Nota Integrativa Sma Torino S

Società Metropolitana Acque Torino CONSOLIDATED FINANCIAL STATEMENT and FISCAL YEAR FINANCIAL STATEMENT2019

XVI CONSOLIDATED FINANCIAL STATEMENT XX SUSTAINABILITY REPORT

On cover: “Inauguration of the Aqueduct for Valle di Susa – June 29th 2019”

2019

CONSOLIDATED FINANCIAL STATEMENT

CONSOLIDATED FINANCIAL STATEMENT FOR FISCAL YEAR

XVI CONSOLIDATED FINANCIAL STATEMENT XX FINANCIAL STATEMENT

Approved by Ordinary Shareholders’ Meeting on May 27th, 2020

SOCIETÀ METROPOLITANA ACQUE TORINO

INTRODUCTION 7 Administration and control bodies and corporate positions 7 The SMAT Group at December 31st 2019 8

A. SMAT GROUP DIRECTORS’ REPORT 10 A1. Introduction 10 A2. Summary of the 2019 results in figures 10 A3. Main technical data and operating area 11 A4. General description of activities 12 A5. Service agreement 13 A6. Piano d’Ambito (Territorial Plan) Update 13 A7. Applied research & development activities 13 A8. International projects 14 A9. SMA Torino S.p.A. Membership in National and European Associations 14

B. COMPOSITION OF THE SMAT GROUP 16 B1. Parent Company SMA Torino S.p.A. 16 B2. Own shares and shareholdings in subsidiaries 16 B3. Subsidiaries and associates included in the consolidation area 16 B4. Shareholdings in other companies 17

C. SMAT GROUP ECONOMIC TREND 20

D. INVESTMENTS BY SMA TORINO S.P.A. AND THE SMAT GROUP 21

E. FINANCIAL MANAGEMENT OF SMA TORINO S.P.A. AND THE SMAT GROUP 23

F. SIGNIFICANT EVENTS DURING FISCAL YEAR 2019 25 F1. Legal comparative study SMAT 25 F2. 2019 Rates 26 F3. Equalization rate components UI1-UI2-UI3-U4 27 F4. Fulfilment of the technical quality regulations (RQTI) 28 F5. New ARERA regulations 28 F6. Rate method for the third regulatory period (MTI-3) 29 F7. Acquisition of management of operations in the Rivalta municipality 29 F8. Inauguration of the Large Aqueduct in Valle di Susa 29 F9. Hiring of personnel 29 F10. Legality ratings 29 F11. Legislative decree no. 175 of August 19th 2016 (Madia) 29

G. SIGNIFICANT EVENTS OCCURRING AFTER DECEMBER 31ST 2019 AND FORESEEABLE BUSINESS OUTLOOK 30 G1. Monitoring of impacts related to the COVID-19 emergency. 30

G2. Water Safety Plan for the City of Turin (WSP) 30 G3. Acque potabili S.p.A. extraordinary operations 31 G4. Biomethane Plant 32 G5. Industrial Plan Project 4.0 32

H. ORGANIZATIONAL MODEL SUPERVISION, ANTICORRUPTION AND TRANSPARENCY ENTITY 33 H1. Supervisory entity 33 H2. Anti-Corruption and Transparency 33 H3. Privacy - GDPR 34 H4. Certification of the health and safety management system for personnel and the workplace 34 H5. Certification of the environmental management system 34 H6. Certification of the quality management system 35 H7. List of SMAT Group branches 35

I. RELATIONSHIPS WITH RELATED PARTIES 36 I1. Relations with the City of Turin 36 I2. Relations with the subsidiaries and associates 36

CONSOLIDATED FINANCIAL STATEMENT OF THE SMAT GROUP AT 12.31.2019 37

SMAT GROUP SUPPLEMENTARY NOTE 44 Principles for preparation of the balance sheet 44 Structure and contents of the balance sheet 44 Consolidation criteria 45 Valuation criteria 46 Goodwill and other intangible fixed assets 46 Assets under concession 47 Tangible fixed assets 47 Shareholdings 48 Non-current financial assets 49 Inventory 49 Receivables 49 Financial assets and other current assets 49 Industry information 49 Cash and cash equivalents 49 Own shares 50 Provisions for risks contingencies and charges, benefits to the employees 50 Commercial payables and other current liabilities 50 Costs and revenues 50 Grant for Plants 51 Financial income and charges 51 Income tax for year 51 Impairment test 51 Conversion of exchange rate earnings/losses 52 Use of estimations 52 Additional information 52 Company agreements outside the Statement of Assets and Liabilities 52 Amounts expressed in Supplementary Note 52 Accounting principles, IFRS amendments and interpretations adopted from January 1st 2019 52 Accounting principles, amendments and interpretations IFRS and IFRIC authorized by the European Union, not yet mandatory and not adopted in advance by the Company on December 31st 2019 54

Accounting principles, IFRS amendments and interpretations not yet certified by the European Union 55 Comments on the entries of the Statement of Assets and Liabilities 57 REPORT FOR OPERATIVE CATEGORIES 57 ASSETS 57 NET EQUITY AND LIABILITIES 67 Notes of commentary to the entries of the Financial Statement 76 Revenues 76 Operating costs 77 Financial income and expenses 81 Other information 82

SMA TORINO S.P.A. FISCAL YEAR BALANCE SHEET TO DECEMBER 31ST 2019 87

SMA TORINO S.P.A. SUPPLEMENTARY NOTE 94 Application of IAS/IFRS and its effects 94 Structure and contents of the financial statement 94 Valuation criteria 95 Tangible fixed assets 95 Goodwill and other Intangible fixed assets 95 Assets under concession 96 Shareholdings 96 Non-current financial assets 97 Inventory 97 Trade receivables 97 Financial assets and other current assets 97 Cash and cash equivalents 97 Own shares 98 Provisions for liabilities and charges, employee benefits 98 Trade payables 98 Other liabilities 98 Costs and revenues 98 Contributions for Plants 99 Financial income and expenses 99 Income taxes for the year 99 Impairment test 99 Conversion of assets/liabilities into foreign currency 100 Use of estimations 100 Other information 100 Corporate agreements outside the Statement of Assets and Liabilities 100 Amounts expressed in Notes to the Accounts 100 Accounting principles, IFRS amendments and interpretations adopted from January 1st 2019 100 Accounting principles, amendments and interpretations IFRS and IFRIC authorized by the European Union, not yet mandatory and not adopted in advance by the Group on December 31st2019 102 Accounting principles, IFRS amendments and interpretations not yet certified by the European Union 103 Remarks on the Financial Position and Results 105 NON-CURRENT ASSETS 105 CURRENT ASSETS 113 NET EQUITY AND LIABILITIES 116 Notes of commentary to the entries of the Income Statement 125 Revenues 125 Operating costs 126 Financial income and expenses 130 Other information 132 Proposals regarding the deliberations on SMAT S.p.A. fiscal year financial statement as at December 31st 2019 137

FINANCIAL STATEMENTS OF RISORSE IDRICHE S.P.A. AS AT DECEMBER 31ST 2019 140

AIDA AMBIENTE S.R.L. FISCAL YEAR BALANCE SHEET AS AT DECEMBER 31ST 2019 146

REPORT BY THE BOARD OF AUDITORS ON THE CONSOLIDATED FINANCIAL STATEMENT ON DECEMBER 31ST 2019 153

INDIPENDENT AUDITOR’S REPORT 161

ORDINARY SHAREHOLDERS’ MEETING 26 JUNE 2020 170

SOCIETÀ METROPOLITANA ACQUE TORINO S.p.A. Legal offices in Turin, Corso XI Febbraio, 14 Share capital € 345,533,761.65 fully paid up Turin Business Registry no. 07937540016 Tax code and VAT code 07937540016

INTRODUCTION

Administration and control bodies and corporate positions

. BOARD OF DIRECTORS The Board of Directors, appointed by the Ordinary Shareholder Meeting in compliance with articles 2364-2449 of the Italian Civil Code and 18 of the Articles of Association, is composed of : • ROMANO Paolo Chairman • RANIERI Marco Managing Director • BISCOTTI Antonella Director • LANCIONE Serena Director • SESSA Fabio Director

. BOARD OF AUDITORS – INTERNAL CONTROL AND ACCOUNTING AUDITS The Board of Auditors, appointed by the Ordinary Shareholder Meeting in compliance with articles 2364-2449 of the Italian Civil Code and 18 of the Articles of Association, is composed of: • VIETTI Pier Vittorio Chairman • CARRERA Ernesto Effective Auditor • NARDELLI Gabriella Effective Auditor • CACCIOLA Maurizio Substitute Auditor • GIORDANO Paola Lucia Substitute Auditor

. AUDITING FIRM Deloitte & Touche S.p.A.

. SUPERVISORY BODY The Board, which is appointed by the Board of Directors, is composed of: • BOCCHINO Umberto Chairman • CASSONE Cinzia Member • FINO Luisa Member • GUARINI Fulvio Member

. CORRUPTION PREVENTION OFFICER Appointed by the Board of Directors SCIOLOTTO Roberta

. DATA PROTECTION OFFICER Appointed by the Board of Directors QUAZZO Armando

The SMAT Group at December 31st 2019

MANAGEMENT REPORT

A. SMAT GROUP DIRECTORS’ REPORT Dear Shareholders, Before presenting the annual financial statements, it is important to take a moment and reflect on the specific moment in history we are experiencing. There are many initiatives that have been implemented by your company in favour of local territories, aimed at guaranteeing continuity of provided services, protecting health and safety, as well as supporting stakeholders: employees, suppliers and customers. We are united in the fight to contain the public health emergency and economic crisis that has struck the country, continuing business and committing energy to support recovery. The financial statement results of the SMAT Group shows a substantial maintenance of the performance levels with respect to the approved Industrial Plan and are determined by the business developed in the reference of /to the fiscal year by the Parent Company Società Metropolitana Acque Torino S.p.A. (hereinafter also SMA Torino S.p.A. or SMAT S.p.A.) and by its subsidiaries as the effect of the direct ownership by SMA Torino S.p.A. of controlling and association shareholdings.

A1. Introduction The present financial statements of the Group and of SMA Torino S.p.A. reports the accounting data of the closing fiscal year compared to those of the previous fiscal year, which are presented in application of the International Financial Reporting Standards (IFRS) adopted by the European Union. The Board of Directors of the Company, at the meeting of January 30th 2020, decided to postpone convocation of the Meeting of Shareholders for approval of the financial statement as at December 31st 2019, availing itself of the extended term of 180 days after closing of the fiscal year as contemplated by article 2364 of the Italian Civil Code and by article 14 point 5) of the current Articles of Association.

A2. Summary of the 2019 results in figures

Consolidated Consolidated Financial Financial Financial Financial Absolute var- Absolute var- SMAT GROUP: SUMMARY OF THE Results IN FIGURES Variation % Statement Statement Variation % Statement Statement iation iation 2019 2018 2019 2018

ECONOMIC DATA Total Revenues 445,149 417,857 27,292 6.53% 442,953 414,902 28,051 6.76% Gross operating margin 134,984 142,665 (7.681) -5.38% 134,683 142,311 (7,628) -5.36% Gross operating margin/Total revenues 30.32% 34.14% -3.82 p.p. 30.41% 34.30% -3.89 p.p. Operating income (EBIT) 54,959 73,746 (18.787) -25.48% 54,695 73,405 (18,710) -25.49% Operating income (EBIT)/Total revenues 12.35% 17.65% -5.30 p.p. 12.35% 17.69% -5.34 p.p. Net profit (loss) 40,190 51,963 (11.773) -22.66% 40,102 51,797 (11,695) -22.58% Net profit (loss)/ Total Revenues 9.03% 12.44% -3.41 p.p. 9.05% 12.48% -3.43 p.p.

EQUITY DATA Net fixed assets 845,008 789,838 55,170 6.98% 844,865 789,763 55,102 6.98% Net equity 646,282 616,645 29,637 4.81% 645,698 615,975 29,723 4.83% Gross financial debt (286,701) (333,808) 47,107 -14.11% (286,631) (333,808) 47,177 -14.13% Net financial position (231,668) (213,464) (18,204) 8.53% (232,337) (213,996) (18,341) 8.57%

OTHER DATA Investments 121,303 90,744 30,559 33.68% 121,279 90,730 30,549 33.67% Amortization 67,958 57,782 10,176 17.61% 67,899 57,766 10,133 17.54%

WORKFORCE1 1,037 1,045 -8 -0.77% 1,007 1,013 -6 -0.59%

ECONOMIC/EQUITY INDICATORS Gross Financial Payables /Net Equity 0.44 0.54 (0.10) 0.44 0.54 (0.10) Gross Borrowing Need/MOL 2.12 2.34 (0.22) 2.13 2.35 (0.22) EBITDA/Financial expenses 2 27.23 27.05 0.18 27.29 27.06 0.23 ROI 4.67% 6.14% -1.47 p.p. 4.65% 6.09% -1.44 p.p. ROE 6.22% 8.43% -2.21 p.p. 6.21% 8.41% -2.20 p.p. Net financial Position/Net Equity ≤1 0.36 0.35 0.01 0.36 0.35 0.01 Net financial debt/EBITDA 3 (EBIT+Amortization) ≤5 1.88 1.62 0.26 1.90 1.63 0.27 EBITDA (EBIT+Amortization)/Net financial income and expenses (excluding the value adjustments of (153.99) (499.79) 345.80 (134.66) (382.26) 247.60 financial assets) >5 4 Net fixed assets/Gross financial debt ≥ 1,30 5 2.93 2.35 0.58 2.93 2.35 0.58

1 Including outsourced work contracts and transfer contracts 2 Excluding the value adjustments of financial assets 3 EBITDA or MOL meant in compliance with the contract statements as EBIT + Amortization 4 The ratio results to be negative since item Financial Earnings and Charges shows a positive balance, since the financial earnings are greater than the financial charges. 5Net fixed assets excluding goodwill.

A3. Main technical data and operating area At the end of the fiscal year, your Company develops water services in 289 Municipalities, either directly or through Operational Services involved, besides the water treatment in the Municipalities of Burolo, Bruzolo and Villar Focchiardo. In respect to last year, the municipalities are less, because on 01/01/2019 mergers occurred that resulted in the founding of the following new municipalities: • The Val di Chy municipality, which encompasses: Alice Superiore, Lugnacco and Pecco; • The Valchiusa municipality, which encompasses: Meugliano, Trausella and Vico Canavese.

