 21 (3) Office workers 353 314 39 Manual workers 103 115 (13) Total employees 474 450 24

The increase in the average workforce number is mainly explained by the full consolidation of Veritas Energia S.p.A. which, at the end of the year, has 35 employees with an incidence of 18 units on the average number.

31. Other management costs

The following table shows the breakdown of other operating costs in the periods considered:

FY 2014 FY 2013 (Thousands of Euro) Provision for risks on credits 6,819 6,039 Other provisions 319 80 Membership and AEEG fees 739 800 Capital losses 611 405 Extraordinary losses 1,435 777 Other taxes 1,090 813 Other costs 777 1,052 Costs of contracts 907 804 Energy efficency certificates 10,036 7,934 Other operating costs 22,733 18,704

Other operating costs, increasing from Euro 18,704 thousand in 2013, to Euro 22,733 thousand in 2014, show an increase of Euro 4,029 thousand mainly determined by the contribution of Veritas Energia S.p.A. following full consolidation of the company totalling Euro 2,204 thousand (of which 1,946 thousand related to allowance for doubtful accounts). The most significant change is recorded in the item "Energy efficiency certificates", with an increase of Euro 2,101 thousand, because Gestore Servizi Elettrici to which the AEEGSI has delegated the management, has raised the energy saving target for the year. The increase is also explained by the energy efficiency certificates purchased by the parent company on behalf of the subsidiary Unigas Distribuzione S.r.l., which is also subject to the obligation. At the end of 2014, provisions for doubtful accounts showed an increase of Euro 781 thousand as compared to the previous year, mainly due to the full consolidation of Veritas Energia S.p.A.. The item, in 2014, includes provisions made by Parent Company relating to receivables from the Municipality of Creazzo and recorded under "Other non- current receivables" for Euro 464 thousand.

32. Other income

The following table shows a breakdown of other operating income in the periods considered:

______Ascopiave Group – Annual Financial Report as at 31 st December 2014 140 Ascopiave Group ______

FY 2014 FY 2013 (Thousands of Euro) Other income 32 1,146 Other income 32 1,146

At the end of the reference period, other operating income shows a decrease of Euro 1,113 thousand, from Euro 1,146 thousand in 2013, to Euro 32 thousand in 2014. This change is explained by the recognition in the previous period of the capital gain caused by the transfer of the gas-distribution plants in Tezze sul Brenta by the parent company Ascopiave S.p.A..

33. Amortization and depreciation

Amortization and depreciation for the relevant periods are analysed in the following table:

FY 2014 FY 2013 (Thousands of Euro) Intangible fixed assets 17,669 15,551 Tangible fixed assets 2,430 2,582 Impairment losses and revelsals assets 0 140 Amortization and depreciation 20,099 18,273

Amortization and depreciation record an increase of Euro 1,826 thousand, from Euro 18,273 thousand at the end of 2013, to Euro 20,099 thousand in the reference period. The increase in amortization is mainly explained by the modification of the useful life of natural gas measurement devices, from 20 to 15 years due to the regulatory evolution issued by the AEEGSI and the actual activation of massive plans to replace all the meters currently installed.

______Ascopiave Group – Annual Financial Report as at 31 st December 2014 141 Ascopiave Group ______

Financial income and expense

34. Financial income and expense

The following table shows a breakdown of financial income and expenses in the periods considered:

FY 2014 FY 2013 (Thousands of Euro) Interest income on bank and post office accounts 708 18 Other interest income 648 1,266 Other financial income 9 1,372 Financial income 1,364 2,656 Interest expense on banks 1,334 1,627 Interest expense on mortgage loans 891 644 Other financial expenses 732 1,899 Financial charges 2,957 4,171 Evaluation of subsidiary companies with net equity method 1,228 (262) Share of profit from jointly controlled companies 3,225 6,730 Evaluation of subsidiary companies with the net equity method 4,453 6,468 Total net financial expenses 2,860 4,953

At the end of 2014, the balance between financial income and expenses showed a loss of Euro 1,593 thousand, a decrease from the previous year of Euro 78 thousand. The decrease is explained by the combined effect of the reduction in interest rates applied by banks to lines of credit and by the improvement in interest rates payable recognized on sight deposits, which allowed the parent company to take advantage of the surplus of credit lines to perform arbitrage transactions on interest rates. The item "Evaluation of associated companies using the equity method" amounts to Euro 1,228 thousand and includes the use of a portion of the bad debt provision for the coverage of the capital deficit of the affiliate company Sinergie Italiane S.r.l. in liquidation following the profit achieved during the period as detailed in the section "Shareholdings" of these explanatory notes. The item registers an increase of Euro 1,490 thousand as compared to the previous financial year. The item "Result quota from jointly controlled companies" includes the net results achieved by the jointly controlled companies in the reference period. It should be noted that in 2013 the company Veritas Energia S.p.A. was subject to joint control and, consequently, following the acquisition of the remaining shares of the company, commencing 1 st January 2014, the method is the full consolidation.

Taxes

35. Tax for the year

The table below shows the breakdown of income taxes over the periods considered, distinguishing the current component from the deferred and advance ones:

______Ascopiave Group – Annual Financial Report as at 31 st December 2014 142 Ascopiave Group ______

FY 2014 FY 2013 (Thousands of Euro) IRES current taxes 16,032 23,829 IRAP current taxes 3,404 3,934 (Advance)/Deferred taxes (1,242) (1,956) Taxes for the year 18,194 25,807

Taxes decrease from Euro 25,807 thousand in 2013 to Euro 18,194 thousand in 2014, thus registering a decrease of Euro 7,613 thousand. The decrease in the taxes is mainly explained by lower tax rates related to the Robin-tax IRES surcharge applied to the companies that operate in the sector. The surcharge decreases from 10.5%, in force until the end of the previous year, to 6.5% in the reference period after expiration of the three years during which the so-called "Ferragosto Decree" issued in 2011 had envisaged the surcharge on the direct tax. As concerns the additional IRES Robin-Tax, following the recent judgement of the Constitutional Court (no. 10 of the year 2015), which has declared the unconstitutionality of the additional tax effective from the date of publication of the judgment in the Official Gazette, non-current taxes were adjusted to current tax rates, resulting in a net effect of Euro 1,815 thousand.

The table below shows the breakdown of IRES taxes in the years considered:

(Thousands of Euro) FY 2014 FY 2013 IRES 531 2,448 Additional IRES 3,218 6,185 Charges / (income) from tax consolidation 12,282 15,196 Current taxes IRES 16,032 23,829

This table illustrates the relevance of revenue taxes on the result before taxation, for the accounted periods herein:

FY 2014 FY 2013 (Thousands of Euro) Income before taxes 55,527 66,917 Income taxes for the period 18,194 25,807 Percentage of income before taxes 32.8% 38.6%

The tax-rate in 2014 is equal to 32.8%, a decrease of 5.8% as compared to the previous year. The decrease in tax rate is mainly due to effects caused by the decrease equal to 4% in the IRES additional tax for 2014, the adjustment of advance/deferred taxes stocks following the abolition of the IRES additional tax starting from the next fiscal period which has determined an overall 3.8% reduction in tax rate partially offset by the 1.3% decrease in the result of the companies consolidated with the equity method and a higher incidence of IRAP (0.3%).

36. Net income from sold activities or divested activities

The change as compared to the previous year is explained by the fact that in the previous year this item included the costs incurred for the liquidation of the companies Ascoenergy S.r.l. and Consorzio Re.

______Ascopiave Group – Annual Financial Report as at 31 st December 2014 143 Ascopiave Group ______

Non-recurrent items

In accordance with CONSOB communication no. 15519/2005, we report that there were no non-recurring economic components reported in the interim financial statements as of 31 st December 2014.

Transactions deriving from unusual and/or atypical operations

In accordance with CONSOB communication N. DEM/6064296 dated 28 th July 2006, we report that during 2014 no unusual and/or atypical operations occurred.

______Ascopiave Group – Annual Financial Report as at 31 st December 2014 144 Ascopiave Group ______

OTHER COMMENTS ON THE ANNUAL FINANCIAL REPORT AS OF 31 st DECEMBER 2014

Business Combinations

Acquisition of control of Veritas Energia S.p.A.

As of 31 st December 2013 the Ascopiave Group held a stake of joint control, equal to 51%, in Veritas Energia S.p.A.. The remaining quota, equal to 49%, was held by Veritas S.p.A.. On 10 th February 2014 the purchase from Veritas S.p.A. of the remaining percentage of share capital was finalized, following the decision to entrust the entire management of Veritas Energia S.p.A. to Ascopiave S.p.A.. As a consequence, the latter has acquired total control of the company, against the payment of Euro 4 million. Following the acquisition of control, the company Veritas Energia S.p.A. was fully consolidated by the Ascopiave S.p.A. Group: the Directors, also based on the nature of the agreements existing prior to the finalisation of the exchange of shares, have seen fit to represent the acquisition of control commencing 1 st January 2014. The acquisition agreement envisages that the seller takes out a guarantee on third party receivables for Euro 5,000 thousand, against which Veritas S.p.A. paid to Ascopiave S.p.A. a guarantee deposit, bearing interests, of Euro 2,838 thousand, recognized as of 30 th June 2014 among non-current financial liabilities; the liquidity received was tied to the purchase of two-year “repurchase agreements”, recognized as of 30 th June 2014 among non-current financial assets. The difference between the maximum amount of the guarantee set forth in the agreement, equal to Euro 5,000 thousand, and the deposit amounting to Euro 2,838 thousand was guaranteed by Veritas S.p.A. to Ascopiave S.p.A. through a suitable letter of guarantee issued by the company itself. Upon acquisition, Veritas S.p.A. was granted the right of usufruct on the dividends distributed by Veritas Energia S.p.A. concerning the quota sold. In May 2014, Veritas Energia S.p.A. distributed dividends for Euro 2,041 thousand, of which Euro 1,000 thousand were paid to the seller due to the above-mentioned right of usufruct. The purchase costs, pursuant to “IFRS 3 Revised - Business Combinations” are entered in the consolidated profit and loss statement to the amount of Euro 56 thousand. The quotas of stakes purchased were externally evaluated by an independent subject in order to determine the allocation of the higher value paid with respect to the accounting values of the shareholders' equity as of 31 st December 2013. The examination of the independent consultant highlighted the existence of a finite life intangible asset representing the value of contracts acquired and the relationships with customers set forth in those contracts, equalling Euro 2,920 thousand, on which the corresponding effect of deferred taxation was recognized as well. The Directors prudentially decided to consider a 10-year useful life for that type of intangible asset, in line with the evaluations of similar combinations in previous years. The business combination was temporarily recognized on 30 th September 2014 pursuant to the international accounting principle IFRS 3.62. In particular, the fair value attributed to identifiable assets and liabilities of Veritas Energia S.p.A. at purchase date 2014 is as follows:

______Ascopiave Group – Annual Financial Report as at 31 st December 2014 145 Ascopiave Group ______

100% book value at adoption of 100% net value at (Thousands of Euro) allocation acquisition control date IFRS acquisition control date

Non-current assets Goodwill 1,197 1,197 0 Other intangible assets 108 108 2,920 2,920 Tangible assets 200 200 Shareholdings in other companies 0 0 Other non-current assets 1,712 1,712 Deferred tax assets 2,612 2,612 Non-current assets 5,829 1,305 2,920 7,444 0 Current assets 0 Trade receivables 32,905 32,905 Other current assets 5,541 5,541 Current financial assets 1,385 1,385 Tax receivables 68 68 Cash and cash equivalents 3,049 3,049 Current assets 42,949 0 0 42,949 Assets 48,778 1,305 2,920 50,393 0

Non-current liabilities 0 Provisions for risks and charges 1,195 1,195 Severance indemnity 243 243 Other non-current liabilities 1,728 1,728 Deferred tax payables 42 42 949 949 Non-current liabilities 3,208 41 949 4,116 0 Current liabilities 0 Payables due to banks and financing institutions 8,013 8,013 Trade payables 21,842 39 21,803 Tax payables 2,027 2,027 Other current liabilities 2,930 2,930 Current financial liabilities 6,795 6,795 Current liabilities 41,607 39 0 41,568 Liabilities 44,815 80 949 45,684

Assets/Liabilities of acquired company 3,962 1,224 1,971 4,709 Economic rights of former shareholders - 1,000 Goodwill 2,742

TOTAL FAIR VALUE 6,451

Remeasured fair value on 51% 2,450 Payment for 49% acquired company 4,000 TOTAL FAIR VALUE 6,450

The residual surplus value equal to Euro 2,742 thousand was booked in goodwill and attributed to the gas sale CGU relating to the company Veritas Energia S.p.A..

______Ascopiave Group – Annual Financial Report as at 31 st December 2014 146 Ascopiave Group ______

Commitments and risks

Bank guarantees

As of 31 st December 2014, the Group provided the following bank guarantees:

Guarantees to companies within the consolidation area:

(Thousands of Euro) 31 th Decembre 2014 31 st December 2013 On credit lines 13,050,000 10,000,000 On financial leasing agreements 956,000 956,000 Guarantees on credit lines (letter of comfort) 5,128,622 4,963,500 On execution of works (letter of comfort) 879,114 392,000 Agreements on incentives art. 4 of Law no. 92/2012 196,321 0 On UTF offices and regions for taxes on gas (letter of comfort) 6,381,888 6,164,531 On UTF offices and regions for taxes on electricity (letter of comfort) 668,870 118,870 On distribution concession (letter of comfort) 3,404,971 3,794,963 On services agreements (letter of comfort) 120,000 120,000 On purchase/sale of shares (letter of comfort) 0 2,500,000 On conveyance agreements (letter of comfort) 9,676,021 2,855,742 On agreements for transport of electricity (letter of comfort) 2,042,903 0 On active agreements of electricity administration (letter of comfort) 23,002 0 On purchase of electricity agreements (letter of comfort) 11,190,000 0 Total 53,717,711 31,865,605

Guarantees to the jointly controlled companies and affiliate companies assessed with the equity method:

(Thousands of Euro) 31 th Decembre 2014 31 st December 2013 On credit lines 34,333,334 61,166,667 On gas supply agreements 0 2,550,000 On execution of works (letter of comfort) 2,809 0 On UTF offices and regions for taxes on gas (letter of comfort) 482,049 27,572 On UTF offices and regions for taxes on electricity (letter of comfort) 12,446 547,946 On distribution concession (letter of comfort) 178,661 164,504 On conveyance agreements (letter of comfort) 621,313 1,813,334 On agreements for transport of electricity (letter of comfort) 2,435,505 5,479,016 On active agreements of gas administration (letter of comfort) 50,175 68,907 On active agreements of electricity administration (letter of comfort) 0 76,500 On purchase of electricity agreements (letter of comfort) 2,623,406 9,646,202 On realization of photovoltaic agreements (letter of comfort) 190,610 213,503 Total 40,930,309 81,754,150

The letters of comfort on lines of credit and gas purchase contracts issued in favour of the subsidiary Sinergie Italiane S.r.l. in liquidation amount as of 31 st December 2014 to Euro 30,400 thousand (Euro 61,167 thousand as of 31 st December 2013).

Risk and uncertainty factors

Management of financial risk: objectives and criteria The investments in the operative activities of the Group mainly consist of bank loans, financial leasing, lease contracts with the possibility of purchase and bank deposits at sight and short-term. The recourse to such forms of investment exposes the Group to the risk connected with the fluctuation of interest tax rate, that successively determine possible ______Ascopiave Group – Annual Financial Report as at 31 st December 2014 147 Ascopiave Group ______variations on financial costs. The operative activity, on the contrary, put the Group on the position of possible receivable risks with the counterparts.

The Group, furthermore, is subject to liquidity risks because the available financial resources may not be sufficient to meet its financial obligations, in the terms and deadlines forecast. The Board of Directors re-examines and agrees the policies for risk management, described hereinafter.

Interest rate risks Because of the seasonality of the natural gas business cycle, the Group aims at managing the need for cash by means of temporary and medium-term loans at variable rates. Furthermore the Group manages medium-long term financings at variable rates with primary bank institutions, with an outstanding debt as of 31 st December 2014 of Euro 62,398 thousand and due dates between 1 st January 2015 and 5th February 2026. Furthermore the Group manages credit lines at fixed rates (loans) for minor amounts, which originated upon assignment of gas distribution networks by local authorities that are now partners of Asco Holding S.p.A. The medium - long term loans are mainly represented by the loan granted in 2011 by Unicredit S.p.A. with an outstanding debt of Euro 20,000 thousand as of 31 st December 2014, subject to a securitization operation by the lender, and by the loan issued in August 2013 by the European Investment Bank with an outstanding debt of Euro 41,500 thousand. Both are subject to covenants which are met. For further details please see paragraph no. 17 “ Medium- long term loans ”.

Sensitivity analysis of the interest rate risk The following table shows the impacts on the Group’s Pre-tax result of the possible variations in interest rates in a reasonably possible interval.

January February March April May June July August September October November December Net Financial Position 2014 (137,019) (122,247) (105,777) (89,767) (102,823) (101,122) (125,401) (134,376) (119,553) (104,691) (106,025) (129,673) Positive average rate 0.11% 0.10% 0.09% 0.07% 0.85% 1.03% 1.02% 1.24% 0.99% 0.90% 1.15% 1.09% Negative average rate 1.53% 1.49% 1.39% 1.39% 1.25% 1.18% 1.11% 1.08% 1.01% 0.94% 0.90% 0.89% Positive average rate increased of 200 basis point 2.11% 2.10% 2.09% 2.07% 2.85% 3.03% 3.02% 3.24% 2.99% 2.90% 3.15% 3.09% Negative average rate increased of 200 basis point 3.53% 3.49% 3.39% 3.39% 3.25% 3.18% 3.11% 3.08% 3.01% 2.94% 2.90% 2.89% Positive average rate decreased of 50 basis point 0.00% 0.00% 0.00% 0.00% 0.35% 0.53% 0.52% 0.74% 0.49% 0.40% 0.65% 0.59% Negative average rate decreased of 50 basis point 1.03% 0.99% 0.89% 0.89% 0.75% 0.68% 0.61% 0.58% 0.51% 0.44% 0.40% 0.39%

Net Financial Position recalculated with increase of 200 basis point (137,252) (122,434) (105,957) (89,915) (102,997) (101,288) (125,614) (134,605) (119,750) (104,869) (106,200) (129,893) Net Financial Position recalculated with decrease of 50 basis point (136,961) (122,200) (105,732) (89,731) (102,779) (101,080) (125,348) (134,319) (119,504) (104,647) (105,982) (129,618) Total Effect to income before taxes with increase of 200 basis point (233) (188) (180) (148) (175) (166) (213) (228) (197) (178) (174) (220) (2,299) Effect to income before taxes with decrease of 50 basis point 58 47 45 37 44 42 53 57 49 44 44 55 575

The sensitivity analysis, obtained by simulating a variation on interest tax rates applied on the credit lines of the Group equal to 50 basis points in decrease (with a minimum limit of zero basis points) and 200 basis points in increase, maintaining unchanged all the other variables, leads to an estimation of an effect on the result before taxes which is negative for Euro 2,298 thousand (2013: Euro 2,413 thousand) or positive for Euro 575 thousand (2013: Euro 603 thousand).

Receivable risk The operative activity put the Group in a position of possible receivable risk caused by the missed respect of trading obligations between the counterparts. The Group constantly monitors this type of risk through an appropriate credit management procedure, helped in that

______Ascopiave Group – Annual Financial Report as at 31 st December 2014 148 Ascopiave Group ______sense also by the division of a significant component of accounts receivable. The policy prescribes to fully write down the receivables that show an older expiry date than the year (that is to say which have expired for over a year) and in any case all the existing receivables from insolvent clients or clients subject to bankruptcy proceedings, and to apply write-down percentages determined by historical series on the most recent receivables, checking the capacity of the allowance for bad debts, so that it can entirely cover all receivables having an ageing higher than 12 months and most receivables expired between 6 and 12 months.

Liquidity risk The liquidity risk concerns the risk of the Group not to dispose of available and sufficient financial resources in order to meet its financial obligations, in the forecast terms and deadlines, due to the impossibility of raising new funds or selling assets on the market, affecting the income statement if the Group is obliged to incur additional costs to meet its obligations, or in case of insolvency entailing risks for the business. The Group constantly aims at highest balance and flexibility of financing sources and uses, minimizing that risk. The two main factors influencing Group liquidity are on the one hand the resources generated or absorbed by the operative or investment assets, on the other hand the expiry characteristics and debt renewal.

Risk of prices of raw materials and of Euro/Dollar exchange rate The company is exposed to the risk of fluctuation of the cost of the raw material due to the misalignment between the baskets of tariff index of natural gas sale and the basket of purchase costs index, which can be different. In order to reduce the afore-stated risk, the company subscribed contracts of provisioning that envisage the almost full coverage of the indexing clauses of cost in the raw material purchase portfolio and of the indexing clauses of price in the sale portfolio. The risk is therefore connected to possible volume mismatchings between the amounts in the final balance underlying the various indexing formulas and the related amounts budgeted on the basis of which the purchase portfolio has been structured.

Specific risks in the business sectors in which the Group operates

Regulations

The activities carried out by the Ascopiave Group in the gas sector are subject to regulations. Directives and regulatory measures adopted in the European Union and by the Italian Government, as well as the resolutions of the Authority for Electricity, Gas and Water can have a significant impact on the operations, the operating results and the financial balance. Future changes in the regulatory policy adopted by the European Union or at a national level could have unexpected effects on the regulatory reference framework and, consequently, on the activity and results of the Group.

Seasonal nature of the activity Gas consumption varies considerably on a seasonal basis, with a higher demand during winter, in relation to higher consumption for heating. Such seasonal nature influences the rise in gas sales and supply costs, while other management costs are fixed and evenly supported by the Group during the year. The seasonal nature of the activity also affects the performance of the Group's net financial position, as the active and passive billing cycles are not aligned ______Ascopiave Group – Annual Financial Report as at 31 st December 2014 149 Ascopiave Group ______with each other and also depend on the performance of gas volumes sold and purchased during the year. Therefore, the data and information contained in the interim financial statements do not allow to draw meaningful conclusions as to the overall trend of the year.

Management of Capital The primary objective of the management of the Group's capital is to guarantee that a solid credit rating is maintained, as well as suitable levels of the capital indicator. The Group can adapt the dividends paid to shareholders, reimburse capital or issue new shares. The Group checks its capital by means of a debt/capital ratio. The Group includes financial charges, trade and other payables in its net debt, net of liquid funds and equivalent.

31.12.2014 31.12.2013 (Thousands of Euro)

Financial position in the short term (76,015) (60,972)

financial position in the medium-long term (53,659) (62,838)

Financial gross debt 129,673 123,810

Share capital 234,412 234,412

Own shares (17,660) (17,660)

Reserves 157,331 147,248

Undistributed net profit 35,583 38,678

Total Net equity 409,666 402,679

Total capital and gross debt 539,340 526,489

Debt/Net assets ratio 0.32 0.31

The debt/net equity ratio as of 31 st December is 0.32, the same datum calculated on the data at 31 st December of the previous year, thanks to the combined effect of the increase in the Net financial position partially offset by the increase in Shareholders' equity. The increase in the Net financial position at 31 st December 2014 as compared to as of 31 st December 2013 is mainly connected to the following effects: - use of cash resulting from the management of consumption taxes, which entailed for the Ascopiave Group a negative effect on the Net financial position amounting to over Euro 29.3 million, - acquisition of the remaining 49% stake of Veritas Energia, resulting in the full consolidation of the investment, and with a final overall negative effect on the Net financial position of Euro 18 million, including the price paid. ______Ascopiave Group – Annual Financial Report as at 31 st December 2014 150 Ascopiave Group ______

Remuneration of Auditing Company

Pursuant to Art. 149-duodecies of Consob Issuers’ Regulation, hereby a full overview of remuneration of the Auditing Company for 2014 is provided. Payment includes both the auditing service and additional services as well.

Fees (Thousands Type of services Entity providing the service Recipient of Euro) Audit Reconta Ernst & Young SpA Ascopiave S.p.A. 181 Controlled companies 218 Attestation services Reconta Ernst & Young SpA Ascopiave S.p.A. 3 Controlled companies 6 Audit and other services Reconta Ernst & Young SpA Ascopiave S.p.A. 13 Controlled companies 43 Other services Ernst & Young Financial Business Ascopiave S.p.A. 51 Advisors S.p.A. Total 515

Business segment reporting

The sector information is provided with reference to the business sectors in which the Group operates. Business sectors are identified as primary segments of activities. The criteria used for identifying the activity segments have been inspired by the methods whereby management runs the Group and assigns managerial responsibilities. Based on the information required by the IFRS 8 ‘Business Segment Reporting, Operative segments’, the company has identified as segments subjects of the reporting the activities of gas sales and distribution. Information for geographic sectors is not provided, since the Group does not have any business activity outside of the national territory. The following tables show the information on revenues, financial results and balance sheet items concerning the business segments of the Group for the years 2014 and 2013.

Financial year 2014 Gas Gas sale Electricity Other 31.12.2014 Elisions Total (Thousand of Euro) distribution sale values from new acquisitions Net revenues of third-party customers 42,766 444,684 34,261 364 63,223 585,300 Intra-group revenues among the segments 52,590 1,496 455 388 29,202 (84,130) 0 Segment revenues 95,356 446,180 34,717 752 92,425 (84,130) 585,300

Operating result before amortization 40,067 27,127 (106) (81) 5,759 72,766 Amortization 17,244 2,168 61 253 373 20,099 Operating result 22,823 24,959 (167) (334) 5,386 52,667

Result before taxes 21,545 28,254 919 (125) 4,935 55,527

Assets 637,654 237,654 6,826 0 43,799 (58,446) 867,488 Liabilities (375,467) (95,158) (6,056) 0 (39,587) 58,446 (457,821)

______Ascopiave Group – Annual Financial Report as at 31 st December 2014 151 Ascopiave Group ______

restated Financial year 2013 Gas Gas sale Electricity Other 31.12.2013 Elisions Total (Thousand of Euro) distribution sale values from new acquisitions Net revenues of third-party customers 42,792 590,182 33,957 907 667,837 Intra-group revenues among the segments 62,799 1,503 0 0 (64,302) 0 Segment revenues 105,590 591,685 33,957 907 0 (64,302) 667,837

Operating result before amortization 40,958 40,232 (1,237) 284 0 80,237 Amortization 15,787 2,215 21 250 18,273 Operating result before amortization 25,171 38,017 (1,258) 34 0 61,964

Result before taxes 25,509 40,866 291 251 0 66,917

Assets 551,219 261,132 6,799 89 (48,171) 771,068 Liabilities (278,448) (134,428) (3,684) 0 48,171 (368,390)

Earnings per share

As required by the IAS 33 accounting standard, the following information is provided about the calculation of basic and diluted earnings per share.

The basic earnings per share is calculated by dividing the net income for the period attributable to the Company’s shareholders by the number of shares, net of own shares. For the purposes of calculating the profit per base share, the numbering used the financial result of the period less the share attributable to third parties. There are no preference dividends, conversions of preferred shares or similar effects that would adjust the results attributable to the holders of ordinary shares in the Company. Diluted profits for shares result as equal to those for shares in that ordinary shares that could have a dilutive effect do not exist and no shares or warrants exist that could have the same effect. The result and the number of ordinary shares used to calculate base earning per share, identified according to the method forecast by IAS 33 are reported below:

Amount at Amount at (Thousands of Euro) 31 dicembre 2014 31 dicembre 2013

Net profit attributable to parent company shareholders 35,583 38,678

Weighted average number of ordinary shares including own shares, for the 234,411,575 234,411,575 purpose of earnings per share

Weighted average number of own shares 12,195,214 12,195,214

Weighted average number of ordinary shares, excluding own shares, 222,216,361 222,216,361 for the purposes of net income per share

Earnings per share (in Euro) 0.160 0.174

Transactions with related parties

The transactions with related parties in the financial period considered is detailed in the following tables: ______Ascopiave Group – Annual Financial Report as at 31 st December 2014 152 Ascopiave Group ______

Trade Other Trade Other Costs Revenues (Thousands of Euro) receivables receiva payables payable Goods Services Other Goods Services Other

Parent company ASCO HOLDING S.P.A. 10 3,717 1,028 0 12,542 0 23 265 Total parent company 10 3,717 0 1,028 0 0 12,542 0 23 265 Affiliated companies ASCO TLC S.P.A. 73 0 255 0 0 545 15 274 119 85 SEVEN CENTER S.R.L. 20 0 388 0 0 0 0 0 0 MIRANT ITALIA S.R.L. 0 0 0 0 0 0 0 Total affiliated companies 94 0 643 0 0 545 15 274 119 85 Subsidiary companies Estenergy S.p.A. 75 6,370 2,257 0 2,940 23 5 0 42 180 ASM SET S.R.L. 1,669 911 3 0 17 7 7 5,200 485 37 Unigas Distribuzione Gas S.r.l. 43 0 2,656 0 0 9,581 0 33 24 773 SINERGIE ITALIANE S.R.L. 35 12,015 0 73,979 58 0 77 285 Total subsidiary companies 1,821 19,296 4,915 0 76,936 9,611 61 5,232 627 1,276

Total 1,924 23,013 5,558 1,028 76,936 10,156 12,618 5,506 769 1,625

In 2014, in addition, Ascopiave S.p.A. and Ascotrade S.p.A., Asm DG S.r.l., Edigas Distribuzione S.r.l., Pasubio Servizi S.r.l., Blue Meta S.p.A. joined the consolidation of the tax relationships of the parent company Asco Holding S.p.A., recorded under the items "Other current assets" and "Other current liabilities".

As far as the jointly controlled companies are concerned: - Estenergy S.p.A. : o The other receivables: are related to intragroup current account agreements with Ascopiave S.p.A.; o The costs for assets are related to the purchase of electricity by Etra Energia S.r.l. and Ascotrade S.p.A.; o The revenues for services are connected to services of gas transportation by Ascopiave S.p.A.; o The other revenues relate to interests on the intragroup current account. - ASM Set S.r.l. : o The other receivables: are related to intragroup current account agreements with Ascopiave S.p.A.; o The costs for assets are related to the purchase of Gas with Asm Dg S.r.l.; o The costs for assets are related to the purchase of Electricity with Veritas Energia S.p.A.; o The costs for services are connected to administrative services provided to Ascopiave S.p.A.; o The other costs relate to interest payable on the current account with Ascopiave S.p.A.; o The revenues for services are connected to gas transportation revenues and distribution services with Asm DG S.r.l.; o The other revenues relate to interests accrued on the current account with Ascopiave S.p.A.. - Unigas Distribuzione S.r.l.; o The costs for services are connected to gas transportation costs and distribution services with Blue Meta S.p.A.; o The revenues for assets concern the gas sale with Blue Meta S.p.A..

Costs for services to the subsidiary Asco TLC S.p.A. refer to a rental fee for the server. Revenues for the afore- mentioned subsidiary derive from the contract to supply gas and electrical energy and from service contracts drawn up

______Ascopiave Group – Annual Financial Report as at 31 st December 2014 153 Ascopiave Group ______between the parties.

The costs for assets due to Sinergie Italiane S.r.l. in liquidation relate to the purchase of natural gas for 2014 made by Ascotrade S.p.A. while costs and revenues for services relate to service contracts between the parties and re-invoicing of consultancy. It is also noted that the letters of comfort on lines of credit and on gas purchase contracts issued in favour of the subsidiary Sinergie Italiane S.r.l in liquidation amount to Euro 34,400 thousand as of 31 st December 2014 (Euro 70,002 thousand as of 31 st December 2013).

The costs for services for the subsidiary Seven Centre S.r.l. mainly refer to maintenance services for the natural gas distribution network. Furthermore: - the economic relations between the companies of the Group and the subsidiary companies occur at market prices and are eliminated in the process of consolidation; - the operations set up by the companies of the Group with correlated parties are part of normal management activity and are regulated at market prices; - with reference to the provisions of art. 150, paragraph 1 of Legislative Decree no. 58 of 24 th February 1998, no operations have been carried out that could potentially represent a conflict of interest with companies of the Group, by members of the Board of Directors.

Significant events after the end of 2014

No significant event occurred after the end of 2014.

Goals and policies of the group

As for the natural gas distribution segment, the Group intends to enhance its portfolio of concessions, aiming at confirming its service provision in the territorial areas served, in which it boasts a significant presence, and at expanding its activities to other fields, with the goal of increasing its market share and strengthen its local leadership. As for the segment of gas sale, the Group intends to implement the necessary actions to safeguard the current levels of profitability in an ever-changing market, through a trade policy focused on the proposition of differential pricing formulas and improvement of the quality of service. In this segment, the Group intends to pursue the objectives of increasing its market share by direct acquisition of new customers, and through extraordinary company mergers and/or partnerships.

Synthesis data as of 31 st December 2014 of jointly controlled companies consolidated through the equity method

Estenergy S.p.A. The Group holds a 48.999% stake in Estenergy S.p.A., a jointly controlled entity selling natural gas and electricity to end customers and wholesalers. The stake of the Group in Estenergy S.p.A. is recognized in the consolidated financial statements through the equity

______Ascopiave Group – Annual Financial Report as at 31 st December 2014 154 Ascopiave Group ______method. Please find below the economic and financial synthesis data related to the company, based on the financial statements prepared in compliance with IFRSs, and the reconciliation with the accounting value of the stake in the consolidated financial statements:

Balance Sheet - summary data (thousands of Euro) 31.12.2014 31.12.2013

Current assets 85,472 116,535 Non-current assets 73,854 76,521 Current liabilities 66,846 93,891 Non-current liabilities 6,402 7,742 86,079 91,423 Group interest 48.999% 48.999% Value of the shareholdings 42,178 44,796

Statement of profit/(loss) for the period (synthesis data);

Income Statement - summary data (Thousands of Euro) Financial year 2014 Financial year 2013 Revenues 153,735 249,060 Total operating costs 141,845 226,405 Gross operative margin 11,890 22,655 Amortization and depreciation 2,060 2,119 Operating result 9,830 20,536 Financial income 822 654 Financial charges 3,257 5,207 Earnings before tax 7,395 15,983 Taxes for the period 3,229 7,421 Result for the period 4,166 8,562 Group interest 48.999% 48.999% Net profit for the period attributable to the Group 2,041 4,195

Unigas Distribuzione S.r.l. The Group holds a 48.86% stake in Unigas Distribuzione S.r.l., a jointly controlled entity active in the distribution of natural gas. The stake of the Group in Unigas Distribuzione S.r.l. is recognized in the consolidated financial statements through the equity method. Please find below the economic and financial synthesis data related to the company, based on the financial statements prepared in compliance with IFRSs, and the reconciliation with the accounting value of the stake in the consolidated financial statements:

______Ascopiave Group – Annual Financial Report as at 31 st December 2014 155 Ascopiave Group ______

Balance Sheet - summary data (thousands of Euro) 31.12.2014 31.12.2013

Current assets 12,042 14,604 Non-current assets 45,572 43,227 Current liabilities 14,760 12,446 Non-current liabilities 2,138 3,779 40,716 41,607 Group interest 48.86% 48.86%

Value of the shareholdings 19,894 20,329

Statement of profit/(loss) for the period (synthesis data)

Income Statement - summary data (Thousands of Euro) Financial year 2014 Financial year 2013 Revenues 14,603 13,682 Total operating costs 9,729 8,946 Gross operative margin 4,874 4,737 Amortization and depreciation 2,269 2,118 Operating result 2,605 2,619 Financial income 21 133 Financial charges 40 59 Earnings before tax 2,586 2,692 Taxes for the period 876 1,052 Result for the period 1,710 1,641 Group interest 48.86% 48.86% Net profit for the period attributable to the Group 835 802

Asm Set S.r.l. The Group holds a 49% stake in Asm Set S.r.l., a jointly controlled entity selling natural gas and electricity to end customers and wholesalers. The stake of the Group in Asm Set S.r.l. is recognized in the consolidated financial statements through the equity method. Please find below the economic and financial synthesis data related to the company, based on the financial statements prepared in compliance with IFRSs, and the reconciliation with the accounting value of the stake in the consolidated financial statements:

______Ascopiave Group – Annual Financial Report as at 31 st December 2014 156 Ascopiave Group ______

(thousands of Euro) 31.12.2014 31.12.2013

Current assets 10,715 12,704 Non-current assets 5,820 6,315 Current liabilities 8,547 10,521 Non-current liabilities 1,089 1,086 6,900 7,413 Group interest 49.00% 49.00%

Value of the shareholdings 3,381 3,632

Statement of profit/(loss) for the period (synthesis data);

Income Statement - summary data (Thousands of Euro) Financial year 2014 Financial year 2013 Revenues 26,803 35,400 Total operating costs 25,382 33,254 Gross operative margin 1,421 2,146 Amortization and depreciation 209 212 Operating result 1,212 1,934 Financial income 39 79 Financial charges 27 21 Earnings before tax 1,224 1,991 Taxes for the period 513 903 Result for the period 711 1,088 Group interest 49.00% 49.00% Net profit for the period attributable to the Group 348 533

This statement has been cleared for publishing by the Board of Directors of Ascopiave S.p.A. during the 16 th March 2054 Meeting. Said publication shall be carried out pursuant to Law regulations. The Board has authorized the Chairman to modify this statement to perfect the form of this document within the time frame between 16 th March 2015 and the Shareholders’ Meeting in which this statement will be approved.