Municipalities served to December 31st 2019: n. 289 Drinking water plants: 93 Residents: 2,238,1046 Self‐produced energy: 49.176 MWh Surface area: 6,2922 Km2 Waterworks network in km: 12,646 % of the resident population served: 99.54 Sewer network in km: 9,773 Waterworks users contracts: 407,385 Water treatment plants 413 Water invoiced: 175,833,039 m3 Volumes treated: 329 mln m3

Taking into account the volume estimates in the accounting period, the volume of drinking water amounted to 175,833,039 m3, delivered to a total of 407,385 users of whom 80% were domestic user contracts. The average household use per head is of 170 l/inhabitant/day with an average demand on 3,955 l/sec; the peak demand was of 6,109 l/sec on June 28th 2019.

6Source: ISTAT to December 31st 2018

The water production capacity was used, within a general context where the lack of service does not virtually exist, obtaining resources from:

Sources 2019 Springs 18.00% Surface water 17.00% Water table 65.00% 100.00%

The urban waste water treatment systems that are directly managed, divided by potential, are as follows:

Plants with capacities up to 2,000 p.e. n 353 Systems between 2,000 a.e. and 10.000 a.e. n 41 Plants between 10,000 p.e. and 100,000 p.e. n 17 Plants between 100,000 p.e. and 2,000,000 p.e. n 1 Plants over 2,000,000 p.e. n 1 TOTAL n 413

With regard to the drinking water treatment plant, in 2019 the treated volume amounted to 319 million m3, of which 3.3% represents the volume of industrial waste water, and 23,372 tons of sludge, measured in terms of dried material, were produced. The data refers to plants that serve over 2,000 inhabitants equivalent (317 million m3 treated of which 208 million m3 of the Castiglione Torinese plant), relative to the elimination of the effluent from pollutants and treatment yields, and shows a high index of efficiency and efficacy in the accounting period as in the percentage of reduction in the following indicators:

Abated pollutants Input Output Abated Abatement % (Plants >=2,000 p.e.) t/year t/year Total suspended solids (SST) 69,107 2,411 66,696 97 Chemical oxygen demand (COD) 126,405 6,737 119,668 95 Biological oxygen demand (COD) 67,270 2,454 64,816 96

Total phosphorous (Ptot) 1,362 274 1,088 80

Total nitrogen (Ntot) 10,705 2,982 7,723 72

A4. General description of activities Year 2019 corresponds to the 20th activity of SMAT S.p.A which continues management of the integrated water services in the plan of Ambito Territoriale Ottimale 3 Torinese (“ATO3 Torinese”), coordinated the Group activities and defined its strategic goals for a time frame extended until 2033. The results obtained in the fiscal year align fully with the forecast in the Industrial Plan 3.0 approved by the ordinary Shareholder Meeting on 06/29/2015. This objective was reached reducing the rate of 2.3% in 2019 and applying the new rate scheme foreseen by ARERA as of January 1st 2018, which will be discussed further on, and supporting the important, intense activities correlated to regulating technical quality in compliance with national authorities. The fiscal year was characterized by significant growth of approximately 34% in respect to the previous fiscal year, reaching a level of over 121 million Euros, corresponding to more than 54 Euros per inhabitant. The positive results were backed up financial data, which in addition to guaranteeing respect for contractual agreements, were marked by a reduction in respect to the previous fiscal year of more than 10% in the gross financial debt and gross operating margin ratio.

A5. Service agreement The management re-unification of Ambito 3 Torinese and the subsequent distribution of the service in compliance with the rates and action plan defined by the Ambito Governance Body are exercised by your Company on the grounds of the following deeds: • Service agreement for the management of the integrated water service within Ambito Territoriale Ottimale no. 3 called “Torinese”” signed on October 1st 2004 in execution of deliberation no. 173 undertaken by the Conference of Ambito 3 Torinese on May 27th 2004; • Supplementary deed signed on October 2nd 2009 for the assimilation of the periodical review of the 2008¬2023 Ambito Plan, approved by Ente d’Ambito Conference resolution no. 349 dated March 27th 2009; • Agreement signed with ACEA Pinerolese Industriale S.p.A. on December 28th, 2007, upon execution, with validity starting on July 1st 2007, of the provisions of resolution no. 282 passed by the Conference of Ambito 3 Torinese on June 14th 2007, which confirmed the qualification of SMAT as Sole Provider of the Integrated Water Services for Ambito Ottimale Torinese and of ACEA as safeguarded operational provider in the territory of historical reference, revised by the parties on November 20th 2015; • ATO3 approved by Resolution no. 598 of April 29th 2016 the updated Ambito Plan (2016-2033), after reiterating the choice of an in-house appointment and confirmed SMAT S.p.A. for the Ambito management up to December 31st 2033, term that was considered as consistent to ensure the economic and financial sustainability of the investments required by the Plan; • On August 8th 2016, SMAT and ATO3 signed the amendment to the convention, which is also aimed at having the Service Convention comply with the Standard Convention approved by AEEGSI by deliberation no. 656/2015/R/IDR dated December 23rd 2015, as submitted to the Assembly of the Share- holders on October 14th 2016. • on December 6th2018 the Shareholder Meeting approved the amendment to the integrative document for the Convention to implement the 2-year rate provisions for the years 2018-2019 and development of the economic plan for the period 2018-2033, approved by ATO 3 with resolution no. 692 on 06/26/2018. • on June 27thand July 11th 2019, SMAT S.p.A. and ATO3 stipulated a supplementary agreement to the Convention, in order to implement the updated financial economic plan approved by ATO by way of Resolution no. 720 on 09/04/2019.

A6. Piano d’Ambito (Territorial Plan) Update The Ordinary Shareholders Meeting of SMAT S.p.A. on June 29th, 2015 approved the Company's Business Plan for years 2015 through 2019 with the proposal of ending the mandate in year 2033 and the related Economic and Financial Plan (EFP).

On December 21st 2015, ATO3 Torinese - by resolution 587 - then adopted the Ambito Plan updated to the 2016-2033 period, which reports total investments for EUR 1,534,138,724, transmitting it to the Regional Ex- ecutive Council and to the Authority for Electricity, Gas and Water Systems (AEEGSI now ARERA) for the con- sequent fulfilment.

On April 29th 2016, by resolution no. 598, the Autorità d’Ambito 3 approved the updated Ambito Plan (2016¬2033), which adopted the modifications applied during the Strategic Environmental Assessment. On June 26th 2018 with resolution no. 692, the Territory Authority no. 3 “Two-Year Updating of rate provisions for the years 2018-2019 and development of the Piano Economic Financial Plan for 2018-2033” approved the Interventions Program setting forth the objectives in the Territorial Plan, as well as those connected to the Technical Authority. Finally, on April 9th 2019 by way of Resolution no. 720, the Territory Authority no. 3 approved the Territory Plan aligned with the ARERA Resolution no. 617/2018/R/IDR of November 27th 2018.

A7. Applied research & development activities SMAT dedicates a significant portion of its structure and resources to Research and Innovation, participating in prestigious national and international projects, and attracting new talent and qualified collaborators to its Research Centre.

It is fundamental to start from objectives and data. The SMAT Research Centre selects and develops its projects by transferring knowledge acquired through studies and experimentation in various productive facilities, contributing to technological innovation and industrial development in the water sector. The SMAT Research Centre was founded in 2008, and after 5 years of uninterrupted growth, in 2019 important results were obtained: - 140 projects concluded, 11 of which in 2019 - 26 ongoing projects at the conclusion of 2019 - 8 projects starting in 2020 - 2 ongoing projects financed by EU Horizon 2020 - 7 fulltime employed researchers - 6 scholars, interns and graduate candidates attending the SMAT Research Centre - more than 100 SMAT employees involved in research projects - 48 research partnership agreements - 2 awards as Top Utility for research and innovation - 20 scientific publications in 2019 - 2 research facilities, in Turin and in Castiglione T.se SMAT is a partner in the Master course in climate change with the permanent Master and Training school of the Politecnico of Turin, with intern programmes at the Research Centre.

A8. International projects In addition to the activities in the European area developed by SMAT through its Research Center, facilitated by financing from Horizon 2020 and involving the presence of several foreign partners, SMAT has also rein- forced its activities abroad, through participation in the EDW Association - European Drinking Water - with headquarters in Brussels. EDW includes all of the major European water service providers with public shares, counting around 70 members, from Austria, Belgium, France, Germany, Greece, Ireland, Italy, Holland, Portugal, United Kingdom (Scot- land), Spain and Hungary, providing water services to over 80 million citizens in the European Union. There are five priorities covered by the EDW “mission”, including i) the right to water and sustainable financing, ii) transparent and responsible water services, iii) water safety and quality, iv) efficient management for environmental sustainability, and v) local development of public management of water services, all values that SMAT embodies. The Association supports a commitment by public water service providers to high quality services, and facili- tates exchange of knowledge and best practices through specific Work Groups with skills that cover all aspects of the circular economy to finance, communications and performance. SMAT continued his activity as coordinator – together with Belgian company Société Wallonne des Eaux – of Work Group WG4 “Innovation”, dedicated to research and technological innovation in the water sector, with the objective to develop analysis relative to application of Water Safety Plans and the use of advanced sensors

A9. SMA Torino S.p.A. Membership in National and European Associations In 2019, SMAT kept on developing its presence in national and European associations in the aim of being present on the emerging themes relevant to the Integrated Water Service and of increasing its own technical, administrative and legislative knowledge. The most significant memberships are reported hereinafter:

Utilitalia is the National Federation that gathers more than 500 Companies operating in the local public services, amongst which the Integrated Water System, with approx. 90,000 operators and a production volume worth approx 38 billion Euros. In particular, the Utilitalia Members provide the water service to approx. 80% of the national population. Within the largest Italian association, SMAT is represented in the Steering Commit- tee, in the Executive Council and is present in several Commissions (Drinking Water, Waste water, Regulation, In-house and SME).

Confservizi Piemonte and Valle d’Aosta is the service company confederation that represents the Members that operate in the SPLs of industrial application (Water, Gas, Energy, Environmental Hygiene and TPL). SMAT S.p.A. is represented by two members in the Executive Council.

Aqua Publica Europea is the European Association of the Public Operators of the Water Sector a based in Brus- sels; it includes public companies from 11 Countries serving more than 80 million inhabitants and generating

14 an overall turnover of approx. 10 billion Euros per annum. Amongst the most significant companies, it is worth mentioning Eau de Paris which serves the capital of France as a result of a complex process which led it to become public again. In 2019 the European Public Water General Assembly elected the new Board of Directors and nominated a new Vice President, Engineer Paolo Romano – President of SMAT S.p.A. SMAT S.p.A is part of the APE Work Group and one of the coordinating companies for the Innovation & Re- search Group.

Water Alliance of Piemonte transforms into “Utility Alliance of Piemonte” and expands its field of operations beyond the water sector (Water Alliance) to the energy sector (Energy Alliance), as well as to the environmental protection sector (Environment Alliance), opening up the possibility to participate in the network only to those companies that are entirely public, manage public services and share the common objectives of the Network of Companies. The Utility Alliance of Piemonte, which unites 14 Public Service Providers in the water, energy and environmental protection sectors, with in-house concessions in the Piemonte Region and serving over 3.5 million residents (approximately 80% of the population in Piemonte), with comprehensive turnover of more than 600 million Euros. SMAT holds a member within the Shared Management Committee.

SMAT also participates to EUREAU, the European Association that gathers companies that operate in the sector of drinking water and of waste water treatment, serving over 400 million inhabitants of the European Union. Its member come from 29 different European Countries (26 EU, 2 EFTA and 1 observer). EurEau promotes the shared interests towards the European Institutions and pays special care to the pathway that generates the policies related to the water sector. SMAT is represented in the Drinking Water Commission

IWA – International Water Association is a non-governmental and non-profit organisation with offices in Lon- don, which aims to cover all aspects of the integrated water cycle.

The European House Ambrosetti is an organisation that brings together professionals with similar and distin- guished know-how in the areas of Corporate Consulting, Continuing Education services and Research, organis- ing Summits, Workshops and Forums.

SPRING – Sustainable Process and Resources for Innovation and National Growth is a non-profit association that involves innovative subjects dedicated to the development of the entire green chemistry supply chain, to approach a new economy (bio-economy). The objective is to contribute to the creation of the right conditions for developing context, and a dynamic, innovative, competitive industrial and academic framework, in constant growth.

B. COMPOSITION OF THE SMAT GROUP

B1. Parent Company SMA Torino S.p.A. The Capital Stock at the end of fiscal year 2019 is equal to € 345,533,761.65, fully paid and recorded to the Register of Enterprises of Turin in compliance with the law, and it is represented by 5,352,963 ordinary shares of the unit nominal value of € 64.55. The share register, updated to the date of the balance sheet, the Municipality of Turin directly holds 3,231,679 shares and - indirectly - through subsidiary Finanziaria Città di Torino Holding S.r.l., other 169,331 shares, for a total amount of 63.53% of the Share Capital. The Parent Company holds 492,965 (9,21% of the Capital Stock) own shares that it purchased pursuant to art. 2357 of the Italian Civil Code. The remaining 1,458,988 shares (which represent 27.26% of the Capital Stock, equal to Euro 94,177,675.40) are distributed amongst 289 other Associates, 287 of which are Municipalities.

B2. Own shares and shareholdings in subsidiaries As at 12/31/2019 the number of own shares held by the parent company SMAT S.p.A. Amounts to 492,965 shares (representing 9.21% of the share capital for a total value of EUR 32,993,340.40) and corresponding to the relative negative Net Equity provision. The available reserves in the 2019 balance sheet, after purchasing owned shares in the previous years, are nearly totally exhausted. Within the SMAT Group, the subsidiaries do not hold any shares in the controlling company.

B3. Subsidiaries and associates included in the consolidation area

SUBSIDIARIES: - RISORSE IDRICHE S.p.A. of Turin To December 31st 2019, the Capital Stock of Euro 412,768.72 is held at 91.62% by the Parent Company and for the remaining part by Service and design companies that operate at local level. The company prevailingly operates in the engineering sector relevant to the Integrated Water Service and was transferred by the Parent Company - effective on January 1st 2005, the branch of activity relevant to the design services with the specific aim of maximizing the sistematicity, the quality, organizational efficiency, flexibility and design standardization of the Integrated Water Service with special reference to the territory water infrastructures connected to the Piano d’Ambito. Fiscal year 2019 closed with an operating income of EUR 9,024 and a net result of EUR 3,493. The activities of the subsidiary are fully focused to Parent Company SMAT, for which it developed the totality of the appointments for design and works management it received. Consequently, the Net Capital of the subsidiary at the end of 2019 amounts to Euro 669,346. Subsidiary Risorse Idriche S.p.A. has been consolidated by the Integral Consolidation method since fiscal year 2004.

- AIDA AMBIENTE S.r.l. of Pianezza On August 1st 2008, the Parent Company subscribed 51% of the Capital Stock, namely Euro 100,000, of Company AIDA Ambiente S.r.l., established at the same date, since the remaining part was subscribed by Azienda Intercomunale Difesa Ambiente A.I.D.A. di Pianezza. Since the Company operates in a systematic, independent way within the group framework with the Par- ent Company, and is therefore subject to the management and coordination of the latter in compliance with articles 2359 and 2497 of the Civil Code, it is assigned to the management of segments of the integrated water cycle managed by the Parent Company as Sole Territorial Service Provider, as well as the management of liquid waste as defined by the law. The management evolution of the subsidiary generated and EBIT of Euro 166,033 and a positive Net Result of Euro 115,815 in the fiscal year 2019. Consequently, the Net Capital of the subsidiary at the end of 2019 amounts to Euro 636,181. The aforesaid company was consolidated by the Integral Consolidation method since fiscal year 2009.

COMPANIES SUBJECT TO JOINT EQUAL CONTROL (ASSOCIATES) - GRUPPO SAP of Turin The Meeting of Shareholders of Società Azionaria per la Condotta di Acque potabili (SAP) S.p.A., held on September 24th 2014, approved the merger by incorporation of SAP into its partially held company Sviluppo Idrico S.p.A. (special purpose entity established in a joint form – 50% by SMAT and Iren Acqua and Gas S.p.A. - now IRETI) The aforementioned merger, which was finalized on January 20th 2015, (with civil effects as from February 1st 2015and accounting and tax effects starting on January 1st 2015) determined - with last quotation day on January 30th 2015, the delisting of SAP. Furthermore, after the merging, company Sviluppo Idrico S.p.A. changed its corporate name into Acque Potabili S.p.A. (SAP). As a result of the merging of subsidiary Acque Potabili di Crotone S.r.l. into Parent Company SAP S.p.A. starting from August 1st 2016, the SAP Group consists - to December 31st 2018 - by company SAP S.p.A. and Società per l’Acquedotto del Monferrato S.p.A., which is controlled at 100%. As at the date of the statement of account, SMAT is connected to SAP S.p.A. since it holds a participating interest of 44.924% - equal to that of IRETI S.p.A.- and it holds 3,429,125 shares of the nominal value of Euro 1.00. The management evolution of the Group to which SAP is the parent company completed in 2018 the activity for divestment of concessions. As at the closing date the fiscal year the Group realized a Consolidated Net Loss of EUR 690,000 At the end of 2019, the Consolidated Net Equity reaches a value of Euro 22.053 million (IAS/IFRS criteria). For the purposes of the Consolidated Financial statement as at December 31st 2019, the shareholding in Acque Potabili S.p.A. was assessed with the Net Equity method, since there are the premises that define its equal joint control, together with IRETI, and it was classified amongst the shareholdings in associated companies with joint control. Subsequently, in the consolidated financial statement, the carrying value of the shareholding – in relation to the entry of the same shareholding for a value equal to the pro-rata of the Net Equity, which fell as a result of the losses sustained – amounted to EUR 9,907 thousands. This value is supported by the impairment test, conducted by an external expert.

B4. Shareholdings in other companies - APS S.p.A. in Liquidation (now in Bankruptcy) in Palermo Company Acque Potabili Siciliane S.p.A. (APS) was established on February 27th 2007 with an initial Share Capital of EUR 5,000,000, and it is held jointly for 9.83% by SMAT S.p.A. and Mediterranea of Acque S.p.A. The same company was established as a result of the tender called for awarding the Integrated Water Service in the territory of the 81 Municipalities of the Province of Palermo (Municipality of Palermo excluded) by ATO 1 of Palermo. With reference to the aforementioned investment in Acque Potabili Siciliane S.p.A., until October 28th 2013, under Extraordinary Administration Procedure, now in Bankruptcy, was subjected to complete writedown in the previous fiscal years. Furthermore, already in fiscal year 2010, SMAT S.p.A. set up an ad hoc provision for liabilities and potential charges of EUR 650,000 and - in the financial statement closed as at December 31st 2013 - provided for the full extinction of all the payables accrued up to the end of the Extraordinary Administration Procedure period (October 28th 2013).

Arbitration On June 25th 2015, an articulated arbitration procedure started on January 7th 2010 by the submittal by APS and of the shareholders aimed at: • ascertaining that AATO 1 Palermo had become seriously noncompliant against the AAPS authority; • sentencing AATO 1 Palermo to full compliance with the Agreement and to restore the economic and financial balance of the concession; • sentencing AATO 1 Palermo to pay in any event the damages suffered by APS deriving from the ascertained and declared noncompliances. The final Award of the arbitration between Acque Potabili Siciliane in bankruptcy, Acque Potabili S.p.A. and AATO 1 Palermo was deposited on June 25th 2015.

The Award acknowledges in favour of Acque Potabili Siciliane in bankruptcy and against the ’ATO, the following amounts: • EUR 18,349,342.00 for the indemnity of the redemption bonuses • EUR 21,195,041.00 less revenue for non- collection of the set-off amount by AMAP; • EUR 5,923,000.00 reduced revenue for lower water volumes invoiced and different rates applied; • EUR 3,212,037.00 greater wholesale water costs; • EUR 773,000.00 less revenues resulting from arrears. Furthermore, the arbitration acknowledges some of the emerging damage assumptions affecting the shareholders, highlighting that they can enforce them against Acque Potabili Siciliane in bankruptcy also through claiming in the liabilities, i.e.: • Euro 6,600,681.00 for the engineering shareholders; • EUR 1,350,685.00 for the management shareholders (of which EUR 359,548 for SMAT) as related to the know-how project. On the other hand, all the damage assumptions claimed by ’ATO (for an overall amount of Euro 200,000,000.00) were rejected and the only damage claim is the one regarding the Management Agree- ment fee, for a total amount of EUR 23,815,000.00 Subsequently, the final Award grants damages to ’ATO for an overall amount of Euro 33,588,786. On February 9th 2016, ’AATO 1 Palermo notified the summons to appear in court for an appeal with request of declaration of groundlessness, after withholding the effectiveness, of the Second, Non-Final Award of October 29th 2012, of the Third Non-Final Award of February 24th 2015 and of the Final Award of June 25th 2015, which were pronounced as related to the aforementioned arbitration. By an order filed on July 28th 2016, the Court of Appeal of Palermo ordered r the withholding of the effectiveness of the final award of June 25th 2015, upon condition that ’AATO 1 Palermo provides the appropriate surety policy. The Court of Appeal has also ordered to adjourn the proceedings for the clarification of the conclusions to the hearing of November 7th 2018. At the hearing on November 7th 2018 all the Parties presented their respective conclusions. Subsequently the Court assigned the terms for the closing arguments, which all the Parties compiled and deposited. The decision is still forthcoming. - SII S.p.A. of Vercelli 19.99% shareholdings in Servizio Idrico Integrato del Biellese e Vercellese S.p.A. di Vercelli (Share Capital 130 thousand Euros – accounted cost and value 1,300,102 Euros). Furthermore, the Company features shareholdings by Municipalities of Ambito 2 Vercellese and - since the object is the management of the water service in the Associated Municipalities, it shows a remarkable synergy potential with other local entrepreneurial realities in the perspective of being entrusted the management of the Integrated Water Service of said Ambito. - NOS S.p.A. of Turin 10% Shareholding in Nord Ovest Servizi S.p.A. di Torino (Share capital EUR 7,800,000)– accounted cost and value 1,750,000 Euros). Furthermore, the Company features a shareholding by Iren Acqua Gas S.p.A. di Genova, and by other public and private providers. “Nord Ovest Servizi S.p.A.” manages the 45% shareholding in Asti Servizi Pubblici S.p.A.”, which was purchased as a result of a public call of tender by a joint venture of the same shareholders in Nord Ovest Servizi. - Mondo Acqua S.p.A. of Mondovì 4.92% shareholding in Mondo Acqua S.p.A. di Mondovì (Share Capital 1,100 thousand Euros – accounted cost and value 18,204 Euros) Company with majority local public shareholding, held by the municipalities of Mondovì, Briglia, Villanova Mondovì, Roccaforte Mondovì and Vicoforte. The company purpose is the management of the water service in the territory of the shareholding Municipalities. - Environment Park S.p.A. of Turin 3.38% in Environment Park S.p.A. of Turin (Share Capital 11,407 thousand Euros - cost 463,565 and accounted value 385,440 Euros). Furthermore, the Company is also held by Public bodies, Service Companies and financial companies with local value and its purpose is the management of the environmental technological park appointed to research aimed at sustainable development. - Galatea S.c.a.r.l. of Alessandria 0.50% participating interest in Galatea S.c.a.r.l. Cooperative company of Alessandria (Share Capital 10,000 Euros - accounted cost and value 51 Euros) in divestment process, whose object is the building and management of the waste water treatment plant of the Municipality of S. Stefano Belbo.

- Utility Alliance del Piemonte 7.14% shareholdings in Utility Alliance- del Piemonte with offices in Turin (70,000 Euros equity fund on the date of the financial statement – accounted cost and value 5,000 Euros). Such network of public enterprises with in-house mandates was established by Notary Deed of July 19th 2016 among 11 water service companies of Piedmont, that have signed an ad hoc "network agreement" aimed at upgrading their competitive capacity through the shared exercise of representing interests in institutional and associative stakeholders, as well as in the decision-making processes. After the entrance of the new "network partners" Alegas S.r.l. and S.I.I. S.p.A. – Servizio Idrico Integrato del Biellese e Vercellese in the course of fiscal year 2019, the number of water company members became 14. By notary deed dated 05/21/2019, the consortium of companies took on the new name “Utility Alliance del Piemonte”, expanding its operating area, adding the energy sector (Energy Alliance) to water services (Water Alliance), as well as environmental protection (Environmental Alliance), and opening up the possibility to join the network also for public service providers that manage public services and share the same goals as the business network. - Hydroaid – International School of Water Development 11.58% shareholdings in Hydroaid – International School of Water Development with offices in Turin (endowment € 259,000 - accounted cost and value 30,000 Euros), composed of permanent shareholders coming from the public and private sectors (Piemonte Region, Turin Municipality, San Paolo Company, Turin Chamber of Commerce, Hydrodata S.p.A., in addition to SMAT), working to support corporate business and actively contributing to the creation of numerous projects and initiatives.

C. SMAT GROUP ECONOMIC TREND

Consolidated Consolidated Financial Financial Financial Financial Absolute Absolute Amounts in thousands of Euros Variation % Statement Statement Variation % Statement Statement variation variation 2019 2018 2019 2018

Revenues 320,058 327,215 (7,157) -2.19% 320,117 327,180 (7.063) -2.16% Revenues for planning and construction works 103,823 72,243 31,580 43.71% 103,823 72,243 31,580 43.71% Other operating revenues 21,268 18,399 2,869 15.59% 19,014 15,480 3,534 22.83% Total Revenues 445,149 417,857 27,292 6.53% 442,953 414,902 28,051 6.76% Consumption of raw materials and consumables (13,812) (11,994) (1,818) 15.16% (13,713) (11,885) (1,828) 15.38% Costs for services and leased assets (110,410) (109,204) (1,206) 1.10% (110,845) (109,060) (1,785) 1.64% Payroll costs (63,568) (62,091) (1,477) 2.38% (61,551) (59,999) (1,552) 2.59% Other operating expenses (22,953) (22,234) (719) 3.23% (22,738) (21,978) (760) 3.46% Costs for engineering & construction works (99,423) (69,670) (29,753) 42.71% (99,423) (69,670) (29,753) 42.71% Total operating expenses (310,165) (275,192) (34,973) 12.71% (308,270) (272,592) (35,678) 13.09% Gross operating margin 134,984 142,665 (7,681) -5.38% 134,683 142,311 (7,628) -5.36% Depreciation, provisions and write-downs (80,025) (68,919) (11,106) 16.11% (79,989) (68,905) (11,084) 16.09% Operating income (EBIT) 54,959 73,746 (18,787) -25.48% 54,695 73,405 (18,710) -25.49% Total financial management 798 263 535 203.29% 910 343 567 165.23% Result before taxes 55,758 74,009 (18,251) -24.66% 55,605 73,748 (18,143) -24.60% Taxes (15,568) (22,046) 6,478 -29.38% (15,503) (21,951) 6,448 -29.38% Net Profit/(loss) for the year 40,190 51,963 (11,773) -22.66% 40,102 51,797 (11,695) -22.58% Of which belonging to third-party shareholders 60 89 belonging to shareholders of the Parent Company 40,130 51,874

The trend in the item “Revenues” for the 2019 fiscal year of the Parent Company is -2.16%, mainly deriving from contraction in consumption and application of the reduced rate at 2.3% in respect to the previous three year period. The increase in "Other operating revenues" of 22.83% was mainly generated by the combined effect of greater contributions in the operating account distributed by the Piemonte Region for the water emergency in the period 2017 - 2018, issued contributions in the systems account (correlated to implementations of large infrastructure interventions) and unexpected receivables or unsubstantiated liabilities and lesser reimbursements and adjustments to the risk fund. The “Costs of raw and expendable materials” show a total 15.38% increase from the previous year, mainly resulting from the increase in materials for works connected to indirect capitalized investments and maintenance on property of the City of Turin and other municipalities.