Pieve di Soligo, 16 th March 2015

Chairman of the Board of Directors Fulvio Zugno

______Ascopiave Group – Annual Financial Report as at 31 st December 2014 157 Ascopiave S.p.A. ______

Annual Financial Report As of 31 st December 2014

______st Ascopiave S.p.A. – Annual financial report as of 31 December 2014 1 Ascopiave S.p.A. ______

TABLE OF CONTENTS

Premise ...... 3 Statement of financial position as of 31 st December 2014 and as of 31 st December 2013 ...... 4 Income statement - FY 2014 and FY 2013 ...... 5 Statement of Cash Flows for the year 2014 and 2013 ...... 7 IAS/IFRS ACCOUNTING PRINCIPLES ADOPTED IN DRAWING UP THE BALANCE SHEET AS OF 31st DECEMBER 2013 ...... 8 Drafting criteria and compliance with IRFS ...... 8 Financial statements representation ...... 8 Accounting principles, amendments and interpretations applied from 1st January 2014 ...... 8 Use of estimates ...... 10 Assessment criteria ...... 10 Merger by incorporation of the subsidiary Asco Blu S.r.l. in Ascopiave S.p.A...... 17 INFORMATION ON MANAGEMENT AND COORDINATION ACTIVITIES ...... 17 Non-current assets ...... 18 Current assets ...... 26 Net shareholders' equity ...... 29 Non-current liabilities ...... 31 Current liabilities ...... 36 COMMENTS ON THE MAIN INCOME STATEMENT ITEMS ...... 40 Revenues ...... 40 Operational costs ...... 41 OTHER EXPLANATORY NOTES ...... 46 Non-recurring components ...... 46 Information on related parties ...... 46 Earnings per share ...... 47 Fees of the Auditing Company ...... 48 Commitments and risks ...... 48 Specific risks in the business sector in which the Company operates ...... 51 Significant events subsequent to year end 2014 ...... 53 Litigations ...... 53 Proposal of the Board of Directors to the Shareholders’ Meeting ...... 60

______st Ascopiave S.p.A. – Annual financial report as of 31 December 2014 2 Ascopiave S.p.A. ______

Premise Pursuant to the provisions set forth in Legislative Decree no. 32 dated 2nd February 2007, with which EU Directive 2003/51/EC was implemented, the Company avails itself of the possibility to draw up and prepare a single document for both the Report on Operations of the Parent Company Ascopiave S.p.A. and the Report on Consolidated Management, to be included in the Consolidated Financial Statements. Therefore, the Report on Consolidated Management also contains all information relating to the balance sheet of Ascopiave S.p.A., as required by article 2428 of the Italian Civil Code.

______st Ascopiave S.p.A. – Annual financial report as of 31 December 2014 3 Ascopiave S.p.A. ______

ASCOPIAVE S.p.A.

Statement of financial position as of 31 st December 2014 and as of 31 st December 2013

(Euro) 31.12.2014 31.12.2013

ASSETS Non-current assets Goodwill (1) 20,433,126 20,433,126 Other intangible assets (2) 262,788,450 258,478,963 Tangible assets (3) 35,556,524 36,507,842 Shareholdings (4) 183,037,099 179,082,061 Other non-current assets (5) 4,369,348 4,865,972 Non current financial assets (6) 3,124,060 561,000 Advance tax receivables (7) 9,070,257 10,539,354

Non-current assets 518,378,864 510,468,318 Current assets Inventories (8) 1,986,872 1,578,520 Trade receivables (9) 23,181,121 25,641,861 Other current assets (10) 30,432,021 20,001,399 Current financial assets (11) 45,153,279 28,931,698 Tax receivables (12) 732,105 135,154 Cash and cash equivalents (13) 71,838,303 2,523,751

Current assets 173,323,701 78,812,382 ASSETS 691,702,565 589,280,700 Net equity and liabilities Patrimonio netto Totale Share capital 234,411,575 234,411,575 Own shares (17,659.719) (17,659.719) Reserves 175,707,207 157,761,838 Total Net equity 392,459,063 374,513,694 Non-current liabilities Provisions for risks and charges (15) 250,000 Severance indemnity (16) 1,224,362 1,161,912 Medium- and long-term bank loans (17) 53,456,054 63,200,953 Other non-current liabilities (18) 3,673,871 1,612,805 Non-current financial liabilities (19) 3,326,734 552,414 Deferred tax payables (20) 14,686,101 18,380,480 Non-current liabilities 76,617,122 84,908,564 Current liabilities Payables due to banks and financing institutions (21) 184,665,042 89,371,312 Trade payables (22) 19,407,318 21,224,396 Tax payables (23) 255,403 Other current liabilities (24) 18,490,283 15,207,274 Current financial liabilities (25) 63,738 3,800,057 Current liabilities 222,626,380 129,858,442 Liabilities 299,243,502 214,767,006 Net equity and liabilities 691,702,565 589,280,700

______st Ascopiave S.p.A. – Annual financial report as of 31 December 2014 4 Ascopiave S.p.A. ______

Income statement - FY 2014 and FY 2013

(Euro) FY 2014 FY 2013

Revenues (26) 80,404.425 77,806.950

Total operating costs 50,206.286 48,886.881 Purchase costs for other raw materials (27) 1,299.094 1,387.770 Costs for services (28) 22,054.142 22,591.165 Personnel costs (29) 12,710.991 14,588.566 Other management costs (30) 14,168.894 11,458.733 Other income (31) 26.835 1,139.353 Amortization and depreciation (32) 15,410.700 14,220.269 Operating result 14,787.439 14,699.800 Financial income (33) 36,368.496 36,295.452 Financial charges (33) 2,352.960 2,609.178 Depreciation of shareholdings (33) 1,759.803 Earnings before tax 48,802.975 46,626.270 Taxes for the year (34) 5,174.647 6,573.433 Net result for the year 43,628.329 40,052.837 Statement of comprehensive income Components that can not be reclassified to the income statement Actuarial (losses) / gains from remesurement on defined-benefit obligation (70.367) (30.300) Total comprehensive income 43,556.962 40,022.537

______st Ascopiave S.p.A. – Annual financial report as of 31 December 2014 5 Ascopiave S.p.A. ______

Statement of changes in shareholders’ equity as of 31 st December 2014 and as of 31 st December 2013

(Euro) Share Legal Own Other Reserves IAS 19 Net Result Total net capital reserve shares reserves actuarial equity differences Balance as of 1 st January 2014 234,411,575 46,882,315 (17,659 ,7 18 ) 70,884,663 (57,977) 40,052,837 374,513,694

Allocation of 201 3 result 40,052,837 (40,052,837) (0)

Dividends paid to shareholders (26,665,726) (26,665,726)

IAS 19 TFR actualization for the (71,367) (71,367) year

Incorporation of Ascoblu S.r.l. 1,054,133 1,054,133

Purchase/Sale of own shares (0)

Net result of financial year 43,628,329 43,628,329

Balance as of 31 st December 2014 234,411,575 46,882,315 (17,659,718) 85,325,906 (129,344) 43,628,329 392,459,063

(Euro) Share Legal Own Other Reserves IAS 19 Net Result Total net capital reserve shares reserves actuarial equity differences Balance as of 1 st January 201 3 234,411,575 46,882,315 (17,108,647) 67,802,639 (27,677) 27,566,170 359,526,375

Allocation of 201 2 result 27,566,170 (27,566,170) (0)

Dividends paid to shareholders (24,484,147) (24,484,147)

IAS 19 TFR actualization for the (30,300) (30,300) year

Purchase/Sale of own shares (551,071) (551,071)

Net result of financial year 40,052,837 40,052,837

Balance as of 31 st December 201 3 234,411,575 46,882,315 (17,659,718) 70,884,663 (57,977) 40,052,837 374,513,694

______st Ascopiave S.p.A. – Annual financial report as of 31 December 2014 6 Ascopiave S.p.A. ______

Statement of Cash Flows for the year 2014 and 2013

(Euro) Financial year 2014 Financial year 2013 Net income of the year 43,628,329 40,052,837 Cash flows generated (used) by operating activities Adjustments to reconcile net income to net cash 14,948,785 15,700,130 Amortization and depreciation 15,410,700 14,220,269 Bad debt provisions 831,713 230,254 Variations in severance indemnity 62,450 53,686 Net variation of other funds (136,245) (6,608) Losses/(gains) on investments 1,759,667 Losses/(gains) on disposal fixed assets 665,746 (1,203,204) Interests paid (2,291,194) (2,446,102) Interest expense for the year 2,318,260 2,574,478 Taxes paid (7,087,291) (6,055,742) Taxes for the year 5,174,647 6,573,433 Variations in assets and liabilities (6,177,413) 3,386,096 Inventories (22,107) 860,005 Accounts payable 2,296,247 (2,873,283) Other current assets (11,294,369) (1,267,981) Trade payables (1,846,172) 3,332,441 Other current liabilities 2,495,302 3,391,519 Other non-current assets 33,085 (55,900) Other non-current liabilities 2,160,601 (706) Total adjustments and variations 8,771,372 19,086,225 Cash flows generated (used) by operating activities 52,399,701 59,139,063 Cash flows generated (used) by investments Investments in intangible assets (18,010,900) (15,288,167) Realisable value of intangible assets 3,099 4,902,254 Investments in tangible assets (1,446,753) (1,579,432) Realisable value of tangible assets 19,940 143,539 Disposal/(acquisitions) in investments and avances (4,000,000) 318,647 Other net equity operations (71,367) (30,300) Cash flows generated/(used) by investments (23,505,981) (11,533,459) Cash flows generated (used) by financial activities Net changes in non current financial liabilities 2,838,060 (60,639) Net changes in short-term bank borrowings 85,548,831 (74,951,227) Net changes in loans to subsidiaries (21,300,332) 9,438,486 Purchase of own shares 0 (551,071) Net changes in medium and long-term loans 0 36,182,506 Dividends paid to Ascopiave S.p.A. shareholders’ (26,665,726) (24,484,147) Cash flows generated (used) by financial activities 40,420,832 (54,426,092) Variations in cash 69,314,552 (6,820,488) Cash and cash equivalents at the beginning of the year 2,523,751 9,344,238 Cash and cash equivalents at the end of the year 71,838,303 2,523,751

______st Ascopiave S.p.A. – Annual financial report as of 31 December 2014 7 Ascopiave S.p.A. ______

IAS/IFRS ACCOUNTING PRINCIPLES ADOPTED IN DRAWING UP THE BALANCE SHEET AS OF 31st DECEMBER 2013

Drafting criteria and compliance with IRFS The Ascopiave S.p.A. balance sheet as of 31 st December 2014 was prepared in accordance with International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB) adopted by the European Commission as per art. 6 of the Regulation (EC) no. 1606/2002 of the European Parliament and of the European Council of 19 th July 2002, and 9 of Legislative Decree no. 38/2005. The annual financial report was drawn up based on the principle of historical cost, taking into account the adjustments as appropriate, with the exception of the budget items that under IFRS must be recognized at fair value as described in the evaluation criteria and according to the principle of going-concern. The Board of Directors held on March 16, 2015, authorized the publication of these financial statements drawn up based on the accounting records updated to 31 st December 2013 and audited by Ernst & Young S.p.A.. These financial statements consist of the Balance Sheet, Income Statement and Statement of Comprehensive Income, Statement of Changes in Equity and Cash Flow Statement, drawn up in Euros, as required by art. 2423 of the Civil Code, and by the notes, where, however, the information is given in thousands of Euros.

Financial statements representation The items of the balance sheet are classified into "current" and "non-current"; those in the income statement are classified by their nature; furthermore, the items of income suspended in equity are also highlighted in the comprehensive income.

The statement of changes in shareholders' equity reconciles the opening and closing balances of each net equity item, reconciling through the profit or the loss of the FY, operations with shareholders and variations in the net equity.

The financial statement has been defined according to the indirect method, by adjusting operating income of non- monetary components.

We believe that these schemes adequately represent the economic situation and financial position of the company.

Accounting principles, amendments and interpretations applied from 1st January 2014 The accounting policies adopted in the preparation of the financial statements are consistent with those used in preparing the financial statements as of 31 st December 2013. Here are reported the principles that came into force from the exercise in 2014, stating that they had no particular impact in the financial statements of the Company, as these relate to matters not present, or affect only the financial information:

IFRS 10 " Consolidated Financial Statements “and IAS 27” Separate Financial Statements ” IFRS 10 partially replaces IAS 27 and SIC 12 providing a new unified definition of the idea of control. An investor controls another company when he simultaneously has the power to direct the relevant decisions, the exposure to the future performance of the investment and the ability to use the power to affect the returns on investments. IAS 27 has been revised following to the introduction of IFRS 10 and provides a comprehensive guide on the preparation of individual financial statements only.

______st Ascopiave S.p.A. – Annual financial report as of 31 December 2014 8 Ascopiave S.p.A. ______

IFRS 11 “Joint control agreements ” and IAS 28 " Investments in associated companies and joint ventures ” IFRS 11 replaces IAS 31 "Interests in Joint Ventures" and applies to all companies that are part of agreements through which two or more parties, sharing the control through unanimous consent, have the power to direct the relevant decisions and to govern the exposure to future performances. Two types of agreements are identified: ‹ joint operation : the participant to the agreement enrolled in its financial statements its share of assets, liabilities, income and expenses; ‹ joint venture : the contractual agreement is managed by a company and the only participant in the agreement has the right to the net cash flows arising from the business. The share of participation in the joint venture is valued by the equity method.

The new IAS 28 reflects the changes in the classification of the joint control agreements introduced by IFRS 11 and is applicable only in the definitional parts of the individual balance sheet. Investments are valued at cost under IAS 27.

IFRS 12 "Disclosure of shares in other entities" The principle governing the information to be disclosed in the financial statements regarding subsidiaries and associated companies, joint operations and joint ventures, as well as to businesses vehicle (structured entities) not included in the consolidation area.

IAS 32 " Financial Instruments" IAS 32 and the amendments to IFRS 7 indicate, respectively, the criteria for the compensation of financial assets and liabilities and the related disclosure requirements. In particular, the amendments to IAS 32 require that: (i) in order to make a compensation, the offsetting right must be legally enforceable in all circumstances, i.e. both in the normal course of business and in case of insolvency, default or bankruptcy of one of the contractual parties; and (ii) upon the occurrence of certain conditions, the simultaneous settlement of financial assets and liabilities on a gross basis with the consequent elimination or significant reduction of credit risks and liquidity, may be considered equivalent to net settlement.

IAS 36 "Impairment of Assets" The principle reflects those contained in IFRS 13 introducing an obligation to disclose information in cases where a loss is detected or cancelled and the recoverable amount of the asset or of the cash generating unit corresponds to its fair value net of disposal charges

Accounting principles, amendments and interpretations not yet effective and not early adopted by the Group

The principles and interpretations which, at the date of preparation of the individual statement, had already been issued but were not yet effective are reported here below. The Company intends to adopt these standards when they become effective.

IFRIC 21 "Taxes"

IFRIC 21 clarifies that an entity recognizes a liability at the earliest when the event related to the payment occurs, in accordance with the applicable law. For payments due only after a minimum threshold, the liability is recognized only

______st Ascopiave S.p.A. – Annual financial report as of 31 December 2014 9 Ascopiave S.p.A. ______when this threshold is reached. The retrospective application of IFRIC 21 is required. This interpretation is to be mandatorily applied in financial statements beginning on 17 th June 2014 or later.

Use of estimates

The preparation of the financial statements and related explanatory notes in compliance with the IFRS requires the management to provide accounting estimates based on complex and/or subjective assumptions, on past experience and hypotheses that are considered reasonable and realistic and that are known at the estimates moment. The use of these estimates affects the values of the assets and liabilities reported on the financial statements and the information relating to potential assets and liabilities as of that date, as well as the amount of revenues and costs in the reference financial year.

Estimates are used to report:

• Duration and residual value of the goods in concession: the gas distribution activity is carried out as a concession, i.e. the local public bodies entrust the supply of the service to the company. Regarding the duration of concessions, Legislative Decree no. 164/00 (Letta Decree) stated that all concessions should be put to tender by the end of the "transitional period" (for Ascopiave S.p.A., between 31 st December 2010 and 31 st December 2012) and that the new term of the concessions will not exceed twelve years. Upon expiry of the concessions, the outgoing provider, against the sale of its distribution networks, with the exception of freely transferable assets, receives a compensation defined according to the criteria of business appraisal. In relation to the estimates made by the Management for determining the depreciation method, the net book value of assets at the expiration of the concession should not be higher than the above mentioned industrial value; • the effects of disputes on the application of distribution and/or sale tariffs, and those with the municipalities for the acknowledgement of the redemption value of assets as under the concession, returned upon its expiry; • Permanent reductions in the value of all non-financial assets: the Group assesses whether there are permanent reductions in the value of all non-financial assets. In particular, goodwill is tested for possible reductions in value at least annually and during the year if such indicators exist; this requires an estimate of use value of the cash- generating unit to which goodwill is assigned, in turn based on the estimated cash flows expected from the unit and their discounting on the basis of a suitable discount rate. Further details can be found under Note 1; • Inventory obsolescence; • Benefit plans for employees and share-based payment plans; • Taxation. The estimates and assumptions are reviewed periodically, and the variations are immediately reflected in the income statement. In applying the Group accounting principles, the directors have taken decisions based on the stated discretional evaluations, with a significant effect on the values reported on the statements. However, the uncertainty surrounding these assumptions and estimates may determine results that, in the future, will need to be significantly adjusted at the book value of such assets and/or liabilities.

Assessment criteria

The accounting principles adopted by Ascopiave S.p.A. are reported below.

Non-current assets ______st Ascopiave S.p.A. – Annual financial report as of 31 December 2014 10 Ascopiave S.p.A. ______

Goodwill: As of 1 st January 2005, goodwill refers to the surplus values paid for the acquisition of distribution companies, as well as to those recognized to the shareholders upon allocation of the distribution network. Goodwill is entered at cost price. As from the transition date of IFRS (1 st January 2005), goodwill is no longer depreciated is reduced by any impairment.

Goodwill is subject to an annual recoverability analysis or a more frequent one if events or changes in circumstances occur which can lead to the emergence of possible losses of value.

With the intent of analysing the recoverability, the examination is performed at the level of the smallest aggregate on the basis of which the Management evaluates, directly or indirectly, the return on investment (units which generate flows or groups of units) which includes the goodwill itself. Loss of value is determined by defining the recoverable value of a unit which generates flows (or groups of units) to which the goodwill is allocated. When the value entered in the financial statements of the cash generating unit which includes the goodwill attributed to it exceeds the recoverable value, the difference is subject to depreciation attributed as a matter of priority to the goodwill up to its amount; any depreciation surplus with respect to goodwill is ascribed pro-rata at book value of the assets which constitute the cash generating unit. Therefore, the original value is not restored if the reasons that determined the reduction in value cease to exist.

Other intangible fixed assets: other intangible fixed assets are entered at cost price, determined with the same method used for tangible fixed assets. For having a defined useful life, intangible assets are booked net of the accumulated relevant amortization operations and net of any losses in value, determined with the same basis indicated below for tangible assets. The useful life is then re-examined on an annual basis, and any changes, if necessary, made prospectively. Other intangible assets include agreements for service under concession between the public and the private sector (so- called service concession arrangements ) for the development, funding, management and maintenance of infrastructure under concession in which: (i) the grantor controls or governs the services provided by the operator through the infrastructure and the related price to apply; (ii) the grantor controls — through ownership, beneficial entitlement or otherwise — any significant residual interest in the infrastructure at the end of the term of the arrangement Intangible fixed assets with a defined life are verified annually in order to find any losses in their value when events or changes of situation indicate that the book value cannot be realized. Any profits or losses deriving from the sale of an intangible asset is determined as the difference between the disposal value and the book value of the asset, and are reported on the income statement at the time of the sale. The main economical-technical rates used are as follows

type plants useful life pipeline 45 connections 45 gas meters 15 reduction measure gas cabins 20 reduction measure gas groups 25 final reduction groups 20

______st Ascopiave S.p.A. – Annual financial report as of 31 December 2014 11 Ascopiave S.p.A. ______

Other intangible assets also include the charges paid to the grantors (municipalities) and/or to the retiring operators after awarding and/or the renewal of the relevant tenders for the distribution of natural gas. These items are amortized on a straight-line basis over the term of the concession period. The goods acquired though financial lease are booked at fair value, net of contributions within the scope of the lessee or, if lower, at the actual value of the minimum payments due for the leasing, including any amount to pay to exercise the purchase option, among the intangible assets in consideration of financial debt towards the lessor.

Tangible fixed assets: The tangible assets are booked at their historic cost, including accessory costs directly ascribable to the putting into operation of the asset for the use for which it was acquired. Lands - both free of constructions and annexed to civil and industrial buildings - were generally accounted for separately and are not depreciated since they are elements with an unlimited useful life. Maintenance and repair costs that are not subject to valuing and/or extending the residual useful life of assets are spent in the year in which they are borne. Otherwise, they are capitalised. Tangible assets are presented net of the relevant accumulated depreciation and any losses of value determined according to the basis described below. Amortisation is calculated in uniform instalments on the basis of the estimated useful life of the asset for the company, which is re-examined annually, and any changes, if necessary, are made prospectively.

The main economical-technical rates used are as follows Errore. Non si possono creare oggetti dalla modifica di codici di campo.

The book value of tangible fixed assets is subject to verification in order to report any loss of value, should events or changes of situation suggest that the book value may not be recovered. Should there be an indication of this type and in the event that the book value should exceed the presumed realisation value, the assets are depreciated until they reach their realisable value. The realisation value of the tangible fixed assets is represented by the greater of the net sales price and the value of use. Losses of value are reported on the income statement with the costs for amortizations and write downs. Such losses of value are restored should the reasons for their cause cease to exist.

When the asset is sold or if there are no future economic benefits expected from the use of the asset, it is eliminated from the financial statements and any loss or profit (calculated as the difference between the sale value and the book value) is entered in the income statement of the year of the above mentioned elimination.

Shareholdings: shareholdings in subsidiaries jointly controlled and associated companies are entered at the cost adjusted for any impairment. The value entered in the financial statements is determined on the basis of the purchase or subscription price. Shareholdings in subsidiaries, jointly controlled and associated companies are reviewed annually or, if necessary, more frequently, for impairment detection. The analysis of recoverability of the value entered in the financial statements is performed by comparing this value with the recoverable value, which is the higher between the fair value, net of disposal charges, and the use value. If there is no binding sale agreement, the fair value is estimated on the basis of the values expressed by an active market, by recent transactions or on the basis of the best information available to represent the amount that the company could obtain by selling the asset. The use value is determined by actualizing the

______st Ascopiave S.p.A. – Annual financial report as of 31 December 2014 12 Ascopiave S.p.A. ______asset's expected cash flows and, if considerable and reasonably determinable, by its transfer net of disposal charges. Cash flows are determined on the basis of reasonable assumptions which can be documented and which represent the best estimate of future economic conditions. The actualization is performed at a rate which reflects current market evaluations of the time value of money and of the specific risks of the asset not reflected in cash flow estimates. If there is evidence that these shareholdings have suffered an impairment loss, this is recognized in the income statement as depreciation. If the share of the controlled company exceeds the book value of the shareholding and the company has the obligation or the intention to cover such losses, the value of the shareholding is reduced to zero and the losses are recognized as a provision in the liabilities. If, subsequently, the loss is reduced or cancelled, the value is restated in the income statement, within the limits of the cost.

Current assets Inventories: inventories are booked at whichever of the following is lower: purchase cost, determined in accordance with the weighted average cost basis, or the estimated realizable net value. The net realisation value is determined on the basis of the estimated sales price in normal market conditions, net of direct sales costs. Obsolete and/or slow to realise inventories are written down in relation to their presumed possibility of use or future realisation. The write down is eliminated in the following years, should the reasons for its cause cease to exist. Trade receivables and other current assets: trade receivables, whose expiry is within normal commercial trading terms, are not discounted back and are booked at cost (identified by their par value) net of the relevant value losses. These are suited to their presumed realisation value through the reporting in a specific adjustment fund, which is constituted when there is objective evidence that the Company will be unable to receive credit for the original value. Provisions to the reserve for doubtful accounts are reported on the income statement.

Cash and cash equivalents: they include the ready cash values, i.e. values with the following requirements: availability at sight or in a very short term. They are booked at nominal value.

Non-current liabilities Benefits for employees: benefits guaranteed to employees, paid when or after employment ceases, by means of programs with defined benefits (Employees' leaving indemnities) or with other long-term benefits (retirement indemnity) are recognized in the period when the right accrues. Company bonds are determined separately for each plan, measuring the current value of future benefits that the employees have accrued in the current year and in the previous ones. This calculation is carried out with the projected unit credit method. The components of the defined benefits are established as follows: • the remeasurement components of liabilities, which include actuarial profits and losses, are immediately measured in the total Other revenue (losses); • Costs for the service performances are inscribed at their P&L account value; • Net financial costs on liabilities on defined benefits are entered in the P&L account.

The components found in total Other revenues (losses) may never be reclassified in the P&L account in the following years. ______st Ascopiave S.p.A. – Annual financial report as of 31 December 2014 13 Ascopiave S.p.A. ______

Compensation plans Compensation plans based on Ascopiave S.p.A. shares paid through shares (stock option plans, long-term incentive plans) are entered as liabilities and valued at the fair value at the end of each accounting period or at least up to their payment. Each following variation of the fair value is entered in the P&L account.

Reserves for risks and charges The reserves for risks and charges concern costs and charges of a given type, and of certain or probable existence, which on the closing date of the reference period are undetermined in terms of amount or due date. Provisions are reported when: (i) there is a current obligation (legal or implicit) that derives from a past event; (ii) an outlay of resources is likely in order to meet the obligation; (iii) a reasonable estimate can be made as to the amount of the obligation. On the other hand, if it is not possible to make an estimate of the obligation, or if it is deemed that the outlay of financial resources is only possible but not likely, the related potential liabilities are not entered in the financial statements, but it is detailed and described in the explanatory notes. Provisions are reported at the representative value of the best estimate of the amount that the company would pay to extinguish the obligation, or to transfer it to third parties upon period end. If the effect of discounting of the value of money is significant, the allocations are determined by discounting back the expected future financial flows at a pre-tax rate which reflects the market's current valuation of the value of money in relation to time. When discounting is carried out, the increase in the allocation due to the passing of time is reported as a financial charge.

Medium- and long-term loans: loans are initially booked at fair value, net of any transaction costs and, subsequently, are valued at amortization cost, calculated by applying the actual interest rate. When a condition of a long-term financing contract is violated, on or before the date of the financial statements, causing the liability to become payable on demand, the liability is classified as current, even if the lender has agreed - after the reference date of the financial statements and before the authorization for its publishing - not to require the payment as a result of the breach. The liability is classified as current because, as of the date of the financial statements, the entity does not have an unconditional right to defer its settlement for at least twelve months after that date.

Current liabilities

Trade receivable and other liabilities: trade receivables, whose expiry is within normal commercial trading terms, are not discounted back and are booked at cost (identified by their par value) net of the relevant value losses. Other payables are reported at cost (par value).

Current financial liabilities: Financial assets and liabilities are recognized at par value.

Own shares: Re-acquired own shares are taken as a decrease of the assets. The original cost of own shares, revenues from sales and any other subsequent variation are recognized under the net equity

Revenues and costs ______st Ascopiave S.p.A. – Annual financial report as of 31 December 2014 14 Ascopiave S.p.A. ______

Revenues and costs are booked on an accrual basis. The revenues from sales and service performance are recognized to the extent to which it possible to determine their fair value and it is likely that the connected economic benefits will be enjoyed upon transfer of the risks and advantages typical of the property or upon performance of the service. Depending on the type of operation, revenues are entered on the basis of the following specific criteria: • the revenues from natural gas transportation are recognized at the time when the supply or the service are provided - although not yet invoiced - and are determined according to the restriction on total revenues as provided for by the regulations issued by the Authority for Electricity and Gas; • the contributions received by users for connection services or for parcelling works, if not in relation to costs incurred into for network extension, are reported in the Income statement; • the revenues for service performance are recognized with reference to the level of completion of the activity, based on the same criteria applied to works performed upon order. In case it is impossible to determine their value, the revenues will not be not booked until the amounts of the costs incurred into are deemed recovered. • the revenues are entered net of all discounts, rebates and premiums, as well as the fees directly connected with the sale of the commodities and service performance;

Public contributions: public contributions are reported when there is a reasonable certainty that they will be received and all relevant conditions are met. When public contributions are linked to costs components, they are reported as income, but are systematically divided up over the periods, so as to be measured to the costs they are intended to offset. In case the contribution is related to an asset, the asset and the contribution are recorded at their nominal value and their recording into the income statement is accounted for progressively along the useful life of the reference asset, with constant shares.

Private contributions: private contributions received until 31st December 2013 for the construction of users derivations were recorded in full in the income statement when the costs for its realization and for the commissioned work were incurred. The received contributions for these works that were not related to the costs incurred for the realization of the same were suspended in liabilities and attributed in the income statement when the conditions were realized. The private contributions received for the construction of users derivations are recognized as of 1 st January 2014 in the liabilities at the time of payment and reattributed in the income statement, as of the date of the connection, in line with the detection of the costs related to the works and to their life. The new regulatory environment is a condition that leads to detect private contributions in ways that differ from the previous ones, without altering the value of the contributed assets. The new method of detection is not a change in accounting under IAS 8:16 a) and it is prospectively adopted from the year ended on 31 st December 2014.

Dividends received The dividends received by the controlled companies are recognized under the income statement at the time when their payment is due.

Financial income and expenses: income and costs are booked by competence according to the interests accrued on the net value of the relevant financial assets and liabilities, using the actual interest rate.

______st Ascopiave S.p.A. – Annual financial report as of 31 December 2014 15 Ascopiave S.p.A. ______

Income taxes: current taxes are calculated based on an estimate of the income before tax and are entered at the amount that is expected to be recovered or paid to the tax authorities. The rates and tax regulations used to calculate the amount are those issued or basically issued upon year end. Current taxation relating to elements reported directly under assets is reported directly as assets and not on the income statement.

As concerns taxes on companies' income (IRES) Ascopiave S.p.A. decided to join in 2013 for a three-year period the national tax consolidation regime, pursuant to articles 117/129 of the T.U.I.R. (Income Tax Consolidated Act). This option allows the determination of IRES on a taxable base made up of the sum of the negative and positive taxable amounts of companies joining the national tax consolidation regime. AscoHolding S.p.A., in its capacity as consolidating company, determines only one taxable base for the group of companies joining the national tax consolidation regime.

Each member company, including Ascopiave S.p.A., transfers its income tax (taxable income or tax loss) to the consolidating company; in particular, Ascopiave S.p.A. transfers a taxable income to the consolidating company, recognizing therefore in the income statement the item "tax consolidation charges" for an amount equal to the current IRES rate for the financial year, that will be paid by the parent company AscoHolding S.p.A..

Deferred taxes are calculated using the so-called liability method on the temporary differences resulting from the date of the statements between the tax values taken as reference for the assets and liabilities and the values reported on the statements. Deferred tax liabilities are reported against all taxable temporary differences, except for:

- when deferred payable taxes derive from the initial reporting of goodwill or an asset or liability in a transaction that is not a company merger and that, at the time of the transaction itself, has no effect on the profit of the year calculated for the purposes of the statements, nor on the profit or loss calculated for tax purposes;

- with reference to temporary taxable differences associated with holdings in subsidiaries, associated companies and joint ventures, should the reversal of the temporary differences be able to be controlled, and it is probable that this does not take place in a foreseeable future;

Advance taxes are reported against all deductible temporary differences and for tax assets and liabilities brought forward, in the amount in which the existence of suitable future tax income is probable that can make the use of the deductible temporary differences and tax assets and liabilities brought forward applicable, except when deferred payable tax assets connected with deductible temporary differences derive from the initial reporting of an asset or liability in a transaction that is not a company merger and that, at the time of the transaction itself, has no effect on the profit of the year calculated for the purposes of the statements, nor on the profit or loss calculated for tax purposes.

Merger by incorporation of the subsidiary Asco Blu S.r.l. in Ascopiave S.p.A. The subsidiary Asculum S.r.l. was merged into the parent company Ascopiave S.p.A., by application of 29th September 2014 with deed by the notary Maurizio Bianconi. The extraordinary transaction took civil, accounting and tax effect as of 1st January 2014. Please note that the financial statements as of 31st December 2013 of the subsidiary Asco Blu S.r.l. was drawn up in accordance with the Italian accounting principles. The Directors, following the merger that resulted in the recognition of assets and liabilities of the subsidiary in the financial statements of the merging as of 1st January 2014, have also

______st Ascopiave S.p.A. – Annual financial report as of 31 December 2014 16 Ascopiave S.p.A. ______evaluated the impact of the conversion of such items according to international accounting standards; in this case little significant amounts were found. The merger described above revealed a merger surplus of Euro 1,055 thousand for the cancellation of the investment, equal to Euro 11,410 thousand against the equity of the subsidiary IFRS as of 1st January 2014, equal to Euro 12,464 thousand, and net of the dividend paid by the subsidiary in April 2014, equal to Euro 1,226 thousand. This "surplus" has been recognized as equity reserves of the Company.

Heat branch divestment On 3rd December 2014 with deed by Maurizio Bianconi, Ascopiave S.p.A. transferred to the subsidiary Veritas Energia S.p.A. the business unit operating as sales of thermal energy, cooling and electricity. The branch is composed of human resources, of the signed contracts with customers for the business of selling energy, capital equipment needed to perform the activity, as well as other agreements with regards to the same branch and the receivables and payables related to branch. The price agreed between the parties for the sale of the branch in question corresponds to Euro 202 thousand, equal to the book value. This amount was paid by the purchaser before the year-end. The above operation has resulted in the closure of the items recorded as assets (Euro 249 thousand) and liabilities (47 thousand). Given the non- significance of the amount, with sole reference to the business unit ceased, the profit earned from it and the corresponding comparative figures for the previous year have not been presented in one specific line on the income statement (profit (loss) from discontinued operations/ assets held for sale) as required by IFRS 5.

INFORMATION ON MANAGEMENT AND COORDINATION ACTIVITIES

Ascopiave S.p.A. is not subject to management and coordination activities on the part of AscoHolding S.p.A. since it operates in conditions of corporate and entrepreneurial autonomy with respect to its parent company. Ascopiave S.p.A. avails itself of some services offered by Asco Holding S.p.A. and other subsidiary companies, under market conditions, for organization and economic reasons.