The increase in "Costs for leased assets and services" in respect to the previous year, comprehensively 1.64%, is due to an increase in costs for electricity (based on a consumption efficiency project, decreasing power coming from the mains network and increase in self-produced power, increasing the cost per kWh for acquisition of electricity produced using renewable sources), maintenance correlated to the technical quality and management of infrastructures dedicated to disposal of rain water, transport, and disposal of sludge, works with third parties, reading services, maintenance subscriptions, agency commissions for subcontracted works and training of personnel. In contrast, the maintenance costs for outdoor areas, SOG services (due to transfer of operating management of the company Ac- quagest), subscriptions to local entities, rental and leasing are decreasing (through application of IFRS 16). The increase in "Costs for personnel" of 2.59% is attributable mainly to the effects of acquisition of personnel from the company Acquagest (former Managed Company) after the aggregation program was implemented, adjustments for renewal of the national labour contract, incentivized early retirement, INAIL contributions and higher costs for overtime, subcontracted personnel and personnel transfers justified by working activities correlated to technical quality. Savings derived from transfer of personnel mitigated all of this. The "Other operating expenses" recorded an increase of 3.46% in respect to 2018, mainly due to costs for stamp duty tax, contingent and non-existent assets and the supplementary bonus based on more numerous received applications. These increases were mitigated by the reduction in costs for contributions to the Mountain Communities and lesser contributions to the risk fund. The item Amortization, depreciation and write-downs increased by 16.09%, for amortizations on investments concluded and implemented during the year and amortizations on leased goods (IFRS principle 16). The financial revenues increased in respect to 2018 by 4.37% due to higher dividends received by subsidiary companies and IRES credit interest reimbursed by the Revenue Authority. The increase is compensated by the reduction in penalty interest and dividends from other companies. The financial charges, which in the current fiscal year include the actuarial assessment according to IFRS principle 16, are decreasing mainly due to lesser interest and guarantee commissions on mortgages.

D. INVESTMENTS BY SMA TORINO S.P.A. AND THE SMAT GROUP

The framework of the technical investments developed by the Parent Company and its subsidiaries in the balance sheet period is reported in the following table:

Investments SMAT S.p.A. Investments Tangible fixed assets 14,779,850 Intangible fixed assets 2,676,080 Assets under a license agreement 103,822,716 SMAT S.p.A. Total investments 121,278,645 Investments by AIDA Ambiente Tangible fixed assets 8,078 Intangible fixed assets 1,200 AIDA Ambiente Total investments 9,278 Investments by Risorse Idriche Tangible fixed assets 14,604 Intangible fixed assets 214 Risorse Idriche Total investments 14,818

SMAT Group Total investments 121,302,741

STATE OF PROGRESS OF LARGE INFRASTRUCTURE

The Valle Susa Aqueduct and Waterworks This allows the use of the drinking water of the Rochemolles dam through the development of a main duct of over 66 km that, thanks to another 40 km of feed pipelines, serves 30 Municipalities of the Valley, delivering 16 million m3/year of high-quality drinking water. The waterworks will have three hydro-electrical power stations, which shall exploit the altimetry difference between the drinking water plant of Bardonecchia and the Gravere reservoir and generate electricity thanks to the multi-purpose use of the resources. In 2018 the main pipeline related to lot II: Bardonecchia - Salbertrand, was completed as well as a significant number of lots for completion and interconnection. The drinking water treatment plant in Bardonecchia was inaugurated in 2019, which serves the mains network in the Bardonecchia Municipality. All of the railroad works and lines have been completed, and currently clean- ing and sanification is underway to prepare for hook-up to the municipal networks. Soon the supply of machines for hydroelectric energy production stations will be subcontracted.

Reclamation of the district to the southwest of Ivrea Construction works on the new Plant in San Bernardo di Ivrea (proj. 445) (ultra-filtration system) on the right bank of the Dora River are concluded for the first phase. The second lot of sewers was tendered in 2020.

Mediano Main Sewer The enormous work is a main sewer of 3.2 m in diameter made with a depth of 20 m in underground crossing of the entire urban area of Turin from South to North for a total length of over 14 km. Basically the work is a single sewage main sewer to be built in parallel to the existing one and to be used in alternative to it in cases of malfunction or maintenance. Another of its important functions is to serve as an accumulation tank for first rain waters to be sent for treatment in a differentiated way. Using the new main sewer, it will be possible to proceed with maintenance of the old canal and avoid the environmental consequences of subsiding. In 2018, SMAT drafted the preliminary advanced project, and then published a call for bids to contract the design and execution of the entire job. After assessing all the received offers, the awarding commission identified the assigned group for the tender.

Preliminary administrative procedures are currently underway for signing of the contract. The economic framework is EUR 146,000,000.00 and the time needed to complete the work is scheduled at approximately 8 years. The project was presented on December 4th , 2019. The works are carried out totally in the Municipality of Turin, for the purpose of improving management of rain water collected in the sewer system coming from 30 municipalities in the south-west area of the city, as well as storm water from the Municipality of Turin network. The objectives are: - to plan for the problems stemming from changes in climate, to alternate periods of drought with rainy periods, planning for future generations, - to increase system reliability, - to contribute to reducing environmental pollution.

The Valle Orco Aqueduct and Waterworks This is the greatest and most extensive of the large infrastructure projects in the industrial plan of SMAT S.p.A. for the next few years. It will cover the current water deficits in terms of quantity as well as quality in the areas of Ivrea, Caluso and Canavese. The aqueduct will use the water from the reservoirs of Ceresole, Telessio and Angel situated at high altitude in the Parco del Gran Paradiso and today exploited by Iren Energia only for the production of hydroelectric power. The infrastructure will consist of 140 km of pipeline, for sourcing and supplying that will serve over 50 municipalities directly and indirectly, from Rivarolo to Cuorgnè and from Castellamonte to Ivrea amounting to over 120,000 inhabitants. The preliminary design was completed in 2017. Over the course of 2018, the whole project was submitted to the assessment of EIA (Environmental Impact Assessment) liability at the Ministry of the Environment. On February 6th 2019, the project was deemed as screened for EIA. Following the tender process, the project for designing the water treatment plant and pipelines were assigned. The economic framework is EUR 186,000,000.00 and the time needed to complete the work is scheduled at approximately 9 years. In June 2019, the Agreement between Regione/ATO3/SMAT/IREN Energia for the use of water resources for drinking water needs was signed.

Revamping the Po drinking water treatment plant The modernization activities of the facilities for the drinking water treatment plants Po1, Po2 and Po3 introduced in the Po-La Loggia plant complex at the service of the drinking water network of the City of Turin proceed. The definitive project was completed over the course of 2018 and approved by ATO in a Board Meeting held in January 2019. The awarding phase for the integrated tender process for the works is ongoing. Moreover, the project for the feeding conduit segment to the Valsalice tank and Castello tank in Moncalieri is in the final phase. The economic framework is EUR 125,000,000.00 and the time needed to complete the work is scheduled at approximately 8 years.

E. FINANCIAL MANAGEMENT OF SMA TORINO S.P.A. AND THE SMAT GROUP

Consolidated Consolidated Financial state- Financial state- financial financial Amounts in ,000 Euros ments as of ments as of statements as at statements as at 12/31/2019 12/31/2018 12/31/2019 12/31/2018

A. Cash and cash equivalents 45 45 45 44 B. Other liquidity 54,988 120,299 54,249 119,767 C. Shares held for negotiation 0 0 0 0 D. Liquidity (A) + (B) + (C) 55,033 120,344 54,294 119,811 E. Current financial credits 0 0 0 0 F. Current bank debt (2,135) (2,162) (2,135) (2,162) G. Current part of non-current payables (48,707) (48,943) (48,707) (48,943) H. Other current financial debts (1,092) 0 (1,049) 0 I. Current financial payables (F)+(G)+(H) (51,934) (51,105) (51,891) (51,105) J. Net current financial payables (D) + (E) + (I) 3,099 69,239 2,403 68,706 K. Non-current bank debts (100,049) (148,719) (100,049) (148,719) L. Issued bonds (134,142) (133,984) (134,142) (133,984) M. Other non-current debts (576) 0 (549) 0 N. Non-current financial payables (K) + (L) + (M) (234,767) (282,703) (234,740) (282,703) O. Net Financial Position (J) + (N) (231,668) (213,464) (232,337) (213,996)

The current net financial payables the Parent Company as at December 31st 2019 presents a positive balance of Euro 2.403 million, versus Euro -68.706 million of the previous fiscal year.

The net financial position as at 12/31/2019 amounted to EUR -232.337 million as opposed to EUR -231.996 million as at 12/31/2018. This variation is attributed to reimbursement of capital amounts on current loans and a reduction in amortized cost for the debenture loan and mortgages. The total gross financial debt of the Parent Company as at December 31st 2019 amounts to EUR 286.631 million, of which EUR 51.891 million due within the next fiscal year, and EUR 234.740 million due after the next fiscal year for more details, see the Notes to the Accounts of the Parent Company SMAT S.p.A. The situation of the Group is substantially similar: the net financial position to December 31st 2019 amounts to Euro –231.668 million versus the Euro -213.464 of the previous fiscal year. The difference versus the results of the Parent Company is mainly determined by the liquidity of subsidiary AIDA Ambiente.

FINANCIAL RISKS Below you will find comments regarding the financial risks for which the group business is exposed and the hedges provided where needed.

Liquidity risk The financial activity is, for the most part, managed separately by each company of the Group with autono- mous management of the financial flows and current accounts in banks utilized for collection and payment operations, as well as negotiations with the banking system for collection and payment transactions. Starting in fiscal year 2015, a cash-pooling system was activated between the Parent Company and its subsidiary Risorse Idriche S.p.A. to optimize the liquid assets management and the associated financial charges through a greater integration of the control by the Parent Company. Starting in fiscal year 2015, a cash-pooling system was activated between the Parent Company and its subsidiary Risorse Idriche S.p.A. to optimize the liquid assets management and the associated financial charges through a greater integration of the control by the Parent Company.

Guarantees and covenants on the debt The composition and conditions of the loans are itemized in the Notes to the Accounts in the comment on the financial liabilities. As at 12/31/2019 part of the financial position of the Group and of the Company is represented by loan agreements that involve clauses — in line with international procedures — that forbid some operations. Amongst

23 them, the commitment to not grant future financiers any burden on any own assets (negative covenant) and the commitment to treat the obligations undertaken on equal terms with all other present and future obligations (equal pace). Financial covenants are provided, as better detailed in the Notes to the Consolidated Accounts and — in cases of noncompliance with even only one of the aforementioned financial parameters — the lending institutions have the right to terminate the agreement early.

Interest rate risk The Group is exposed to the risk of fluctuation of the interest rates deriving from the financial indebtedness, and it varies according to its composition as variable or fixed rate. To December 31st 2019 the medium to long term fundings are 38.5% at variable rate and 61.5% at fixed rate. The Parent Company adopted the strategy of limiting as much as possible the exposure to the risk of growing interest rates through the preferential access to EU fundings released by the European Bank for the investments with guarantee by a national Bank, in order to benefit of both the lower onerousness of the provisions and of the lower content of the guarantee, attaining medium to long term fundings at variable rate and agree- ing on EURIBOR increases that are lower than the market standards. Furthermore, also in the perspective of limiting the exposure to the risk of rising rates, the Parent Company requested the granting of the loans obtained in the fiscal year being closed at a fixed rate and — in 2017 - it diversified the sources of financing through the issue of a fixed rate debenture loan.

Exchange rate risk The Group is not exposed to the exchange rate risk and — consequently – as at the date of December 31st 2019, does not detain any financial derivative instruments to cover the exchange rate risk.

Rating On June 26th 2015 Standard & Poor’s granted the Company the “BBB” rating level (“A+” for SMAT stand alone). Subsequently, Standard & Poor’s released the following Rating Actions: - On June 28th 2016, it confirmed Corporate Credit Rating “BBB” on the long term and the steady outlook; - On February 13th 2017, it confirmed corporate credit rating “BBB” on the long term and the steady ’outlook, and it allocated preliminary rating “BBB” to the planned release of bonds; - On April 5th 2017, it confirmed corporate credit rating “BBB” on the long term, revising the outlook from steady to negative, only as a function of the revision of the outlook on the Municipality of Turin, and it confirmed preliminary rating “BBB” to the planned issue of bonds; - On April 11th 2017, it confirmed rating “BBB” for the issue of bonds. - On November 2nd 2017 it lowered the rating (Corporate Credit Rating and Senior Unsecured) to “BBB-” in relation to the uncertainties in the long-term regarding the uncertainties on the long term financial strategy caused by the proposal of the City of Turin to transform the company into a non-profit consortium, confirming the negative outlook and bringing the stand-alone credit profile to “bbb+”. - On November 26th 2018 the rating “BBB-” was confirmed; On November 27th 2019 the rating “BBB-” was confirmed, the outlook shifted from negative to positive and the stand-alone credit profile stayed “bbb+”.

F. SIGNIFICANT EVENTS DURING FISCAL YEAR 2019

F1. Legal comparative study SMAT The summarised procedure carried out by SMAT should be stated here, a public company with in-house concessions, in light of the result of the revocation referendum on June 12th 13th 2011 relative to the local public services sector, aimed at preventing the transfer of shares to private shareholders. The Extraordinary Shareholders Meeting on May 6th 2014 approved the amendment to article 17 of the Articles of Association for the case of deliberations with the objective to modify the structure of company shareholdings to the qualified majority of 90% of share capital and 60% of shareholders present at the meeting. In parallel, a significant number of SMAT shareholders undersigned a Convention pursuant to article 30 TUEL in December 2013, which requires the destination of not less than 80% of revenues from the fiscal year to reserves of the Company to support the financial economic plan and up to 20% to distribution to shareholders, limiting this assignment to environmental protection activities, with special reference to water resources. On December 6th 2018, the Municipality of Turin requested that the Shareholders meeting examine a proposal for drafting a comparative study on joint-stock companies limited by shares with wholly public capital and special consortium companies.

As deliberated at the Common Shareholder Meeting on April 4th 2019, the company started a procedure for drafting a comparative study on the legal nature of the company, for a maximum amount of 150,000 Euros, which was then assigned at the amount 86,000 Euros. The study has the objective of identifying single professionals, associates or groups to compare the two different forms of corporate structure: Company limited by shares with wholly public capital and a Special Con- sortium Company. The comparison had to compare the characteristics of the current legal form, a company limited by shares with wholly public capital. and the characteristics of a special consortium company with particular reference to efficiency of management, efficiency in control processes on the rational use of resources, opportunities for obtaining the capital necessary for completing, modernizing and maintaining infrastructures, and impact on local and central public financing to support investments.

The comparative study also takes into account compatibility with organizational requirements typical of the provided service, compatibility with current financial frameworks of the company and the commitments deriving from the same, the financial and operative effects caused by possible withdrawal of shareholders, cost containment, guarantees of universal access, guarantees of continuity, equal distribution of costs, environmental protection, guarantees of continuity in current provisioning from the Authorities, adequacy of decision- making processes in respect to the characteristics of management, respect of standards in place to safeguard competition "in" and "for" the market, fiscal effects, issues related to labour and social security, comparison with similar experiences, and responsibility profiles for administrators in the two different corporate formats. The covered topics were grouped into six thematic areas and each participant presented his/her candidacy for the development of a maximum of two thematic areas, as indicated in the procedure. The study was to be delivered within 90 days of assignment.

The shareholders meeting on June 28th 2019 was informed about the public result of the procedure, by way of which the following professionals were nominated for sis specific topic areas: - Management efficiency and relative limitations (management, organisation, control processes, compatibility and adequacy of management processes); - Investments, financing and fiscal effects (limitations derived from current financial contract and SMAT qualification as a Public Interest Entity); - Containment of costs and possible effects of withdrawal, costs and time for transformation; - Control processes; - Analysis of S.p.A. versus ASC legal structure (regulations, continuity of concessions, responsibilities of administrators); - Labour law consequences.

Within the deadline set on September 23th 2019, the professionals carried out the comparative study relative to assigned topic areas and the comprehensive document was transmitted to the Shareholders on November 5th 2019.

Following analysis and review, some shareholders requested convocation of a shareholders meeting, pursuant to article 14.6 of the Articles of Association, with the objective to conclude the analysis phase with the assumption of a clear intention by the shareholders in light of the valuable elements for evaluation produced by the comparative study. The Ordinary Shareholders Meeting was convoked initially on the date March 26th, rescheduled for April 24th, and then convoked once again for June 5th, due to the pandemic emergency. The question of development of a transformation process for SMAT S.p.A. into a Special Consortium Company was voted on, taking into account: - the assessment that emerged in the comparative study between joint-stock companies and Special Consor- tium Companies, - that the main shareholder, the Municipality of Turin, proposed precise directions for the transformation of SMAT S.p.A. into a Special Consortium Company, - that the second shareholder CIDIU S.p.A. expressed the position of not participating in the corporate transformation of SMAT, activating a withdrawal procedure.

F2. 2019 Rates The rates applied in 2019 decreased by 2.3% in respect to 2018 and were derived from the 2-year 2018-2019 updating of the Rate Maneuver as described below. For households in hardship conditions because of the persisting negative economic conditions, the rate reduction is confirmed with the criteria and amounts define by deliberations 897/2017/R/IDR of 12/21/2017. Furthermore, upon request of the Municipalities, on the grounds of the high social value represented by the municipal and provincial users, which concerns - amongst others - schools, canteens and public fountains, in 2019 a 50% reduction of the Integrated Water Service rate was applied to said users, so that they could continue delivering the aforementioned services and were also involved and encouraged to invest and pay greater attention and deploy resources in favour of the environmental policies, to safeguard of the territory and recover degraded areas. The subsequent lower rate revenues shall not be the subject of adjustment on the water service rate.

Rate update On December 27th 2017 the ARERA published resolution no. 918/2017/R/IDR issuing “Biennial update of rate predisposition of the integrated water service” that approves the provisions involving the definition of rules and procedures for the biennial update, envisaged by article 8 of resolution 664/2015/R/IDR, for the purposes of redetermining the rates of the integrated water services for the years 2018 and 2019, elaborated in ob- servance of the rate methodology as per Annex A to the same resolution (MTI‐2). The rate method envisages an increasingly accentuated integration with the technical quality measures required by the RQTI as per Reso- lution 917/2017/R/IDR.

In fulfilment of the requisites of said resolution, the Government Territorial Plan Entity with the rate proposal approved by resolution on June 26th 2018 no. 692 defined the objectives to pursue (based on the RQTI and the starting level performance) and acquired the proposal of the utilities company regarding the interventions required to achieve those objectives, update the interventions schedule, the financial economic plan that, along with the documentation attached thereto, it must send to the Authority.

Through resolution ARERA no. 617/2018/R/IDR of November 27th 2018, the Authority approved the rates update 2018-2019, requiring some variations to the aforesaid rate proposal, which were implemented by ATO3 Torinese through resolution no. 720 of April 9th 2019.

Fee reform (TICSI) On September 28th 2017 the authority published resolution no. 665/2017/R/IDR stating “approval of the integrated text on fees for water services (TICSI), laying down the criteria of rate articulation applied to users”, that defines the criteria for the definition of rate articulation applied to the users of the integrated water service (SII) by government agencies on the Ambito (or other competent entities) are called upon to follow the reor- ganization of the fee structure for the final users. The authority rationalized and standardized the rate articulation criteria by promoting the installation of differentiated meters that would at least separate the consumption volumes of domestic users from non-domestic users.

By June 30th 2018, the Ente di Governo d’Ambito (EGA) [Government Area Agency] will be responsible for defining, in particular, the rate articulation applied to resident domestic users by using, for the purpose of determining the variable amount of the aqueduct fee, the per capita criterion. The EGA will also have to define the new fees for the waste water collection treatment service or non-domestic users authorized to discharge their effluent and - industrial waste into public sewers (industrial fee). Finally, the EGA will have to verify compliance with limitations on the revenues of utility providers, adopting, through its own approval resolution, the fee structure to be applied to users of the integrated water service starting on January 1st 2018. In March 2019 the Territorial Governmental Entity communicated the rate plan for civil users of the integrated water service to be applied from January 1st 2019 and, to supplement and complete the plan, by way of resolution no. 744 of 19 December 2019, the sewer and treatment rates for industrial waste waters authorized for discharge into public sewers.

Water bonus (TIBSI) On December 21st 2017 the authority published resolution no. 897/2017/R/IDR declaring “Approval of the consolidated text for the application modalities of social water bonus for the supply of water to economically dis- advantaged domestic uses”, amended by Resolution ARERA May 7th 2019 no. 165/2019/R/COM, in accordance with converted Legislative Decree 4/2019 (to Law 26/2019). With the TIBSI, the Authority Implemented the system for the compensation of expenses sustained for water supply by domestic users living in economic hardship. Adhering to the provisions already envisaged by the D.P.C.M. October 13th 2016, it therefore introduced the social water bonus, articulated according to the standard regulations on National territory. The Authority protected the improvement opportunities provided locally by allowing the application of the supplementary bonus. The admissibility procedure and dispensing of the supplementary water bonus are determined and approved by the Government of Piano d’Ambito Entities having territorial jurisdiction in consideration of various territorial specificities. Direct users are given in their water bill through the application of a compensatory rate component, while the indirect users are giving a one off contribution according to the procedures autonomously established by the utilities company. The Authority in Territory ATO3 Torinese maintained improved conditions for users with the introduction of the integrated water bonus, based on resolution ATO3 Torinese of June 26th 2018 no. 692 approving the rate proposal. The Decree by the President of the Territory Authority no. 3 Torinese on July 23th 2018 no. 169 changed the regulations for application of incentives to access the integrated water service based on the Equivalent Eco- nomic Situation (I.S.E.E.) and with resolution no. 697 on November 6th 2018 ratified the Regulations for application of the integrated water bonus. The social water bonus is paid for a period of 12 months (renewable). The applications for the bonus can be submitted starting on July 1st 2018, effective retroactively from January 1st 2018. The Torinese Territorial Authority no. 3 also confirmed the Supplementary Bonus for users in economic difficulty for 2019. ARERA by way of Resolution on 3 December 2019 no. 499/2019/R/COM updated the threshold ISEE value for accessing the social water bonus as of January 1st in accordance with the decree Implementing that set forth in the recent "fiscal decree" (Legislative Decree 124/2019), the Authority, by way of Resolution on January 14th 2020 no. 3/20/R/IDR, increased the value of the Bonus on water bills for families in difficulty, guaranteeing reduction not only for water consumption, but also extending to costs related to sewer and treatment services. Furthermore, as of 2020 people receiving social pensions and welfare also have the right to the water bonus, by presenting an application after February 1st.

F3. Equalization rate components UI1-UI2-UI3-U4 By deliberation 6/2013/R/COM of January 16th 2013, AEEGSI (now ARERA) established the UI1 rate component in favour of populations stricken by the earthquake, applied as an increase to the costs for water, sewers and waste water treatment starting from January 1st 2013 with a two-month payment by the provider to CSEA (Energy and Environmental Services Fund). Such component is 0.4 eurocents/mc for the service managed. The ARERA set up a UI2 rate component, in the amount of 0.9 €/m3 for each aqueduct, sewer and drinking water treatment service applicable starting on January 1st 2018 and mainly intended to promote the technical quality.

The charge deriving from the payment of the social water bonus is guaranteed by establishing a new rate component called UI3 in the amount of 0.5 eurocents/m3 of the aqueduct service applicable starting on Janu- ary 1st 2018, that is payable by the Local Community. As of January 1st 2020 it is applied to the three water, sewer and treatment services. Starting on 01/01/2020, in accordance with Resolution ARERA no. 580 on 12/27/2019, users of the water, sewer and treatment services will be charged UI4 equalisation - in the amount 0.4 Euro/m3 – destined to supply and cover the costs of the Fund guaranteeing water works pursuant to article 58 of Law 221/2015.

F4. Fulfilment of the technical quality regulations (RQTI) By resolution no. 917/2017/R/IDR of December 27th 2017 issuing “Regulation of the technical quality of the integrated water service or each of the single services therein (RQTI)” are defined as the minimum levels and goals of technical quality of the integrated water service, by the introduction of prerequisites, general standards, associated with an incentivizing mechanism with bonuses/penalties, and specific standards, and noncompliance gives rise to the application of indemnities. The new regulation become applicable on January 1st 2018. The utility companies are required to register all the values underlying the specific and general indicators for each of the ATOs in which they operate, and to keep such data for a period 10 years starting from January 1st of the year subsequent to the year of registration. The Territorial Governmental Entity, with resolution no. 720 on April 9th 2019, implemented the objectives approved in resolution ARERA no. 617/2018/R/IDR of aforesaid November 27th 2018.

F5. New ARERA regulations Reconciliation (TICO) ARERA with resolution dated April 16th 2019 no. 142/2019/E/IDR established methods for implementation of the protection system for claims and disputes by final users in the water sector, which providers are required to participate in procedures voluntarily activated by users through the Reconciliation Service. In alignment with the corporate vision set forth in it Social Responsibilities and Code of Ethics, SMAT adheres to out-of-court resolution of disputes (ADR - Alternative Dispute Resolution) through reconciliation procedures.

National Aqueducts Plan The Authority, after preliminary activities, by way of ARERA Resolution no. 252/2019/I/IDR on June 20th 2019, selected a preliminary list of interventions to be carried out for the years 2019 and 2020, including the project to “Implement water connections in the Rivoli and Rosta plants” for an amount of 1,800,000 Euros, valued on each year of the two-year period. By way of ARERA Resolution on October 23th 2019 no. 425/2019/R/IDR, the methods for distributing resources for the realisation of the interventions contained in attachment 1 to the Decree by the President of the Council of Ministers on August 1st 2019 were set forth, citing “Adoption of the first phase of the national plan for interventions in the water sector – aqueducts section”, adopted in accordance with article 1, section 516, of Law 205/2017. By way of resolution on December 3rd 2019 no. 512/2019/R/COM, the Energy and Environmental Services Fund (CSEA) was authorized to release the first financing amounts.

Delinquency (REMSI) ARERA intervened by way of Resolution 311/2019/R/IDR (REMSI) for containment of overdue payments in the integrated water service, with the measures that the Authority intends to implement to contain overdue payments in the integrated water service, in particular focused on the conditions for limitation and suspension of supply for domestic users with overdue payments, not from vulnerable groups, on the procedures for management and containment of over payments in the case of condominium users, as well as instalment payment plans and communications to users to be adopted in the case of overdue amounts. Subsequently, in November an update was approved in the Integrated Water Service Regulations to align with the new ARERA regulations.

F6. Rate method for the third regulatory period (MTI-3) By way of resolution on December 28th 2019 no. 580/2019/R/IDR ARERA approved the water rate method, for the four-year period 2020-2023, with updating every 2 years, containing the definitions of the regulations for computing costs allowed by the rate plan for the third regulatory period (MTI-3), in alignment with the guiding criteria starting in 2012. A uniform but asymmetrical rate method, in consideration of local differences and programming decisions by governmental bodies, to surpass the Water Service Divide, generate more efficiency in operating costs and management costs, enhance environmental sustainability, also through the Plan for Strategic Works and incentives for consumption measuring instruments. The method places the sector squarely in the circular economy, also awarding energy efficiency and offering incentives for saving and reusing water. The Plan for Strategic Works (POS) is also introduced, an instrument through which the governmental body in the territory indicated infrastructural interventions dedicated to complex projects with useful lifespan exceeding 20 years, considered priorities for guaranteeing the quality of service for users. In the POS, which collects works planned for 2020 - 2027, the time lines must be included for the interventions, with any available public contributions. Better capacity to program and organise available coordinated financing will be, according to ARERA, the basis for future availability of water resources, also in respect to climate change.

F7. Acquisition of management of operations in the Rivalta municipality As of January 1st 2019, SMAT took over management of operations of the aqueduct in the Rivalta Municipality from the company Acquagest Srl, with transfer deed dated December 28th 2018, confirming the same employment numbers.

F8. Inauguration of the Large Aqueduct in Valle di Susa The Large Aqueduct in Valle di Susa was inaugurated on June 29th 2019, demonstrating the high potential of the Group and its capacity to forecast and assess emergent problems to avoid crisis, providing a service with the highest social value.

F9. Hiring of personnel For the implementation of the 2015-2019 Industrial plan, and in particular with the start-up of the Aqueduct serving Valle di Susa, a public selection process was completed for the hiring of 8 technical operators, 7 of which must be specialized in maintenance on electrical systems, and 1 for conducting and maintaining the water purifying plant, all of whom hired on for permanent employment contracts. The new employees have been placed in the facilities in Bardonecchia, Collegno and Turin (Southern area). In the month of November another selection process was initiated for hiring 25 employees in 2020.