______st Ascopiave S.p.A. – Annual financial report as of 31 December 2014 17 Ascopiave S.p.A. ______

EXPLANATORY NOTES AND COMMENTS ON THE MAIN ITEMS OF THE STATEMENT OF ASSETS AND LIABILITIES

Non-current assets

1. Goodwill

Goodwill, equal to Euro 20,433 thousand at the end of the reference period, refers in part to the surplus value created by the contribution of the gas distribution networks by the local authorities in the period between 1996 and 1999, and in part to the surplus value paid during the acquisition of some branches of the company related to the distribution of natural gas. In accordance with International Accounting Principle 36, goodwill is not subject to depreciation, but its impairment is verified at least annually. The depreciation audit on goodwill has been carried out by checking the depreciation in the activities of natural gas distribution, comparing the recoverable value of the relevant assets with their accounting value, including the goodwill allocated to them. As no reliable criteria exist to evaluate the sales value between the aware and available parties in the activities of gas distribution, other than the criteria put forward in literature to evaluate the branches of a company, the recoverable value of the audited activity is defined by its use value.

The value recoverable from the financial flow-generating unit in the distribution of natural gas has been estimated using the Discounted Cash Flow method, discounting back the operating financial flows generated by the activity itself at a discount rate representative of the cost of capital. Cash flows used for the calculation of the recoverable value receive the forecasts made by the management in the business plan 2015-2017 approved by the Board of Directors on 24 th February 2015.

The current legislation establishes that the natural gas distribution service is provided by means of tender procedures in the territorial areas within pre-established time limits. The tenders for the award of the service in the territorial areas where the Company currently holds the municipal concessions– if the deadlines illustrated in the so-called Criteria Decree (Ministry for Economic Development Decree 226/2011) and following modifications are respected with regards to the tenders publication– will mainly take place during the three-year period 2015-2017. Although it is reasonable to believe that some tenders will be banned and awarded before 31 st December 2017 - even assuming that the tender procedures have an extended duration - the business plan, and thus the valuation method adopted for determining the value of use of the company's activities, suggests that the same, in the three years 2015-2017, will keep the management of the portfolio of municipal concessions. It should be noted that in March 2015 (L 11/2015) an extension for the publication of the call for tender for the areas belonging to the first batch was ordered.

With reference to the activity of gas distribution, it was hypothesised that in the three-year period 2015-2017 the management would generate financial flows in line with those envisaged in the Economic and Financial Plan 2015- 2017 while, considering the uncertainty that bears on the renewal of concessions, it has been decided to estimate the final value of the company’s activities by hypothesising two alternative scenarios:

______st Ascopiave S.p.A. – Annual financial report as of 31 December 2014 18 Ascopiave S.p.A. ______

• Scenario 1: the Company obtains in 2017 the renewal of all the concessions and credits in effect on 31st December 2014. • Scenario 2: the Company ends the activity of gas distribution in 2017, realising the return value of the plants as per Art. 15 of Legislative Decree no. 164/2000; as modified by new regulation (L 9/2014 and L 166/2015);

With reference to the first scenario, the terminal value has been estimated as an estimate of a perpetuity as from the last year specified in the financial forecasts, and considering the economic terms and conditions of the renewals. The growth factor (g) used for the purpose of calculating final value, estimated at 1.5%, in line with the International Monetary Fund forecasts for 2019.

The cost of capital (WACC) was calculated assuming:

a) the sector-average coefficient beta levered, as indicated by the AEEG with Deliberation no. 573/2013/R/GAS dated 12 th December 2013; b) the level of financial leverage (ratio between financial debt and own means) is in line with the financial structure of reference presumed by the AEEG with Deliberation no. 573/2013/R/GAS dated 12 th December 2013; c) A market risk premium of 5% in line with the market procedure; d) the Risk-Free Rate adopted - equal to net yields on 10-year government bonds recorded as peak value as of 31 st December 2014 e) the average cost of debt equal to the annual average of the Euro - Swap to 10 years, calculated at 31 st December 2014, increased by a spread of 3%

On the basis of these elements, the average weighted cost of the post-tax capital will be equal to 5.21%. These rates have been used for updating cash flows in the period provided for by the Plan 2015-2017. The cost of capital used to determine the value of the perpetuity and the rate of discounting of the terminal value is equal to 5.84% and was calculated on the basis of the above parameters and providing for an "additional risk premium "for the calculation of the cost of equity (Ke) of 1%, to take into account the uncertainty on the possible renewal of the concessions and their conditions of renewal.

On the basis of these elements, for both scenario 1 and 2 the recoverable value of the company assets is higher than the accounting values and therefore the conditions are not met to proceed to devaluing the goodwill for depreciation.

The results obtained were subjected to sensitivity tests, in order to find as the result of this evaluation process might change depending on the change of the profitability parameters assumed in the future cash flows, the growth rate considered in determining the terminal value or the discount rate to update the cash flow. This analysis has led the Directors to evaluate that the expected cash flows are such that they can absorb normal variations of the parameters highlighted with respect to the sensitivity analysis generally performed in the evaluation process. As for the results of such analysis, please refer to the consolidated financial statement.

______st Ascopiave S.p.A. – Annual financial report as of 31 December 2014 19 Ascopiave S.p.A. ______

2. Other intangible fixed assets

The changes in the historical cost and accumulated amortization of intangible assets at the end of the each period considered are shown in the following table:

31.12.2014 31.12.2013 Accumulated Accumulated Historic cost Net value Historic cost Net value (Thousands of Euro) depreciation depreciation Industrial patent and intellectual property rights 4,014 (3,489) 525 3,991 (3,341) 650 Concessions, licences, trademarks and similar rights 9,887 (3,310) 6,577 9,887 (2,567) 7,319 Other intangible assets 1,241 (709) 531 1,241 (656) 585 Intangible assets under IFRIC 12 concession 439,120 (193,074) 246,047 424,795 (181,518) 243,277 Intangible assets in progress under IFRIC 12 concession 9,109 0 9,109 6,648 0 6,648 Other intangible assets 463,370 (200,581) 262,788 446,561 (188,082) 258,479

The changes in the inventory allowance for the other intangible assets in the period considered are shown in the following table:

31.12.2013 31.12.2014 Change for the Amortizations Net value Decrease Depreciations Net value year during the year (Thousands of Euro) Industrial patent and intellectual property rights 650 23 0 148 0 525 Concessions, licences, trademarks and similar rights 7,319 (0) 0 743 0 6,577 Other intangible assets 585 0 0 53 0 531 Intangible assets under IFRIC 12 concession 243,277 15,499 1,173 12,235 679 246,047 Intangible assets in progress under IFRIC 12 concession 6,648 2,489 29 0 0 9,109 Other intangible assets 258,479 18,011 1,202 13,178 679 262,788

The investments made during the financial year are equal to Euro 18,011 thousand and are mainly related to costs for the construction of infrastructures for natural gas distribution.

Industrial patents and intellectual property rights During the financial year, no relevant investments were allocated to “Industrial patents and intellectual property rights”. The item variation is due to the amortization instalments for the year, amounting to Euro 148 thousand.

Concessions, licences, trademarks and similar rights They represent the costs for the acquisition of licences and servitude rights connected to the natural gas distribution network. The credit lines obtained after being placed in the tender because of the implementation of the Decree n. 164/00 (Letta Decree), providing that all contracts must be included in the tender by the end of the "transitional period", were amortised in a useful life of twelve years under the period established by the same Decree. During the fiscal year the item has registered some variations for the amortisation shares only

Other intangible fixed assets The item “other tangible fixed assets", amounting to Euro 531 thousand, is related to the construction works of a co- generation plant near Venice. The goods acquired though financial lease are booked at fair value, net of contributions within the scope of the lessee or, if lower, at the actual value of the minimum payments due for the leasing, including any amount to pay to exercise the purchase option, among the intangible assets in consideration of financial debt towards the lessor. The change during the year is explained by the amortization, the useful life attributed to the tangible fixed assets is equal to the duration of the financial leasing.

Leased plants and machinery ______st Ascopiave S.p.A. – Annual financial report as of 31 December 2014 20 Ascopiave S.p.A. ______

The item reports the costs incurred into for the construction of facilities and distribution network of natural gas, the related connections as well as for the installation of measurement and reduction groups. At the end of the financial year, the item shows a net book value of Euro 246,047 thousand. The investments made for the construction of infrastructure suitable for the distribution of natural gas, including the reclassification of assets in progress, amount to Euro 15,499 thousand and mainly relate to the implementation of the distribution network of natural gas for Euro 3,716 thousand, and to the creation of connections for Euro 3,957 thousand. Investments for the installations of gas meters amount to Euro 2,497 thousand. The investments made for the installation of meters are instead of Euro 5,071 thousand and mainly related to the installation of electronic meters in compliance with resolution 155/07 of AEEGSI. It should be noted that the activity of implementing the network of natural gas has involved the installation of 35,625 meters of pipelines (41,998 in 2013).

Leased intangible fixed assets in progress The item includes the costs incurred into for the building of the natural gas distribution plants and systems constructed partially on a time and materials basis and not completed at the end of the financial year. The item involved investments amounting to Euro 2,489 thousand.

3. Tangible fixed assets

The changes in the historical cost and accumulated amortization of tangible assets at the end of each period considered are shown in the following table:

31.12.2014 31.12.2013 Accumulated Accumulated Historic cost Net value Historic cost Depreciation Net value (Thousands of Euro) depreciation depreciation Lands and buildings 36,091 (7,535) 28,556 35,777 (6,438) 0 29,339 Plant and machinery 4,567 (1,613) 2,954 4,558 (1,333) 0 3,225 Industrial and commercial equipment 2,712 (2,160) 552 2,603 (1,984) 0 619 Other tangible assets 12,960 (9,973) 2,988 12,429 (9,295) 0 3,134 Tangible assets in progress and advance payments 506 0 506 331 0 (140) 191 Other tangible assets 56,837 (21,281) 35,557 55,698 (19,050) (140) 36,508

The following table marks the variations in the tangible fixed assets item during FY 2013.

31.12.2013 31.12.2014 Change for the Amortizations Net value Decrease Revaluation Depreciations Net value year during the year (Thousands of Euro) Lands and buildings 29,339 314 0 1,097 0 0 28,556 Plant and machinery 3,225 9 0 280 0 0 2,954 Industrial and commercial equipment 619 109 0 176 0 0 552 Other tangible assets 3,134 683 151 813 0 135 2,988 Tangible assets in progress and advance payments 191 177 2 0 140 0 506 Other tangible assets 36,508 1,292 153 2,366 140 135 35,557

Land and buildings This item is mainly made up of the buildings owned in relation to company headquarters, offices and warehouses as well as masonry works for the natural gas decompression chambers. During the year, no significant investments were made and the item variation is due to current assets under construction for the completion of works on company offices for Euro 314 thousand in total

Plants and machinery The item "Plants and machinery" increased from Euro 3,225 thousand in the previous fiscal year, to Euro 2,954 ______st Ascopiave S.p.A. – Annual financial report as of 31 December 2014 21 Ascopiave S.p.A. ______thousand in the fiscal year of reference. The item variation is due to the amortization instalments for the year,

Industrial and commercial equipment In the period considered, the item “Industrial and commercial equipment” registered investments equal to Euro 109 thousand. The item refers to the purchase of equipment for the maintenance service of the distribution plants and for measurement activity.

Other assets The investments made during the first nine months of the year increased the voice “Other assets ”, for Euro 683 thousand, and they mainly relate to the costs incurred into for the purchase of hardware for Euro 280 thousand and for the purchase of office furniture for Euro 369 thousand.

Tangible assets in progress and advance payments This item includes costs for the construction of co-generation plants, partially made in economics. The revaluations, amounting to Euro 140 thousand, are explained by the recovery of fixed assets recorded for the construction of a cogeneration plant site in the Venetian area and written down in the previous year The finalization of the agreements, which occurred during the year, allowed the recovery of the works.

4. Shareholdings:

The following table shows the changes in the shareholdings interest in other companies by Ascopiave S.p.A. as of 31 st December 2014:

______st Ascopiave S.p.A. – Annual financial report as of 31 December 2014 22 Ascopiave S.p.A. ______

Share Total net Result for the Name Location % Book value capital equity year Controlled companies Ascotrade S.p.a. Pieve di Soligo (TV) 1,000,000 27,633,627 13,594,801 89% 4,809,636 ASM DG S.R.L. Rovigo (RO) 7,000,000 11,692,813 861,831 100% 14,964,474 Edigas Esercizio Distribuzione Gas S.p.A. Cernusco sul Naviglio (MI) 1,000,000 8,551,881 949,993 100% 23,317,602 Pasubio Servizi S.r.l. Schio (VI) 250,000 4,652,348 1,771,944 100% 23,053,908 Blue Meta S.p.A. Orio Al Serio (BG) 606,123 8,113,687 3,272,048 100% 35,322,544 Veritas Energia S.r.l. Venezia (VE) 1,000,000 4,212,055 2,290,411 100% 5,713,503 Amgas Blu S.r.l. Foggia (FG) 10,000 1,627,812 1,362,490 80% 11,364,738 Etraenergia S.r.l. Cittadella (PD) 100,000 185,293 6,873 51% 357,000 Total shareholdings in controlled companies 118,903,405

Share Total net Result for the Name Location % Book value capital equity year Jointly controlled companies Estenergy S.p.A. Trieste (TS) 1,718,096 16,601,601 4,960,864 48.999% 39,838,121 ASM SET S.R.L. Rovigo (RO) 200,000 1,659,660 799,986 49.00% 3,333,229 Unigas Distribuzione S.r.l. Nembro (BG) 3,700,000 39,263,102 1,683,505 48.86% 20,652,416 Total shareholdings in jointly controlled companies 63,823,767

Share Total net Result for the Name Location % Book value capital equity year Affiliated companies Sinergie Italiane S.r.l. - in liquidazione Milano (MI) 1,000,000 (23,229,781) 1,648,725 30.94% 309,400

Share Total net Result for the Name Location % Book value capital equity year Shareholdings in other companies B. Cred. Coop. Prealpi 528

It is to be pointed out that the net equity and results for the period of the controlled or jointly controlled companies reported in the tables above refer to financial statements for the periods ended 31 st December 2014 and approved by the Boards of Directors of the associated companies.

The following table summarizes the changes in shareholdings in the reference period:

31.12.2013 31.12.2014 Change for the Net value Increase Decrease Net value (Thousands of Euro) year Shareholdings in controlled companies 113,235 4,000 (45) 1,714 118,904 Shareholdings in jointly controlled companies 65,537 (1,714) 63,824 Shareholdings in associated companies 309 309 Shareholdings in other companies 1 1 Total shareholdings 179,082 4,000 (45) 0 183,037 The item equity investments in subsidiaries recorded an overall increase of Euro 4,000 thousand due to the acquisition of the remaining 49 % of the shares of Veritas Energia S.p.A. The increase was partially offset by the negative differential, equal to Euro 45 thousand, resulting from the merger of Asco Blu S.r.l. in Ascopiave S.p.A. which saw the cancellation of the investment recorded in the merged company and the registration of the equity interest in Amgas Blu S.r.l. It should be noted that the share of the associate in Veritas Energia S.p.A. as of 31 st December 2013, amounting to Euro 1,714 thousand, was reclassified in equity investments in subsidiaries. It should be noted that during the year the 100% merger of the subsidiary Edigas Due S.p.A. in the 100% subsidiary Blue Meta S.p.A. took place. Consequently, the share held by Ascopiave S.p.A. in the merged company, equal to Euro 13,014 thousand, increased the share in the incorporating company by the same amount. ______st Ascopiave S.p.A. – Annual financial report as of 31 December 2014 23 Ascopiave S.p.A. ______

The comparison between the value of the investments in subsidiaries and joint ventures and the share attributable to the Company highlights situations in which the value entered in the financial statement exceeds the total net assets of the subsidiary as of 31st December 2014. At the end of the annual assessment of the eventual reduction of the values entered in the financial statements in Subsidiaries and joint ventures, we proceeded to determine the use value for each. The use value was calculated by using the projected cash flows contained in the 2015-2017 business plans of the individual subsidiaries that have been approved by the Board of Directors on February 24th 2015.Following the results of the impairment tests on the single shareholdings, no depreciation was recognized. The main criteria adopted in evaluating impairment, both in terms of growth rates for other periods than those illustrated on the plans and in terms of discount rate, are consistent with those considered in the impairment tests of the goodwill allocated to the CGU in the consolidated financial statements.

5. Other non-current assets

The following table shows the details of the items included under the "Other non-current assets" in the financial years considered:

(Thousands of Euro) 31.12.2014 31.12.2013 Deposits and guarantees 407 440 Other receivables 3,963 4,426 Other non-current assets 4,369 4,866

The item “Other non current assets” decreases from Euro 4,866 thousand of 2013 to Euro 4,369 thousand of 2014, a Euro 497 decrease, mainly due to the decrease of the item “Other receivables”. The change from the other receivables item (Euro 497 thousand) is mainly explained from the adjustment of credit liability to the municipality of Creazzo, equal to Euro 2,141 thousand, to the redemption value enshrined in Euro 1,678 thousand, with the Court of Vicenza judgment of 25 th August 2014.

The item “Other receivables” in composed by: • Receivables from the local authority of Creazzo, for a value of Euro 2,141 thousand corresponding to the net book value of the distribution plants awarded in June 2005 for the natural expiry of the concession corresponding, pursuant to "Letta" Legislative decree, art. 15 subpar. 5, to the industrial value of the net according to evaluation reported in the experts’ examination. During the year 2014, the litigation with the Municipality about the value of the delivered distribution plant ended with the judgment of the Court of Vicenza, which enshrined in Euro 1,678 thousand the value of the refund, leading to a devaluation credit for Euro 463 thousand. The Company maintains good reason to believe it can recover the least recognition of the credit in the following states of the dispute that however is not maintained in writing and has became, as a result of that judgment, a contingent asset. • Receivables from the municipality of Santorso, for Euro 748 thousand. This amount corresponds to the net book value of the distribution plants awarded in August 2007 to the Municipality itself and the delivery of the infrastructures took place after the expiry of the concession on 31 st December 2006. The value of the receivable from the municipality of Santorso corresponds to the 'Letta' law, article 15, paragraph 5, as indemnification of

______st Ascopiave S.p.A. – Annual financial report as of 31 December 2014 24 Ascopiave S.p.A. ______

the industrial value of the network, in line with the estimations outlined in a suitable appraisal. • Receivables from the municipality of Costabissara, for Euro 1,537 thousand. This amount corresponds to the net book value of the distribution systems delivered on 1 st October 2011 to the Municipality; the delivery of infrastructures happened at the natural expiry date of the concession. The value of the credit is equal to the net book value of the divested asset, considered lower than the reconstruction value as per new request of the Local Body.

As of 31 st December 2014 there is an ongoing litigation with the municipalities mentioned in order to define the value of compensation of distribution systems delivered.

6. Non-current assets

The following table shows how the items of “Non-current financial assets” are broken down at the end of each period considered

(Thousands of Euro) 31.12.2014 31.12.2013 Security deposits after 12 months 2,838 Other financial receivables after 12 months 286 561 Non current financial assets 3,124 561

Non-current financial assets relate to a remaining credit liability to the town of San Vito di Leguzzano, whose repayment plan provides for repayment in 2015 (classified under current financial assets) and in the year 2016, classified as non-current financial assets. It should be noted that during the year 2014 the due were regularly paid regularly by the Municipality. The bonds and long-term financial deposits relate to the purchase of ready securities against to two years term made by cash paid by Veritas S.p.A. by way of security deposit provided as collateral on trade receivables of Veritas Energia S.p.A. at the time of acquisition by Ascopiave S.p.A. of 49% of Veritas Energia S.p.A. for Euro 2,838 thousand.

7. Advance tax receivables

The advance tax receivable go from Euro 10,539 thousand to Euro 9,070 thousand with a decrease of Euro 1,469 thousand as reported in the following table.

(Thousands of Euro) 31.12.2014 31.12.2013 Advance tax receivables 9,070 10,539 Advance tax receivables 9,070 10,539

The Company has been performing a full accounting of advance taxes concerning temporary differences between tax- imposition and balance sheet value, as the Group supposes that future tax-imposition could take up all differences that generated them. In determining the advanced taxes, we referred to IRES (taxes on the companies income) and, where applicable, to the current IRAP at the moment in which the temporary differences are supposed to be deposited again. In particular, a 27.5% IRES tax rate, and a 4.2% IRAP tax rate were applied in accordance with the changes introduced by Law 111 dated 15 th July 2011 to art. 23, paragraph 5 of Legislative Decree 98 dated 6 th July 2011.

______st Ascopiave S.p.A. – Annual financial report as of 31 December 2014 25 Ascopiave S.p.A. ______

It should be noted that, following the declaration of unconstitutionality of the IRES called " Robin Hood Tax ", sanctioned with sentence no . 10 for the year 2015 by the Constitutional Court, the Company has adjusted the value of tax assets calculated, releasing in the loss account € 1,953 thousand due to the fact that, when the temporary differences reverse, the tax effect previously thought for this higher rate will no longer be recoverable. The total value of the temporary differences and the amounts on which the deferred tax assets were calculated are as follows:

31/12/2014 31/12/2013 Temporary Temporary Description Tax rate Total effect Tax rate Total effect differences differences Allocation of bad debt provisions 1,303 27.5% 358 820 34.0% 279 Allocation of inventory write-down 27 31.7% 8 413 38.2% 158 Risks fund 250 27.5% 69 0 34.0% 0 Exceeding amortizations IRES 14,997 27.5% 4,124 11,781 34.0% 4,005 Exceeding amortizations 2007 over 2013 13,495 31.7% 4,278 14,048 38.2% 5,366 Other 408 31.7% 129 383 38.2% 146 Phantom stock option 0 27.5% 0 57 34.0% 19 Allocation of assets 0 27.5% 0 140 34.0% 48 Canons concessional deductible in futurte years 373 27.5% 103 1,520 34.0% 517 Total advance taxes 9,070 10,539

Current assets

8. Inventories:

The shareholders' equity at the end of the periods considered is analysed in the following table:

31.12.2014 31.12.2013 (Thousands of Euro) Gross value Bad debt Net value Gross value Bad debt Net value Fuels and warehouse materials 2,014 (27) 1,987 1,992 (413) 1,579 Total inventories 2,014 (27) 1,987 1,992 (413) 1,579

Inventories are mainly represented by materials used for maintenance or constructions works of the natural gas distribution plants and they are entered into the balance sheet under the Net Devaluation of Inventory fund in order to adapt their value to the opportunities for their clearance or use. At the end of the fiscal year, the item marks an increase of Euro 408, from Euro 1,579 thousand of the previous year to Euro 1,987 thousand in the year of reference. The analyses carried out on the codes rotation and on their residual usability, but especially the effects of the warehouses centralised management, have resulted in the ability to determine a new and lower devaluation fund, with a consequent release in the income statement of Euro 386 thousand.

9. Trade receivables

The following table shows how the items are broken down for each period considered:

(Thousands of Euro) 31.12.2014 31.12.2013 Trade receivables 10,282 13,118 Trade receivables for invoices to be issued 13,595 13,114 Bad debt provisions (696) (590)

Trade receivables 23,181 25,642

Trade receivables are entered net of the advance payments in bills and net of provision for doubtful accounts accrued as of the closing date of the financial year. These receivables are due within the following financial year, and mainly relate to natural gas transportation service on the distribution network. The item increases from Euro 25,642 thousand of the previous fiscal year, to Euro 23,181 thousand of the current

______st Ascopiave S.p.A. – Annual financial report as of 31 December 2014 26 Ascopiave S.p.A. ______financial year, with a decrease of Euro 2,461 thousand. The decrease is mainly explained by the decrease in trade receivables (Euro 2,836 thousand), partially offset by higher bills to be issued (Euro 481 thousand). All receivables from clients are entirely made up of Italian debtors.

The changes in the provision for doubtful accounts are shown in the following table:

(Thousands of Euro) 31.12.2014 Initial bad debt provision 590 Disposal branch (219) Provisions 368 Utilization (43) Final bad debt provision 696

The increase in the provision for bad debts is mainly explained by the provisions for the year partially offset by a decrease in the provision due to the sale of the business unit related to the supply of electricity, heat and hot water, carried out by means of cogeneration plants, to end customer having an agreement. The sale of the subsidiary to Veritas Energia S.p.A. involved the transfer to the latter of receivables outstanding at the date of signing of the contract and the fund related to them (Euro 219 thousand). At the end of 2014 the use of the valuation allowance for uncollectible credit amounted to Euro 43 thousand while the provisions recorded at the end of the year (Euro 368 thousand) are related to receivables towards companies selling natural gas for the transmission service. Trade receivables will be due within the following year and no significant receivable amount has currently expired.

10. Other current assets

The following table shows how the item is broken down for each period considered: (Thousands of Euro) 31.12.2014 31.12.2013 Tax consolidation receivables 813 1,291 Annual pre-paid expenses 672 390 Advance payments to suppliers 4,532 2,793 annual accrued income 185 Receivables due from Conguaglio Settore Elettrico 23,445 15,050 VAT Receivables 654 74 UTF and Provincial/Regional Additional Tax receivables 82 157 Other receivables 51 246 Other current assets 30,432 20,001

Other current assets showed an increase of Euro 10,431 thousand, from Euro 20,001 thousand in 2013 to Euro 30,432 thousand in 2014. The increase is mainly explained by the increase in receivables in respect of the Equalisation Fund for the electricity sector for Euro 8,394 thousand, by the increase in advances to suppliers for Euro 1,739 thousand, and by higher VAT credits for Euro 580 thousand. The increase in receivables from the Electric Sector Compensation Fund are mainly due to the increase in the energetic saving targets set by the AEEG for 2014, as well as by the increased contribution to the achievement thereof.

______st Ascopiave S.p.A. – Annual financial report as of 31 December 2014 27 Ascopiave S.p.A. ______

11. Current financial assets

The following table shows how the item is broken down for each period considered: (Thousands of Euro) 31.12.2014 31.12.2013 Controlled companies 19,758 12,761 Jointly controlled companies 25,120 14,228 Other financial current assets 275 1,943 Current financial assets 45,153 28,932

Current financial assets amount to Euro 45,153 thousand, an increase compared to the previous year amounting to Euro 16,222 thousand. The item includes balances of intercompany accounts through which the company managed the Group Treasury, granting the necessary funding to its subsidiaries and affiliates, in order to meet their financial requirements. The item "Other current financial assets", equal to Euro 275 thousand, includes the credit liability to the town of San Vito di Leguzzano, as explained in paragraph “Other non-current assets”, which will be repaid during the year 2015.

Hereby the composition of financial assets from subsidiary and joint-control companies for the two years is highlighted.

(Thousands of Euro) 31.12.2014 31.12.2013 c/c intercompany Ascotrade 11,557 9,733 c/c intercompany ASM Distribuzione Gas Srl 1,645 1,860 c/c intercompany Etra Energia 1,623 C/C intercompany Edigas Es. Distribuzione Gas Spa 1,553 498 C/C intercompany Pasubio Servizi Srl 104 C/C intercompany Ascoblu Srl 0 395 C/C intercompany Blue Meta S.p.A. 1,307 275 C/C intercompany AMGAS BLU Srl 1,970 c/c intercompany Estenergy Spa 6,370 9,800 C/C intercompany Veritas Energia Srl 17,839 2,902 C/C intercompany ASM SET SRL 911 1,526

Current financial assets 44,878 26,989

The variation, equal to Euro 17,889 thousand, is mainly explained by higher loans granted to the subsidiaries Veritas Energia S.p.A. (Euro 14,937 thousand), Ascotrade S.p.A. (Euro 1,824 thousand), Amgas Blu S.r.l. (Euro 1,970 thousand) and Etra Energia S.r.l. (Euro 1,623 thousand). The same were partially offset by lower balances registered against the jointly controlled companies Estenergy S.p.A. (Euro 3,430 thousand) and Asm Set S.r.l. (Euro 615 thousand).

12. Tax receivables

The following table shows how the items are broken down for each period considered: (Thousands of Euro) 31.12.2014 31.12.2013 Receivables related to IRAP 283 Receivables related to IRES 314 Other tax receivables 135 135 Tax receivables 732 135

______st Ascopiave S.p.A. – Annual financial report as of 31 December 2014 28 Ascopiave S.p.A. ______

Tax credits increased from Euro 135 thousand in 2013 to Euro 732 thousand in 2014 showing an increase of Euro 597 thousand due to higher down payments made during the year 2014 of the actual tax due.

13. Cash and cash equivalents:

The following table shows how the items are broken down at the end of each period considered: (Thousands of Euro) 31.12.2014 31.12.2013 Bank and post office deposits 71,827 2,514 Cash and cash equivalents on hand 11 10 Cash and cash equivalents 71,838 2,524

The figures reported refer to the balances of bank accounts and to the values of company funds. At the end of the fiscal year, the item "Other payables" amounts to Euro 71,838 thousand, recording an increase as compared to the previous financial year equal to Euro 69,315 thousand. The significant increase in bank and postal deposits mainly derives from arbitrage transactions on interest rates taken by the parent company, through which the excess of cash and of financial lines in the short term has been used in deposits at major banks with highly rated, benefiting from the interest rate differential. For a better understanding of changes in the cash flows occurred during the year, please refer to the cash flow statement.

Net shareholders' equity

14. Net shareholders' equity

The shareholders' equity at the end of the periods considered is analysed in the following table: (Thousands of Euro) 31.12.2014 31.12.2013 Share capital and reserves 348,831 334,461 Net result of the Group 43,628 40,053 Total net shareholders equity 392,459 374,514

The composition of the net shareholders' equity is reported below: (Thousands of Euro) 31.12.2014 31.12.2013

Share capital 234,412 234,412 Legal reserve 46,882 46,882 Own shares (17,660) (17,660) Reserves 85,326 70,885 Reserve for severance pay discount ias 19 (129) (58) Group's Net Result 43,628 40,053

Total Net equity 392,459 374,514

______st Ascopiave S.p.A. – Annual financial report as of 31 December 2014 29 Ascopiave S.p.A. ______

Stockholders' equity as of 31 st December 2014 amounted to Euro 392,459 thousand, an increase of Euro 17,945 thousand compared to 31 st December 2013. Please refer to the changes in equity for further details. During the year 2014 the Shareholders' Meeting held on 24 th April approved the distribution of dividends equal to Euro 26,666 thousand, corresponding to 0.12 euros per share. The reserves of the company have also suffered from an increase following the merger into Ascopiave S.p.A. of the subsidiary Asco Blu S.r.l. which revealed a merger surplus of Euro 1,054 thousand, as described in the opening of this Annual Financial Report. The share capital of Ascopiave S.p.A. as of 31 st December 2013 consists of 234,411,575 shares with a nominal value of Euro 1.00 each. It is also to be noted that during the year 2014 no own shares were purchased.

The changes in the net shareholders' equity in FY 2014 are reported in the following tables:

Shares in circulation as of 31 December 2014 and 31 December 2013

(Number of shares) 31.12.2014 31.12.2013 Number of shares from shareholders' capital 234,412 234,412 Number of shares in portfolio (12,209) (12,209) Total number of shares in circulation 222,203 222,203

Value of the shares in circulation 31.12.2014 31.12.2013 Ordinary shares 234,412 234,412 Own shares in portfolio (17,660) (17,660) Total value of shares in circulation 216,752 216,752

Revenues (losses) entered directly in the Shareholders’ Equity

As of 31 st December 2014, losses for Euro 129 thousand have been entered directly in the Shareholders’ Equity, marking a decrease of Euro 71 thousand from 31 st December 2013. This reserve gathers accounting gains and losses deriving from the assessment of current benefit plans that shall never be reclassified under profit and loss account.

Pursuant to article 2427-bis of the Italian Civil Code, the prospects indicating the origin, possibility of use and distributability of the net equity items are reported below:

______st Ascopiave S.p.A. – Annual financial report as of 31 December 2014 30 Ascopiave S.p.A. ______

Usage in the previous three financial period Description Amount Possibility of use Portion available For coverage of losses For other reasons Share capital 234,411,575 - 0

CAPITAL RESERVES Share premium fund 50,171,613 A, B, C 50,171,613 Own shares 17,659,719- 0

EARNINGS RESERVES Legal reserve 46,882,315B 0 Extraordinary reserve Free reserve Other reserve 35,024,950 A, B, C 35,024,950 Total 114,419,159 85,196,563 Portion non available Residual value of available portion 85,196,563

Note: "A" = capital increase "B" = coverage of losses, "C" = distribution to shareholders

The share premium fund is available considering that the legal reserve reached a value equal to one fifth of the share capital, in accordance with civil law provisions.

Non-current liabilities

15. Reserves for risks and charges

The following table shows how the items are broken down for each period considered:

31.12.2014 31.12.2013 (Thousands of Euro) Other reserves for risk and charges 250 0 Reserves for risk and charges 250 0

The fund movement in the year considered are shown in the following table:

(Thousands of Euro) Reserves for risks and charges as of 1 st January 2014 0 Use of provisions for risks and charges 250 Reserves for risks and charges as of 31 st December 2014 250

The increase in the provision for contingencies is explained by the provisions of Euro 250 thousand against outstanding lawsuits with employees who terminated their employment with the Company.

16. Severance indemnity

The changes in severance indemnity in the year considered are shown in the following table:

______st Ascopiave S.p.A. – Annual financial report as of 31 December 2014 31 Ascopiave S.p.A. ______

(Thousands of Euro) Severance indemnity as of 1 st January 2014 1,162 Retirement allowance (878) Payments for current services and work 791 Previous actuarial losses/(profits) recorded 44 Actuarial loss/(profits) recorded 106 st Severance indemnity as of 31 December 2014 1,224

The liability of the severance indemnity is calculated with the actuarial method. Its value is therefore subjected to variation between the various hypotheses. The main hypothesis used for the measurement of the severance indemnity is the discount rate, the average yearly employee turnover and maximum retiring age of employees. The discount rate used to measure the liability deriving from severance indemnity is determined from market trend of fixed-rate, high quality bonds with due date and amount corresponding to due date and amounts of expected future payments. For this plan, the average discount rate reflecting the due dates and amounts of future payments for 2014 amounts to 1.49%. The main hypotheses of the model are: • Mortality rate: IPS55 survival table • Inability rates: INPS tables year 2000 • Personnel rotation rate: 3.00% • Annual probability rate of TFR down payment: 2.00% • Increase in remuneration rate: 3.00% • Inflation rate: 1.50%

The current cost related to work performance is included as personnel costs, while the interest cost, equal to Euro 35 thousand, is recorded under financial income and expense.

17. Medium- and long-term loans:

The following table shows how the item is broken down at the end of the periods considered:

31.12.2014 31.12.2013 (Thousands of Euro) Loans from Prealpi 828 898 Loans from European Investment Bank 38,000 41,500 Loans from Cassa DD.PP. With direct guarantee 127 327 Loans from Cassa DD.PP. With guarantee from municipalities 215 476 Loans from Unicredit S.p.A. 14,286 20,000 Medium/long-term loans 53,456 63,201

The medium and long-term show a decrease of Euro 9,745 thousand due to the reclassification of the shares that provide for the natural expiration for repayment in the year 2015. The loan form the European Investment Bank (EIB) also includes the respect of certain financial parameters in the consolidated financial statement every year.

______st Ascopiave S.p.A. – Annual financial report as of 31 December 2014 32 Ascopiave S.p.A. ______

In particular, the Agreement envisages that the Company, for the entire duration of the Loan, undertakes to respect the following parameters:

• EBITDA/ Net financial costs > 5; • Net consolidated financial indebtedness/ EBITDA < 3.5

Said covenants shall be cross-checked upon year end and second quarter financial reports. As guarantee of the obligations covered by the loan agreement, Ascopiave sold to the European Investment Bank a share of future claims arising from the repayment of the residual value of assets related to the Distribution Gas Concessions. The medium term also include a loan in 2011 with Unicredit S.p.A. to finance major business combinations. The original amount of the loan is Euro 40,000 thousand, and the lease term is seven years. The repayment of the loan is expected in half-yearly instalments starting from 31 st December 2011 until 30 th June 2018. The interest rate is variable, and it involves a three-month indexation parameter provided for in EURIBOR and a fixed margin to be added to the "spread" parameter. The value of the fixed margin is apt to increase on the basis of the value of the ratio between the consolidated net financial position and the consolidated gross operative margin at the end of each financial year. The variation in the fixed margin on the basis of the index described above is reported in the following table:

Value of N.F.P./G.O.M. ratio Spread value Index>2.5 125 basis point 2

Along with the terms and conditions provided for to calculate the interest rate to be applied to the financed capital, the continuation of the loan agreement is subject to the following financial and operating terms and conditions: a) the value of the index described above may not exceed 3.5 (covenants amended by notarial deed of 22 nd December 2014, the previous limit was equal to 2.75); b) R.A.B. value (Regulatory Asset Base, i.e. the value of the gas network) cannot be lower than Euro 270,000 thousand; c) the stake of ASCOHOLDING S.p.A. in ASCOPIAVE S.p.A. cannot be lower than 51%. By notarial deed of 22 nd December 2014 was established the sale to Unicredit, as warranty of the obligations associated with the loan, to a share of future receivables arising from the repayment of the value of assets related to the gas distribution concessions. It is noted that both the above financial covenants were met at 31 st December 2014 and as the PFN/M.O.L. ratio calculated on the consolidated data is equal to 1.63, the spread applied to Unicredit mortgage for 2015 will amount to 75 basis points.

The residual debt is due to Cassa Depositi e Prestiti for Euro 342 thousand, subscribed following investments for extension of the natural gas distribution network. The overall debt is made up of several overdue debts payable to the above mentioned institution, with deadlines between 2015 and 2016, and fixed interest rates between 6% and 7.50%.

______st Ascopiave S.p.A. – Annual financial report as of 31 December 2014 33 Ascopiave S.p.A. ______

The table below shows the deadlines of the medium- and long-term loans for each financial year considered:

(Thousands of Euro) 31.12.2014 Financial year 2016 9,628 Financial year 2017 9,287 Financial year 2018 7,681 After 31st December 2018 26,860 Total medium and long-term loans 53,456

18. Other non-current liabilities

The following table shows how the items are broken down at the end of each period considered: (Thousands of Euro) 31.12.2014 31.12.2013 Security deposits 279 147 Multi-annual deferred income 3,395 1,466 Other non-current liabilities 3,674 1,613

The other non-current liabilities increase from Euro 1,613 thousand of the previous year, to Euro 3,647 thousand in the year of reference, an increase equal to Euro 2,061 thousand. The change is mainly explained by the increase in long-term deferred detected in order to suspend the public and private contributions received for the construction of derivations of users. The same are deferred and released to income over the useful life of the infrastructure built (45 years) and the carrying value of other non-current liabilities correspond to the economic value of the same that will be released from 2016. The change is mainly explained by the increase in long-term deferred detected liabilities in order to suspend the public and private contributions received for the construction of users derivations. The same are deferred and released to income over the useful life of the infrastructure built (45 years) and the carrying value of other non-current liabilities corresponds to the economic value of the same that will be released as from 2016.

19. Non-current financial liabilities

The following table shows how the items are broken down at the end of each period considered: (Thousands of Euro) 31.12.2014 31.12.2013 Payables due to leasing companies (over 12 months) 489 552 Other's non-current financial liabilities 2,838 Non-current financial liabilities 3,327 552

Financial non-current liabilities detect an increase of Euro 2,774 thousand compared to the previous year mainly due to enrolment, among other non-current financial liabilities of the deposit received from Veritas S.p.A. as collateral for trade receivables of Veritas Energia S.p.A. following the acquisition of the remaining shares of the subsidiary Veritas Energia S.p.A.. This increase was partially offset by the decrease in payables due to leasing companies due to the reclassification to other current financial liabilities of the instalments subject to repayment in the year 2015.

The table shows the deadlines for exercising the debt recorded against the leasing company for twelve months: ______st Ascopiave S.p.A. – Annual financial report as of 31 December 2014 34 Ascopiave S.p.A. ______

Financial non-current liabilities detect an increase of Euro 2,774 thousand compared to the previous year mainly due to enrolment, among other non-current financial liabilities of the deposit received from Veritas S.p.A. as collateral for trade receivables of Veritas Energia S.p.A. following the acquisition of the remaining shares of the subsidiary Veritas Energia S.p.A.. This increase was partially offset by the decrease in payables due to leasing companies due to the reclassification to other current financial liabilities of the instalments subject to repayment in the year 2015.

The table shows the deadlines for exercising the debt recorded against the leasing company for twelve months:

(Thousands of Euro) 31.12.2014 Financial year 2016 67 Financial year 2017 70 Financial year 2018 74 Financial year 2019 78 Financial year 2020 82 Financial year 2021 86 After 31st December 2022 32 Total medium and long-term loans 489

20. Deferred tax payables The following table shows how the items are broken down at the end of each period considered: (Thousands of Euro) 31.12.2014 31.12.2013 Deferred tax payables 14,686 18,380 Deferred tax payables 14,686 18,380

Deferred taxes mark a variation from Euro 18,380 thousand, to Euro 14,686 thousand, an increase of Euro 3,694 thousand. The Company has provided a full accounting of deferred taxes on temporary differences between taxable values and book values. In determining the advanced taxes, we referred to IRES (taxes on the companies income) and, where applicable, to the current IRAP at the moment in which the temporary differences are supposed to be deposited again. In particular, a 27.5% IRES tax rate, and a 4.2% IRAP tax rate were applied in accordance with the changes introduced by Law 111 dated 15 th July 2011 to art. 23, paragraph 5 of Legislative Decree 98 dated 6 th July 2011. It should be noted that, following the declaration of unconstitutionality of the IRES called " Robin Hood Tax ", sanctioned with sentence no. 10 for the year 2015 by the Constitutional Court, the Company has adjusted the value of tax assets calculated, releasing in the loss account € 3,341 thousand due to the fact that, when the temporary differences reverse, the tax effect previously thought for this higher rate will no longer be recoverable. The total value of the temporary differences and the amounts on which the deferred tax assets were calculated are as follows: The total value of the temporary differences and the related amounts on which the liabilities for deferred taxes gave been detected are detailed below:

______st Ascopiave S.p.A. – Annual financial report as of 31 December 2014 35 Ascopiave S.p.A. ______

31 dicembre 2014 31 dicembre 2013 Description Temporary Tax rate Total effect Temporary Tax rate Total effect differences differences Exceeding amortizations over 2013 32,858 27.5% 9,036 34,005 34.0% 11,562 Severance indemnity 31 27.5% 9 66 34.0% 22 Goodwill deductibility for tax purposes within 2013 9,872 31.7% 3,129 9,872 38.2% 3,771 Exceeding amortizations 7,848 31.7% 2,488 7,765 38.2% 2,966 Gain on sale of properties over 2013 87 27.5% 24 173 34.0% 59 Total advance taxes 14,686 18,380

Current liabilities

21. Amounts due to banks and current portion of medium/ long-term loans

The following table shows how the items are broken down at the end of each period considered: (Thousands of Euro) 31.12.2014 31.12.2013 Payables due to banks 174,920 79,587 Current portion of medium-long-term loans 9,745 9,784 Payables due to banks and financing institutions 184,665 89,371

At the end of FY 2014, bank payables are broken down into negative bank account balances for Euro 174,920 thousand and short-term loan instalments for Euro 9,745 thousand. The total increase, amounting to Euro 95,294 thousand, is mainly explained by higher use of the credit available and connected to arbitrage transactions on interest rates taken near the end of the financial statements as already mentioned in the section on cash which reference is made.

The following table shows the allocation of Ascopiave S.p.A. credit lines used and available and relative rates applied as of 31 st December 2014.

______st Ascopiave S.p.A. – Annual financial report as of 31 December 2014 36 Ascopiave S.p.A. ______

Credit lines Interest rate Debt Banks Type 31 dec 2014 31 dec 2014 31 dec 2014

Banca Europea per gli Investimenti Bank loan 10,000.00 0.99% 10,000.00 Banca Europea per gli Investimenti Bank loan 31,500.00 1.23% 31,500.00 Banca Intesa Bank credit for overdraft 40,000.00 0.76% 20,029.05 Banca Intesa Bank credit for derivatives 7,000.00 n.d. 0.00 Banca Nazionale del Lavoro Bank credit for overdraft 10,000.00 1.50% 0.00 Banca Nazionale del Lavoro Short-term financing 40,000.00 0.80% 40,000.00 Banca Popolare di Verona Short-term financing/guarantees 20,000.00 n.d. 0.00 Banca Popolare di Verona Guarantees 10,000.00 0.40% 3,964.60 Banca Popolare di Vicenza Short-term financing 52,000.00 n.d. 0.00 Banca Prealpi Bank credit for overdraft 5,000.00 n.d. 0.00 Banca Prealpi Unsecured loan 898.19 2.10% 898.19 Banca Sella Bank credit for overdraft 5,000.00 0.71% 1,954.05 Cassa di Risparmio del Veneto Bank credit for overdraft 13,000.00 0.76% 12,929.85 Credem Bank credit for overdraft 25,000.00 0.80% 25,000.00 Friuladria Crédit Agricole Bank credit for overdraft 10,000.00 0.88% 9,950.00 Friuladria Crédit Agricole Guarantees 5,000.00 n.d. 0.00 Monte dei Paschi di Siena Bank credit for overdraft 5,000.00 0.70% 5,000.00 Monte dei Paschi di Siena Guarantees 8,000.00 0.30% 7,905.77 UBI - Banco di Brescia Bank credit for overdraft 30,000.00 0.71% 30,000.00 Unicredit Short-term financing 48,700.00 0.70% 30,000.00 Unicredit Bank loan 20,000.00 1.05% 20,000.00 Unicredit Guarantees 12,400.00 0.30% 9,166.81 Unicredit Credit cards 605.00 n.d. 0.00 total 409,103.19 258,298.31

22. Trade payables

The following table shows how the items are broken down at the end of each period considered: (Thousands of Euro) 31.12.2014 31.12.2013 Payables to suppliers 6,495 6,217 Payables to suppliers for invoices not yet received 12,913 15,008 Trade payables 19,407 21,224

The item increases from Euro 21,224 thousand of the previous fiscal year, to Euro 19,407 thousand of the current financial year, with a decrease of Euro 1,817 thousand. The decrease is mainly explained by the lower allocation of invoices to be received at the term of the year for Euro 2,095 thousand. The item mainly refers to payables due to suppliers for construction works of the natural gas distribution infrastructures as well as to invoices issued for the purchase of energetic efficiency securities for the attainment of 2014 goal. Trade receivables are due within the following year.

23. Payables to tax authorities

The following table shows how the items are broken down for each period considered: (Thousands of Euro) 31.12.2014 31.12.2013 IRAP payables 46 IRES payables 210 Tax payables 255

At the end of the year the debts due to the fact that the Company has a net claim against the Treasury are not registered. ______st Ascopiave S.p.A. – Annual financial report as of 31 December 2014 37 Ascopiave S.p.A. ______

24. Other current liabilities

The following table shows how the items of “Other current liabilities” broken down for each period considered: (Thousands of Euro) 31.12.2014 31.12.2013 Advance payments from customers 949 826 Amounts due to parent companies for tax consolidation 1,007 435 Amounts due to social security institutions 721 757 Amounts due to employees 2,241 2,619 VAT payables 87 873 Payables to revenue office for withholding tax 539 538 Annual passive prepayments 639 613 Annual passive accruals 737 734 UTF and Provincial/Regional Additional Tax payables 58 Other payables 11,570 7,752

Other current liabilities 18,490 15,207

At the end of the year, other current liabilities amounted to Euro 18,490 thousand, compared to Euro 15,207 thousand in 2013, with an increase of Euro 3,283 thousand, mainly explained by the variation of the item “other debts” (+ Euro 3,817 thousand) Advances from customers represent the amounts paid by the users as contributions for apportionment works and connections in progress as of the closing date of the financial statements. The item increases from Euro 826 thousand of the previous year, to Euro 949 thousand of 2014, with an increase equal to Euro 123 thousand. The "Debts towards social security institutions" refer to the liability for contribution charges pertaining to the months of November and December paid during the first months of 2015, while the "Debts towards employees" include payables holiday pay, and bonuses accrued at as of 31 st December 2014 and not paid at the same date. The VAT debt was a decrease of Euro 786 thousand because of the advances made in December almost fully offset the negative balance accrued in the same month. Accrued expenses are mainly related to the state fees, and royalties concessions, accrued in 2014 but not yet paid to the respective local authorities, while the deferred income are mainly related to the suspension of government grants and private contributions received for the construction of derivations of users whose recognition in the income statement in the year 2015 will take place. At the end of the fiscal year, the item "Other payables" amounts to Euro 11,570 thousand, recording an increase as compared to the previous financial year equal to Euro 3,817 thousand. The variation is mainly explained by the increase in payables towards the Electric Sector Compensation Fund (+3,346 thousand of Euro) concerning the tariff components charged to the sales companies operating on the territory where the natural gas distribution network of the Company rests and which are paid to the Fund itself every two months as established by the Authority for Electricity and Gas with resolution ARG/gas 159/08.

25. Current financial liabilities

The following table shows the breakdown of the item “Current financial liabilities” at the end of each period

______st Ascopiave S.p.A. – Annual financial report as of 31 December 2014 38 Ascopiave S.p.A. ______considered: (Thousands of Euro) 31.12.2014 31.12.2013 Financial payables within 12 months 0 3,739 Payables to leasing companies within 12 months 64 61 Current financial liabilities 64 3,800

Current financial liabilities amount to Euro 64 thousand, down by Euro 3,736 thousand compared to the previous year mainly due to the zeroing of balances held for members in respect of subsidiaries in intercompany current accounts through which the company manages the Group Treasury. The variation is explained by the decrease in loans and borrowings against Pasubio Servizi S.r.l. to Euro 2,706 thousands, of Etra Energia S.r.l. for Euro 156 thousand, as well as the outstanding liability of the subsidiary Edigas Due S.p.A. for Euro 878 thousand, a company that has been the subject of merger in Blue Meta S.p.A. during the year 2014.

Net financial position The table below shows the composition of the net financial position as requested in Consob communication no. DEM/6064293 of 28 th July 2006: (Thousands of Euro) 31.12.2014 31.12.2013

Cash and cash equivalents 71,838 2,524 Current financial assets 45,153 28,932 Current financial liabilities 0 (3,739) Payables due to banks and financing institutions (184,665) (89,371) Payables to leasing companies within 12 months (64) (61)

Net short-term financial position (67,737) (61,716)

Non current financial assets 3,124 561 Medium and long-term bank loans (53,456) (63,201) Non-current financial liabilities (3,327) (552)

Net medium and long-term financial position (53,659) (63,192)

Net financial position (121,396) (124,908)

Net financial indebtedness of Ascopiave S.p.A. records a decrease of Euro 3,512 thousand compared to the previous year, amounting to 121,396 thousand. It is to be pointed out that no covenants or negative pledges are provided for in the short-term bank loans, while with regard to the loan granted by Unicredit banca S.p.A. and by European Investment Bank undergo covenants – to be verified based on the results of the consolidated financial statements- described in the previous note 16 “Medium-long term financing”

______st Ascopiave S.p.A. – Annual financial report as of 31 December 2014 39 Ascopiave S.p.A. ______

COMMENTS ON THE MAIN INCOME STATEMENT ITEMS

Revenues

26. Revenues

The following table shows the revenues in the periods considered: (Thousands of Euro) FY 2014 FY 2013 Revenues from gas transportation 54,425 56,496 Revenues from connections 47 3,004 Revenues from heat supply 18 32 Revenues from distribution services 2,647 3,702 Revenues from billing and taxes 426 628 Revenues from services supplied to Group companies 7,594 5,733 Revenues from AEEG contributions 12,555 6,328 Other revenues 2,692 1,884 Total revenues 80,404 77,807

At the end of the period, the item amounted to Euro 80,404 thousand, with a decrease of Euro 2,597 thousand compared to the previous year. The decrease is mainly explained by the lower revenues new connection services for Euro -2,957 and decreased revenues from gas distribution services for Euro -1,055 thousand. The decrease is partially offset by the revenues from AEEG contributions (+6,227 thousand of Euro) as well as by the increased revenues from general services provided to other group companies (+1,862 thousand of Euro). The transport service of natural gas on the distribution network generated revenues of Euro 54,425 thousand decrease compared to 56,496 thousand in the previous year, mainly because of lower bond total revenue (the so-called VRT) recognized by AEEGSI to distribution companies working in the field. During the year, the distribution of natural gas has involved the transport of 613.9 million cubic meters, compared with 719.1 million of the previous year, recording a decrease of Euro 105.9 million mainly amenable to the particular climatic conditions with particularly mild winter and summer periods. It should be noted that the voice revenues from gas transportation includes a share of equalization equal to Euro 11,367 thousand, an increase over the previous year of Euro 5,868 thousand due to the higher differential found at the end of the year between revenues charged to sellers for the service of natural gas distribution (contracts because of lower consumption) and the VRT recognized. At year end revenue from connection services amounts of Euro 47 thousand. The decrease compared to last year is mainly explained by the change of accounting method thereof which is fully recognized as non-current liabilities released to the income statement based on the useful life of existing plants. At the end of the financial year, revenue from general services to company subsidiaries increased by Euro 1,055 thousand, going from Euro 3,702 thousand of 2013 to Euro 2,647 thousand of the reference year The item includes the income statement items arising out of activities on the meters installed at the end users on behalf of the selling companies. At the end of the financial year, revenue from general services to company subsidiaries increased by Euro 1,862 thousand, going from Euro 5,733 thousand of the previous year to Euro 7,594 thousand of the reference year thanks to the increase in the type of services provided to controlled companies. The item "revenues from AEEG contributions", and the water system are equal to 12,555 thousand Euro, with an increase of 6,227 thousand Euro. These contributions are allocated for the attainment of the objectives set by the

______st Ascopiave S.p.A. – Annual financial report as of 31 December 2014 40 Ascopiave S.p.A. ______

Authority in matters pertaining energy saving; they are published through a Deliberation, which also specifies the specific requirements of primary energy saving by main distributors. The increase recorded is mainly explained by the upgrading of the specific target set by the Authority for Electricity and Gas and by the increase in the contribution recognized for each energy efficiency certificate. It should be noted that this item includes income reported in the income statement against Unigas Gas Distribution S.r.l. (company subject to joint control) for the sale of energy efficiency certificates purchased on behalf of the company and aimed at achieving the objective assigned to it by AEEGSI. Other revenues increased from Euro 1,884 thousand in 2013 to Euro 2,692 thousand in the reference fiscal year, recording increases of Euro 808 thousand mainly explained by premiums paid by the Authority for Electricity, Gas, and the water system in the field of safety improvements (Euro 505 thousand).

Operational costs

27. Cost of raw materials

The following table reports the costs relating to the purchase of raw materials during the financial periods considered: (Thousands of Euro) FY 2014 FY 2013 Diesel fuel and LPG purchase 13 Purchase of other raw material 1,299 1,374 Purchase costs for other raw materials 1,299 1,388

The costs for the purchase of other raw materials decrease from Euro 1,388 thousand in 2013 to Euro 1,299 thousand in 2014, with a decrease equal to Euro 89 thousand.. The item mainly includes costs for the purchase of materials used for the construction of infrastructures for natural gas distribution, as well as costs for the purchase of natural gas and electric power required for the functioning of the co-generation plants.

28. Costs for services

Costs for services for the relevant periods are analysed in the following table: (Thousands of Euro) FY 2014 FY 2013 Costs for counting meters reading 774 792 Mailing and telegraph costs 1,341 1,224 Maintenance and repairs 2,016 3,125 Consulting services 3,304 2,647 Commercial services and advertisement 143 53 Sundry suppliers 1,714 1,618 Directors' and Statutory Auditors' fees 578 593 Insurances 608 549 Personnel costs 600 545 Other managing expenses 939 1,377 Costs for use of third-party assets 10,038 10,069

Costs for services 22,054 22,591

______st Ascopiave S.p.A. – Annual financial report as of 31 December 2014 41 Ascopiave S.p.A. ______

The costs for services amount to Euro 22,054 thousand at the end of the period considered, recording decrease as compared to the previous financial year equal to Euro 537 thousand. The decrease is mainly explained by lower costs for maintenance and repairs (Euro 1,109 thousand) as well as for other management costs (Euro 438 thousand partially balanced by the higher consultancy costs (Euro 658 thousand). Costs for maintenance and repairs decrease from Euro 3,125 thousand of 2013 to Euro 2,016 thousand of the reference year, explained by the decrease in the costs incurred into for the maintenance of facilities for the distribution of natural gas. Personnel costs include costs for the management of vehicles assigned to employees, expenses for the canteen service and costs for training and education, and record an increase of Euro 54 thousand compared to the previous year. The increases recorded by the consulting services are mainly explained by higher costs incurred for the development of IT platforms of the Group and whose cost is passed to the beneficiaries. At the end of the previous year these costs were registered under "Other operating expenses" for total Euro 594 thousand. The item "Costs for the use of third-party assets" includes costs for concession fees paid to Local Bodies due to economic compensation, suggested by Ascopiave S.p.A. in order to continue managing the service in the default of the completion of the re-award procedure, which envisages an annual consideration, starting from 2011, equal to an amount calculated on the basis of the formula illustrated in the Supplementary Deed of the Agreement submitted to the Local Bodies for examination and to be signed and recorded as an Administrative Public Deed. The procedures aimed at a fair and objective evaluation of the distribution plants as a preliminary initiative before awarding again the gas distribution public service was completed only in the fourth quarter of 2013 for some Local Bodies. And for the remaining ones in the year 2013.

29. Personnel costs

Personnel costs for the relevant periods are analysed in the following table: (Thousands of Euro) FY 2014 FY 2013 Wages and salaries 11,691 11,334 Social security contributions 3,606 3,722 Severance indemnity 797 791 Current severance indemnity actualization 9 Other costs 23 101 Total personnel costs 16,117 15,957 Capitalized personnel costs (3,406) (1,368) Personnel costs 12,711 14,589

Personnel costs are reported net of capitalised costs in relation to increases in intangible assets for works carried out partially on a time and material basis, which are directly attributed to the creation of facilities for the distribution of natural gas. The item increases from Euro 15,957 thousand of the previous year, to Euro 16,117 thousand of 2014, with an increase equal to Euro 161 thousand. The increase is mainly explained by the higher wages paid and incentives accrued by the employees on long-term plans and phantom stock options for a total of Euro 165 thousand. The item increases from Euro 1,368 thousand of the previous year, to Euro 3,406 thousand of the current financial year, with an increase of Euro 2,038 thousand. The increase in capitalized hours during the year is mainly explained by the process of internal reorganization that affected several sectors of the technical area, the structure of the organization, the efficiency of the

______st Ascopiave S.p.A. – Annual financial report as of 31 December 2014 42 Ascopiave S.p.A. ______procedures in place with the subsequent redevelopment of the activities from the labour force. The economic performance in recent years in the area where the distribution network of the company insists and the measures approved by the Authority aimed to focus investment in certain types of systems, have created the conditions for changing the organization of work. Any changes and the review of practice in the area (which saw the internalisation of some processes), as well as the different recipe of investments, such as the meter replacement campaigns, led to the increase shown.

The table below shows the number of employees of the Group, divided by category, at the end of 2013 and at the end of 2014:

Type 31.12.2014 31.12.2013 Variation

Executives 14 14 0 Office workers 169 174 -5 Manual workers 80 83 -3 No. Of personnel employed 263 271 -8

It is to be noted that some employees of the company hold phantom stock option plans, which during the accounted year accrued costs for Euro 568 thousand, while at the end of the previous year they had a negative balance of Euro 402 thousand. It is to be noted that some employees of the company hold multi-year incentive plans which during the accounted year accrued costs for Euro 94 thousand, while at the end of the previous year they had a negative balance of Euro 184 thousand.

30. Other management costs

Other operating costs for the relevant periods are analysed in the following table:

(Thousands of Euro) FY 2014 FY 2013 Provision for risks on credits 832 230 Other provisions 250 Membership and AEEG fees 407 410 Capital losses 525 371 Extraordinary losses 224 499 Other taxes 652 634 Other costs 451 722 Costs for tenders 793 660 Energy efficency certificates 10,034 7,933 Other operating costs 14,169 11,459

Other operating costs register increases of Euro 2,710 thousand compared to the previous year, mainly due to higher costs recorded for the purchase of energy efficiency certificates (+2,101 thousand) and higher provision for doubtful accounts (+602 thousand Euros). The increase is mainly explained by the purchase of energy efficiency certificates so-called "white certificates", registered as “Energy efficiency certificates”, are explained by the increase of the energy saving objective established ______st Ascopiave S.p.A. – Annual financial report as of 31 December 2014 43 Ascopiave S.p.A. ______by the Authority for electric energy and gas and water sector, for the fiscal year of reference. The Company reserves the right to purchase the remainder of the securities during the first five months of 2015. Provisions for risks on receivables recorded at the end of the year were made in order to adjust the realizable value of the credit liability to the town of Creazzo described in the paragraph "Other non-current assets" of this report for Euro 463 thousand. The residue is explained by provisions made on accounts receivable recorded against companies selling natural gas services for carriage, which in the course of 2014 have submitted a booking for the agreement. Other provisions, amounting to Euro 250 thousand, were made because of quarrels with employees who terminated their relationship with the Company. The increase of the capital loss item, amounting to Euro 155 thousand, is mainly explained by the increase in the installations of meters at end users, by replacing the counters (so-called traditional ones) with electronic ones, in compliance with the provisions of the Authority for electricity, gas and water services. The higher costs described were partially offset by a decrease in contingent features (-275 thousand) and other costs (- 271 thousand). The other costs include, among others, the costs incurred into by the Company for membership fees paid to the AEEG, for other taxes and for calls for tenders.

31. Other management costs

Other operating incomes for the relevant periods are analysed in the following table:

(Thousands of Euro) FY 2014 FY 2013 Other income 27 1,139 Other income 27 1,139

At the end of FY, the item amounts to Euro 27 thousand, recording an increase as compared to the previous financial year equal to Euro 1,113 thousand. In 2013 the item included the capital gain, equal to Euro 593 thousand, recognized on the sale of the properties of the distribution systems of natural gas in the municipality of Tezze sul Brenta and the gain recognized on the settlement agreement signed with the City of San Vito Leguzzano

32. Amortizations and depreciations

Amortizations and depreciations for the relevant periods are analysed in the following table: (Thousands of Euro) FY 2014 FY 2013 Intangible fixed assets 13,178 11,705 Tangible fixed assets 2,232 2,375 Impairment losses and revelsals assets 0 140 Amortization and depreciation 15,411 14,220

Then depreciations recognized at the end of the year amounted to Euro 15,411 thousand an increase over the previous year of Euro 1,190 thousand; the increase is mainly explained by the re-determination of the useful life of the meters of natural gas, which went from 20 to 15 years due to the regulatory evolution scheduled by AEEGSI and by the effective implementation of replacement massive plans of the meters currently installed.

______st Ascopiave S.p.A. – Annual financial report as of 31 December 2014 44 Ascopiave S.p.A. ______

33. Net financial income and expenses

Financial income and expenses in the years considered are analysed in the following table: (Thousands of Euro) FY 2014 FY 2013 Interest income on bank and post office accounts 643 2 Other interest income 707 632 Distribution of dividends from controlled companies 35,019 35,661 Other financial income 0 1 Financial income 36,368 36,295 Interest expense on banks 1,299 1,627 Interest expense on loans 891 635 Other financial expenses 163 347 Financial charges 2,353 2,609 Depreciation of shares 1,760

Total net financial expenses/(revenues) (34,016) (31,926)

Financial income increases by Euro 2,089 thousand from the previous year, showing a positive balance of Euro 34,016 thousand. The increase is mainly explained by the absence of a reversal in the previous year and referred to the subsidiary Asco Energy S.r.l. in liquidation (Euro 1,760 thousand) and by the improvement in the net balance between interest income and interest expense accrued on credit lines granted by financial institutions which recorded decreases of Euro 712 thousand. The decrease of the latter is explained by the combined effect of the reduction of interest rates charged by lenders to credit lines and the improvement of recognized lending rates on demand deposits, which allowed the company to take advantage of the surplus lines of credit to make the operation of arbitrage on interest rates. The increases described were partially offset by lower dividends received from subsidiaries that, compared to the previous year, recorded a decrease of Euro 642 thousand.

34. Taxation for the period

The table below shows the breakdown of income taxes over the periods considered, distinguishing the current component from the deferred and advance ones: (Thousands of Euro) FY 2014 FY 2013 IRES current taxes 6,109 5,860 IRAP current taxes 1,291 1,532 (Advance)/Deferred taxes (2,225) (818) Total taxes for the year 5,175 6,573

Taxation for the period decreases from Euro 6,573 thousand of the previous FY, to Euro 5,175 thousand of the period considered, marking an increase equal to Euro 1,399 thousand. In particular, the current taxes are substantially in line with those of the previous year, while deferred tax assets / liabilities mark a change of Euro 1,407 thousand. The decrease is mainly explained by the recognition of deferred tax assets and liabilities that, following the recent declaration of unconstitutionality of the IRES called "Robin Hood Tax", sanctioned with sentence no. 10 for the year 2015 by the Constitutional Court, saw the adjustment of the rates applied to them. It should be noted that the Company

______st Ascopiave S.p.A. – Annual financial report as of 31 December 2014 45 Ascopiave S.p.A. ______in the calculation of the current tax applied the corporate income tax surcharge of 6.5%.

The following table highlights the impact of taxes on income:

(Thousands of Euro) FY 2014 FY 2013 Earnings before tax 48,803 46,626 Taxes for the year 5,175 6,573 Percentage of income before taxes 10.6% 14.1%

The actual tax rate decreased from 14.1% in 2013 to 10, 6% of the period considered, recording a decrease of 3.5%. The decrease is partly explained by the decrease of the addition IRES called "Robin Hood Tax", the rate of which has increased from 10.5% in force until 31 st December 2013 to 6.5% for the year 2014 having completed the three years that the Article 7 of decree no. 138, which came into force on 13th August 2011, the so-called "Manoeuvre of August 15 th " had sanctioned the increase.

31.12.2014 31.12.2013 (Thousands of Euro) Ordinary tax rate applicable 34.0% 38.0% Pre-tax results 48,803 46,626 Theorical tax charges 16,593 34.0% 17,718 38.0% Taxes on dividends (11,707) -17.2% (12,874) -27.6% Costs/(income) not taxable (vehicles, phones) 945 1.9% 1,239 2.7% Advance/Deferred taxes (1,986) -4.1% (818) -1.8% Actual IRES charges 3,845 7.9% 5,265 11.3% IRAP (current and deferred) 1,330 2.7% 1,308 2.8% Total actual tax charges 5,175 10.6% 6,573 14.1%

Effective tax rate 10.6% 14.1%

OTHER EXPLANATORY NOTES

Non-recurring components

In accordance with CONSOB communication no. 15519/2005, we report that there have been no non-recurring economic components reported in the annual financial statements as of 31 st December 2014.

Information on related parties

The Company is controlled by Asco Holding S.p.A., which holds 61.562% of the shares. All operations with the companies of the Group are part of the ordinary management of the enterprise and are regulated at market conditions. In 2014, there were no other operations carried out with companies, entities or administrators of the Company, of the parent companies and of the controlled companies.

______st Ascopiave S.p.A. – Annual financial report as of 31 December 2014 46 Ascopiave S.p.A. ______

(Thousands of Euro) 31.12.2014 Trade Other Trade Other Costs Revenues Companies receivables receivables payables payables Goods Services Other Goods Services Other

Parent company ASCO HOLDING S.P.A. 10 813 0 1,005 0 0 0 0 233 Total parent company 10 813 0 1,005 0 0 0 0 23 3 Controlled companies Ascotrade S.p.A. 12,028 11,557 290 0 1,319 19 31 0 43,657 134 Blue Meta S.p.A. 342 1,307 14 0 0 44 14 0 882 65 Edigas Esercizio Distribuzione Gas S.p.A. 132 1,553 10 0 0 41 0 0 344 58 Etra Energia S.r.l. 77 1,623 0 0 0 0 3 0 218 11 Pasubio Servizi S.r.l. 213 104 6 0 0 18 16 0 58914 ASM DG S.r.l. 160 1,645 33 0 5 115 0 0 377 51 Unigas Distribuzione Gas S.r.l. 38 0 15 0 0 15 0 0 24 769 Veritas Energia S.r.l. 352 17,839 103 0 439 0 0 0 840 271 Sinergie Italiane S.r.l. 35 0 0 0 0 000773 Amgas Blu S.r.l. 162 1,970 0 0 0 0 0 0 460 48 Jointly controlled companies ASM SET S.r.l. 89 911 2 0 0 0 5 0 23817 Estenergy S.p.A. 75 6,370 0 0 0 0 0 0 0170 Total controlled companies 13,704 44,878 473 0 1,763 252 69 0 47,742 1,610 Affiliated companies ASCO TLC S.p.A. 48 0 255 0 0 545 15 0 11684 Seven Center S.r.l. 20 0 274 0 0 0 00 00 Mirant Italia S.r.l. 0 0 0 0 0 0 0 0 Total affiliated companies 69 0 529 0 0 545 15 0 116 85 Subsidiary companies Sinergie Italiane S.r.l. 35 0 0 0 0 000773 Total subsidiary companies 35 0 0 0 0 0 0 0 77 3 Total 13,817 45,691 1,003 1,005 1,763 797 83 0 47,958 1,700

The relationships that Ascopiave S.p.A. engages with other group companies mainly deal with the following types: V purchase of natural gas and electricity for the distribution plants by the subsidiary Ascotrade S.p.A. and of the cogeneration plants controlled by Veritas Energia S.p.A.; V purchase of call centre services from the subsidiary Ascotrade S.p.A. made at the market price by using as parameter the number of calls; V debit of some insurance costs by the Asco Holding S.p.A.; V purchase of some administrative services, call centres, credit management; V sales of transmission service, ancillary service, and readings to different companies selling natural gas; V sales of printing and mailing of bills; V sales of counter services, personnel management, IT service, real estate service management, optical storage, staff services such as quality, privacy and safety of workers; V sales of accounting and management of regulatory compliance; V sales of administration and finance services; V sales of technical services on the management of measurement data to the company Asm Distribuzione Gas S.r.l., Edigas Exercise Distribution Gas S.p.A.; V debit to Group companies of accounting services and information technology, and of any external expenses incurred; V Agreement for the regulation of treasury relations designed to offset cash surpluses and deficiencies among the group companies. V Agreement to the participation to the group consolidated having Asco Holding S.p.A. as parent company.

Earnings per share

As required by the IAS 33 accounting standard, the following information is provided about the calculation of basic and diluted earnings per share. The earnings per share are calculated by dividing the net income for the period by the number of shares. net of own

______st Ascopiave S.p.A. – Annual financial report as of 31 December 2014 47 Ascopiave S.p.A. ______shares. In order to calculate the base value of each share, it is specified that the numerator value has been calculated as the economic result of the year, minus the percentage due to third parties. There are no preference dividends, conversions of preferred shares or similar effects that would adjust the results attributable to the holders of ordinary shares. There are no shares or warrants that could influence the calculation of the diluted earnings per share. Therefore, the calculation of earnings per share shows the same values as the diluted earnings per share. The result and the number of ordinary shares used to calculate base earning per share are reported below, pursuant to accounting principles stated in IAS 33. Amount at Amount at (Thousands of Euro) 31 dicembre 2014 31 dicembre 2013

Net profit attributable to parent company shareholders 43,628 40,053

Weighted average number of ordinary shares including own shares, for the 234,411,575 234,411,575 purpose of earnings per share

Weighted average number of own shares 12,195,214 12,195,214

Weighted average number of ordinary shares, excluding own shares, 222,216,361 222,216,361 for the purposes of net income per share

Earnings per share (in Euro) 0.20 0.18

Fees of the Auditing Company

Pursuant to Article 149-duodecies of the Issuer's Regulations, this item includes the fees received in 2014 for auditing services and for services other than auditing provided by the Auditing Company. No services were provided by entity belonging to its network.