F10. Legality ratings In December the legality rating assigned by the Authority Guaranteeing Competition and the Market was re- newed with a score of ++. ★★ F11. Legislative decree no. 175 of August 19th 2016 (Madia) In accordance with art. 26 section 5, the decree is not applied to companies with publicly owned shares that have issued financial instruments different from shares, traded on regulated markets.

G. SIGNIFICANT EVENTS OCCURRING AFTER DECEMBER 31ST 2019 AND FORESEEABLE BUSINESS OUTLOOK

G1. Monitoring of impacts related to the COVID-19 emergency. In consideration of the fact that starting in January 2020, the national and international scene was character- ised by the Coronavirus and subsequent restrictive measures put into place by the public authorities to prevent its spread, SMAT made great efforts to ensure service levels compatible with the health protection measures to protect worker health, and for this reason enacting several organizational measures, including:

- making available improved protective instruments for employees, limiting contact in the workplace through the creation of "closed groups" of employees dedicated to operations management activities that do not require contact; in this same scope, where possible new work sites were activated and user help desks were closed, prioritising online services and toll-free numbers; - protecting minimum service levels, also in the most critical emergencies, where the water service operators were working around the clock to continue providing a useful public service, extremely valuable from a social and health standpoint; - combining the primary need to protect public health with the possibility to perform work. limiting the presence of office personnel as much as possible; this was achieved by introducing the possibility for employees to work from home whenever possible.

This circumstance, extraordinary in its extension and nature, had direct and indirect repercussions on the company business. The relative impacts on the 2020 financial statement cannot yet be determined, and will be the object of constant monitoring through the course of the fiscal year. The company has updated its forecast earnings, assets and financial revenues, which at present confirm the consistency of the financial means available for current management. The management considers the most critical variable for SMAT, in light of the business where it operates, could be future developments in users' behaviour when paying bills, during the emergency period as well as immediately following: this behaviour is unpredictable at the moment, but based on the data collected from the first months of 2020 there are not significant impacts as of yet. Based on the data collected in the first months of 2020, a concentration of consumption was also noted, due to closures in the months of April and March of some commercial and industrial businesses, considered to be a phenomenon isolated to those specific months due to the relative regulatory standards issued; the Manage- ment predicts recovery in consumption over the next several months. At the moment there are no detectable problems for corporate continuity and the organizational structure appears adequate. Nevertheless, it is necessary to point out the possible contingent need for liquidity in 2020 for delays and or arrears in payments of bills in the second half of the year caused by the economic crisis linked to the COVID-19 emergency.

Where critical issues are detected, the management of cash flows could be rebalanced with possible modifications to payment flows, or in the case of financial issues with of extraordinary relevance, through the activation of attenuation mechanisms as set forth by the national Authorities and Legislative Decree 23 of 4/8/2020 (so-called "Liquidity Decree"), which provides the possibility to concede state facilitated guarantees on banking loans through the Sace company to businesses impacted by Covid-19.

G2. Water Safety Plan for the City of Turin (WSP) The drafting of the SMAT Water Safety plan for the City of Turin began with the cooperation of the National Institute of Health, the Piemonte Region, ATO3 Torinese, the City of Turin, ARPA Piemonte and ASL. The Water Safety Plans are considered the most effective means for guaranteeing the safety of a drinking water system, the quality of the water and the protection of consumers' health. The instituted work group will draft the plan based on the methodologies of the World health organisation (WHO) as required by the European Directive in the approval phase.

G3. Acque potabili S.p.A. extraordinary operations Summarizing the steps leading up to acquisition of co-control shares of the Società Acque Potabili di Torino, on June 22nd 2005 SMAT and AMGA Genova (presently IRETI), following a public procedure acquired majority shares in Condotta di Acque Potabili S.p.A. (SAP) – a company founded in 1852 and the first Italian company in the water sector to be traded on the Milan stock exchange, from Italgas/ENI. SAP holds the entirety of shares of Acquedotto Monferrato S.p.A., the company that manages the aqueduct services in the municipalities of Monferrato.

The intervention by SMAT with the acquisition of SAP, in addition to having significant industrial impact, represented an important signal at a local level, because it guaranteed occupational continuity to more than 200 workers in Turin and in many other Italian regions. SAP became the vehicle through which SMAT and AMGA intend to develop their presence at a national level: SAP also participated in the tender to become a service provider for the integrated water service in territory ATO1-Palermo, and in 2007 won the 20-year concession. This was the basis for the constitution of Acque Po- tabili Siciliane, the provider of water services to 55 of the 82 municipalities in the Palermo province. Following several vicissitudes, in 2010 Acque Potabili Siciliane was liquidated and commenced a drawn out arbitration procedure, at the end of which ATO 1-Palermo was judged to be the losing party, with the SMAT subsidiary awarded damages for over 32 million Euros (thwarted by the simultaneous administrative liquidation, which the Authority was recently subjected to).

The business model represented by SAP, based on multiple non-prevailing concessions, scattered through different territories throughout Italy following the referendum results of June 2011, abrogating article 23 bis of Law August 6th 2008, no. 133 and the judgement of the Constitutional Court 199/2012, meant that the company Acque Potabili progressively lost its capacity to function as an independent industrial entity.

In 2014 SMAT and IREN Acqua e Gas (taken over by AMGA) then decided to jointly promote - through Sviluppo Idrico S.p.A. (holding equal shares) – A Tender Offer for the acquisition of shares held by private shareholders and the delisting of the company from the Screen-Based Trading System Managed by the Italian Stock Ex- change. The Tender Offer consolidated in the control of SMAT (and equally IREN Acqua e Gas) a share holding of just less than 45% and in 2015 – following an inverse merger – Acque Potabili was delisted.

This was the start of rationalisation and integration of business and concessions still controlled by SAP, with division of relative services locally and from a managerial standpoint: in 2015 the transfer of two branches of SAP to SMAT and IREN was concluded. On July 1st 2015, SMAT began directly managing 31 municipalities with the ATO3-Torinese territory, which were previously managed by SAP, serving a population of approximately 250,000 residents and transferring 60 employees to SMAT.

After the concession of the branch of the Turin company to SMAT and the Liguria company to IREN Acqua a Gas, Acque Potabili held 32% of the originally held concessions. Another step towards corporate rationalising was concluded in the end of 2016, with the transfer to IREN of a remaining 31 concessions (defined "performing" and located in the provinces of Alessandria, Asti, Aosta, Cu- neo, Mantova, Novara, Vercelli, Brescia, Milan, Pavia, Piacenza and Verona), simultaneously transferring 47 employees to IRETI (which took over IREN Acqua e Gas in the meantime).

In the end of 2018, SAP had completed the process of ceding any remaining concessions ("non-performing") with the transfer of the concession in Adria (RO), and in 2019 all the price adjustment transactions for the Veneto transferee Acque Veronesi S.p.A. were completed.

SAP had no direct employees. Operations and adequate organizational frameworks were guaranteed by specific service contract stipulated with SMAT and IRETI.

In light of the aforesaid and in relation to the negative result of the case brought by the subsidiary company Acquedotto Monferrato S.p.A. with the Consortium for the Acquedotto del Monferrato, it was considered op- portune to activate a series of corporate transactions for the purpose of: 1. Incorporating the company Acquedotto Monferrato into Acque Potabili;

2. Approving an amendment to the articles of association setting forth the right of shareholders to withdraw; 3. Approving the liquidation of Acque Potabili on the occasion of the Shareholders Meeting, which will be convened to approve the 2019 financial statement.

The incorporation of Acquedotto Monferrato - today 100% owned shares - into Acque Potabili is necessary to limit the liquidation to a single subject and to further contain corporate costs, while the amendment to the articles of association will make it possible to reduce the number of shareholders (currently 1,277), hopefully to a number below the number set for companies with dispersed ownership (500), with the objective of accessing simplified corporate procedures.

On January 30th 2020 the SMAT Board of Directors approved the aforesaid transactions.

G4. Biomethane Plant Works relative to the reconversion system in the biogas recovery plant to biomethane recently concluded, located within the water treatment plant in Castiglione Torinese, the introduction of which, with reference to environmental sustainability, will guarantee savings in CO2 emissions.

G5. Industrial Plan Project 4.0 The Industrial Plan Project 4.0 was developed for the period 2020-2024 On February 26th the Board of Directors approved the Project to be sent for approval at an upcoming shareholders meeting, and if confirmed the current SMAT framework as an entirely public joint-stock company will be confirmed.

Based on the results of the upcoming meeting scheduled for June 5th 2020, where the shareholders will delib- erate on the legal form of SMAT (joint-stock company or special consortium), The Board of Directors will assess whether to maintain the already approved Plan or change it based on the company becoming a consortium.

H. ORGANIZATIONAL MODEL SUPERVISION, ANTICORRUPTION AND TRANSPARENCY ENTITY

H1. Supervisory entity The experience of SMAT S.p.A. on matter of administrative responsibility led to the appointment of the mon- ocratic Supervisory entity as early as 2003 resulting in the adoption of the Organizational Management and Control entity7 In 2011, SMAT appointed a joint Supervisory entity, and again allocated the appropriate financial resources for the development of its tasks The Board of Directors meeting of February 15th 2018 confirmed the four members (an external Chairman and three internal members) of the Supervisory entity for approval of the 2019 financial statement.

The Organizational Model, Supervisory and Anti-Corruption Board for the prevention of administrative breaches constitutes - together with the Code of Ethics and other elements of the corporate governance (Legal Audit, internal auditing, quality certification 9001:2015, BS OHSAS 18001:2007 certification, environmental certification 14001:2015), - an effective tool to raise the awareness of all subjects that operate on behalf of SMAT so that - in exercising their activities - they adopt behaviours inspired by the ethics of responsibility and in compliance with the provisions of law . The Organizational and Management Model pursuant to Legislative Decree no. 231/2001 and the Code of Ethics were updated by the Board of Directors on November 26th 2019, to adjust them according to legislative changes, in particular following the introduction of new crimes based on racism and xenophobia8, the introduction of “whistleblowing”, a fundamental element of MOG, for the purpose of protecting employees who report illicit acts 9, relative to which the procedure for reporting issues or atypical behaviours was also approved, pursuant to Legislative Decree 231/2001, which can be reviewed on the corporate website; the sections relative to market abuse were also updated.

In fiscal year 2019, on the basis of the organization, management and control Model and of the Code of Ethics, the OdV has developed its activities of monitoring, updating and information. In particular: • •monitoring and implementation of the Model in line with the conformity programs approved by the Board of Directors and drafted for each procedure subject to the "sensitive" processes identified by the Model, in order to prevent crimes that may imply administrative liability of the Company; • •information to all the executives and employees involved in activities subject to the risk of alleged crime, to spread the updating of the new crimes pursuant to Legislative Decree 231/2001, on the purposes and contents of the adopted Organization, Management and Control Model. The information was spread through the company intranet platform by the ad hoc document management software. In general, all the aforementioned subjects were informed of the disciplinary system adopted in case of viola- tion of the Model, as well as of the communication required in cases of breaches of the Code of Ethics or the internal procedures. A dedicated communication line to Supervisory Body has been reserved. With reference to the information to external collaborators and partners, the purchase contracts and orders were adapted with a specific request of acceptance of and commitment to the application of the ethical principles contained in the Code. The General Part of the Organization a Model is available on company website www.smatorino.it.

H2. Anti-Corruption and Transparency After the ANAC resolution no. 8 of 06/17/2015 at the meeting held on September 7th 2015, the Board of Di- rectors appointed the Corruption Prevention Officer (CPO) from among the company executives, and deliberated to supplement the composition of the Supervisory Body by introducing the CPO as an additional internal member. At the Board of Directors meeting held on January 26th 2017, the Anti-Corruption Measures were approved, and the existing Corruption Prevention Preliminary Plan was updated on the Company's institutional website.

7In compliance with Legislative Decree 231/2001. 8 In effect since December 12th 2017, pursuant to Law 167/2017 which introduced art. 25-terdecies of Legislative Decree 231/01. 9 In effect since December 29th 2017, pursuant to Law 179/2017 (amended art. 6 of Legislative Decree 231/01).

On 11/08/2017, with Directive no. 1134, the ANAC issued the new Guidelines for private law companies under public control, in replacement of the previous Guidelines pursuant to Resolution no. 8 of 06/17/2015, confirming the need to appoint a Corruption Prevention Officer also responsible for transparency requirements as per Legislative Decree 33/2013. The last ANAC guidelines also gave a new list of requirements for the publication of data for Transparency. In 2018 the company implemented the "Transparent Company" section on its corporate website. SMAT S.p.A., with Resolution by the Board of Directors on February 15th 2018, nominated a new Transparency and Anti-Corruption Manager (RPCT), until approval of the 2019 financial statement. Mandatory communications and inspections were carried out in relation to the schedule of works prepared based on defined strategic objectives. A Three-Year Plan for the Prevention of Corruption and Transparency 2019-2021 was prepared and approved by the Board of Directors on January 31st, which was then published on the website and transmitted to all the Directors and Managers of services involved. In 2019 a general level training course was created for all employees and for specific level training for upper manager figures. On 12/20/2018 the Board of Directors prepared and approved the “Whistle-blowing Procedure” published on the corporate website and provided to all employees through an internal Service Order. On July 29th 2019 the Board of Directors adopted the Consolidated regulations for governing the right of access to administrative documents and the right of access to documents, data and information, published on the corporate website and distributed to employees with a dedicated internal Service Order. The reports that arrived in 2019 to RPCT were analysed as required in the aforesaid procedure. No facts occurred that could be traced back to phenomenon/behaviours that could be qualified as corruption.

H3. Privacy - GDPR In 2019 Smat S.p.A., the data controller, implemented organizational and technical activities to carry out completely the so-called “General EU Data Protection Regulation Alignment Project (GDPR) no. 2016/679 To implement the European personal data protection regulation 679/2016 (GDPR), which became definitively applicable directly in all the countries of the EU as of May 25th 2018, by way of resolution by the Board of Directors on March 7th 2018, the Data Controller was appointed up to approval of the 2019 financial statement. Over the course of 2019 the functional diagram for the Privacy policy and nominations for Privacy Managers were approved by the Data Controller, the data processing register pursuant to art. 30 of the Regulation and all information sheets were updated, and all the employees received training.