(Thousands of Euro)

Type of services Service provider Beneficiary Fees

Auditing Reconta Ernst & Young SpA Ascopiave S.p.A. 180 Certification services Reconta Ernst & Young SpA Ascopiave S.p.A. 3 Auditing/other services Reconta Ernst & Young SpA Ascopiave S.p.A. 13 Oother services Reconta Ernst & Young SpA Ascopiave S.p.A. 51 Total 247

Commitments and risks

Bank guarantees As of 31 st December 2014, the Group provided the following potential bank guarantees:

______st Ascopiave S.p.A. – Annual financial report as of 31 December 2014 48 Ascopiave S.p.A. ______

(Thousands of Euro) 31 th Decembre 2014 31 st December 2013

On credit lines 47,383 71,167 On financial leasing agreements 956 956 On gas supply agreements 2,550 Guarantees on credit lines (letter of comfort) 3,629 3,464 On execution of works (letter of comfort) 844 392 Agreements on incentives art. 4 of Law no. 92/2012 196 0 On UTF offices and regions for taxes on gas (letter of comfort) 2,715 2,893 On UTF offices and regions for taxes on electricity (letter of comfort) 104 104 On distribution concession (letter of comfort) 3,405 3,795 On purchase/sale of shares (letter of comfort) 2,500 On agreements for transport of electricity (letter of comfort) 6,817 166 On purchase of electricity agreements (letter of comfort) 6,790

Total 72,840 87,987 * Please note that the items "Patronage of credit lines", "Patronage on gas contracts” include patronage given by Ascopiave S.p.A. against Sinergie Italiane S.r.l. for a total of Euro 34,333 thousand (EUR 61,167 thousand in 2013).

Risk coverage policies

Management of Capital Objectives and criteria

The main financial liabilities of Ascopiave S.p.A. include bank loans, financial leasing, lease contracts with the possibility of purchase and short-term and at-sight bank deposits. The main objective of these financial liabilities is to finance the company's operating activities. Ascopiave S.p.A. holds several financial assets such as trade receivables and short-term deposits and reserves that derive directly from the company's operating activity. Trade receivables, as well as financial receivables, are mainly due to the controlled company Ascotrade S.p.A...

The main risks generated by the financial instruments of Ascopiave S.p.A. are the interest rate risk and the liquidity risk. The Board of Directors re-examines and identifies the policies for risk management, described hereinafter.

Interest rate risk The exposure of Ascopiave S.p.A. to the risk of interest rate fluctuation is mainly connected to the variable interest rate loans and financings subscribed with credit institutions, being the Company responsible for managing the financial requirements of the controlled companies. Ascopiave S.p.A.’s policy, depending on the seasonality of the natural gas business cycle, aims to manage the need for cash by means of temporary loans at variable rates that, given their constant change, do not make it possible to suitably cover the interest rate risk, besides presenting medium-long term funding, always with variable rate, with repayment between 2015 and 2026, with an total outstanding debt of Euro 62,400 thousand (2013 Euro 72,985 thousand) as of 31 st December 2014 Ascopiave S.p.A. also manages fixed rate loans for non-significant amounts that depend on the granting of the gas distribution networks of the local bodies, now shareholders of Asco Holding S.p.A. The impact on the result of FY 2014 are detailed below, based on a hypothetical increase of 200 basis points, and on a hypothetical decrease of 200 basis points of the interest rates applied to the medium-/long-term loan granted by Unicredit Banca during FY 2011 and by the European Investment Bank and Prealpi Bank in FY 2013.

______st Ascopiave S.p.A. – Annual financial report as of 31 December 2014 49 Ascopiave S.p.A. ______

Income statement 2014 Garanting body + 200 basis point - 50 basis point Unicredit S.p.A. (486) 121 European Investment Bank (857) (214) Banca Prealpi (18) (5) Total (1,361) (97)

The sensitivity analysis obtained thanks to the simulation leads to an estimation of an effect on the 2014 result before taxes which is negative for Euro 1,361 thousand, or positive for Euro 97 thousand, respectively.

Sensitivity analysis of the interest rate risk

The following table shows the sensitivity of the Company's earnings before tax, on the basis of possible variations in interest rates, keeping all the other variables constant.

January February March April May June July August September October November December Net Financial Position 2014 (120,455) (111,979) (115,302) (75,362) (93,471) (116,227) (114,717) (118,604) (89,346) (89,346) (114,280) (121,396) Positive average rate 0.14% 0.14% 0.15% 0.06% 1.18% 1.23% 1.11% 1.08% 1.01% 0.94% 0.90% 0.89% Negative average rate 1.44% 1.43% 1.39% 1.39% 1.25% 1.18% 1.17% 1.39% 1.06% 0.92% 1.23% 1.22% Positive average rate increased of 200 basis point 2.14% 2.14% 2.15% 2.06% 3.18% 3.23% 3.11% 3.08% 3.01% 2.94% 2.90% 2.89% Negative average rate increased of 200 basis point 3.44% 3.43% 3.39% 3.39% 3.25% 3.18% 3.17% 3.39% 3.06% 2.92% 3.23% 3.22% Positive average rate decreased of 50 basis point 0.00% 0.00% 0.00% 0.00% 0.68% 0.73% 0.61% 0.58% 0.51% 0.44% 0.40% 0.39% Negative average rate decreased of 50 basis point 0.94% 0.93% 0.89% 0.89% 0.75% 0.68% 0.67% 0.89% 0.56% 0.42% 0.73% 0.72% Net Financial Position recalculated with increase of 200 basis point (120,659) (112,151) (115,498) (75,486) (93,629) (116,418) (114,912) (118,806) (89,493) (89,498) (114,468) (121,602) Net Financial Position recalculated with decrease of 50 basis point (120,404) (111,936) (115,253) (75,331) (93,431) (116,179) (114,668) (118,554) (89,309) (89,308) (114,233) (121,344) Total Effect to income before taxes with increase of 200 basis point (205) (172) (196) (124) (159) (191) (195) (201) (147) (152) (188) (206) (2,135) Effect to income before taxes with decrease of 50 basis point 51 43 49 31 40 48 49 50 37 38 47 52 534 The sensitivity analysis, obtained by simulating a variation on interest tax rates applied on the credit lines of the Company equal to 50 basis points in decrease (with a maximum limit of zero basis points) and 200 basis points in increase, maintaining unchanged all the other variables, leads to an estimation of an effect on the result before taxes which is negative for Euro 2,135 thousand (2013: Euro 2,485 thousand) and an increase of Euro 534 thousand (2013: Euro 621 thousand).

Receivable risk policy

Credit risk represents the company's exposure to potential losses arising from the counterparts' failure to meet their obligations. The failure or delay in the payment of fees owed may have a negative impact on the economic and financial stability of the Company.

Ascopiave S.p.A. provides its business services to a limited number of operators in the gas sector, the most significant in terms of turnover being Ascotrade S.p.A. The rules for the access of customers to the services offered are determined by the Authority for Electricity and Gas and are provided for in the network codes, i.e. documents that establish, for each type of service, the rules governing the rights and obligations of the parties involved in the delivery of services, and they provide for contract terms and conditions that reduce the risk of default by customers. In particular, the network codes provide for the issuance of adequate guarantees to cover part of the obligations undertaken if the customer does not hold a credit rating issued by major international bodies.

Liquidity risk

Ascopiave S.p.A. constantly pursues the aim of maintaining the stability and flexibility between financing sources and uses, in its capacity as treasury manager for the Group.

The two main factors influencing the liquidity of Ascopiave S.p.A. are, on the one hand, the resources generated or absorbed by the operating or investment assets, on the other hand, and the expiry and debt renewal characteristics.

______st Ascopiave S.p.A. – Annual financial report as of 31 December 2014 50 Ascopiave S.p.A. ______

Under note 19, financial payables are detailed according to their date of expiry, as of 31 st December.

Liquidity requirements are constantly monitored by the Treasury Department of Ascopiave S.p.A., in order to ensure that financial resources are easily identifiable and collectible, or that appropriate investments are made in relation to cash or cash equivalents.

The Administrators believe that the reserves and credit lines currently available, as well as those that will be generated by the operating and financial activities, will allow meeting the requirements connected to investments, management of circulating capital and to the reimbursement of debt upon date of expiry.

Specific risks in the business sector in which the Company operates

Regulations The activities carried out by Ascopiave S.p.A. in the gas sector are subject to regulations. Directives and regulatory measures adopted in the European Union and by the Italian Government, as well as the resolutions of the AEEG can have a significant impact on the operations, the operating results and the financial balance of the Company. Future changes in regulatory policy adopted at a national level could have unexpected effects on the regulatory reference framework and, consequently, on the activity and results of the Company.

Risks relating to bids for the award of new concessions for the distribution of gas As of 31 st December 2014, Ascopiave S.p.A. holds 148 concessions (149 in FY 2013) for the distribution of natural gas Nation-wide. In compliance with the regulations in force governing the concessions held by the company, the calls for tenders for the new awards of the gas distribution service will be no longer announced for every single Municipality but exclusively for the territorial areas determined with Ministerial Decrees dated 19 th January 2011 and 18 th October 2011, and pursuant to the deadlines illustrated in Annex 1 attached to the Ministerial Decree on tender criteria and bid assessment standards, issued on 12 th November 2011. With the progressive development of the tenders, the Company may not be awarded to one or more of the new concessions, or it could award them with less favourable terms than the current ones, with possible negative impacts on the operational business and on the economic and financial position, being understood, in case of non-award for those municipalities previously managed by the company, the proceeds of the redemption value estimated in favour of the outgoing operator.

Risks relating to the possible claim by Municipalities to acquire ownership of distribution networks for gas and to the amount of reimbursement paid by the new operator. With regard to the concessions under which the Ascopiave Group also owns the gas distribution networks, Law no. 9/2014 states that the reimbursement paid by the new operator shall be calculated according to what is envisaged in conventions and contracts and, for those aspects that are not directly set forth by the parties or related to conditions that are not disciplined by the aforementioned contracts and conventions, guidelines on criteria and operating modalities for the evaluation of the reimbursement shall apply instead, including Article 4 paragraph 6 of Law Decree 21 June 2013 no. 69, converted into law and modified by Law 9 August 2013 no. 98. In any case, the redemption value is deducted from the private contributions relating to local assets, valued according to the tariff regulation methodology in force. Furthermore, should the value of the reimbursement exceed the net value of local fixed assets calculated with tariff regulations, net of public and private contributions by more than 10%, the local authority in charge of the concession shall forward the information in detail to the AEEG, pending verification, before the call for tender can be published.

______st Ascopiave S.p.A. – Annual financial report as of 31 December 2014 51 Ascopiave S.p.A. ______

The Ministry of Economic Development Decree dated 12 November 2011 no. 266 states that the new operator shall take over property of the plant through the payment of the reimbursement to the old operator, with the exception of the municipality-owned share if applicable. In the periods following the first, transitional one, the redemption value to the outgoing operator shall be equal to the local net intangible assets, net of public capital contributions and of private ones for local fixed assets, calculated with reference to the criteria used by the Authority to determine the distribution tariffs (RAB).

On this point it should be noted that the Authority has recently intervened with Resolution 367/2014 / R / gas, providing that the redemption value, referred to in Article 14, paragraph 8, of the Legislative Decree n. 164/00, at the end of the first period of custody of field is determined as the sum of: a) the residual value of the existing stock at the beginning of the custody period, assessed for all assets subject to transfer for a consideration to the incoming operator in the second custody period depending on the value of reimbursement provided for in Article 5 of the Decree 226/11, recognized to the outgoing operator in during the first period of custody, taking into account the depreciation and disposals recognized for tariff purposes in the custody period; b) the residual value of the new investments made in the custody period and at period end, assessed on the historical cost revalued for the period in which the investments are recognized in the final balance, as provided by Article 56 of the Regulation of tariffs of distribution services and gas metering (RTDG), and by the average of the net value determined on the historical revalued cost basis and on the net value based on valuation methodologies with standard costs, in accordance with paragraph 3.1 of the resolution 573/2013 / R / GAS, for the next period. The Company is protecting its case sheet and income compared to the adverse regulatory changes described as per the terms reported in the paragraph "Territorial areas" of this report.

Management of Capital The primary objective of the management of Ascopiave S.p.A.'s capital is to guarantee that a solid credit rating is maintained, as well as suitable levels of the capital indicator. Ascopiave S.p.A. can adapt the dividends paid to shareholders, reimburse capital or issue new shares.

Ascopiave S.p.A. checks its capital by means of a debt/capital ratio, i.e. comparing the net debt to the total of the capital plus the net debt. Ascopiave S.p.A. includes financial charges, accounts payable and other liabilities in the net liabilities, net of liquid funds and equivalent.

______st Ascopiave S.p.A. – Annual financial report as of 31 December 2014 52 Ascopiave S.p.A. ______

(Thousands of Euro) 31.12.2014 31.12.2013

Medium and long-term loans 56,783 63,753

Loans from banks net of equivalents on hand 112,827 86,848

Financial gross debit 169,610 150,601

Share capital 234,412 234,412

Reserves 114,419 100,049

Profit / (loss) for the period 43,628 40,053

Total Net equity 392,459 374,514

Total capital and gross debit 562,069 525,115

Debit/Net assets ratio 0.43 0.40

Policies for the coverage of risks connected to fluctuations of interest rates

The Company is exposed to risks connected to fluctuations of interest rates, mainly in relation to short-term payables to banks.

Significant events subsequent to year end 2014

On 9 th February 2015, by ruling no. 10 of 2015, the Constitutional Court declared the unconstitutional constitution of IRES called Robin Hood Tax. The same, introduced by art. 81, paragraphs 16, 17 and 18 of the legislative decree of 25th June 2008, no. 112 and converted, with amendments, by art. 1, paragraph 1, of Law 6 th August 2008, n. 133, provided for the application of an additional rate of 6.5% (10.5% in 2011-2013) for the operators of direct taxes calculations.

Litigations

CATEGORY I – ADMINISTRATIVE LITIGATIONS On 31 st December 2014 there were not pending administrative cases related to existing concessions.

CATEGORY II – Litigations on the value of plants - Civil Law As of 31 st December 2014 the following litigations are pending:

MUNICIPALITY OF CREAZZO: A trial is pending before the Civil Court of Vicenza between Ascopiave and the Municipality of Creazzo for the establishment of the industrial residual value of the distribution plants (delivered in 2005 to the new operator).By ______st Ascopiave S.p.A. – Annual financial report as of 31 December 2014 53 Ascopiave S.p.A. ______

Judgment of 25 th August 2014, the single judge ordered the Municipality the payment of Euro 1,677,602 and the repayment of two-thirds of the expenditure validated in the same provision, while the remaining third is offset by the Parties. On 18 th December 2014, it was confirmed the appointment to the lawyers to start the enforcement proceedings, without prejudice, in the event, to the right to appeal, for retrieving not less than Euro 2,141 thousand. In order to identify the economic impact of the judgment, refer to the notes of this financial report.

CATEGORY III – Litigations on the value of plants - Arbitrations As of 31 st December 2014 the following litigations are pending:

MUNICIPALITY OF COSTABISSARA: Arbitration is pending between Ascopiave and the Municipality of Costabissara for the establishment of the industrial residual value of the distribution plants (delivered in to the new operator during FY 2011). The Commission met for the first time on 16 th January 2012. Given the disagreement on this point between the parties, the Commission resolved to enforce a partial arbitral award aimed at verifying whether the arbitration clause provided for in the convention is valid (Ascopiave) or not (Municipality) This has confirmed the enforcement of the same clause. Subsequently an Expert Report has been ordered. The report was filed on 25th November 2013. The parties have explained their findings on 16 th June 2014. The closing and replication briefs were filed and we are waiting for the arbitrators ‘award, for which the term has been extended to 28 th May 2015.

MUNICIPALITY OF SANTORSO: An arbitration between Ascopiave S.p.A. and the Municipality of Santorso for the determination of the residual industrial value of the plants (delivered in 2007 to the new operator). The start of the procedure became necessary as a result of the Judgment dated 4 th September 2013 by which the judge declared the incompetence of the Court of Vicenza for the validity of the arbitration clause enshrined in the original Agreement. Having verified the impossibility of settling this matter outside court, on 12 th November 2013, Ascopiave has notified the litigation lawsuit to the other party and appointed Lawyer as their defendant. The Municipality, with act dated 26 th November 2013, appointed its defendant.

By decision of the President of the Court of Vicenza dated 31 st January 2014 (produced requested by Ascopiave S.p.A.) the third Arbitrator and Chairman of the Board was appointed. The Municipality has challenged this procedure (also fixed in the concession contract) by supporting the applicability of the legislative news dated 2012 that, amending the Public Contracts Code, introduced a peculiar discipline with respect to arbitration proceedings with public bodies, which provides, among others, the appointment of the third Arbitrator by the AVCP Chamber of Arbitration . The Authority has accepted this request, actually looking forward to the retroactive application of the new standard and introducing a kind of supervening invalidity of the arbitration clauses. In this perspective it has planned the appointment of the third Arbitrator on 17 th April. Ascopiave S.p.A. has always expressed its opposition to that setting (most recently with a note by AVCP dated 15 th April 2014) and therefore the Board is perfectly composed, which, however, in its meeting of 14 th April 2014, confirmed its legitimacy. The AVCP Chamber of Arbitration sent the minutes extract of the meeting held on 17 th April 2014, where it ratified the acknowledgment of the communication to Ascopiave S.p.A. and therefore declared the proceedings abandoned. The Municipality defence renewed AVCP instance, while the lawyers of Ascopiave S.p.A. reiterated the position of the parent company with a further letter dated 12 th June 2014. The Board, at

______st Ascopiave S.p.A. – Annual financial report as of 31 December 2014 54 Ascopiave S.p.A. ______the hearings of 26 th June 2014 and of 7 th July 2014 addressed the issue by envisaging a partial award on the subject and by assigning, in this sense, the terms for the Parties memories on 30 th September 2014 and on 15 th October 2014. It could be particularly important for this topic the result of the recent LD 90/2014 whose art. 19 deleted the AVCP. The parties have filed their memories (and replies) within the period prescribed. With the partial award of 10 th January 2015, the Board confirmed its jurisdiction and competence. The Judgment, therefore, will continue with the current Board. CATEGORY IV – administrative litigations- not concerning concessions As of 31 st December 2014 the following litigations are pending:

ASCOPIAVE S.p.A– HEADQUARTERS EXTENSION: An appeal before the Council of State filed by the company Setten Genesio S.p.A., for the tender involving the construction of the new company headquarters and aimed at obtaining the review of the sentence no. 6335/2010 issued by the Regional Administrative Court of Veneto that, despite admitting the appeal filed by the company and thereby annulling the tender acts, rejected the request for compensation for damage (for about Euro 1,300 thousand) against Ascopiave and the company Carron S.p.A.. In order to obtain the review of the First Instance Sentence, Ascopiave S.p.A. has filed an incidental appeal. The only important proceeding concerns the request for an appeal on 10 th May, 2011. Should none of the parties take any other action, the non-suit is scheduled in 2016.

AEEGSI – RESOLUTIONS ARG/GAS 99/11 – 207/11 – 166/12 – 352/12 – 241/2013 – 533/2013: An appeal promoted by AEEG in order to obtain the cancellation of judgement no 3272 dated 28 th December 2012 through which the Regional Administrative Court of Lombardy based in Milan accepting the appeal from Local Distributors has cancelled the Default discipline,. that is, the initial legislation by which AEEGSI had intended to create and regulate the so-called Services of last resort in the gas sector. Through the appeal, AEEG has requested to stay the Regional Administrative Court Judgement by means of an emergency protective court order. That stay was granted by means of Single Judge Decree. The protective hearing was scheduled on 23 rd April 2013 but was postponed to 9 th July 2013 upon joint demand from the parties. On the same date, the Commission confirmed the protective court order, scheduling the substantive discussion in March 2014. the same was regularly held on 4 th March 2014. With Judgment filed on 12 th June 2014 the Security Council upheld AEEGSI appeal and consequently set aside the judgment of the Regional administrative Court of Lombardia. Probably the decision has greatly influenced the unexpected change of the contested legislation that is no longer in force. The costs have, however, been recovered.

An appeal to the Regional Administrative Court of Latium, which overrules Ministerial Decree dated 5 th Feb. 2013 approving the agreement-type for managing the service subsequent to the following calls, limiting to the last part of 21.3 where the manager “supplies the default service according to the methods defined by the Authority.” This is a merely precautionary measure aiming at avoiding the risk of lack of interest in the aforesaid main judgement. Given the purely instrumental character of the need to avoid a lack of interest and the aforementioned final Judgment, the Judgment will not be further cultivated.

In the meantime, on 6 th June 2013, the AEEG issued a new Resolution (241/2013) through which it granted the activities essentially concerning management and supply to a seller to be identified, at the end of the first period of service provision, following a public call for tenders announced by “Acquirente Unico”. The new regulation partially

______st Ascopiave S.p.A. – Annual financial report as of 31 December 2014 55 Ascopiave S.p.A. ______overcomes the allegations made to the previous one. The Resolution 241/2013 was appealed at the Regional Administrative Court of Lombardy (filed before the C.d.S. judgment mentioned above). The main reasons are: lack of default remuneration for the current interventions; penalties for delay or failed power outage of the distributor even when delays or failed performances were not attributable to the distributor itself. Finally, in relation with previous appeal, the motivation of the resolution was also appealed against, as it is considered by the AEEG as only useful in fill in some sort of “inadequacy” of distributors. As of today, this appeal has not been yet scheduled. The AEEGSI again intervened in the matter, with Resolutions 533/2013 and 84/2014. On 21 st January 2014 the recourse against Resolution 533/2013 was filed at the Regional Administrative Court of Milan. The reasons are similar to those that led to the appeal of Resolution 241/2013.

AEEG – RESOLUTIONS ARG/GAS 28/12 – 193/12 – 246/12- 631/2013: An appeal to the Regional Administrative Court of Lombardy - Milan in respect of AEEGSI for the cancellation of ARG / gas 28/12 regarding the planned transition from traditional to electronic tele-read and tele-managed metres and in particular: the forecast of the missed fee recognition of residual depreciations for the replaced metres but with still valid metric stamp ; for the wrong (underestimated) indication / recognition of standard costs for new equipment; for the provision of the obligation to use only electronic meters already from 1 st March 2012 despite the fact that the technology is not yet available upon "industrial" orders. Subsequently, as partial modifications to Resolution 28, the AEEG issued Resolutions 193/2012 and 246/2012, which, however, were not sufficient to withdraw the company's complaint. The deadlines set on 1st March 2012 was cancelled and postponed to 31 st December 2012. The company has filed an appeal against both resolutions with additional grounds. Similarly, Resolution 316/2012 through which the Authority for Electricity and Gas further intervened on the matter has also been contested. Similarly, Resolution 316/2012 through which the Authority for Electricity and Gas further intervened on the matter has also been contested. With Decision 631/2013, the AEEGSI again intervened in the matter, changing the Resolution 28/2012. It then proceeded to the withdrawal of the new suspension request in the meantime filed with reference to the previous rules (at the time the contested). It formally remains the final judgments which, however, by virtue of Resolution 631, should / could be considered without further interest. The related assessments are underway.

GUIDELINES – M.D. 22.05.2014 An appeal to the Regional Administrative Court of Lazio - Rome from the Ministry of Economic Development for the cancellation of the MD of 22 nd May 2014 dealing with the introduction of guidelines for the determination of VIR. As part of that judgment were proposed issues of constitutionality and of Community prejudiciality concerning Laws 9 and 116 of 2014, in the parts where they have amended Article 15, paragraph 5 of the Legislative Decree no. 164/2000 (retroactive deduction of private contributions and time limitation of the agreement validity). The TAR, with reference to the Appeals submitted by other distributors, including a request for suspension, set the hearing on 27 th June 2015. The lawyers of Ascopiave S.p.A. will request that the judgments are gathered in order to be discussed in the same hearing, or in another hearing set for this purpose. AEEGSI Resolutions ARG / gas 310/2014 and ARG / gas 414/2014 An appeal to the Regional Administrative Court of Lombardy - Milan against AEEGSI, for the annulations of Resolutions ARG / gas 310 and 414/2014 relating to the monitoring of the delta VIR RAB in compliance with art. 15,

______st Ascopiave S.p.A. – Annual financial report as of 31 December 2014 56 Ascopiave S.p.A. ______paragraph 5 of Legislative Decree no. 164/2000 (current text) where the difference is greater than 10%. To date there are no further pleadings.

AEEGSI ARG / gas 367/2014 An appeal to the Regional Administrative Court of Lombardy - Milan against AEEGSI, for the cancellation of ARG / gas 367/2014 dealing with procedures for the tariff acknowledgement of the delta VIR R.A.B. insofar as it provides a conflicting regulation depending on whether the Tender contractor is (no tariff relief) or not (full tariff relief) "incumbent". To date there are no further pleadings.

CATEGORY V – CIVIL litigations- not concerning concessions As of 31st December 2014 the following litigations are pending:

ASCOPIAVE – BUILDING B: A civil lawsuit at the Court of Treviso (RG 6941/2013) following the Preliminary Technical Advisory which resulted in the Expert Report by the Court-appointed expert (appointed by the Court) and filed by Ascopiave (writ dated 22nd August 2013) in order to obtain indemnification for the damages to the floor of the entrance of “Building B” against: Bandiera Architetti S.R.L. (Progettisti), Eng. Mario Bertazzon (Director of Operations) and Eng. R. Paccagnella Lavori Speciali S.R.L. (Contractor). The requested indemnification value ranges from Euro 127 thousand (estimate of the Expert for the full renovation of floor) and Euro 208 thousand (estimate for works for full renovation by a third party construction company). All parties are duly represented. Following the involvement of other parties (insurance company and work contractor) the court appearance is scheduled on 17 th April 2014. Upon completion of the same, the Judge granted the instructors ordinary terms and scheduled the hearing on 15 th July. The Court, by Order dated 22 nd December 2014, decided the complete renewal of the Expert Report, appointing an expert witness. The hearing for the confirmation of the assignment and the oath of the Expert Reports scheduled on 13 th March 2015. Ascopiave S.p.A., by that date, shall appoint its own technical adviser. The scrutiny for the possible candidates is currently ongoing.

Relations with the Agenzia delle Entrate (Inland Revenue Agency) During 2008, the company Ascopiave S.p.A. was subject to tax audit by the Inland Revenue Office_Regional Office Following the audit, a report on findings with observations on the indirect and direct taxes was issued. During the month of July 2008, the local Internal Revenue Office issued a notice of assessment regarding the contents of the report on findings. The company, on 5 th February 2010, filed an appeal in the Provincial Tax Commission in addition pay the sum of Euro 243 thousand following application to its pending judgment. On 30 th September 2010 the Provincial Tax Commission of Treviso delivered judgment 131/03/10 filed on 14 th December 2010 upheld the action and recognizing the proper conduct tax adopted by the company. Subsequently, the Inland Revenue Office has appealed against the first instance judgment issued by the Provincial Commission of Treviso. On 24 th September 2012, the Regional Tax Commission issued the ruling no. 109/30/12, filed on 20 th December 2012 which dismissed the appeal filed by the Revenue upholding the judgment of first instance. On 26 th June 2013, the company Ascopiave S.p.A. was notified about the appeal in Cassazione (Court of Cassation) by the Inland Revenue Agency and joined proceedings because of the result of previous judgements. The directors,

______st Ascopiave S.p.A. – Annual financial report as of 31 December 2014 57 Ascopiave S.p.A. ______encouraged by the opinion of the professionals consulted, are confident about a positive result of the litigation.

Territorial areas During 2011/2012, the regulatory framework of the sector was further defined, in particular with reference to territorial calls for tenders, through the issue of some ministerial decrees, which implemented several authorisations and directions envisaged by legislation. In particular: the Decree dated 19 th January 2011 issued by the Ministry for economic Development in agreement with the Ministry for the Relationship with Regions and Territorial Cohesion, the territorial areas for issuing calls for tenders to entrust the gas distribution service were identified; with subsequent Decree dated 18 th December 2011, the municipalities belonging to each territorial area were also identified (the so-called Territorial Areas Decree); the Decree issued by the Ministry for Economic Development and the Ministry of Employment and Social Policies on 21 st April 2011 contained provisions ruling the social effects connected to the assignment of the new gas distribution concessions, thus implementing paragraph 6 of art. 28 of Legislative Decree no. 164 issued on 23 rd May 2000 (the so- called Workforce Protection Decree); by Decree of the Ministry of Economic Development n. 226 of 12 November 2011 was approved the rules for the tender criteria and for the evaluation of the tender for the concession of the service of gas distribution (so-called Decree criteria). The enactment of the Ministerial Decrees helped give certainty to the competitive environment within which operators will move in the next few years, laying the foundations for the process of market opening started with the transposition of European directives, can actually produce the desired benefits. The Ascopiave Group – like many other operators- has favourably welcomed this new regulation framework, deeming it may create new opportunities for investments and development for average-sized operators, rationalizing the offer on the market. At the end of 2013, the Government issued Law Decree no. 145 dated 23.12.2013, by making changes to the regulatory framework with regard to the determination of the redemption value of the plants due to the outgoing operator at the end of the cd "Transitional Period". The Decree has been modified and transposed in to Law 9/2014, which changed substantially the original provisions of the Decree in this regard. The Law Decree –modifying the contents of Article 15 of Legislative Decree no. 164/2000, set for that the value of the reimbursement due to previous operators formerly in charge of the concessions during the transitional period should be recalculated according to conventions and contracts and, for those aspects that are not directly set forth by the parties or related to conditions that are not disciplined by the aforementioned contracts and conventions, guidelines on criteria and operating modalities for the evaluation of the reimbursement shall apply instead, following modalities set forth in Article 14, paragraph 8 of Legislative Decree no. 164/2000 and following modifications. In any instance, from value of the reimbursement the private contributions related to assets are subtracted, measured according to the current tariff regulation methodology. The conversion Law of the Decree (Law no. 9/2014) modified its original contents. Now, the owners of the concessions during the transitional period shall receive a reimbursement from the new operator, calculated according to concessions and contracts and, for those aspects that are not directly set forth by the parties or related to conditions that are not disciplined by the aforementioned contracts and conventions, guidelines on criteria and operating modalities for the evaluation of the reimbursement shall apply instead from Article 4 paragraph 6 of Law Decree 21 June 2013 no. 69, converted into law and modified by Law 9 August 2013 no. 98. In any case, the redemption value is deducted from the ______st Ascopiave S.p.A. – Annual financial report as of 31 December 2014 58 Ascopiave S.p.A. ______private contributions relating to local assets, valued according to the methodology of tariff regulation in force. Furthermore, should the value of the reimbursement exceed the net value of local fixed assets calculated with tariff regulations, net of public and private contributions by more than 10%, the local authority in charge of the concession shall forward the information in detail to the AEEG, pending verification, before the call for tender can be published. Law no. 9/2014 has set forth that the expiry terms stated in paragraph 3 of Article 4 of the Law Decree 21 June 2013 no. 69, converted into law and modified by Law 9 August 2013 no. 98 shall be extended for four additional months, and that the deadlines set out in Annex 1 to the Regulation of the Decree of the Minister of Economic Development dated 12 th November 2011, n. 226 (so-called Decree criteria), concerning the areas falling in the third group of Annex 1 and the relevant terms of Article 3 of that regulation, shall be extended by four months. On 6 th June 2014 the Decree of the Minister of Economic Development dated 22 nd May 2014 was published on the Official Gazette, which approved the "Guidelines on criteria and application procedures for the evaluation of the redemption value of natural gas distribution systems" under Article 4, paragraph 6, of the Legislative Decree no. 69/2013, converted with amendments by Law no. 98/2013 and Article 1, paragraph 16 of the Legislative Decree no. 145/2013, converted with amendments into Law no. 9 / 2014. According to Law no. 9/2014 the "Guidelines on criteria and application procedures for the evaluation of the redemption value of the natural gas distribution plants" define the criteria for the valuation of repayments of plants to integrate those aspects that are not already provided for in the agreements or contracts, and although it is not deducible from the will of the parties. The "Guidelines" have several critical points, not only on the merits of the resulting valuations, but also in terms of scope, that the Ministry has extremely extended, to the point of considering as ineffective all the valuation agreements of the plants concluded between the plant operators and the municipalities after 12 th February 2012 (date of entry into force of Decree 226/2011). Furthermore, the same guidelines are in contrast with the provisions of art. 5 of the Ministerial Decree 226/2011. This discrepancy refers to art. 4, paragraph 6 of the Legislative Decree 69/2013, which makes explicit reference to Article. 5 of the Ministerial Decree 226/2011. In view of these illegalities, Ascopiave S.p.A. challenged the MD on 21 st May 2014 (so the Guidelines) before the administrative court (Regional Administrative Court of Lazio). As part of that judgment the issue of the constitutionality relating to the (basically retroactive) interpretation of the new rules on the deduction of private contributions set by Law 9/2014 was raised. Lastly, with Resolution 310/2014 / R / gas - "Provisions for determining the redemption value of the distribution networks of natural gas", published on 27 th June 2014, the Authority for Electricity, Gas and Water System approved the provisions for determining the redemption value of the gas distribution networks, as implementation of the provisions of Article 1, paragraph 16 of LD dated 23 rd December 2013, n. 145, converted, with amendments, by Law dated 21 st February 2014, no. 9. This provision requires the grantor local authority to send to the Authority for verification all the documents containing the detailed calculation of the redemption value (VIR), if this value is higher by more than 10% to RAB. The Authority performs the procedures provided for by Article 1, paragraph 16 of the LD no. 145/13 within the time- limit of 90 days from the date of receipt of the documents by the contracting stations, ensuring priority according to the deadlines for the call of tender publication. By Law no. 116/2014 dated 11 th August 2014 (converted by amendments to Law Decree 24 th June 2014 n. 91); the legislature has provided a further extension of the time limits for the calls for tender publications. Specifically for the areas belonging to the first group as per Annex 1 to the MD 226/2011, the deadline was postponed by eight months, for

______st Ascopiave S.p.A. – Annual financial report as of 31 December 2014 59 Ascopiave S.p.A. ______the areas belonging to the second, third and fourth groups the term was postponed by six months and finally for the belonging to the fifth and sixth groups the extension is of four months. Such extensions do not apply to areas which, although falling in the first six groups, are among the areas considered as "earth quake" because more than 15% of the delivery points falls under the municipalities affected by the earthquakes of 20 th and 29 th May 2012 in accordance with the Annex to the Decree of the Minister of Economy and Finance dated 1 st June 2012. The same law, making a further amendment to Article 15, Section 5 of the Legislative Decree 2000, has finally determined that the redemption value is to be calculated in compliance with the provisions of the agreements or contracts, provided that they have been concluded before the date of entry into force of the Ministerial Decree of 12th November 2011 n. 226, that is, before 12th February 2012, thus affirming the principle of retroactive application of the Guidelines, which has already been the subject of an appeal of the judicial review filed against the Guidelines.

Proposal of the Board of Directors to the Shareholders’ Meeting

The Board of Directors of Ascopiave S.p.A., considering the results of the period and solidity of the capital, shall propose to the Shareholders’ Meeting the distribution of a dividend of 0.15 Euro per share, for a total of 35.162 million Euros Ascopiave S.p.A. announces that, if approved, the dividend will be paid on 13 th May 2015, with ex-dividend date of 11 th May 2015 (record date 12 th May 2015). The Board of Directors will not propose to any amount to legal reserve as it is already equal to one fifth of the share capital

Pieve di Soligo, 16 th March 2015

Chairman of the Board of Directors Fulvio Zugno

______st Ascopiave S.p.A. – Annual financial report as of 31 December 2014 60

DECLARATION

regarding the Consolidated Financial Statements for the accounting period 2014 pursuant to Article 81-ter, Consob Regulation N. 11971 dated 14 May 1999, subsequent amendments and additions.

1) The undersigned dr. Fulvio Zugno in his capacity as Chairman of the Board of Directors, and dr. Cristiano Belliato, Officer Responsible for preparing the Corporate Financial Reports of Ascopiave S.p.A. hereby certify, pursuant to the guidelines of Article 154-bis, paragraphs 3 and 4, Legislative Decree n. 58, dated 24 February 1998:

¢ the appropriateness of the Financial Statements with respect to the characteristics of the company, and ¢ the effective adoption of administrative and accounting procedures in preparing the Consolidated Financial Statements for the period 1 January 2014 –31 December 2014

2) We also declare that:

2.1 the financial statements

(a) have been written in accordance with IFRS International Accounting Principles adopted by the European Union as well as with the provisions of regulations based on Article 9, Legislative Decree n. 38/2005; (b) correspond to the information in the books and other accounting records ; (c) to our best knowledge, provide a true and fair representation of the performance and financial position of the Issuer and the companies included in the scope of consolidation .

2.2 the report on operations accompanying the financial statements contains a reliable analysis of operations and performance, as well as the situation of the Issuer and the companies included in the scope of consolidation, together with a description of the main risks and uncertainties to which they are exposed.

Pieve di Soligo – 16th March 2015

Chairman of the Board of Directors Officer Responsible for the preparation of Corporate Financial Reports

dr. Fulvio Zugno dr. Cristiano Belliato

signature signature

1 REPORT ON CORPORATE GOVERNANCE AND COMPANY STRUCTURE

in accordance with Art.123 bis TUF Issuer: Ascopiave S.p.A. Website: www.gruppoascopiave.it Financial Year of Reference: 2014 2014 16.03.15

GLOSSARY ...... 5

1. INFORMATION ON OWNERSHIP STRUCTURES (ART. 123BIS, FIRST PARAGRAPH CONSOLIDATED FINANCE LAW) AS OF 31.12.14 ...... 6

a) Structure of Share Capital ...... 6

b) Restrictions concerning transfer of equities ...... 7

c) Significant share-holdings ...... 7

d) Equities granting special rights ...... 8

e) Employees share participation: Exercise of voting rights ...... 8

f) Restrictions to voting rights ...... 8

g) Agreements between Shareholders ...... 8

h) Change of control clauses and statute regarding takeover bid ...... 8

i) Power to increase Share Capital and for purchase of treasury stock ...... 8

l) Management and Co-ordination Activity ...... 9

3. COMPLIANCE ...... 10

4. BOARD OF DIRECTORS ...... 10

4.1. 4.1. APPOINTMENT AND SUBSTITUTION ...... 10

4.2. STRUCTURE ...... 11

4.3. 4.3. ROLE OF THE BOARD OF DIRECTORS ...... 14

4.4. 4.4. DELEGATED PARTIES ...... 17

4.5. 4.5. OTHER EXECUTIVE DIRECTORS ...... 18

4.6. 4.6. INDEPENDENT DIRECTORS ...... 18

Report on Corporate Governance and Company Structure 2014 2

4.7. 4.7. LEAD INDEPENDENT DIRECTOR ...... 20

5. PROCESSING OF COMPANY INFORMATION ...... 20

5.1. 5.1. CODE FOR THE TREATMENT OF CONFIDENTIAL INFORMATION AND REGISTER OF INFORMED PERSON ...... 20

5.2. 5.2. INTERNAL DEALING ...... 21

6. INTERNAL BOARD COMMITTEES ...... 22

7. APPOINTMENTS COMMITTEE ...... 22

8. COMPENSATION COMMITTEE ...... 22

9. COMPENSATION OF DIRECTORS ...... 23

10. RISKS AND CONTROL COMMITTEE ...... 25

11. INTERNAL CONTROL AND RISK MANAGEMENT SYSTEM ...... 27

11.1. 11.1. EXECUTIVE DIRECTOR IN CHARGE OF INTERNAL CONTROL AND RISKS MANAGEMENT SYSTEM ...... 31

11.2. 11.2. PARTY RESPONSIBLE FOR INTERNAL AUDIT ...... 31

11.3. 11.3. ORGANISATION MODEL ex Legislative Decree 231/2001 ...... 33

11.4. 11.4. AUDITING COMPANIES ...... 34

11.5. 11.5. MANAGER RESPONSIBLE FOR PREPARING COMPANY ACCOUNTING DOCUMENTS ...... 34

11.6. 11.6. COORDINATION BETWEEN THE PARTIES INVOLVED IN THE SYSTEM OF INTERNAL CONTROL AND RISK MANAGEMENT ...... 34

12. INTERESTS OF THE DIRECTORS AND OPERATIONS WITH RELATED PARTIES 35

13. APPOINTMENT OF AUDITORS ...... 35

Report on Corporate Governance and Company Structure 2014 3

14. COMPOSITION AND FUNCTIONING OF THE BOARD OF AUDITORS ...... 37

15. RELATIONSHIP WITH SHAREHOLDERS ...... 39

16. MEETINGS ...... 39

17. FURTHER OPERATIONS OF CORPORATE GOVERNANCE ...... 42

18. CHANGES SINCE THE END OF THE YEAR IN QUESTION ...... 42

TABLES ...... 43

Tab. 1: Information on ownership structure

Tab. 2: Structure of the Board of Directors and Committees

Tab. 3: Structure of the Board of Auditors

Report on Corporate Governance and Company Structure 2014 4

GLOSSARY

Code/Self-discipline code: the Self-Discipline Code of listed companies approved in July 2014 by the Committee for Corporate Governance and promoted by Borsa Italiana S.p.A., ABI, Ania, Assogestioni, Assonime and Confindustria. Cod. civ./ c.c.: the civil code. Board : The Issuer’s Board of Directors. Issuer: The Issuer of listed shares to which the Report refers. Year: The Corporate year to which Report refers. Consob Issuer Regulations : The Regulations issued by Consob under the resolution no. 11971 of 1999 (as subsequently amended) relating to issuers. . Consob Market Regulations . The Regulations issued by Consob under the resolution no. 16191 of 2007 (as subsequently amended) relating to issuers. Consob Related Parties Regulations: The Regulations issued by Consob under the resolution no. 17221 dated 12 th March 2010 (as subsequently amended) relating to operations with related parties. Stock Exchange Regulations: The Regulations of the markets organized and managed by Borsa Italiana S.p.A. under the resolution of the Italian Stock Exchange Board of 26th June 2012 and approved by Consob under resolution no. 18299 dated 1st August 2012. Stock Exchange Regulations Instructions: Instructions to the Regulations with regards to markets organized and managed by Borsa Italiana S.p.A. Report: Report on the corporate governance and structures that the companies have to draw up as per art. 123-bis Consolidated Financial Law. Consolidated Financial Law: The Legislative Decree dated 24 th February 1998, no. 58.

Report on Corporate Governance and Company Structure 2014 5

ISSUER PROFILE

The Ascopiave Group works in the field of natural gas, and mainly in its distribution and sale to final consumers. For the area of its client basin and for the quantities of gas sold, Ascopiave is currently one of the main operators of the sector at national level.

The Group owns the distribution network managed, which extends for more than 8,600 kilometres, supplying the service to a customer base of more than one million inhabitants to over 200 municipalities.

The sales of natural gases are performed by many companies, some of which are at joint control. Totally considered, the controlled companies of the Group sell to the final customers more than 1 billion of cubic metres of gas.

Since 12th December 2006, Ascopiave has been listed in the Star segment of the Italian Stock Exchange.

The Issuer is organised according to the traditional management and control model, as per articles 2380 bis and following of the civil code, with the Shareholders' Meeting, the Board of Directors and the Board of Auditors as well as a separate Auditing Company (external firm).

The Report on Corporate Governance and company structure, which is also published in a separate folder, and the Company Charter, can all be viewed on the Company's website (www.gruppoascopiave.it).

1. INFORMATION on OWNERSHIP STRUCTURES (Art. 123bis, first paragraph Consolidated Finance Law) as of 31.12.14

a) Structure of Share Capital

Amount in Euros of the subscribed and paid in Share Capital (S.C:): 234.411.575,00

Types of shares making up the Share Capital:

N° Shares % against S. C. Listed/Not Listed Rights and Obligations Ordinary 234.411.57 5 100% STAR Each share represents Shares one vote. The shareholders ‘rights and obligations are provided by articles 2346 and following of the Civil Code and by the

Report on Corporate Governance and Company Structure 2014 6

Company Charter.

On 5th July 2006, the Meeting resolved to increase the Share Capital by payment in the form of subscription under public offer for subscription, offering, as an incentive, the assignment of a bonus share. This incentive specified that those adhering to the Public Subscription Offer and who retained ownership of their shares for at least 12 months, would then have the right to be assigned ‘additional shares’ without further outlay. The Meeting specifies that “The funds necessary to pay for the Additional Shares will derive from a special fixed reserve fund set up specifically for this purpose and as such unavailable for any other use than that specified hereafter, by means of the provision of a part of the total price paid by the subscribers to the Public Offer”. On 17th January 2008, Mediobanca S.p.A. declared that the number of free shares to be assigned to those with such rights equalled Euro 1,078 thousands. The increase of the Share Capital in relation to the bonus shares has been reported to the Treviso Company Registry, on 29th January 2008.

On the date of approval of this Report, no rights were assigned to subscribe new issue shares.

b) Restrictions concerning transfer of equities

There are no restrictions concerning the transfer of equities.

c) Significant share-holdings

As of 31st December 2014, own shares held in the Issuer’s portfolio are equal to 12,197,189 1. As of that date, the significant shares in the Issuer’s capital, according to that resulting from the communications made in accordance with Article 120 Consolidated Finance Law, are as follows:

Declarant Direct Shareholder % ordinary capital % on voting capital Asco Holding S.p.A. Asco Holding S.p.A. 61,562% 61,562%

Ascopiave S.p.A. Ascopiave S.p.A. 5,203%(i) 5,203%(i)

Comune di Rovigo ASM Rovigo S.p.A. 4,419% 4,419%

Amber Capital UK LLP Ambe r Capital UK LLP 3,093% 3,093%

1 Including no. 1.975 bonus shares, with a value of Euro 1,00

Report on Corporate Governance and Company Structure 2014 7

d) Equities granting special rights

No equities have been issued that grant special control rights.

e) Employees share participation: Exercise of voting rights

There is no system of employee share holding.

f) Restrictions to voting rights

There are no restrictions concerning voting rights.

g) Agreements between Shareholders

There are not agreements between the Shareholders known to the Issuer pursuant to art. 122 of Consolidated Financial Law.

h) Change of control clauses and statute regarding takeover bid

The Issuer and its subsidiaries have not drawn up any significant agreements that become effective, are changed or cancelled in the event of a change of control of the contracting company. With regards to takeover bid, the Issuer has not provided in the Statute for any derogation to the provisions of the Consolidated Financial Law. The Issuer's Statute does not furthermore provide for the application of the neutralization rules as per art. 104-bis, subpar 2 and 3 of the Consolidated Financial Law.

i) Power to increase Share Capital and for purchase of treasury stock

The Board of Directors has obtained no powers from Shareholders’ Meeting pertinent to the increase of Share Capital. On 24 th April 2014 the Shareholders’ Assembly deliberated the adoption of a new Plan for the purchase of own shares (hereinafter referred to as the “2014 Plan”). The 2014 Plan authorises the Board of Directors to purchase and transact, in one or more times, on a rotating base, a maximum of 46,882,315 ordinary shares, i.e. the different number that will represent a portion not higher than the maximum limit of 20% of the share capital, also considering the shares already owned by the Company and those that will be owned each time by the controlled companies and, in any case, respecting the limits set by law. The shares could be acquired for a length of 18 months from the date of the resolution of the Assembly dated 24 th April 2013. In accordance with Article 2357, paragraph 1 of the Italian Civil Code, the purchase of own shares is subject to the limits of the distributable earnings and of the available reserves resulting in the financial statement as of 31st December 2013, equal to € 79,754,780. The purchase operations shall start and end in accordance with the timings established by the Board of Directors or the President and CEO. The purchase operations shall take place, in one or more times

Report on Corporate Governance and Company Structure 2014 8

and on a rotating basis, in accordance with the methods established by the Regulations of the Organised Markets and managed by Borsa Italiana S.p.A. The transactions may also be performed prior to having completed all purchases, and may take place on one or more occasions and adopting any method appropriate to the goals to be achieved. The implementation of the plan for the purchase and transaction of own shares will basically allow to perform investment operations consistent with the strategic objectives of the Company, also in the form of exchange, loan, transfer, sale or other Act concerning own shares performed with the aim of acquiring shares or share holdings or for any other operation on the capital that may involve the assignment or transaction of own shares. Moreover, the plan will allow to: 1. intervene, in accordance with the current regulations, directly or through authorised intermediaries, on the share tendencies in relation to contingent market conditions, thus facilitating exchanges when there is little liquidity on the market, and encouraging regular negotiations; 2. offer the shareholders an additional tool useful for monetising their investment; 3. acquire own shares to be used, if deemed appropriate, in incentive plans based on shares and reserved to directors and/or employees and/or collaborators of the Company or of companies controlled by the parent Company. The number of own shares as of 31st December 2014 results equal to 12,197,189 2, equal to 5.203% of the share capital, for a counter value equal to Euro 17,491,478.

l) Management and Co-ordination Activity

Despite the Issuer participates in the consolidated taxation in the hands of the consolidating Asco Holding S.p.A. and there are some relationships of economic nature with the parent company Asco Holding S.p.A., the Issuer believes not being subject to any management and coordination activity pursuant to Articles 2497 et following of the Civil Code, as Asco Holding S.p.A. does not issue directives to its subsidiary and there is no connection between the two organizational-functional companies. As a consequence, Ascopiave S.p.A. considers it has always operated in conditions of corporate and business autonomy with regard to its parent company Asco Holding S.p.A.

***

We specify that: − The information requested by art. 123 bis, first par., lett. i) ("the agreements between the company and the directors… that provide for compensations in case of resignations or dismissal without a just cause or if their business relationship ends after a public offer of purchase”) are illustrated in the section of the Report dedicated to the Compensation of the Directors (Section 9); − The information requested by Article 123-bis, first paragraph, letter l) (“the norms applicable to the appointment and substitution of the directors…and also changes to the Charter, if different from those legislative and of the regulations applicable in supplementary way”) are illustrated in the section of the Report dedicated to the Board of Directors (Sec. 4.1).

2 Including no. 1.975 bonus shares, with a value of Euro 1,00

Report on Corporate Governance and Company Structure 2014 9

3. COMPLIANCE

The Issuer has complied with the Code of Self-Conduct, adopting the principles and the application criteria it envisages, any failure to comply will be motivated in this Report.

The Code of Self-Conduct is publicly available on the website of the Italian Stock Exchange (www.borsaitaliana.it).

The Issuer is not subject to non-Italian provisions of law that influence the Issuer's own corporate governance structure.

4. BOARD OF DIRECTORS

4.1. 4.1. APPOINTMENT AND SUBSTITUTION

The dispositions of the Issuer’s Charter that regulate the composition and nomination of the Board (Articles 14 and 15) are qualified to guarantee the respect of the dispositions introduced by Law 262/2005 (Article 147-ter of Consolidated Financial Law) and by Legislative Decree no. 303 dated 29th December 2006, and Law dated 11th July 2011 no. 120. According to Article 15 of the Company Charter, the members of the Board of Directors are appointed through the so-called list vote on the basis of the lists presented by the shareholders that, alone or with other shareholders, own shares for at least 2.5% of the share capital, i.e., when different, the maximum portion of participation in the share capital required by the law and current regulations to present the lists ("shares in the capital"). The shares in the capital shall be indicated in the summons notice of the Assembly, which shall take a decision on the appointment of the board of Directors. Article 15 of the Company Charter also states that the lists presented by the shareholders be deposited at the Company Headquarters within the deadline provided for, every time, by the current and relevant regulations. Together with each list, within the afore-stated deadlines, the declarations, with which the single candidates accept the candidature and certify under their responsibility, the non existence of ineligibility and incompatibility causes, and also the possession of the requested data previewed by the Normative applicable each time must be published. The first candidate of each list must own the requirements of independence previewed by Article 148.3 of Legislative Decree dated 24th February 1998, no. 58 (and subsequent amendments) and by the codes of behaviour drawn up by management companies of the market which the Company accepted. The lists having at least 3 candidates cannot be exclusively composed of candidates of the same gender (male or female). The candidates of the least represented gender cannot be less than one third (rounded up) of all the candidates in the list. After the vote of the assembly, if two or more lists have been presented, the first four candidates of the list that will obtain the higher number of votes and the first candidate of the list that will result second for number of votes will be elected.

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The appointment mechanism through the so-called list vote guarantees transparency, as well as rapid and adequate information on the personal and professional characteristics of the candidates. As of the date of the report, the Board still hadn’t set up an internal committee for the proposals of appointment, because it did not judge it necessary. This choice is dictated by the fact that the current and applicable regulatory dispositions and the provisions of the company Charter – such as, in particular, the appointment mechanism through the list vote- attribute adequate transparency to the procedure of selection and indication of the candidates. If during the financial year, for whatsoever reason, one or more directors taken from the list that obtained the highest number of votes (“Majority Directors”) is out, and despite this the majority still holds, the Board will substitute the missing Majority Directors through co-optation, in accordance with Article 2386 C.C., it being understood that if one or more missing majority Directors are Independent directors, other independent directors must be co-opted, respecting applicable regulations governing gender balance. The directors thus remain in charge until the following Meeting, that will confirm their appointment or substitution with the ordinary procedures and majorities, as an exception to the list vote system previously indicated. If during the year, for whatsoever reason, one or more directors taken from the first list that obtained the second highest number of votes (“Minority Director”) is out and, despite this the majority still holds, the Board will substitute the missing Minority Directors with the first non-elected candidates part of the same list, only if they are still eligible and willing to accept the post, or, if defecting, to the first list following for number of votes between those that achieved a number of votes equal to at least the minimum threshold envisaged in paragraph 15.10 of the Charter, without prejudice, in both cases, to the applicable regulations governing gender balance. The terms of the substitutes elapse along with the directors in charge at the moment of their joining the Board, as an exception to the provisions set forth in Article 2386.1, Civil Code; in the event one or more missing Minority Directors are independent directors, they have to be substituted with other independent directors; if it is not possible to proceed with the afore-stated terms, for insufficient choice on the lists or for the non-availability of the candidates, the Board shall proceed with co-optation, in accordance with Article 2386 of C.C., of a director chosen by the Board, pursuant to law, in order to respect the legal and regulatory prescriptions related to the presence of the minimum number of independent directors, respecting applicable regulations governing gender balance and also, if possible, the principle of minority representation. The director thus co-opted will remain in charge till the following Meeting that will confirm their appointment or substitution with the ordinary procedures and majorities, as an exception to the list vote system.

Succession plans In view of the structure of governance, of the decision-making system and of the powers, as well as the organizational structure adopted by the Issuer and the Group Ascopiave, aimed at ensuring an adequate separation between the direction, management and control functions and to promote the effective implementation of power balance between the top management, the Board of Directors has decided not to adopt a plan for the succession of executive directors, according to the guidelines 5.C.2 of the Code of Self-Conduct.

4.2. STRUCTURE

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In accordance with Article 14 of the Company Charter, the Board of Directors comprises five (5) members, who need not necessarily be Shareholders, appointed by the Meeting. The members of the Board of Directors remain in charge for three financial years, and their term expires at the date of the Meeting called to approve the Financial Statement relating to the last year of their office; no different expires are established for the members of the Board. The members of the Board of Directors may be re-elected. The Ascopiave Board of Directors, appointed during the Meeting of 24th April 2014, currently comprises 5 (five) members who will remain in charge until the date of the Meeting summoned to approve the Financial Statement relating to the year ended 31st December 2016. In this Meeting 2 lists with no correlation have been submitted. The Directors, except Bruno Piva, have been taken from the list presented by the majority shareholder Asco Holding S.p.A. The Director Bruno Piva has been taken from the minority list no. 2 presented by the shareholder Asm Rovigo S.p.A The summary of the presented lists and the voting results is reported below:

% VOTES OBTAINED IN RELATION TO PRESENTING LIST OF ELECTED VOTING LIST OF CANDIDATES PARTY CANDIDATES EQUITY OWNERSHIP INTEREST

Lista n. 1 1. Dimitri Coin 1. Dimitri Coin 88,255% Asco Holding 2. Fulvio Zugno 2. Fulvio Zugno S.p.A. 3. Enrico Quarello 3. Enrico Quarello 4. Greta Pietrobon 4. Greta Pietrobon

Lista n. 2 1. Bruno Piva 1. Bruno Piva 7,846% ASM Rovigo 2. Claudio Paron S.p.A.

As of 21 st May 2014, the Director Bruno Piva, elected from list 2 submitted by the Shareholder ASM Rovigo S.p.A, presented his resignation from this office and, on 19 th June 2014, in compliance with art. 15.15 of the Company Charter in force, the Board of Directors appointed through co-optation Mr. Claudio Paron, first not appointed of the same list. For the detailed composition of the Board of Auditors, please refer to Table 2 attached to the Report. In accordance with the Application Guideline 1.C.1 lett i). of the Code, the main professional skills of the executive director in charge and the seniority from the first appointment are presented :

− Mr. Fulvio Zugno, President and CEO, beginning of term 28th April 2011, at his second mandate: Mr. Zugno is a professional in the economic field, registered to the Association of Business Consultants and of Professional Accountants and to the Legal Auditors Registry. He

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practices in his studio, he still holds appointments in economic subjects in public bodies and business companies. − Mr. Dimitri Coin, independent Director, already in office since 28 th April 2011, at his second mandate: he is an entrepreneur in the agro-nursery sector and in the real estate-commercial sector. − Mr. Enrico Quarello, Director, already in office since 14 th February 2012: he carries out management activities in companies of organized distribution, he has been director of national companies. − Mrs. Greta Pietrobon, independent Administrator, in office since 24th April 2014: She is a freelancer in the areas of private law and criminal law − Mr. Claudio Paron, independent Director, already in office since 19 th June 2014: experience in the direction of international companies, he is currently participating in the management Rovigo Municipality.

The Directors’ professional curricula are filed at the company's headquarters and available on the Issuer's institutional website www.gruppoascopiave.it under the Investor Relations section.

Maximum accumulation of offices held in other companies

The Board has not deemed it necessary to define any general guideline regarding the maximum number of administrative and control functions held in other companies that can be deemed compatible with an efficient implementation of the role of director of the Issuer, keeping into account the member’s participation in the Committees constituted inside the Board, without prejudice to the requirement of each Director to evaluate the compatibility of the position of director and auditor held in other companies listed in regulatory markets, financial companies, banks, insurance brokers, or companies of significant size, with the diligent fulfilment of the tasks accepted as Director of the Issuer.

During the meeting held on 29 th April 2014, the Board evaluated the offices currently held by its Directors in other companies, and deemed that the number and type of office held does not interfere and is, as such, compatible with an efficient fulfilment of the office of Director in the Issuer. A list of the companies in which each Director holds administrative or control offices is attached to this report (Table 2), highlighting whether or not the company in which the office is held belongs to the group to which the Issuer belongs.

Induction Programme

During the year, in line with the Application Guideline 2.C.2 of the Self-Discipline Code, the members of the Board of Directors were adequately informed about the main legislative and regulatory developments affecting the industry in which the Issuer operates, as well as about the performance of the corporate bodies functions, through the divulgation of information during meetings and in the pre- board report. On 29th April 2014, during the appointment of the new Board of Directors, the Board session was largely devoted to the development of knowledge of the new members on corporate governance, to business issues, to the main regulations on the area of operations of the Group Ascopiave.

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4.3. 4.3. ROLE OF THE BOARD OF DIRECTORS

In accordance with the provisions set forth in Principle 1.P.1 and with the recommendations set forth in the Application Guideline 1.C.1 of the Self-Discipline Code, on 24th July 2006, the Company's Board of Directors resolved to meet at least once a quarter, failing any further need or urgent situation.

During the year 2014, 16 (sixteen) Board of Directors meetings were held in the following dates: 14th January 2014; 27th February 2014; 7th March 2014; 14th March 2014, 1st April 2014, 24th April 2014, 29th April 2014, 14th May 2014, 19th June 2014, 25th July 2014, 29th August 2014, 29th September 2014, 20th October 2014, 28th October 2014, 13th November 2014, 19th December 2014. The meetings average duration was about 2 hours.

As of today, since the beginning of 2015, 5 (four) Board Meetings have already been held on the dates: 9th January 2015, 16 th January 2015, 9 th March 2015 and 16 th March 2015. The 2015 calendar of the main company events (already sent to the market and to Borsa Italiana S.p.A. in accordance with regulatory provisions) includes 3 (three) further meetings on the following dates: - 11th May 2015 – approval of the Quarterly Report as of 31st March 2015; - 5th August 2014 – approval of the Half year Report as of 30th June 2015; - 9th November 2015 – approval of the Quarterly Report as of 30 th September 2015;

During 2014, in line with the Application Guideline 1.C.5. of the Code, the Chairman of the Board of Directors and CEO has, with the support of the Corporate Affairs Department, compatibly with the organisation needs and the content of the discussed topics, and in order to guarantee thorough and timely pre-meeting information, transmitted the support documents for the meeting of the Board at least two working days before the scheduled dated the Directors and Auditors, failing any further need or urgent situation. In addition, with the support of the Corporate Affairs Department, the Chairman of the Board of Directors has made sure that the topics on the agenda may be devoted the necessary time to allow a constructive debate, by encouraging, during the meetings, contributions from the Directors.

In line with the Application Guideline 1.C.6, during 2014, the General Manager of the Company has participated in all the meetings of the Board of Directors. Furthermore, with regard to the topics discussed, the Issuer's Managers in charge for the departments concerned, according to the subject, or external consultants, were invited to attend the Board of Directors meetings, upon request of the President or other administrators, in order to provide additional information on the topics on the agenda.

***

The Board of Directors plays a primary role in the Ascopiave system of Corporate Governance, in that it determines the company’s strategic goals and those of the subsidiaries belonging to the Group it heads, ensuring that they are achieved. Furthermore, the Board of Directors is also significantly involved in the correct management of company information and relations with shareholders.

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To this end, Article 19 of the Company Charter invests the Board of Directors with broad powers for administration of the Company, with no exceptions, and grants it the faculty to perform all the actions which it deems appropriate or useful to reach the Company objectives, excluding only those actions that the law reserves to the Shareholders' Meeting. Moreover, and again in accordance with Article 19 of the Company Charter, the Board of Directors shall be exclusively responsible for all resolutions to be taken in compliance with Article 2436 Civil Code, concerning: - mergers or spin-offs in accordance with articles 2505, 2505-bis, 2506-ter, civil code; - creation and closing of secondary branches; - transferral of company headquarters within Italy; - specification of which Directors shall act as legal representatives; - decrease of company capital in case of recession of partners; - amendments to the company charter to comply with the law, without prejudice to the fact that such resolutions can, in any case, also be made by the Shareholders’ extraordinary meeting. In applying Guideline 1.C.1 of the Self-discipline Code, on 24th July 2006 the Board of Directors resolved - the examination and approval of the strategic, industrial and financial plans of the Issuer and of the Group it heads, the periodic monitoring of the related implementation; - and the definition of the corporate governance system of the Issuer and of the Group structure (in line with the Application Guideline 1.C.1., lett. a).

***

In line with the Application Guideline 1.C.1. let. c), the Board has evaluated, on a three month basis, the suitability of the organisational, administrative and general accounting structure of the Issuer, with specific reference to the Internal Control system and management of conflicts of interest, in accordance with the procedures adopted by the Issuer for that purpose. With regard to this activity, as need may dictate, the Board has made use of the support offered by the Internal Control Committee, by the Internal Control Supervisor, the auditing company and the Director Responsible for preparing company accounts, as well as the procedures and checks implemented in accordance with Law no. 262/2005.

***

In line with the Application Guideline 1.C.1. letter c), the Board of Directors of Ascopiave , despite in compliance with the law in this field regarding the administration and counting separation, has evaluated, during 2014, the suitability of the organisational, administrative and general accounting structure of the participated companies with strategic relevance, with specific reference to the Internal Control system and to the Risk management; the analysis involved all the participated companies of Ascopiave S.p.A.

In 2012, the Board of Directors of Ascopiave S.p.A., approved a document “Guidelines for direction and coordination” to regulate the implementation mechanism of management and coordination, the information and control flows between the issuer and the participated companies. In 2012 the

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document was approved by the meetings of the investee companies, and forms an integral part of the Group's governance system.

In addition, in 2013 organizational, management and control models were adopted in accordance with the requirements of the Legislative Decree no. 231 at all Issuer’s participated companies. Each company adopted its own “231 Model”, created a body in charge of monitoring the implementation and the efficacy of the 231 Model, and adhered to the Code of Ethics of the Ascopiave Group.

***

In line with the Application Guideline 1.C.1. letter e), the Board has evaluated, on a quarterly basis, the general trend of management verifying the economic, property and financial results of the Company and consolidated. The results, and the performance indicators, were compared to the planning data. ***

In accordance with the guideline 1.C.1 lett. f) of the Self-Discipline Code, it is up to the Board of Directors of Ascopiave, given the system of delegated powers in force and in accordance with the resolution of the Council of 24th July 2006, the resolution on the transactions of significant strategic, economic, or financial importance for the Issuer. If these operations are carried out by the participated companies, in the document "Guidelines on management and coordination" it is expected that, in compliance with industry regulations relating to administrative and accounting separation, the administrative bodies of the subsidiaries submit the same to the prior exam of the Board of Directors of Ascopiave. The following operations are considered, but not limited to, having a strategic, economic, or financial, relevance: - agreements with competitors and partners of the Group which, for the object, commitments, constraints, limits which may directly or indirectly arise, may for long-term affect strategic decisions on the freedom of business strategic choices (e.g. partnership, joint venture, etc.) ; - acts and operations involving the entrance in (or the exit from) geographic and/or products markets; - investment in tangible and intangible assets; - purchase and arrangement of companies or business units; - purchase and arrangement of subsidiaries of controlling interests and connections and share in profits in other companies, as well as the conclusion of agreements on the exercise of rights related to those shares; - undertaking of loans of significant amount, as well as provision of loans and issuing of guarantees for the interest of Group companies; - purchase of assets and services binding the company for a multi-year period; - decision of merger in the cases provided for by arts 2505 and 2505-bis of the civil code; - creation and closing of secondary branches; - amendments to the company charter to comply with the law.

***

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In line with the Application Guideline 1.C.1,. let. g) on 29 th April 2014 the Board of Directors has completed the self-assessment on the functioning of the Board itself and of its internal Committees, as well as their size and their composition, stating that it involves professional and managerial skills in the economic/financial , managerial, entrepreneurial fields, consistent with the activities of the Issuer. It is furthermore considered as adequate the presence of 3 (three) Independent Directors, out of a total of no. 5 (five) Directors. The assessment process was carried out on the basis of qualitative criteria, by comparing the composition and functioning of the Board of Directors and of the internal committees to the best practices of reference. For the assessment, the Board has not made use of external consultants, but of professionals internal to the Company. ***

The Meeting did not authorise any exceptions to the prohibition of competition as specified by Article 2390 Civil Code.

4.4. 4.4. DELEGATED PARTIES

Managing Directors

By resolution dated 29th April 2014, the Company’s Board of Directors, appointed during the meeting held on 24th April 2014, resolved to grant the Chairman of the Board of Directors, Fulvio Zugno, as CEO; Mr. Fulvio Zugno, was assigned with the following main powers: - Coordinating the activity of the Board of Directors and implementing the related resolutions; - Taking care of the relationships with the shareholders; - Managing the institutional relationships and promoting the Company image; - Elaborating medium-long term strategies; - Contracts for the purchase and sale of goods, raw materials, movable properties, services with economic content not higher than Euros 1,500,000 for each operation; - Purchasing, selling or exchanging installations, machines, equipment, trademarks, patents with value not higher than Euros 500,000 for each operation;

The division of powers is completed by the General Manager , appointed by the Board of Directors on 15th March 2012, in the person of Mr . Roberto Gumirato . The General Manager directly reports to the Chairman and Chief Executive Officer, in compliance with the new arrangement of powers set by the current Board of Directors.

In accordance with the allocation of powers, it is believed that the Chairman and Chief Executive Officer, Dr. Fulvio Zugno, cannot be regarded as primarily responsible for the company management (chief executive officer).

Chairman of the Board of Directors See above par. “Chief Executive Officer”

Information to the Board

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In accordance with what specified by Article 19.5 of the Company Charter, the delegated parties report on at least a quarterly basis to the Board of Directors and Board of Auditors as to their work, general management trends, foreseeable evolution and the most economically, financially and equity important operations performed by the Company and its subsidiaries; specifically, the Chairman provides information as to the operations in which he has an interest on his own behalf or that of third parties. With regards to the statutory provisions, it should be noted that the delegated parties report and involve the board on the activity performed at each meeting of the Board of Directors. On a quarterly basis, upon approval of the annual and half-yearly financial statements and of the intermediate management reports are instead communicated the management results and related performance indicators.

4.5. 4.5. OTHER EXECUTIVE DIRECTORS

There are no other executive directors further than the Chairman and Chief Executive Officer, Mr. Fulvio Zugno.

4.6. 4.6. INDEPENDENT DIRECTORS

In the present composition of the Board of Directors of the Issuer there are three independent directors, in line with the Application Guideline 3.C.3 of the Self- Discipline Code. The non-executive Directors and Independent Directors are, in terms of number and authority, such as to guarantee that their judgement can have significant influence on the Issuer's board resolutions. The non-executive Directors and Independent Directors shall bring their specific competencies to board discussions, contributing to the decision-making process in accordance with the Company interests.

The number of independent directors (3 on a board of 5) is adequate both on the basis of the provisions of art . IA.2.10.6 Instruction Stock Exchange, and in relation to the size of the Board and to the Issuer's activity; furthermore, this is sufficient to the constitution of the committees within the board that the Company has deemed appropriate to adopt.

In the meeting held on 29 th April 2014, the Board of Directors evaluated the existence of the requirements of independence of the Directors Mr. Dimitri Coin, Mr. Bruno Piva, Mrs. Greta Pietrobon, as specified by Principle 3.P.2., where it is recommended to assess the independency of Directors on a yearly basis, and in line with the Application Guideline 3.C.4. The verification was repeated on 19th June 2014, on the occasion of the appointment of the new Director Claudio Paron , co-opted following to the resignation of the Director Bruno Piva. In performing such evaluations, the Board of Directors adopted the Application Guidelines 3.C.1. and 3.C.2. as specified by the Code. The Independent Directors are, as such, in possession of the independence requirements listed in Article 148, 3rd paragraph, letters b) and c) of the Consolidated Finance Law, in as much as none: (i) controls the Issuer, directly or indirectly, even through subsidiaries, fiduciary companies or on behalf of third parties, nor are able to exercise undue influence; (ii) participates, directly or indirectly, in any company agreement where one or more subjects may exercise control or significant influence on the Issuer;

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(iii) is, or in the previous 3 fiscal years was, an important party (by such, meaning Chairman, legal representative, Chairman of the Board of Directors, and executive Director or Manager with strategic responsibility) of the Issuer or of a holding with strategic relevance or of a company under common management with the Issuer or of a company or body which, even with others, through a representational company agreement, controls the Issuer or is able to exercise significant influence; (iv) Does not have, or did not have, during the previous year, directly or indirectly (e.g. through subsidiaries or companies of significance in the sense specified by the previous point (iii), or as partner of a professional studio or consultancy company) significant commercial, financial or professional relations, or subordinate working relations: (a) with the Issuer, with its subsidiary, or with one of relevant its partners, in the sense specified by the previous point (iii), (b) with a subject that, even jointly with others, through a representational company agreement , controls the Issuer or – given that it is a body or company -with the partners, in the sense specified by the previous point (iii); (v) without prejudice to what specified under the previous point (iv), holds any independent or subordinate working relations, or other relations of an economic or professional nature such as to compromise independence: (a) with the Issuer, with one of its holdings or parent companies, or with the companies subject to common management; (b) with the Issuer Directors; (c) with subjects that are married or related up to the fourth level with the Company's Directors as under the previous point (a); (vi) receives or has received in the previous three fiscal years from the Issuer or from a holding or subsidiary a significant additional fee in addition to the “fixed” fee as non-executive Company Director including participation in incentives linked to company performance even based on shares; (vii) has been a Director of the Issuer for more than nine years during the last twelve years; (viii) holds the office of Executive Director in another company in which an Executive Director of the Issuer holds an office of Director; (ix) is a member of the board of a company or of one in the network of companies tasked with the auditing of the Issuer's accounting; (x) is a close family member of a person who finds himself in any of the situations as specified under the previous points and, in any case, is a husband, wife, relative or similar within the fourth grade of the Issuer Directors of the subsidiaries, of the companies controlling it and those subject to common management.