H4. Certification of the health and safety management system for personnel and the workplace The company has continued the activities aimed at ensuring compliance with the law, regulations and standards related to safety and health at the workplace. Therefore, in a perspective of pursuing the continuous improvement in terms of the management of workplace health and safety, on March 5th 2015 the Company obtained voluntary certification BS OHSAS 18001.

The BS OHSAS 18001:2007 certification defines the standards recognized at international level, in order to allow the organization to control its own risks and optimize its performance, defining policies and objectives that involve and motivate the personnel. In such perspective, the corporate activities will keep being submitted to periodical surveillance to ascertain the effectiveness and implementation of the system. We hereby certify that - during the fiscal year that is the subject of these Financial Statements - no fatalities or charges due to occupational diseases or mobbing on employees entered on the sole job register have been recorded.

H5. Certification of the environmental management system SMAT has set up an Environmental Management System shared with the whole personnel for the safeguard of the environment which - at the end of 2016 - allowed obtaining the UNI EN ISO 14001:2015 certification, updated on June 29th ,2019.

This is a voluntary certification, aimed at ensuring the safeguard of the environment, preventing any pollution, reducing the amounts of waste, energy and material consumption, the environmental impact deriving from the company activities or the activities the company may influence.

H6. Certification of the quality management system SMAT S.p.A. has a Quality Management System in place, which is shared among all personnel, allowing it to update its UNI EN ISO 9001:2015 certification, with the most recent issue date on June 12th 2019. The integrated certification system for the Quality, Safety and Environmental Systems is ongoing.

H7. List of SMAT Group branches Parent Company SMAT S.p.A. and the other subsidiaries exert their own activities in the respective registered offices and in local reference operations, no group branches ex-art. 2299 of the Italian Civil Code are entered.

I. RELATIONSHIPS WITH RELATED PARTIES As related to the relations developed with the related parties, as defined in art. 2428, paragraph 2, no. 2 of the Italian Civil Code, we highlight herein under the main operations Parent Company SMAT S.p.A. has developed with them.

I1. Relations with the City of Turin In relation to the City of Turin, regarding the shares held (directly or indirectly), in the amount of 63.53%, as at the date of this Financial Statements, the following relations exist, as a result of transactions operated in standard market conditions:

Receivables Payables Expenses Revenues CITY OF TURIN 2,275,952 1,504,860 1,837,314 3,631,087

As related to the composition of the receivables from the City of Turin, the most significant items concern the supply of the Integrated Water Service (invoices issued or to be issued for approx. EUR 1.838 million), and other activities and services (invoices issued or to be issued for approx. EUR 438 thousands). As related to the composition of the payables to the City of Turin, the item only consists of the 2019 installments of the Local Authority Fees deliberated by Ente d’Ambito n. 3 Torinese for the fiscal year that is being closed and for a total amount of approx. EUR 1.505 million. The evolution of the amounts receivable from and payable to the City of Turin is a consequence of the recip- rocal payments made at the stipulated deadlines.

The revenues are reported at the net amount of EUR 3.191 million in reference to the 50% rate reduction established for public use users applied in 2019.

I2. Relations with the subsidiaries and associates As regards the companies of the Group which are to be considered as subsidiaries and/or associates in compliance with article 2359 c.c., as at the date of these Financial Statements there were the following relations, deriving from transactions operated in standard market conditions or by specific or general agreements to regulate the exchange of services between the parties:

Receivables Debts Expenses Revenues RISORSE IDRICHE S.p.A. 863,750 3,198,309 2,678,051 205,507 AIDA AMBIENTE S.r.l. 65,247 72,209 1,342,025 178,013 SAP S.p.A. 33,407 15,657 65 83,119 ACQUEDOTTO DEL MONFERRATO S.p.A. 5,002 0 0 5,002 Total 967,406 3,286,175 4,020,141 471,641

CONSOLIDATED FINANCIAL STATEMENT OF THE SMAT GROUP AT 12.31.2019

CONSOLIDATED

FINANCIAL

STATEMENT

OF THE SMAT

GROUP

15th CONSOLIDATED FINANCIAL STATEMENT IAS/IFRS FRAMEWORKS SUPPLENENTARY NOTE

CONSOLIDATED STATEMENT OF FINANCIAL POSITION Euro Remarks 12/31/2019 12/31/2018 ASSETS Non-current assets Tangible fixed assets 1 149,265,059 169,230,988 Goodwill 2 5,928,005 5,928,005 Other intangible assets 3 4,202,078 3,567,347 Concessions 4 685,613,165 611,111,310 Investments 5 13,395,887 13,675,862 Deferred tax assets 6 15,565,728 15,374,579 Non-current financial assets 7 1,400,001 985,669 Other non-current assets 0 0 Total non-current assets 875,369,923 819,873,760

Current assets Inventory 8 8,623,844 7,601,363 Trade and other receivables 9 227,498,439 243,575,583 Current tax assets 10 6,499,452 6,424,908 Current financial assets 11 39,127 0 Other current assets 12 3,545,294 3,922,094 Cash and cash equivalents 13 55,033,557 120,344,247 Total current assets 301,239,713 381,868,195

Assets intended for sale 0 0

TOTAL ASSETS 1,176,609,636 1,201,741,955

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

Euro Remarks 12/31/2019 12/31/2018 NET EQUITY AND LIABILITIES NET EQUITY Share capital 345,533,762 345,533,762 Legal reserve 20,909,251 18,319,415 Reserve restricted for PEF implementation 238,874,674 199,509,171 FTA reserve (2,845,993) (2,845,993) Other reserves and retained earnings 3,358,321 3,892,987 Operating profit due to Parent Company shareholders 40,129,756 51,873,573 TOTAL NET EQUITY OF THE PARENT COMPANY 645,959,771 616,282,915

Capital and reserves attributable to non-controlling interests 262,707 271,810 Profit for the year attributable to non-controlling interests 59,759 89,893 TOTAL NET EQUITY 322,466 361,703

TOTAL NET EQUITY 14 646,282,237 616,644,618

LIABILITIES Non-current liabilities Non-current financial liabilities 15 234,767,367 282,702,625 Provisions for employee benefits 16 16,605,147 16,947,465 Provisions for risks 17 19,959,092 23,034,270 Deferred tax liabilities 18 314,986 337,834 Other non-current liabilities 19 52,275,183 50,620,545 Total non-current liabilities 323,921,775 373,642,739

Current liabilities Current financial liabilities 15 51,933,990 51,105,397 Commercial payables 20 78,720,031 83,912,497 Current tax liabilities 21 3,340,635 3,856,040 Other current liabilities 22 72,410,968 72,580,664 Other current financial liabilities 0 0 Total current liabilities 206,405,624 211,454,598

Liabilities destined for sale 0 0

TOTAL LIABILITIES 530,327,399 585,097,337 TOTAL NET EQUITY AND LIABILITIES 1,176,609,636 1,201,741,955

CONSOLIDATED INCOME STATEMENT Remarks 2019 2018

REVENUES Revenues 23 320,058,378 327,214,741 Revenues for planning and construction activities 24 103,822,716 72,243,129 Other revenues 25 21,268,069 18,398,754 Total revenues 445,149,163 417,856,624

COSTS Consumption of raw materials and consumables 26 13,811,573 11,993,686 Costs for leased assets and services 27 110,409,556 109,203,589 Payroll costs 28 63,568,346 62,090,930 Other operating expenses 29 22,952,778 22,233,509 Costs for planning and construction activities 30 99,422,784 69,670,035 Total operating expenses 310,165,037 275,191,749

Gross operating margin 134,984,126 142,664,875

Amortization, provisions and write-downs 31 (80,024,772) (68,918,791)

Operating income (EBIT) 54,959,354 73,746,084

Financial income 32 5,755,403 5,538,219 Financial expense 33 (4,957,162) (5,275,050) Total financial management 798,241 263,169

Result before taxes 55,757,595 74,009,253 Income Taxes 34 (15,568,080) (22,045,787) PROFIT (LOSS) FOR THE YEAR 40,189,515 51,963,466 Of which belonging to non-controlling interests 59,759 89,893 Belonging of the parent company 40,129,756 51,873,573

COMPREHENSIVE CONSOLIDATED INCOME STATEMENT Remarks 2019 2018

A. Profit for the year 40,189,515 51,963,466 Actuarial profit (loss) on employee benefits (Employee Severance Indemnity) (649,881) 569,678 Tax effect on Profit /(loss)that will not be subsequently reclassified in the Income statement 0 0

B. Profits/(losses) entered directly under Net Equity and that (649,881) 569,678 will not later be reclassified in the Income Statement Share of other profits/(losses) by the Enterprises assessed by the 0 0 Net Equity method Tax effect on Profit /(loss)which will then be reclassified on the Income Statement 0 0 when given conditions are met

C. Profits/(losses) entered directly under Net Equity and that

will not later be reclassified in the Financial Statement 0 0

D. Total profit for the year (A + B + C) 39,539,634 52,533,144

Of which belonging to non-controlling interests 45,580 91,747 Belonging to the parent company 39,494,054 52,441,397

CONSOLIDATED CASH FLOW STATEMENT Euro Remarks 2019 2018

A Financial flows of operating assets 114,461,643 132,524,597

Profit (loss) for the year 40,189,515 51,963,466

Adjustments for non-monetary costs and revenues Intangible depreciation 2,052,762 1,485,473 Tangible depreciation 17,441,913 16,119,466 Depreciation for concession 48,463,115 40,177,233 Increase/(Decrease) of the provisions for contingencies and charges (3,075,178) (3,695,189) Increase/(Decrease)in provisions for employee benefits (342,318) (1,679,568) Advanced/deferred tax change (213,997) (140,865) Change for other non-current liabilities 1,240,307 (1,760,846)

Net Equity reserve change Conversion difference 0 0 Actuarial profit and loss 14,179 (1,854) Other movements (748,880) (2,377,637)

Variation in net working capital (Increase)/Decrease of the commercial receivables 16,077,144 24,073,659 (Increase)/Decrease in other assets 263,129 4,954,993 Stock (Increase)/Decrease (1,022,481) (185,960) (Increase)/Decrease of the Commercial payables (5,192,466) 4,739,587 Increase/(Decrease) of other liabilities (685,101) (1,147,361)

B. Financial flows of investment assets (122,848,472) (83,997,240) Disinvestments /(investments) of intangible assets (2,687,493) (1,468,264) Disinvestments/(investments) of tangible assets 2,524,016 (16,308,183) Disinvestments /(investments) of assets under a license agreement (122,964,970) (71,718,143) Variation in shares 279,975 5,497,350 Variation in consolidation area

C. Financial flows of financial assets (56,923,861) (60,179,622) Cash from the issue of share capital 0 0 (Purchase)/Release of shares 0 0 Change of the financial debt (47,079,643) (48,686,440) Other changes in financial liabilities (27,022) (33,505) (Dividends paid) (9,817,196) (11,459,677)

D. Net flow (A ± B ± C) (65,310,690) (11,652,265)

E. Liquidity at the beginning of period 120,344,247 131,996,512

F. Liquidity at the end of period (D ± E) 55,033,557 120,344,247

CONSOLIDATED CHANGES IN NET EQUITY

Allocation of Distribution of Other move- Result for the (Units in Euro) 12/31/2017 12/31/2018 result Profit ments year

Share capital 345,533,762 0 345,533,762 Legal reserve 15,298,020 3,021,395 18,319,415 Reserve restricted for PEF implementation 153,583,962 45,925,209 199,509,171 FTA reserve (2,845,993) 0 (2,845,993) Other reserves and retained earnings:

• Optional reserve 34,342,562 0 34,342,562

• Consolidation reserve 5,026,588 0 5,026,588

• Severance actualization reserve 264,754 1,854 567,824 834,432

• Reserve for purchase of treasury shares (30,101,844) (2,891,496) (32,993,340)

• Reserve for rounding up units (7) 2 (5)

• Retained earnings (3,324,207) 11,468,488 (11,459,677) (1,854) (3,317,250) Total other reserves and retained earnings 6,207,846 11,468,488 (11,459,677) (2,891,494) 567,824 3,892,987 Profit for the year 60,415,092 (60,415,092) 51,873,573 51,873,573 TOTAL NET EQUITY OF THE GROUP 578,192,689 0 (11,459,677) (2,891,494) 52,441,397 616,282,915 Capital and reserve of non‐controlling interests 266,760 60,871 (57,675) 1,854 271,810 Non‐controlling interests 60,871 (60,871) 89,893 89,893 TOTAL EQUITY OF NON‐CONTROLLING PARTIES 327,631 0 0 (57,675) 91,747 361,703 TOTAL CONSOLIDATED NET EQUITY 578,520,320 0 (11,459,677) (2,949,169) 52,533,144 616,644,618

Allocation of Distribution of Other move- Result for the (Units in Euro) 12/31/2018 12/31/2019 result Profit ments year

Share capital 345,533,762 0 345,533,762 Legal reserve 18,319,415 2,589,836 20,909,251 Reserve restricted for PEF implementation 199,509,171 39,365,503 238,874,674 FTA reserve (2,845,993) 0 (2,845,993) Other reserves and retained earnings: • Optional reserve 34,342,562 0 34,342,562 • Consolidation reserve 5,026,588 0 5,026,588 • Severance actualization reserve 834,432 (14,179) (635,702) 184,551 • Reserve for purchase of treasury shares (32,993,340) 0 (32,993,340) • Reserve for rounding up units (5) (2) (7) • Retained earnings (3,317,250) 9,918,234 (9,817,196) 14,179 (3,202,033) Total other reserves and retained earnings 3,892,987 9,918,234 (9,817,196) (2) (635,702) 3,358,321 Profit for the year 51,873,573 (51,873,573) 40,129,756 40,129,756 TOTAL NET EQUITY OF THE GROUP 616,282,915 0 (9,817,196) (2) 39,494,054 645,959,771

Capital and reserve of non‐controlling interests 271,810 89,893 (84,817) (14,179) 262,707 Non‐controlling interests 89,893 (89,893) 59,759 59,759 TOTAL EQUITY OF NON‐CONTROLLING PARTIES 361,703 0 0 (84,817) 45,580 322,466 TOTAL CONSOLIDATED NET EQUITY 616,644,618 0 (9,817,196) (84,819) 39,539,634 646,282,237

SMAT GROUP SUPPLEMENTARY NOTE

We report herein under the main criteria and accounting principles applied in setting and drafting the consolidated financial statement of the Group (the Consolidated Financial statement) Such accounting principles have been applied consistently for all the fiscal years reported in this document.