***

The Board of Auditors verified, in line with the Application Guideline 3.C.5,during the meeting held on 29 th April 2014, the correct application of the guideline and procedures adopted by the Board to evaluate the independence of its members, and the results of this control will be explained in the Auditors' report at the meeting in accordance with Article 2429 Civil Code. The same verification was carried out during the meeting held on 10 th July 2014.

The independent administrators never met during the year in the absence of the other administrators as no other circumstance demanding the necessity of these reunions occurred. There are various reasons that contributed to the non-convocation of special reunions of the independent administrators. For

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example, the fact that the administrators have always received with large advance all the necessary information for their effective, deep and not formal participation to the reunions of the Board of Directors was determining. This permitted the timely formulation of eventual remarks on the opportunity and correctness of each single proposed decision. Furthermore, the adoption of the Code on Related Parties Transactions, its punctual application, the previous declaration, during the opening of the Board’s works, of any conflicts of interests according to article 2391 of Civil Code and the subsequent abstention of the administrators in conflict, are symptomatic elements of a correct modus operandi that guarantees the absence of conflicts of interest and explains the reason why the necessity of facing these problems without the presence of the so-called not-independent administrators never appeared during the financial year.

4.7. 4.7. LEAD INDEPENDENT DIRECTOR

The Board of Directors did not consider necessary to identify an internal independent Director as a Lead Independent Director, not occurring the circumstances provided for in the Application Guideline 2.C.3. of the Code. This figure, in fact, is expressly provided for by the Application Guideline 2.C.3. of the Self-Discipline Code in the event that the Chairman of the Board is primarily responsible for managing the Issuer - chief executive officer – i.e. the Chairman or the controlling shareholder of the Issuer, or if the Issuer belongs to the FTSE-Mib, for which the appointment of the Lead Independent Director may be required by the majority of independent directors.

5. PROCESSING OF COMPANY INFORMATION

5.1. 5.1. CODE FOR THE TREATMENT OF CONFIDENTIAL INFORMATION AND REGISTER OF INFORMED PERSON

In compliance with the provisions of Article 114, first and twelfth paragraphs, and 115 bis of the Consolidated Finance Law, and arts. 66 et seq. and 152-bis et seq. of the Issuer Regulations and with the Application Guideline 1.C.1. let. J) of the Self-Discipline code, on 11th September 2006 the Board of Directors approved the adoption of a behaviour code concerning confidential information (the ‘Code for the treatment of confidential information’ ), and the institution of a specific register of persons who, due to the working or professional activities performed, or offices held, have access to confidential information (the ‘ Register of Informed Persons’ ). On 14th October 2013, Ascopiave S.p.A. Board of Directors approved a new version of the Code for the treatment of confidential information. The code text approved by the Company first includes the obligation for the Company Directors and all those who, due to their working or professional activities, have access to confidential information concerning the Issuer or companies controlled by such (the ‘Informed Persons’ ) to keep such information confidential. The code sets out a specific procedure aimed at governing the ways and terms in which the confidential information concerning the Company is to be communicated to the market, in compliance with applicable regulations and provisions of law. The procedure also states that Ascopiave Chairman of the Board of Directors shall take responsibility for the management of Confidential Information concerning the Company or Subsidiaries, as well as relations between the Company and institutional investors. Specifically, Ascopiave Chairman of the

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Board of Directors approves the communication sent to his attention by the Contact person and, generally speaking, the management of relations with the press and institutional investors. The Contact person, appointed by the Board of Directors, shall deal with relations with information bodies and prepare the drafts of communications about Confidential Information concerning the Company or Subsidiaries, ensure correct fulfilment of obligations to inform the market, and, in accordance with the methods set out by the Issuer Regulations and the Stock Exchange Regulations, as well as by the 'Code of conduct for corporate information to the market', release any communications relating to the Confidential Information, approved by Ascopiave Chairman of the Board of Directors. The communication obligations outside the Confidential Information must be met by means of press releases to the market, and, where deemed appropriate or fitting, making reports and documents available. Communication to the public of Confidential Information takes place by means of press releases to be prepared and transmitted in accordance with the methods specified by the Stock Exchange Regulations (see article 2.7.1 of the Stock Exchange Regulations). In compliance with what specified under principle no. 7 of the Guide for Information to the Market and the recommendations formulated on this point by Consob, the Company shall publish, through the Contact person, on its website and preferably in the English language (i) the Charter, (ii) the financial statement and consolidated financial statement of the year, (iii) the half-year and quarterly reports, (iv) the information released to the market and all documentation distributed during meetings with market operators, (v) the Behaviour Code governing internal dealing.

The Code also sets out the institution of the Register of Informed Persons and governs the ways by which it should be filled in and updated, in compliance with that specified by Article 115 bis of the Consolidated Finance Law. Data concerning those recorded in the Register of Informed Persons will be kept for a period of 5 years as from the date on which the circumstances arose that meant said person was to be recorded in the Register of Informed Persons, or the updating of his related data.

5.2. 5.2. INTERNAL DEALING

In compliance with the provisions of Article 114, seventh paragraph of the Consolidated Finance Law, and arts. 152-sexies et seq. of the Issuer Regulations, the Board of Directors resolved to adopt a behaviour code with regards to internal dealing (the ‘ Code for Internal Dealing’ ), which identifies the so-called ‘Significant Parties’, and governs the way by which communication of operations made by such concerning shares issued by the listed company or other related financial instruments, must be communicated to Consob and the public. The text of the Code for Internal Dealing (http://www.gruppoascopiave.it/wp-content/uploads/2015/01/Codice-di-comportamento-internal- dealing-GruppoAscopiave-20131014.pdf ) approved on 11th September 2006 and updated on 14th October 2013, specifies the ways by which the Significant Parties (i.e. those parties required to communicate any operations on Company shares or financial instruments) must make such communications to the Company itself and/or Consob. In compliance with what set out by Article 2.2.3 paragraph 3, letter (o), the Code also prohibits the significant parties from performing operations on Company shares and/or financial instruments during the so-called blackout periods, i.e. during the 15 calendar days prior to communication to the public of approval of the draft financial statement, half-year report, and the quarterly reports. In implementing the provisions of the Code for Internal Dealing and the Code of behaviour for corporate information to the market, and in accordance with Article 2.6.1, chapter 2.6 of the Stock

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Exchange Regulations, the Board of Directors Meeting held on 24th January 2012 appointed Mr. Cristiano Ceresatto as Information Officer and Mr. Edo Cecchinel as his alternate, assigning them the task of complying with all provisions of law and regulations as expected of the afore-specified Information Officer, with specific reference to the matters of internal dealing and communication of confidential information, as well as the provisions relating to the communications to the market as per Chapter 2.6 of the Stock Exchange Regulations and, more generally, the provisions of the Code for Internal Dealing and the Code for the Treatment of Confidential Information.

6. INTERNAL BOARD COMMITTEES

Within the Issuer’s Board of Directors, the Compensation Committee and the Risks and Control Committee have been established.

7. APPOINTMENTS COMMITTEE

Given the size of the Company and the limited number of members of the control and administration bodies, the Board of Directors has not deemed it necessary to set up an appointments committee, pursuant to the Guideline 5.P.1, leaving the task of identifying the most suitable persons for the execution of varying tasks within the Company's corporate governance bodies, to the Board of Directors as a whole.

8. COMPENSATION COMMITTEE

In accordance with Principle 6.P.3 of the Code, the Company’s Board of Directors has set up an internal Compensation Committee.

Composition and functionality of the compensation committee

The Compensation Committee of the Issuer is composed by three independent Directors. From 29 th April 2014, the Committee has been composed by the independent Director Dimitri Coin, as Chairman, and by the non-executive Director Enrico Quarello, by the independent Director Claudio Paron. 3 (see Table 2) in accordance with the Principle 6.P.3 of the Code of Self-Conduct, the Director Dimitri Coin has acquired an adequate experience regarding remuneration policies, both as an entrepreneur, and as a member of the Board of Directors and of the Remuneration Committee of Ascopiave from 2011 to today .

During the year, 2 Compensation Committee meetings were held on 7th March 2014 and 14th May 2014. The meetings duration was of about 1 hour. The Committee furthermore met after the end of the fiscal year, on 9th March 2015.No other meetings of the Committee were scheduled for the year 2015.

3 Appointed on 19th June 2014, cooptation date of the Director Claudio Paron, replacing the Director Bruno Piva, who resigned on 21st May 2014.

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The Chairman and one member of the Board of Auditors, invited by the Committee itself, participated in the meeting and, for in-depth examinations of the agenda, some employees of the Company were also in attendance.

In accordance with Application Guideline 6.C.6, the Regulations of the Compensation Committee provides that no director takes part in the meetings of the Committee where proposals to the Board of Directors regarding his Compensation are formulated.

Functions of the Compensation Committee

For the details of the functions and functioning of the Compensation Committee, see Section I, chapter 2.4 of the Report on Compensation, prepared in compliance with Article 123-ter of the Consolidated Finance Law. It should be noted that the Rules of the Compensation Committee, which was adopted in its original form on 12th September 2006, was amended on 19th December 2011.

On 7 th March 2014, the Committee met to discuss the following issue, among others: - Compensation policy adopted by the Company and elaboration of the Report on Compensation pursuant to art. 123-ter Consolidated Financial Law - Outcome of the “ 2013 management by objectives ” plan

On 14 th May 2014, the Committee met to discuss the following issue, among others: - Compensation Chief Executive Director

After the end of the fiscal year, on 9th March 2015, the Committee met to discuss, among the subjects, the adequacy, consistency and application of the Compensation Policy and the drafting of the 2015 Report on Compensation, to monitor the actual achievement of the performance targets set in “ 2014 Management by objectives ” plan.

The minutes of the Committee meetings were regularly written, in line with the Application Guideline (4.C.1., let. D).

The Committee, while performing its tasks, has accessed the necessary information and the corporate functions pertinent to its assignment, in line with the Application Guideline 4.c.1, let e).

No financial resources have been granted to the Internal Control Committee, since it avails of the corporate assets and structure of the Issuer, in order to perform its tasks.

9.COMPENSATION OF DIRECTORS

General compensation policy

The Board of Directors adopted, in the meeting dated 19th December 2011, the “Compensation Policy of the Ascopiave Group” (hereinafter “Compensation Policy”), then amended on 15th March 2012 and 14th March 2013, in compliance with the recommendations of Article 6 of the Self-Discipline

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Code of listed Companies of Borsa Italiana S.p.A. (the “Self-Discipline Code”), to which the Company conforms, and also in compliance with Article 3.2 letter (b) of the Procedure for Related Parties Transactions approved by Ascopiave on 24th November 2010. The Compensation Policy shall be presented to the Board on the occasion of the 2013 financial statement approval, and subject to the advisory vote of shareholders in compliance with Article 123-ter of the Legislative Decree no. 58 of 24th February 1998. For the contents of the Compensation Policy see Section I of the Report on Compensation, prepared in compliance with Article 123-ter. of the Consolidated Finance Law.

Share-based compensation plans

The ordinary meeting of 25th June 2007, on the basis of the report by the Board of Directors, and having heard the favourable opinion of the Board of Auditors, having seen Article 114-bis of Legislative Decree no. 58 dated 24th February 1998 as subsequently amended, and the regulations issued by Consob and by Borsa Italiana S.p.A., the ordinary Meeting approved the adoption of a compensation plan based on a maximum total number of 4,666,680.00 phantom stock options, in favour of certain directors and employees of Ascopiave S.p.A. and Ascotrade S.p.A. with strategically important functions within, respectively, Ascopiave S.p.A. and Ascotrade S.p.A., named 'Phantom Stock Option Plan 2007', in compliance with the guidelines specified in the report made by the Board of Directors. The “Phantom Stock Option Plan 2007” is based: (i) on the trend of the Company stock title, in as much as the so-called phantom stock options assign recipients the right to receive future payment of a differential amount equal to any increase in the market value of Ascopiave's ordinary shares, and (ii) on the achievement of certain performance objectives and/or maintenance of working or administrative relations. By specific delegation, the Board of Directors has fully and completely implemented the Plan. The plan was finally completed in May 2014, with the payment of all fee to the beneficiaries, who exercised their right on the options granted to them and matured .

At the Annual Meeting of 26th April 2012, which approved the 2011 financial statements, a new share- based incentive plan was approved , the so-called "Long-term share-based incentive 2012-2014" or "2012-2014 plan"), elaborated upon the proposal of the Remuneration Committee and previously approved by the Board of Directors on 15th March 2012 .The 2012-2014 plan, in compliance with the recommendations of Article 6 of the 2011 Self-Discipline Code, envisages, in order to grant the bonus, a vesting period of 3 years, and the achievement of pre-fixed performance and return targets of the Company’s shares, also in relation to a basket of stocks of comparable companies. In case the bonus is granted, of which 50% will be assigned in cash and 50% in Ascopiave shares, a 2 year retention period of those shares is envisaged; in case the Beneficiary, at the end of the two-year period, has a management relationship with Ascopiave or with the Companies of the Group, the retention period is extended until the term of his office. The Board of Directors has taken steps to implement the Plan, identifying beneficiaries, among the potential beneficiaries under the Regulations. The informative document is available on the Issuer's institutional website, under the section ‘Investor Relations’ ( http://www.gruppoascopiave.it/wp- content/uploads/2015/02/Pianodiincentivazionealungotermine2012-2014.pdf )

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Compensation of executive directors For the breakdown of the compensation of directors who exercise management proxies, see Section II of the Report on Compensation, drafted in compliance with Article 123-ter of the Consolidated Financial Law.

Compensation of executive director and of managers with strategic responsibilities For the breakdown of the compensation of the executive director and of managers with strategic responsibilities, see Section II of the Report on Compensation, drafted in compliance with Article 123- ter of the Consolidated Financial Law.

Incentive mechanisms for the In-Company Control Supervisor and the Manager in charge of preparing the company accounting documents The Manager in charge of preparing the company accounting documents and the internal audit manager, during 2014, received the “Incentive long-term share-based program 2012-2014”, which was approved by the Board of Directors of Ascopiave S.p.A., upon proposal of the Compensation Committee, on 15th March 2012 and after approved by the Shareholder's Meeting on 26th April 2012. The Manager in charge, as manager with strategic responsibilities, was also the recipient of the incentive plan "management by objectives 2013", the outcomes of which can be found in Section II of the Report on Compensation, prepared pursuant to art. 123-ter of the Consolidated Financial Law.

Compensation of non-executive directors For the breakdown of the compensation of non-executive directors, see Section II of the Report on Compensation, drafted in compliance with Article 123-ter of the Consolidated Financial Law.

In line with Application Guideline 6.C0.4. of the Code, the compensation of non-executive Directors is not connected to the Issuer’s economic results. Non-executive Directors are not recipients of share-based incentive plans.

Management severance pay in case of resignation, dismissal or business termination following a takeover bid

For details on the benefits, see Section II of the Report on Compensation, drafted in compliance with Article 123-ter of the Consolidated Financial Law.

9. RISKS AND CONTROL COMMITTEE

In line with the provisions of Principle 7.P.3., Letter. a), n. (ii) and 7.P.4. the Board has constituted an internal control and risk Committee. The Board of Directors of the Issuer, on 24th January 2013, simultaneously approved the Control and risks Committee Regulations, in compliance with the new Code of Self-Discipline.

Composition and functioning of the control and risks committee

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The Issuer’s Internal Control Committee is composed of non-executive Directors, most of which are independent. The Committee is composed of three members. On 29 th April 2014, the Committee comprised the non-executive Director Dimitri Coin, as Chairman, and the independent Director Claudio Paron 4, by the non-executive Director Enrico Quarello.

In accordance with Principle 7.P.4 of the Self-Conduct Code, the Director Dimitri Coin has expertise in risk management , acquired in business and in his experience as member of the Risk and Control committee in Ascopiave SpA from 2011 .

During the fiscal year 5 (five) meetings of the Risks and Control Committee were held on 27th February, 12 th March, 13 th May, 29th August and 13th November.. The average length of the meetings was about 1 hour. For details on the participation of members, see Table 2 attached to this report. For the year 2015, the meetings of the Committee are fixed on the occasion of the 4 (four) meetings of the Board of Directors, scheduled for the approval of the annual, half-year and quarterly results of the Company. After the end of the fiscal year, 2 (two) meetings of the Committee were held on 24th February 2015 and 9th March 2015. The Committee meetings were attended, upon invitation, by the members of the Board, in line with the Application Guideline 7.C.3 of the Code, the Manager responsible for preparing corporate accounting documents and the head of the Internal Audit department.

Functions attributed to the risks and control committee

n line with the Application Guideline 7.C.1, the Control and Risks Committee, in its role of supporting the Board of Directors, expresses its opinion with regard to: (i) definition of guidelines for the Internal Control and Risks Management system, so that the main risks concerning the Company and its subsidiaries are correctly identified, and properly assessed, handled and monitored, thus determining compatibility criteria of those risks with a healthy and consistent business management; (ii) the assessment, with at least yearly frequency, of the adequacy of the internal control and risks management system in comparison with the corporate characteristics and with the profile of the risks taken, as well as with its effectiveness; (iii) the work plan scheduled with at least annually by the Head of the Internal Audit Department; (iv) the description, in the report on corporate governance, of the main features of the system of internal control and risk management; (v) the results presented by the statutory auditor in the eventual letter of recommendations and in the report on key matters arisen during the statutory audit.

The Control and Risks Committee, furthermore, in supporting the Board of Directors: (i) Assesses, together with the manager in charge of preparing the corporate accounting documents, heard the statutory auditor and the Board of Auditors, the correct application of accounting principles and their uniformity for the purposes of preparing the consolidated financial statements;

4 Appointed on 19th June, cooptation date of the Director Claudio Paron, replacing the Director Bruno Piva, who resigned on 21st May 2014.

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(ii) expresses opinions on specific issues regarding the identification of key business risks; (iii) reviews the periodic reports related to the evaluation of the system of internal control and risk management, and those prepared by the Internal Auditing Department; (iv) monitors the independence, adequacy, effectiveness and efficiency of the Internal Auditing department; (v) may ask the Internal Auditing Department to perform audits on specific operational areas, by simultaneously communicating it to the Chairman of the Board; (vi) reports to the Board of Directors at least once every six months, in occasion of the approval of the annual financial report and statements, on its activity and the adequacy of the system of internal control and risk management; (vii) delivers a preventive motivated opinion on the Company interest to the completion of transactions with related parties, as well as on the convenience and accuracy of the related conditions, pursuant to the Procedure for transactions with related parties approved by the Board of Directors of the company on 24th November 2010; (viii) delivers a preventive motivated opinion on the proposals made by the Director in charge of the internal control system and risk management to the Board of Directors regarding the functions of appointment and dismissal of the Head of Internal Auditing, the allocation to the same of adequate resources for the fulfilment of his responsibilities, as well as the determination of his Compensation in line with the company policy; (ix) performs the other duties which, from time to time, will be assigned to him by the Board of Directors

During the fiscal year the Control and Risk Committee has delivered its opinion in favour of the Board of Directors on the adequacy of the internal control and risk management system. The Committee has examined the periodic reports prepared by the internal audit department on the progress of the work in the field of internal auditing, with particular regard to the activities of risk analysis and to the implementation of the necessary measures to provide reasonable assurance regarding the true and fair representation of the economic, patrimonial and financial information according to the provisions of Law 262/2005. During the meetings, the Committee also discussed the most suitable initiatives with regards the auditing activities for 2014, with a view to progressively improving the Internal Control and Risk Management system.

The minutes of the Committee meetings were regularly written, in line with the Application Guideline (4.C.1., let. D).

In performing its functions, the Committee has had the right to access all information and company functions necessary for the execution of its tasks, and avail of external consultants, within the terms set out by the Board, in line with the Application Guideline 4.C.1., lett. e). No financial resources have been granted to the Committee, since it avails of the corporate assets and structure of the Issuer, in order to perform its tasks.

10. INTERNAL CONTROL AND RISK MANAGEMENT SYSTEM

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Ascopiave has adopted a system of internal control and risk management in accordance with the Code of Self-Discipline for listed companies and in line with the best practices of reference. The Board of Directors, under the definition of the strategic, industrial and financial plans, defined the nature and level of risk consistent with the strategic objectives of the Issuer, in line with the Application Guideline 1.C.1., lett. b).

The Board of Directors defined the guidelines for the Internal Control and Risks Management system, so that the main risks concerning the Issuer and its subsidiaries are correctly identified, and properly assessed, handled and monitored, thus determining the compatibility of these criteria with a healthy and consistent business management in line with the Application Guideline 7.C.1., lett. a).

In 2014, the Group started a project for the implementation and development of the Enterprise Risk Management model (hereinafter “ERM”), through the adoption of methods and operations aimed at improving risk assessment and at implementing checks to monitor the control system related to the risks identified, according to a specific plan. In particular, the project identifies the risk events which, at a strategic, financial, operational and compliance level, may jeopardize the achievement of performance targets. The risk assessment model that was adopted will enable the evaluation of the protection tools adopted and the scheduling of the most adequate hedging actions in line with the issuer's risk preference. Furthermore, the model envisages the implementation of a risk analysis dashboard (so- called Tableau De Bord) through the identification of risks indicators to be continuously monitored.

Existing management of risk and internal control system in relation to the financial information procedure

The system of internal control and risk management is embodied in the set of rules, procedures and organizational structures designed to permit the identification, measurement, management and monitoring of the main risks. In line with the guideline 7.P.1. of the Code, this system is integrated into the broader organizational and corporate governance adopted by the Issuer and shall take in due account the reference models and best practices existing at national and international level. The system is aimed at ensuring the trustworthiness, accuracy, reliability and timeliness of financial reporting.

a) Phases of the existing management of risk and internal control system in relation to the financial information procedure

The internal control and risk management system is aimed at supplying the reasonable certainty that the diffused accounting information supplies to the users a true and correct representation of the management facts, allowing the release of the certifications and declarations requested by law on the correspondence of the document results, of the books and accounting writings of the acts and communications of the company diffused to the market and related to the accounting information also within the year, and also the appropriateness and effective application of the administrative and accounting procedures during the period interested by the accounting documents (year balance, half year balance and intermediate management report) and on the drawing-up of the same according to the international accounting standards.

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In relation to this, we must remember that, as specified in the previous Reports, Ascopiave, as an Italian company with shares negotiated in an Italian regulated market, must appoint a Manager in charge of preparing the company accounting documents (Manager in charge), to whom the law attributes specific duties, responsibilities and certification and declarations obligations. As a consequence, on 19th July 2007 the Board appointed a Manager in charge, to whom it entrusted the task to prepare proper administrative and accounting procedures for the creation of the accounting informative diffused to the market, and also to supervise the effective respect of these procedures, attributing him proper powers and instruments for implementing related functions. The Board entrusted this charge to Mr. Cristiano Belliato, Chief Financial Officer of the Issuer, to whom the Board attributed due powers and instruments for the realisation of the tasks according to the provisions of Article 154-bis of Legislative Decree 24th February 1998, no. 58. The Manager in charge started the “262 Project”, with the aim of ascertaining the consistency of the Internal Control System to supply a reasonable certainty about the true and proper representation of the economic, equity and financial information. The risk management and internal control system is based on the following characterising elements: − a set of company procedures relevant for the preparation and circulation of financial information, comprising, among others, operating instructions, reporting and accounting calendar; − an identification process of the main risks connected to the financial information and of the main controls for the acknowledged risks (financial risk assessment) that brought to the recognition, for each relevant accounting area, of the financial processes/flows considered critical and the activities of control supervising these financial processes/flows and also the elaboration of appropriate control matrixes that describe for each process considered critical and/or sensitive for the 262, the control standard activities (key controls) and the concerning process owners. The company processes and related matrixes are the subject of a periodical evaluation and if necessary to an update. − process owners to whom the update of the matrixes of the controls is entrusted; the Chief Financial Officer is responsible for the verification and the periodical update of the administrative- accounting procedures of the Group; − a process of periodical evaluation of the appropriateness and of the effective application of the identified key controls. The evaluation is performed every 6 months with the preparation of the balance and of the half-year report and is performed by the internal audit department, on the basis of the indication of the Manager in charge. The tests on semi-annual controls are performed on the basis of the priorities identified during the risk assessment; − a process of certification toward the outward based on the reports and declarations given by the manager in charge according to Article 154-bis of Legislative Decree 58/1998, in the framework of the general process of preparation for the annual balance or the half year financial report or the intermediate management report, also on the basis of the controls performed and object of the accounting control model, which content is shared with the President and Chief Executive Officer, who presents the report or the declaration of the Board, together with the accounting document, for the relating approval by this last one. For the purposes of internal reporting, the Manager in charge periodically refers to the Control and Risks Committee, to the Board of Auditors and to the Supervisory Committee about the development procedures of the evaluation process of the control system and also about the results of the evaluations performed to support the released certifications or declarations.

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b) Roles and functions

The internal control system of Ascopiave involves different subjects to whom specific roles and responsibilities are attributed: − Board of Directors; − Director in charge for the internal control and risks management system; − Committee for control and risks; − Supervisory Committee pursuant to Legislative Decree 231/2001; − Manager in charge of preparing the company accounting documents; − Head of the Internal Audit Department; − Board of Statutory Auditors − Auditing company. The Board of Directors is the body called upon to define the nature and level of risk consistent with the strategic objectives of the Issuer . It is up to the Board of Directors , after consulting the Control and Risks Committee, to set the guidelines of the internal control and risk management system and to assess its adequacy, at least every year . To this aim, the Board of Directors relies on the work of the control and risks Committee and of the Director in charge for the system of internal control and risk management. The control and risks Committee supports, with appropriate preliminary assessments, the evaluations and decisions of the Board of Directors relating to the system of internal control and risk management, as well as those for the approval of financial reports. The Head of the Internal Audit Department is assigned with the task of verifying that the system of internal control and risk management is adequate and works properly.

Furthermore, each business unit and company manager of the Company is responsible, under the guidelines of the internal control and risk management system set out by the Board of Directors and by the directives received, for implementing these guidelines, defining, managing and monitoring the efficient functioning of the In-company Control system, with reference to their own area of responsibility. All employees, each according to his role, contribute to ensuring an efficient functioning of Ascopiave’s In-company Control system.

In accordance with what specified by arts. 2.2.3, paragraph 3, letter (j) and 2.2.3 bis of the Stock Exchange Regulations, on 27th March 2008, Ascopiave set up the organisation, management and control model as per Article 6 of Legislative Decree no. 231 dated 8th June 2001, by also appointing a Body in charge for supervising the adequacy and effective application of the Model; for the related details see paragraph 11.3 of this document.

***

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The Board of Directors has assessed, during the fiscal year, the adequacy of the internal control and risk management system with respect to the Company characteristics and the risk profile, as well as its effectiveness, in accordance with the provisions of Application Guideline 7.C.1 letter b). The evaluation was conducted on the occasion of the presentation of financial results for the period, as well as during the regular meetings of the Board, through the constant flow of information guaranteed by the players of the internal control system. It is also in the process of implementing a process of co-ordination, integration and development of the system of risk management, to support the decision-making process of the Board of Directors.

11.1. 11.1. EXECUTIVE DIRECTOR IN CHARGE OF INTERNAL CONTROL AND RISKS MANAGEMENT SYSTEM

The Board of Directors appointed Mr. Fulvio Zugno (Chairman of the Board of Directors and Chief Executive Officer) as executive director in charge of supervising the functioning of the internal control and risk management system, in charge for the implementation and preservation of an effective internal control and risks management system, in line with the Guideline 7.P.3, let a), n. (i). This choice has been made on the basis of the importance that Mr. Zugno holds within the Ascopiave company structure.

***

In accordance with the Application Guideline 7.C.4. of the Code, the executive director in charge of supervising the functioning of the internal control system: - has identified the main company risks taking into account the characteristics of the Issuer’s activities and those of its subsidiaries, and has submitted them to a periodical Board's examination; - has implemented, within the scope of the powers appointed to him, the guidelines defined by the Board, designing, realising and managing the in company control system, constantly checking the overall suitability and efficiency; - has adapted this system to the dynamics of the operative conditions and legislative and regulatory situation; - has asked the internal audit department, which depends under the organizational point of view from the same Chairman and Chief Executive Officer, to perform verifications on specific areas of operation and on the compliance with the rules and the procedures in the execution of business operations; - has set up a constant flow of information with the control and risks Committee and with the Board of Directors on issues and concerns raised, so that the Committee (or the Board) has been able to take appropriate action.

11.2. 11.2. PARTY RESPONSIBLE FOR INTERNAL AUDIT The responsible for internal audit is, since July 2011, Mr. Cristiano Ceresatto. The appointment of Mr. Ceresatto took place following the favourable opinion of the Director in charge for the Internal Control and risks Committee, on the basis of the technical knowledge and skills of the professional experience to perform the task.

Report on Corporate Governance and Company Structure 2014 31

Pursuant to the Guideline 7.C.3., lett. b) The Head of the Internal Audit Department is assigned with the task of verifying that the system of internal control and risk management is adequate and works properly.

The Compensation of the Head of the internal audit department is currently established by the Director in charge of the internal control system, as delegated by the Board of Directors, consistently with the company's Compensation policies. For the execution of the tasks assigned , the Internal Audit function comprises , in addition to the Manager , two additional resources with specific expertise in economics and finance .

The internal audit function is not responsible for any operational area and reports to the Chairman of the Board of Directors of Ascopiave, in line with the Application Guideline 7.C.5, letter. b.

***

The Party responsible for Internal Control, pursuant to the Application Guideline 7.C.5. of the Code: - verifies, either continuously or in relation to specific needs and in compliance with international standards, the operation and the suitability of the internal control and risk management system; the activity is regulated by an audit plan, approved annually by the Board of Directors, based on a structured analysis and prioritization of key risks; - has direct access to all information useful to perform his tasks; - prepares periodic reports containing adequate information about his work, the way in which the risk management is carried out, as well as on the compliance with the plans for their reduction, further to an assessment on the suitability of the internal control and risk management system and he transmits them to the Chairmen of the Board of Auditors and of the control and risk Committee, to the Chairman of the Board of Directors and to the Director responsible for the system of internal control and risk management; - prepares timely reports on major events and transmits them to the Chairmen of the Board of Auditors, of the Control and Risk Committee and of the Board of Directors as well as to the Director in charge of the internal control system and risk management; - verifies, as part of the audit plan, the reliability of information systems including systems of accounting.

For carrying out the activities, if deemed appropriate and if authorized by the Board of Directors or by its representatives, the Head of Internal Audit may request the support of external professionals expert in this field or of tools that support the activity.

***

During the financial year, the Head of Internal Audit performed a verification of the internal control system and risk management of the Issuer on the basis of international best practices. Specifically, such verification concerned the Issuer’s corporate governance system, the implementation of the regulations and provisions of law as specified by Legislative Decree 231/2001 and Law

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262/2005, supply management procedures, company risk management and the implementation of administrative control procedures. The Head of the Internal Audit Department has actively participated in the process of revising the structure of corporate governance of the Group Ascopiave, aimed at strengthening the functions of direction, management and control of their corporate governance, through the introduction of new organizational structures and regulations, both at Ascopiave and at the subsidiaries, also for the effective implementation of the management and coordination activity. He has also participated in the modification of the organizational structures of Ascopiave and the subsidiaries, contributing to the analysis of processes and to the consolidation of the related internal control systems. The Head of Internal Audit department, during the financial year, has guaranteed systematic and periodical information about the outcomes of activity performed, addressed to the Chairmen of the control and risks Committee and of the Board of Auditors, as well as to the administrator in charge of supervising the internal control and risk management system, in order to enable them to fulfil the tasks assigned in the field of supervision and evaluation of the system of internal control and risk management.

11.3. 11.3. ORGANISATION MODEL ex Legislative Decree 231/2001

On 27th March 2008, the Issuer adopted the organisation, management and control model for the prevention of crime with the aims specified by Legislative Decree 231/2001 and subsequent amendments. Along with the adoption of the model, the Company appointed a Supervisory Committee that will have to supervise on the operation and compliance with the model itself. Considering the requested requirements of the reference regulations and the indications deriving from the guidelines of relevant category associations as well as the sector best practices, the Board of Directors met on 29 th April 2014 appointed as components of the Supervisory Committee: Law. Elisa Pollesel (Chairman) Dr. Cristiano Ceresatto- in charge for the Issuer internal audit - and Dr. Paolo Ortica - a professional in the economic-financial field. The abstract of the above model consists of a general part showing the normative system of reference, the process of definition of the model and the constituent elements of the model itself; it also includes various special parts dealing with the special cases of crime that the model is intended to prevent, among which: - crimes against the public administration - corporate crimes - market abuse - safety at work - environmental crimes - computer crimes - receiving of stolen goods and money laundering - corruption between private parties For the dissemination of the model, the general part of the same is available on the Issuer's website (http://www.gruppoascopiave.it/wp-content/uploads/2015/01/Modello-di-organizzazione-e- controllo-231-2001-GruppoAscopiave.pdf ).

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11.4. 11.4. AUDITING COMPANIES

Auditing is entrusted to the company Reconta Ernst & Young S.p.A.. The appointment was made by the Shareholders' Meeting on 5th July 2006, and extended by the Meeting of 5th May 2007, following proposal by the Board of Auditors. As such, the appointment will expire upon approval of the financial statement as of 31st December 2014.

11.5. 11.5. MANAGER RESPONSIBLE FOR PREPARING COMPANY ACCOUNTING DOCUMENTS

Mr. Cristiano Belliato, the Issuer's Chief Financial Officer since 19th July 2012, formerly Administrative Director of the Company, is the Manager responsible for preparing the company’s accounting documents. In accordance with Article 25 of the Issuer’s Charter, the manager responsible for preparing company accounting documents must be in possession, not only of the honourable requirements described by current legislation for all those performing functions of administration and management, but also the professional requirements as follows (i) having graduated in economics, finance or a subject related to company management and organisation, (ii) having matured a total experience of at least three years in administration or control activities, or having performed managerial tasks with capital companies, or administrative or managerial tasks, or held offices of auditor or consultant as chartered accountant with businesses in the fields of credit, finance or insurance, or in any case in fields that are closely related or inherent to the activity performed by the Company, involving the management of economic and financial resources. Furthermore, any person not in possession of the requirements of honour as under article 147quinquies of Legislative Decree no. 58 dated 24th February 1998, cannot be appointed Manager responsible, and if appointed, shall automatically have such appointment revoked. Following the obligatory but not binding opinion of the Board of Auditors, the Board of Directors shall appoint the Manager responsible, setting out his compensation. The Board of Directors will grant the appointed Manager suitable powers and means by which performing his tasks, in accordance with the provisions of article 154 bis of Legislative Decree no. 58 dated 24th February 1998.

11.6. 11.6. COORDINATION BETWEEN THE PARTIES INVOLVED IN THE SYSTEM OF INTERNAL CONTROL AND RISK MANAGEMENT

The Issuer has implemented mechanisms of interaction between the parties involved in the system of internal control and risk management aimed to ensure the coordination and the effective performance of specific tasks. Among these, it is to be noticed the performance of regular meetings between the bodies and the departments responsible for internal control and risk management, the participation of the Board of Statutory Auditors and of the Internal Audit Manager to the meetings of the Control and Risks Committee. It should be noted that the Head of Internal Audit is a member of the Supervisory Board of the Company.

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11. INTERESTS OF THE DIRECTORS AND OPERATIONS WITH RELATED PARTIES

On 24th November 2010, the Board approved the text of the Code on Related Parties Transactions (hereinafter referred to as the "Code"). The Code governs the operations with related parties performed by the Company, either directly or through subsidiaries, in accordance with the provisions set forth in the Regulatory Norms adopted pursuant to art. 2391-bis of the civil code by the National Committee for the Companies and the Stock Market, (CONSOB) with resolution no. 17221 dated 12th March 2010 and further amendments ("Regulatory Norms"). The Code came into force as of 1st January 2011 and it has replaced the previous regulation governing Related Parties Transactions approved by the Board of Directors of the Company on 11th September 2006 (subsequently modified). For the contents of the Code, see the document available on the Issuer's website at the following address: http://www.gruppoascopiave.it/wp-content/uploads/2015/01/Procedura-per-le-operazioni- con-parti-correlate-GruppoAscopiave-20101124.pdf .

***

In order to implement the procedure, a mapping of the so-called Related Parties is Periodically performed, to which the contents and the controls provided for by the document are applied. The Directors are also required to declare, if existent, any interests in conflict with the performing of the transactions in question.

12. APPOINTMENT OF AUDITORS

The appointment and replacement of auditors is governed by the laws and regulations of Article 22 of the Issuer’s Charter. The Board of Auditors is composed of three statutory auditors and two alternate auditors, whose office lasts three years and which can be re-elected. At least one of the statutory auditors should be: (i) a woman, if the majority of the statutory auditors are men; (ii) a man, if the majority of the statutory auditors are women. In accordance with Article 22 of the Issuer’s Charter, the whole Board of Auditors is appointed on the basis of lists presented by Shareholders. Shareholders who alone, or together with other Shareholders, at the time of presentation hold a share of at least 2.5% of the share capital, or, where otherwise, the maximum share of the share capital required for the presentation of lists as specified by applicable provisions of law and regulations, may present lists. The interest share will be specified in the summons notice to the Meeting called to deliberate the appointment of the Board of Auditors. The lists must specify at least one candidate for the office of Statutory Auditor, and one for the office of Alternate Auditor. No candidate may appear in more than one list, at risk of being deemed incompatible. In the lists composed of three or more candidates, the gender of at least one third (rounded up) of the candidates for the role of statutory auditor and the candidates for the office of alternate auditor must be different from the gender of the other candidates. The lists, signed by the Shareholders presenting them, or by the Shareholder who has been delegated to present them and provided with the documentation specified by this Charter and by current provisions

Report on Corporate Governance and Company Structure 2014 35

of law and regulations, must be filed at the company headquarters within the terms of the applicable provisions of law and regulations. If, upon expiry of the terms set out by the applicable provisions of law and regulations, only one list of candidates have been presented, or indeed none, the meeting shall deliberate by relative majority of shareholders. In case of a tie between candidates, there will be a second ballot between these, with a further voting by the meeting. Where two or more lists are presented, election of the Board of Auditors shall take place as follows: (i) in the progressive order in which they have been indicated in the various sections of the list, the following will be appointed from the list that has obtained the greatest number of votes: (a) two statutory auditors and (b) one alternate auditor; (ii) in the progressive order in which they have been indicated in the various sections of the list, the following will be appointed from the list that has obtained the greatest number of votes, and which is not connected, even indirectly, with the shareholders who presented or voted the list that obtained the greatest number of votes: (a) one statutory auditor, who will also hold the office of Chairman of the Board of Auditors, and (b) one alternate auditor and, where available, further alternate auditors ready to replace the minority member, up to a maximum of three. Where this is not possible, the first candidate of the list having obtained the next greatest number of votes, and which is not connected, even indirectly, with the shareholders who presented or voted the list that obtained the greatest number of votes, will be appointed alternate auditor; (iii) should votes for two or more lists be equal, the candidates of the list presented by shareholders holding the greatest share, will be appointed, or, subordinate to this, that presented by the greatest number of shareholders, without prejudice to applicable regulations governing gender balance. Should one or more standing auditors taken from the list that had obtained the greatest number of votes (the ‘Majority Auditors’) stand down during the year, where possible, the alternate auditor from the same list will replace him, without prejudice to applicable regulations governing gender balance. Where proceeding as above is not possible, the Meeting must be called in order to integrate the Board with the ordinary majorities and methods, in accordance with article 2401, paragraph 3 of the Civil Code, as an exception to the list voting system previously specified, respecting applicable regulations governing gender balance. Should one or more standing auditors taken from the list that had obtained the second greatest number of votes (the ‘Minority Auditors’) stand down during the year, where possible, the alternate auditor from the same list will replace him, always in compliance with applicable regulations governing gender balance. Where proceeding as above is not possible, the Meeting must be called in order to integrate the Board with the ordinary majorities and methods, in accordance with article 2401, paragraph 3 of the Civil Code, as an exception to the list voting system previously specified, and in order to respect, where possible, the principle of minority representation. The Meeting held to deliberate on the integration of the Board of Auditors shall proceed in any case with the appointment or replacement of the members of said Board, without prejudice to the need to ensure that the structure of the Board of Auditors complies with the provisions of law and current regulations, and with the Issuer’s Charter. Without prejudice to that set out by the previous paragraph, should the Meeting integrate the Board of Auditors, it shall resolve with ordinary majorities and methods, as an exception to the list voting system, which will only apply in the event of replacement of the Board of Auditors as a whole.

Report on Corporate Governance and Company Structure 2014 36

13. COMPOSITION AND FUNCTIONING OF THE BOARD OF AUDITORS

The Board of Auditors appointed by the Ordinary Meeting held on 24th April 2014 and in office until approval of the financial statement as of 31st December 2016, is structured as follows:

Name Position

Marcellino Bortolomiol Presidente del Collegio Sindacale Elvira Alberti Sindaco effettivo Luca Biancolin Sindaco effettivo Da rio Stella Sindaco supplente Achille Venturato Sindaco supplente

The Standing Auditors Elvira Alberti and Luca Biancolin and the Alternate Auditor Achille Venturato have been taken from the list presented by the majority shareholder Asco Holding S.p.A.. The Chairman of the Board of Statutory Auditors Marcellino Bortolomiol and the Alternate Auditor Dazio Stella have been chosen from the no. 2 minority list presented by the shareholder Blue Flame S.r.l.. The three lists presented have no connection whatsoever with one another.

For the detailed composition of the Board of Auditors for the year 2014, please refer to Table 3 attached to the Report.

Below, the 2 lists that were presented:

SOGGETTO ELENCO DEI ELENCO DEGLI ELETTI % VOTI OTTENUTI IN PRESENTATORE CANDIDATI RAPPORTO AL CAPITALE VOTANTE

Lista n. 1 Sindaci effettivi Sindaci effettivi 88,251% Asco Holding S.p.A. 1. Elvira Alberti 1. Elvira Alberti 2. Luca Biancolin 2. Luca Biancolin Sindaco supplente Sindaco supplente 1. Achille Venturato 1. Achille Venturato

Lista n. 2 Sindaco effettivo Sindaco effettivo 11,748% ASM Rovigo S.p.A. 1. Marcellino Bortolomiol 1. Marcellino Bortolomiol Sindaco supplente Sindaco supplente 1. Dario Stella 1. Dario Stella

Please refer to Table 4 for the list of the bank institutions and of listed companies different from the Issuer in which the same Auditors have responsibilities of administration or control.

Report on Corporate Governance and Company Structure 2014 37

Here below is the personal and professional history of each Auditor: - Chairman, Marcellino Bortolomiol: Registered in the Association of Business Consultants and Professional Accountants of Treviso . He practices in his office of Treviso. He worked as bankruptcy trustee, of liquidator, of expert and consultant in various companies and enterprises. He was Chairman and member of the Board of Auditors as well as Director of several companies and corporate groups. - Statutory Auditor, Elvira Alberti Registered in the Association of Business Consultants and Professional Accountants and in the Legal Auditors Registry, she practices in her office of Treviso. She is member of the Board of Directors of Ascopiave since 2011, she is currently auditor of public entities and auditor for various companies of public and private law. - Statutory Auditor, Luca Biancolin: Registered in the Association of Business Consultants and Professional Accountants of Treviso and in the Legal Auditors Registry, he practices in her office in Conegliano (TV). He is currently director and auditor in various public and private law companies. - Alternate Auditor, Dario Stella: Registered in the Association of Business Consultants and Professional Accountants and in the Legal Auditors Registry . He practices in his office in Pieve di Soligo (TV). He is currently director and auditor in various private law companies. - Alternate Auditor, Achille Venturato: Registered in the Association of Business Consultants and Professional Accountants and in the Legal Auditors Registry, he practices in her office of Treviso. He is currently director and auditor in various private law companies.

The professional curricula of the auditors pursuant to articles 144-octies e 144-decies of the Consob Issuers Regulation are available on the Issuer’s website in the section “investor relations”.

During the year, after the appointment of the new Board of Directors, 5 (five) Board of Directors meetings were held in the following dates: 29 th April 2014, 19 th June 2014, 10 th July 2014, 29 th August 2014, 13 th November 2014. The average length of the meetings was equal to 2 hours. The Board of Directors in office until 24 th April 2014 met, in this period, 5 (five) times, on 14 th January 2014, 25 th March 2014, 27 th March 2014, 14 th April 2014 and 24 th April 2014. For details on the participation of the Auditors to the meetings, see Table 3 attached to this report.

During 2015, the Board of Auditors will meet for at least at a 90-day interval, pursuant to Article 2404 of the Civil Code. At the end of the fiscal year, two meetings of the Board of Directors were held on 27th January 2014 and 9 th March 2015. The meetings scheduled for 2015 are 4 (four).

There have been no changes to the composition of the Board subsequent to balance sheet date.

***

The delegated bodies have reported in a suitable and timely manner to the Board of Auditors concerning all activities performed, the general management trends and predictable evolution, as well as on the most important operations in terms of size and characteristics performed by the Issuer and its subsidiaries, specified by the Law and the Charter, and therefore at least once a quarter.

Report on Corporate Governance and Company Structure 2014 38

The Board of Auditors, at its meeting on 29th January 2014, verified the permanence of the requirements of independence of its members, in accordance with the provisions in the Guideline 8.C.1. The verification did not reveal any element that lead to the disappearance of this need for independence.

***

During the year, in line with the Application Guideline 2.C.2 of the Self-Discipline Code, the members of the Board of Directors were adequately informed about the main legislative and regulatory developments affecting the industry in which the Issuer operates, as well as about the performance of the corporate bodies functions, through the divulgation of information during meetings and in the pre- board report.

***

The Issuer specifies that any Auditor who, on his own behalf or that of third parties, holds an interest in a given Issuer operation, must inform the other auditors and the Chairman of the Board as to the nature, terms, origin and extent of such interest, in a timely and full manner.

The Board of Auditors in the conduct of its business, is regularly coordinates with the Head of Internal Audit and with the control and risks Committee, in line with the Application Guidelines 8.C.4 and 8.C.5. of the Code.

14. RELATIONSHIP WITH SHAREHOLDERS

The Issuer has judged that it be in his interests as well as a duty to the market to set up a continuous dialogue from the time of listing, founded on reciprocal understanding of roles, with the general information of the shareholders. This dialogue will, in any case, take place in compliance with the procedure for the external communication of company documents and information. The article 2.2.3 lett. i) of the Stock Exchange Regulations also states, with specific reference to companies intending to obtain listing of own shares with the 'STAR' qualification, the compulsory appointment of a professionally qualified person from within their organisational structure (Investor Relator) in charge of specifically managing relationships with investors. With regard to the above, and in accordance with the recommendations of Principle 9 of the Self- discipline Code, the Company's Board of Directors appointed during the meeting held on 24th July 2006 Mr. Giacomo Bignucolo as Investor Relator and responsible for relationship with investors. Finally, Ascopiave has set up a specific ‘investor relations’ section within its website (www.gruppoascopiave.it), in which information concerning the company and important for its shareholders is available.

15. MEETINGS

In accordance with Article 11.1 of the Issuer’s Charter, the subjects legitimated by the authorised intermediary may participate in the Meetings, in accordance with the current and relevant regulations.

Report on Corporate Governance and Company Structure 2014 39

Any legitimated subject may be represented by another person, not necessarily a shareholder, upon presentation of a written proxy, in accordance with the current and relevant regulations. The proxy can also be assigned electronically, through the procedures envisaged by regulations currently in force. Moreover, in accordance with the provisions set forth in the summons notice, the electronic notification of the proxy can be sent by accessing the dedicated section of the Company's website, i.e. by sending the document to the certified email address of the Company (Article 11, paragraph 2 of the Company Charter). The regulations concerning Board activities, applicable to listed companies, have been considerably overhauled, following the coming into effect of Legislative Decree no. 27 dated 27th January 2010, the adoption of Directive 2007/36/EC of the European Parliament and of the Council of 11th July 2007, on the exercise of certain shareholders’ rights in listed companies (the so-called “Shareholders’ Rights Directive” or “SHRD”). Now, therefore, the Shareholders’ Extraordinary Meeting dated 28th April 2011 has resolved to integrate Article 11 of the Company Charter by adding the paragraph 11.3 which envisages that the Company can appoint for each meeting an individual that may receive a proxy from those who have the right to vote with instructions on how to vote on each or some of the proposals on the agenda. In order to facilitate Shareholder participation in the Meetings, the Charter also specifies that the Meeting may take place with interventions in different, separate and distant places that are audio/video connected, as long as formal meeting procedures and the principle of good faith and equal treatment of shareholders, are respected (Article 12, paragraph 1 of the Charter).

***

With reference to Guideline 9.C.3 of the Self-discipline Code, the Company’s Ordinary Meeting held on 5th July 2006 resolved to adopt Meeting Regulations (subsequently amended by the Meeting held on 28th April 2008 and by the Meeting held on 28th April 2011), which came into effect as from the date of the Start of Negotiations(http://www.gruppoascopiave.it/investor-relations/assemblee.pdf). These Regulations are specifically aimed at governing the Shareholders’ Meetings, guaranteeing a correct and orderly holding of such, and, in particular, the right of each shareholder to intervene on the matters under discussion. It constitutes a valid instrument by which to guarantee protection of all Shareholders’ rights and the correct formation of the Meeting’s will.

The Regulations include that the Chairman shall lead the discussion, giving the floor to those who may legitimately intervene (i.e. those who have the right to participate in the meeting on the basis of the law and Charter), who may have requested it. Those with a right to intervene who wish to speak, must request to do so of the Chairman, after his having read the item on the meeting agenda to which the request refers, and after discussion has been opened up, before the Chairman declares discussion of the item over. Said request must be made by the raising of the hand, should the Chairman not have arranged for a written request procedure. Where procedure involves the raising of the hand, the Chairman will allow the person who has raised his hand first to speak. Should it be impossible to establish who raised his hand first, the Chairman will allow participants to speak in accordance with the order established by himself, in his own judgement. Where a written request procedure is implemented, the Chairman shall allow participants to speak on the basis of the order of entry.

Report on Corporate Governance and Company Structure 2014 40

The Chairman and/or on his invitation, the Directors and Auditors, with regard to their respective functions or as the Chairman deems fit in relation to the meeting agenda, shall answer those legitimately able to participate, after each intervention, or rather after having completed al interventions on each item on the agenda, in accordance with what specified by the Chairman. Those who have the right to intervene, the Directors and Auditors, have the right to speak on each of the items on the agenda, and to formulate proposals to their regard. Those with a right to intervene can ask questions related to the matters in the agenda even before the meeting, through the procedures specified in the summon notice. The questions submitted prior to the Meeting by those with a right to intervene, are answered during the Meeting itself, provided that the requested information has been accessible according to the applicable regulations and as long as the Chairman is able to give a single answer to the questions concerning the same topic.

***

In light of the amendments to regulations concerning related parties transactions pursuant to the Regulatory Norms adopted by Consob with resolution no. 17221 on 12th March 2010 (and further amendments) and taken into consideration the new regulations introduced by Legislative Decree. no.27/2010 implementing the Directive 2007/36/EC (the so-called “Shareholders’ Rights Directive”, the Shareholders’ Meeting held on 28th April 2011 has resolved to integrate the Company Charter by adding a new article recorded as “Related parties transactions”. This regulation gives the Board of Directors the possibility to approve the transactions of greater relevance within the scope of the Board of Directors as well as to implement the transactions of greater relevance within the scope of the Shareholders’ Meeting, despite a contrary opinion of the Independent Directors, provided that the shareholders meeting authorizes and approves the transaction’s execution; it being understood that the transaction cannot be implemented if, in the presence of not related shareholders representing at least 10% of the share capital, the majority of these shareholders express a vote contrary to the transaction. Regarding the related transactions, see point 4.3 of this Report.

***

The Board has reported back to the Meeting on the activity performed and planned, and has acted to ensure that Shareholders are suitably informed as to all elements necessary in order to taking a knowledgeable decision, where such is the task of the Meeting. 4 (five) Directors have attended the meeting of 24th April 2014.

The method of exercise of the Compensation Committee functions were presented to the shareholders, during the meeting, on 23rd April 2013, by the publication of the Report on Compensation and the discussion about the contents of the same.

We would state that there have been no significant changes to the capitalisation of the Issuer market or to the structure of its subsidiaries that would require changes to be made by the Shareholders' Meeting to the Charter, in relation to the percentages specified for the year of the prerogatives protecting minorities. To this regard, we would specify that in applying Article 144 quarter of the Consob Issuer Regulations 11971/1999 for the presentation of lists for the appointment of members of the Board of

Report on Corporate Governance and Company Structure 2014 41

Directors and the Board of Auditors, arts. 15.2 and 22.2 of the Issuer’s Charter require a percentage threshold of 2.5% of the share capital with voting rights, or other percentage that may be specified or stated by provisions of law or regulations.

16. FURTHER OPERATIONS OF CORPORATE GOVERNANCE

In 2012, the Board of Directors of the Issuer approved the "Guidelines on the exercise of management and coordination powers of the parent company" in order to seize the opportunity to strengthen the functions of direction, management and control, through the introduction of new organizational structures and regulations, both at the parent company in the subsidiaries Ascopiave that, even for the effective implementation of the management and coordination. The Guidelines have been adopted by the boards of the subsidiary companies and approved by the respective shareholders.

17. CHANGES SINCE THE END OF THE YEAR IN QUESTION No changes in the corporate governance system adopted by the Issuer since the end of the fiscal year.

Report on Corporate Governance and Company Structure 2014 42

TABLES

TABLE 1: INFORMATION ON OWNERSHIP STRUCTURE

N° Azioni % rispetto al C.S. Quotato/Non Quotato Diritti e Obblighi Azioni Ordinarie 234.411.575 100% STAR Ogni azione dà diritto ad un voto. I diritti e gli obblighi degli azionisti sono quelli previsti dagli artt. 2346 e ss. cod.civ. e dallo statuto sociale

PARTECIPAZIONI RILEVANTI NEL CAPITALE AL 31 DICEMBRE 2014 (ai sensi dell’art. 120 TUF)

Dichiarante Azionista diretto Quota % su capitale Quota % su ordinario capitale votante

Asco Holding S.p.A. Asco Holding S.p.A. 61,562% 61,562%

Ascopiave S.p.A. Ascopiave S.p.A. 5,203%(i) 5,203%(i)

Comune di Rovigo ASM Rovigo S.p.A. 4,419% 4,419%

Amber Capital UK LLP Amber Capital UK LLP 3,093% 3,093%

Dato relativo alle azioni effettivamente detenute da Ascopiave S.p.A. in data 31 dicembre 2014, comprensive di n. 1.975 bonus share, in carico al valore di Euro 1,0

Report on Corporate Governance and Company Structure 2014 43

TABELLA 2: STRUTTURA DEL CONSIGLIO DI AMMINISTRAZIONE E DEI COMITATI Comitato Controllo e Consiglio di Amministrazione Comitato Remunerazione Rischi Anno Data di List N. altri di In carica Non- Indip. da Indip. Carica Componenti prima In carica da a Esec. incarichi (*) (*) (**) (*) (**) nascit fino a esec. Codice TUF nomina * ** *** a Presidente Bilancio Fulvio Zugno 1952 28/04/2011 24/04/2014 M X - - - 0 16/16 A.D. • 2016 Bilancio Amm.re Dimitri Coin 1970 28/04/2011 24/04/2014 M - X X X 0 16/16 P 5/5 P 2/2 2016 Bilancio Amm.re Quarello Enrico 1974 14/02/2012 24/04/2014 M - X - - 0 16/16 M 2/3 M 1/1 2016 Bilancio Amm.re Pietrobon Greta 1983 24/04/2014 24/04/2014 M - X X X 0 10/10 2016 Bilancio Amm.re Paron Claudio 1951 19/06/2014 19/06/2014 m - X X X 0 7/8 M 2/2 M - 2016 ------AMMINISTRATORI CESSATI DURANTE L’ESERCIZIO DI RIFERIMENTO------Bernardelli Bilancio Amm.re 1966 28/04/2011 28/04/2011 M - X X X 0 6/6 M 2/2 M 1/1 Giovanni 2013 Colomban Bilancio Amm.re 1949 28/04/2011 28/04/2011 m - X X X 5 2/6 M 0/2 M 0/1 Massimino 2013 Amm.re Piva Bruno 1946 24/04/2014 24/04/2014 22/05/2014 m - X X X 0 2/2 M 1/1 M 1/1 N. riunioni svolte durante l’esercizio di riferimento: 16 Comitato Controllo e Rischi: 5 Comitato Remunerazione: 2 Indicare il quorum richiesto per la presentazione delle liste da parte delle minoranze per l’elezione di uno o più membri (ex art. 147-ter TUF): 2,5% NOTE I simboli di seguito indicati devono essere inseriti nella colonna “Carica”: • Questo simbolo indica l’amministratore incaricato del sistema di controllo interno e di gestione dei rischi. ◊ Questo simbolo indica il principale responsabile della gestione dell’emittente (Chief Executive Officer o CEO). ○ Questo simbolo indica il Lead Independent Director (LID). * Per data di prima nomina di ciascun amministratore si intende la data in cui l’amministratore è stato nominato per la prima volta (in assoluto) nel CdA dell’emittente. ** In questa colonna è indicata la lista da cui è stato tratto ciascun amministratore (“M”: lista di maggioranza; “m”: lista di minoranza; “CdA”: lista presentata dal CdA). *** In questa colonna è indicato il numero di incarichi di amministratore o sindaco ricoperti dal soggetto interessato in altre società quotate in mercati regolamentati, anche esteri, in società finanziarie, bancarie, assicurative o di rilevanti dimensioni. Nella Relazione sulla corporate governance gli incarichi sono indicati per esteso. (*). In questa colonna è indicata la partecipazione degli amministratori alle riunioni rispettivamente del CdA e dei comitati (numero di riunioni cui ha partecipato rispetto al numero complessivo delle riunioni cui avrebbe potuto partecipare.). (**). In questa colonna è indicata la qualifica del consigliere all’interno del Comitato: “P”: presidente; “M”: membro.

Report on Corporate Governance and Company Structure 2014 44

TABLE 2: OFFICES OF THE DIRECTORS IN OTHER COMPANIES

Massimino Colomban Carica Società

Consigliere di Amministrazione Save Engineering S.p.A. Amministratore Unico Quaternario Investimenti S.p.A. Consigliere di Amministrazione Sedicidodici S.r.l. Consigliere di Amministrazione Xepta Holding S.r.l.

Consigliere di Amministrazione LAFERT S.p.A.

Report on Corporate Governance and Company Structure 2014 45

TABLE 3: STRUCTURE OF THE BOARD OF AUDITORS

Collegio sindacale Numero altri Data di prima Lista Indipendenza Partecipazione Componenti Anno di nascita In carica dal In carica fino a incarichi Carica nomina* (M/m)** da Codice a riunioni *** **** Marcellino Presidente 1945 24/04/2014 24/04/2014 Bilancio 2016 m X 5/5 5 Bortolomiol Sindaco Elvira Alberti 1954 28/04/2011 24/04/2014 Bilancio 2016 M X 8/10 0 effettivo Sindaco effettivo Luca Biancolin 1952 24/04/2014 24/04/2014 Bilancio 2016 M X 5/5 0 Sindaco supplente Dario Stella 1968 24/04/2014 24/04/2014 Bilancio 2016 m X - - Sindaco supplente Achille Venturato 1966 24/04/2014 24/04/2014 Bilancio 2016 M X - - Sindaci cessati durante l’esercizio di riferimento

Giovanni Zancopé Presidente 1955 28/04/2011 28/04/2011 Bilancio 2013 m X 5/5 0 Ogniben Sindaco effettivo Paolo Papparotto 1969 28/04/2011 28/04/2011 Bilancio 2013 M X 3/5 4

Numero riunioni svolte durante l’Esercizio di riferimento: 10

Indicare il quorum richiesto per la presentazione delle liste da parte delle minoranze per l’elezione di uno o più membri (ex art. 148 TUF): 2,5% NOTE * Per data di prima nomina di ciascun sindaco si intende la data in cui il sindaco è stato nominato per la prima volta (in assoluto) nel Collegio Sindacale dell’Emittente. ** In questa colonna è indicata la lista da cui è stato tratto ciascun sindaco (“M”: lista di maggioranza; “m”: lista di minoranza). *** In questa colonna è indicata la partecipazione dei sindaci alle riunioni del C.S. (n. di presenze/n. di riunioni svolte durante l’effettivo periodo di carica del soggetto interessato). **** In questa colonna è indicato il numero di incarichi di amministratore o sindaco ricoperti dal soggetto interessato rilevanti ai sensi dell’art. 148 bis TUF e delle relative disposizioni di attuazione contenute nel Regolamento Emittenti Consob. L’elenco completo degli incarichi è pubblicato dalla Consob sul proprio sito internet ai sensi dell’art. 144-quinquiesdecies del Regolamento Emittenti Consob.

Report on Corporate Governance and Company Structure 2014 46

TABLE 3: OFFICES OF THE DIRECTORS IN OTHER COMPANIES

Paolo Papparotto Carica Società Sindaco Effettivo (cessato 24/04/2014) Sindaco effettivo Rossfin S.p.A. Sindaco effettivo BH 4 S.p.A. Sindaco effettivo BH 5 S.p.A. Consigliere di Amministrazione Patrimoni affidati S.p.A.

Marcellino Bortolomiol Carica Società Presidente Collegio Sindacale (dal 24/04/2014) Presidente Collegio Sindacale Beni Stab ili SIIQ S.p.A. Presidente Collegio Sindacale Beni Stabili Development S.p.A. Presidente Collegio Sindacale Sipa S.p.A. Presidente Collegio Sindacale Zoppas Industries S.p.A. Consigliere di Amministrazione Banca Apulia S.p.A.

Report on Corporate Governance and Company Structure 2014 47 REPORT OF THE BOARD OF STATUTORY AUDITORS TO MEETING OF ASCOPIAVE S.P.A. SHAREHOLDERS PURSUANT TO ART. 153, LEG D. 58/98, LEG D.39/2010 AND ART. 2429.3 CIVIL CODE

Gentlemen,

In the accounting period ended 31 st December 2014, we performed the supervisory activities envisaged by law, pursuant to the principles of the Code of

Behaviour for the Board of Statutory Auditors recommended by the National

Board of Certified Public Accountants and Chartered Accountants.

With regard to the activities performed also in compliance with the Consob

Communication no.1025564 dated 6th April 2001, subsequent amendments and additions, we acknowledge the following:

1) We have kept watch on compliance with the law and the company charter at intervals envisaged in Article 21.11. of the bylaws. We obtained, from the

Directors, all information relevant to transactions of economic, financial and equity importance performed by the Company and its subsidiaries. Based on the information we have obtained, we can affirm that such operations have not been deemed as overtly imprudent or hazardous, in potential conflict of interest or such as to compromise the integrity of corporate assets. Moreover, in the memo submitted by the Directors to the Board of Statutory Auditors as stated by law, no operations are under way that may be deemed in contrast with the

Company’s interests.

2) We have judged as complete the information submitted by the Board in its Report on Operations with regard to atypical and/or unusual transactions, including those with subsidiaries, group companies, third parties or related parties. In their report on operations and explanatory notes to the financial statements, the Directors list and describe the most relevant operations with third parties, associated companies and intra-group, highlighting their

1 characteristics and economic fallout. We believe such operations are congruent and in the company’s best interests.

3) The External Auditors have issued their reports in accordance with Articles 14 and 16, Leg. D. n. 39 dated 27 th January 2010 with regard to the statutory as well as the consolidated financial statements of the Group as of 31 st December

2014, prepared under the International Financial Reporting Standards – IFRS adopted by the European Union. Said papers reflect that “the documents have been prepared in a clear manner and represent, properly and truthfully, the equity and financial situation of the company, its economic results, any variations in the balance sheet and cash flow for the period” and “the report on operations reflects the financial statements”

4) No claims pursuant to Art. 2408 Civil Code. were submitted to the Board of Statutory Auditors in fiscal 2014. 5) No other complaints pursuant to Art. 2409 were received by the Board of Statutory Auditors in fiscal 2014. 6) With regard to fiscal 2014, external auditors Reconta Ernst & Young S.p.A. - assigned by Ascopiave S.p.A. with auditing both the statutory and consolidated financial statements as well as quarterly reports, pursuant to the shareholder’s

Meeting held on 5 th July 2006 (and renewed by the shareholders on 8 th May

2007) – was paid a fee amounting to € 181.000; the auditing firm also performed activities of an obligatory nature for which it received an additional emolument of € 16.000

Furthermore, Reconta Ernst & Young S.p.A. was also paid by subsidiaries under the control of Ascopiave S.p.A., in fiscal 2014, with regard to the auditing of financial statements as well as periodical inspections, a sum of € 267.000 .

Therefore, the global emoluments disbursed to Reconta Ernst & Young in fiscal

2014 were € 464.000.

2 We have also checked that assistance services were provided in fiscal 2014 with regard to Enterprise Risk Management by Ernst Young Financial – Business

Advisors S.p.A., to the amount of e 51.000. No assignments forbidden under Article

160.1-ter TUF Consob were assigned to Reconta Ernst & Young.

7) In view of the declaration of independence issued by Reconta Ernst & Young in accordance with Art. 17.9 a) Leg. D. 39/2010 with regard to the assignments conferred upon it by Ascopiave S.p.A. and subsidiaries as detailed above, the Board of Statutory Auditors deems there are no grounds to doubt the independence of the external auditing company.

8) The Board of Statutory Auditors held 10 meetings regarding its own role, attended 16 meetings held by the Board of Directors and 5 sessions held by the

Internal Control and Risk Committee, in the 2014 accounting period.

9) We collected information and kept watch, as far as possible under our scope of work, on compliance with the principles of fair administration through acquisition of data from Managers of the Group and meetings with external auditors to the end of mutually exchanging relevant facts and figures.

10) We collected information and kept watch, as far as possible under our scope of work, on the consistency of the Company’s organizational structure through acquisition of data from Managers of the Group to the end of mutually exchanging relevant facts and figures.

11) We assessed and kept watch on the consistency of the internal control system and met, in each of our meetings, the Internal Auditing Manager of the Company, making an in-depth analysis of the corrective measures proposed. On the basis of the findings provided at least at quarterly intervals with specific reference to compliance , we herein confirm that our inspections have revealed nothing untoward as to deserve a mention of criticality with reference to the internal control system.

3 12) We supervised and evaluated the consistency of the administrative structure and the adequacy of the accounting system as a reliable tool for representing operations correctly, through:

(i) examination of the report issued by the Officer Responsible for the preparation of Corporate Financial Statements with regard to Administration and Accounting as well as Internal Audit and Corporate Reports.

(ii) receipt of information on a full and regular basis from the Managers of the Group

(iii) relations with the Control Bodies of subsidiaries in compliance with Art. 151.1 and 151.2, Leg D. 58/98;

(iv) attending the works of the Internal Control and Risk Committee;

(v) receipt of regular updates regarding the work performed by the Supervisory Committee appointed by the Company pursuant to the provisions stated in the Legislative Decree 231/2001.

We herein confirm that our inspections have revealed nothing untoward as to deserve a mention in this report. 13) We collected information and kept watch, as far as possible under our scope of work, on the consistency of the instructions given by the Company to its subsidiaries in compliance with Art. 114.2, Leg D. 58/98, via the acquisition of information from the Managers of the Group, meetings with external auditors, exchange of information from colleagues implementing similar activities in other subsidiaries to the end of mutually exchanging relevant facts and figures.

14) Consequent to meetings between the Board of Statutory Auditors and External

Auditors, in accordance with Article 150.2 Legislative Decree 58/1998, no data, information and remarks that should be highlighted in the present report have emerged.

15) We have focused our attention on the provisions of Code of

Self-Discipline and execution of Ascopiave S.p.A. Internal Dealing as duly stated the “Report on Corporate Governance and Property Structure” where the Board of

4 Directors provides an update on the subject, principles deemed consistent with the

Code of Self-Discipline issued by Borsa Italiana S.p.A and also with the ownership structure envisaged in Article 123 bis T.U.F.

A favourable opinion has been expressed by the Board of Directors with respect to the independence of the Directors in compliance with the degree of independence stated the Code of Self-Discipline

16) We examined and obtained information about activities of an organization and procedural nature following Leg. D. 231/01 governing the administrative liability of

Public Bodies regarding violations under the scope of said law. The Supervisory

Committee appointed by the Board of Directors illustrated the Board of Statutory

Auditors about the activities performed during the accounting period and has found nothing worthy of mention.

17) With regard to the provisions of “International Accounting Standards – IAS 24” governing the definition of related parties, we herein state that the Directors and

Managers bearing strategic responsibilities have declared that they have conducted no transactions either directly, indirectly, through intermediaries or parties acting on their behalf with Ascopiave S.p.A. and its subsidiaries pursuant to Art. 93, Leg

D. 58/98.

The “Procedure for operations with Related Parties”, approved by the Board of

Directors on 24 th November 2010 came into force commencing 1 st January 2011.

During the 2014 fiscal period, there was just 1 (one) operation “with a related party” falling under such scope, the renewal of Asco&Asco contract with the sister company Ascotlc S.p.A. The operation was examined by the Internal Control and

Risk Committee in its session held on 27 th February 2014, prior to the transaction’s approval by the meeting of the Board of Directors held on the same day.

5 18) The Officer Responsible for the preparation of Corporate Financial Statements has issued the declaration pursuant to the guidelines of Article 154-bis, Legislative

Decree n. 58/1998, referring to the statutory and consolidated financial statements of Ascopiave S.p.A.

19) The Board of Statutory Auditors also informs that fiscal 2014 marked the completion of the merger through incorporation of the wholly owned subsidiary

Ascoblu S.r.l. into Ascopiave S.p.A.; likewise, fiscal 2014 marked the completion of the merger through incorporation of Edigas Due S.p.A. into Blue Meta S.p.A., both fully owned by Ascopiave S.p.A.;

20) To conclude, in our controlling activities, no actions or elements have emerged, worthy of bringing to the attention of the Supervisory Committee or of the Shareholders.

In virtue of the above, this Board of Statutory Auditors, as far as it is concerned, envisions no hurdles to the approval of fiscal 2014 Financial Statements as at 31 st December 2014 alongside the proposal for distributing dividends to Shareholders

Pieve di Soligo – 31 st March 2015

Marcellino Bortolomiol, Chairman of the Board of Statutory Auditors

Elvira Alberti, Standing Auditor

Luca Biancolin, Standing Auditor

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