Principles for preparation of the balance sheet European (CE) Regulations no. 1606/2002 of July 19th 2002 introduced the obligation, starting from fiscal year 2005, to apply the International Financial Reporting Standards (“IFRS”), as amended by the International Ac- counting Standards Board (“IASB”), and adopted by the European Union (“IFRS” or "International Accounting Principles”) for the drafting of the statements of account of the companies holding capital and/or debt shares quoted in one of the markets regulated by the European Community. On April 13th 2017, SMAT issued a bond loan for a rated amount of a Euro 135 million subscribed by institutional investors and it provided for quotation at the Irish Stock Exchange. In compliance with the aforementioned legislative provisions, SMAT is therefore supposed to draft the consolidated and fiscal year financial statement in compliance with the IFRS starting from the fiscal year closed on December 31st 2016.

The data of transition to IFRS (The "Transition Date") was therefore been identified as January 1st 2015. the Company had already drawn up the consolidated financial statements for the fiscal years closed at December 31st 2015 and 2014 in compliance with the accounting principles issued by Association of Chartered Account- ants, as amended by the Italian Accounting Body.

This statement of account is therefore drafted in compliance with the IFRS in force at the date of its approval. IFRS means the new International Financial Reporting Standards, the reviewed international accounting principles (“IAS”), all the interpretations of the International Financial Reporting Interpretations Committee (“IFRIC”), formerly named Standing Interpretations Committee (“SIC”), certified and adopted by the European Union.

The Financial Statements schedules and the accounting information reported in the Explanatory Notes comply with the book entries they directly derive from. The IFRS were applied in coherence to all the periods presented in this document.

The statement of account prospectus, as provided for in art. 2423-ter of the Civil Code reports by appropriate comparison the indication of the previous year values. Where required, the data of the previous fiscal year have been suitably adapted in order to ensure the appropriate comparison.

This statement of accounts has been set in the perspective of corporate continuity and on the bases of the contractual criteria of the historical cost, with the exception of some book entries, which are detected at the fair value, in compliance with the provisions contained in the International Accounting Principles.

Structure and contents of the balance sheet The diagram used for the profit and loss account is in scale with the different items analysed according to their type. We believe this presentation, which is aligned with international procedure, is the one that best represents the company results. The total Income Statement is presented, as allowed by the revised IAS 1, in a document separate from net equity, and distinguishes between the components that can be reclassified in the Income Statement and those that cannot. The other components of the total Income Statement are highlighted separately also in the schedule of the net equity changes. The diagram of the equity and financial positions highlights the separation between the current and non-current assets and liabilities. The financial reporting is drafted according to the indirect method, as allowed by IAS 7. The general principle adopted in drawing up this financial statement is cost, with the exception of the financial assets and liabilities (including the derivative instruments) which are assessed at fair value. The preparation of the Financial Statements has required the use of estimates by the management; the main areas characterized by particularly significant assessments and assumptions, together with those that have remarkable effects on the situations presented, are reported in section "Use of Estimates”. All the accounting prospects of the equity

and financial status and of the Income Statement are expressed in Euro unit, whilst the data entered in the explanatory comments are expressed in thousand Euros, except when it is otherwise indicated.

Consolidation criteria Below we have shown the principles adopted for elaborating the consolidated financial statement.

1. CONSOLIDATION AREA AND REFERENCE DATA This consolidated financial statement includes - besides the Financial Statements of Parent Company SMAT S.p.A. - the statements of account of its Subsidiaries (such statements of accounts, approved by the respective Boards of Directors, have been amended/reclassified as appropriate in order to make them homogeneous to the financial statement drafting standards of the Parent Company and consistent to the drafting standards of the international accounting principles (IAS/IFRS). The control is in force when the parent company has the power to manage the activities relevant to the company and is exposed to the variability of the results. The statements of account are included in the consolidated financial statement starting from the date the control is taken until such control ceases to exist.

The joint control agreements can be classified as (i) “shareholding in joint ventures” if the Group has rights on the net assets of the agreement such as - for instance - in case of companies with their own legal personality, or (ii) “joint control activities" the Group has rights on the assets and obligations on the liabilities relevant to the agreements. The classification of the agreements is based upon the analysis of the same rights and obligations. The companies on which a "remarkable influence" is exerted have been assessed with the "net equity method"

Besides Parent Company SMAT S.p.A., the consolidation area includes: • Company Risorse Idriche S.p.A., where the Parent Company has direct control (91.62%) in compliance with article 2359 of the Civil Code; • Company AIDA Ambiente S.r.l., where the Parent Company has direct control (51.00%) in compliance with article 2359 of the Civil Code; There are no discrepancies in the closing dates of the Financial Statements of the enterprises the Group consists of.

The participating interest in SAP S.p.A., where the Parent Company exerts joint control together with company IRETI S.p.A, respectively at 44.92%, has been assessed with the Net Equity method. Through Parent Company SAP S.p.A., SMAT S.p.A. has indirect joint control on company Acquedotto Monferrato S.p.A..

2. CONSOLIDATION PRINCIPLES We represent hereinafter the criteria adopted by the Group for the definition of the consolidation area and of the relevant consolidation principles.

Integral consolidation Consolidation by the "integral method" essentially consists of taking up the assets and liabilities, costs and revenues of the consolidated companies, irrespectively on the size of the shareholding held and allocating the Third-party shareholders - in a purposely-allocated item of the Net Equity called "Equity and reserve of third parties" - the share of profit and reserves of their competence. Companies Risorse Idriche S.p.A. and AIDA Ambiente S.r.l. are consolidated through the full integration system. The asset and liability elements, as well as the revenues and charges of the aforementioned companies are taken in full (line by line).

Elision is applied to: a) shareholdings in subsidiaries and their corresponding fractions of Net Equity held by the Parent Company, allocating the different asset and liability elements the current value at the date control is acquired; any difference, if positive, is reported, if there are the conditions for it, in the "Goodwill" asset item and reported in the Income Statement if negative, b) receivables and payables between companies included in the consolidation area; c) profits and charges relevant to operations performed between said companies, 45

d) profits and charges resulting from operations performed between such companies and relevant to values included in the equity; e) charge off of the dividends cashed by consolidated companies.

In particular, the consolidation procedure required the elision of the charging values of the shareholdings and the corresponding shares of Net Equity in the subsidiaries. Such elision has been implemented in the accounting values referred to the date where the subsidiaries have been included for the first time in the consolidation (for Risorse Idriche S.p.A.at December 31st 2004, for AIDA Ambiente S.r.l. at December 31st 2009).

In past fiscal years, such elision determined for: • Risorse Idriche S.p.A. a greater value of the shareholding in 2004, which was computed into the consolidated financial statement - to the Net Equity - in an item denominated “Consolidation reserve" and amended in 2007, further to the increase in the control percentage (from 83.67% to 91.62%) with computing to the consolidated financial statement amongst the intangible assets in an item denominated “Consolidation Difference”; • AIDA Ambiente S.r.l. no difference.

The greater/lower price paid from the corresponding fraction of payment, deriving from the acquisition of further company shares is computed as reduction/increment of the net equity. The acquisitions of controlling shareholding that occur within the same Group (i.e. “business combinations under common control”) are calculated in value continuity.

Elimination of the intra-group profits/losses For the purposes of the consolidated financial statement, the economic result of the Group only derives from transactions involving third parties. The profits/losses deriving from intra-group transactions - where existing - are eliminated within the consolidation process, sharing the adjustment proportionally between the share relevant to the Group and the one related to Third Parties, taking also into account the tax effects.

Evaluation of the shareholding through the Net Equity method The shareholding is initially detected at cost and the accounting value is increased or reduced to identify the share belonging the controlling company, of the profits and losses of the subsidiary that are achieved after the date of acquisition. Any goodwill included in the value of the participating interest is subject to “impairment test”. The cost of acquisition is allocated to the pro-rate of the assets and liabilities fair value, as they can be identified, of the related companies or joint ventures, and the difference to goodwill. The share of the fiscal year of the subsidiary of competence of the controlling company is identified in the profit and loss account of the latter, with the exception of the effects relevant to other variations in the subsidiary net equity, different from the operations with the shareholders, which are directly reflected in the total Income Statement of the Group. In case of any losses exceeding the loading value of the shareholding, the part in excess is identified in a purposely-allocated passive fund insofar the parent company is committed to comply with the legal obligations or in those that are implicit to the subsidiary or in any case to cover its losses. The dividends received by a subsidiary reduce the accounting value of the shareholding.

Valuation criteria Goodwill and other intangible fixed assets The identifiable controllable intangible assets are identified in the accounting; their cost can be reliably determined provided that such activities generate economic benefits in the future. Such assets are identified at cost value in compliance with the criteria indicated for the tangible assets and - if their useful lifespan is defined - they are depreciated throughout the period of such estimated lifespan. The depreciation starts at the moment the asset is ready to be used or - in any case - it starts producing economic benefits for the enterprise. The current assets include the costs relevant to intangible assets for which the economic utilization process as not started yet.

lifespan are systematically depreciated starting from when the asset is available for use throughout the period of expected usefulness. The goodwill and the other activities whose useful lifespan is not defined are not subject to systematic depreciation, but they are subject to yearly verifications of recoverability (the so-called impairment test) rung at the level of the individual Cash Generating Unit (CGU) or groups of CGU's whose indefinite useful lifespan assets can be reasonably allocated. The test is described hereinafter in "Reduction of the value of the assets". Any write-down ascribed to goodwill cannot be subject to subsequent return to default values. The goodwill acquired against payment during the release of branches SAC (January 1st 2014) and SAP (July 1st 2015) is not depreciated, but it is submitted every year to the so-called impairment test.

The intangible assets identified as a result to an aggregation of companies are reported separately from the goodwill, if their fair value is reliably determined. The profits or losses that derive from the alienation of an intangible asset are identified as the difference between the dismissal value and the loading value of the asset and they are identified in the Income Statement at the moment the buyer is transferred the risks and benefits connected to the ownership of said asset. Assets under concession The concessions mainly consist of rights relevant to networks, systems and other equipment relevant to the Integrated Water Service given under license to SMAT Spa and which are functional to the management of such service. Such licenses are classified in a purposely-allocated item according to the interpretation IFRIC 12 – Service Concession Arrangements. As far as the depreciation is concerned, IFRIC provides that the latter is calculated on the basis of what is stated in the agreement and - in particular - in a constant measure for the shorter period of time between the technical and economic lift of the assets given in license and the duration of the license itself, until the takeover value provided for in the license agreement is achieved. In particular, the value of the right of use of the public assets of the waterworks of the City of Turin and of C.I.A.C.T., which are defined in compliance with the expert appraisal of transfer, have been reported in this Financial Statements on the basis of the duration of the relevant agreement deed extended by Ente d’Ambito Torinese n. 3. The depreciation of the improvements made to said assets after the transfer date have been determined based on the estimated economic and technical useful lifespan. The depreciations on the improvements made to the well systems entrusted in direct management to the Company have been determined with reference to the estimated economic and technical useful life of the improvements made.

The extension of the waterworks system of the City of Turin, received under a license agreement and for which it was established in the previous license contract by the City of Turin to AAM Torino S.p.A. (now liquidated) to be devolved free of charge at the end of the license have been depreciated on the basis of the estimated economic and technical life of said extension.

The extension includes the rights on networks, systems and other equipment relevant to the Integrated Water Service and connected to services managed by SMAT S.p.A. The implementation of ’IFRIC 12 has required the application to the same infrastructures - of IAS 11, since, if the licensee builds or upgrades an infrastructure it does not control, the relevant services of building and upgrading developed on behalf of the licensor are considered as actual activities developed against purchase order. Since a large part of the activities is sub-contracted and that the margin of benefit acknowledged in the remuneration of the service rate cannot be identified separately on the building activities that were developed in-house, such infrastructures are identified based on the cost that was actually sustained. Tangible fixed assets The tangible assets are identified at the purchase or production cost including the accessory charges, or at the value based on appraisals of the company equity, in case of acquisitions of companies, net to the relevant depreciation fund and to any losses of value. The production cost included the direct and indirect costs for the share that can be reasonably ascribed to the assets (e.g.: personnel costs, transport, customs duties, expenses for the preparation of the area of installation, testing costs, notary and land register expenses) The cost includes any professional fees and - for some goods, the financial charges capitalized up to the coming into service of the good. The cost includes any cost for site reclaiming, on which the tangible asset lays, complies with the provisions of IAS 37. The expenses for the ordinary maintenance are fully charged to the Income Statement. The costs for improvements, modernization and transformation of incremental nature are computed to the capital assets. 47

The accounting value of the tangible assets is submitted to verification to identify any losses of value, in particular when events or changes of condition identify that the charged value cannot be recovered. The tangible assets are entered gross to the system revenue grants which are identified in the Income State- ment throughout the period of time required to refer them to the relevant costs; they are represented in the equity and financial status by reporting the grant as deferred revenue. The depreciation starts when the assets enter the production cycle and - for the new acquisitions – it is calculated at 50% of the full rate part, since it is considered as representative of the actual use of the goods. The current assets include the costs relevant to intangible assets whose economic utilization process has not started yet. The tangible assets are systematically depreciated every fiscal year based on economic and technical rate parts that are considered as representative of the residual potential of use of the assets. We report herein under the tables with the depreciation rate parts that have been taken into account for the depreciation of the assets. As required by IAS 16, the estimated useful lifespan of the tangible assets are reviewed every fiscal year, in order to assess the need of an overhaul. In case it is ascertained that the estimated useful lifespan does not represent as appropriate the future expected benefits, the relevant depreciation plans must be redefined based on the new assumptions. Such changes are reported in a prospect to the Income Statement. During the fiscal year that has been closed, no change was reported in the depreciation plans for any of the categories of tangible assets. The land is not depreciated, The profits or losses that derive from the alienation or dismissals of a tangible asset are identified as the difference between the sale revenue and the net accounting value of the asset and they are identified in the Income Statement at the moment the buyer is transferred the risks and benefits connected to the ownership of said asset. Shareholdings Shares in partner companies are accounted using the net equity method, starting from the date when significant impact begins and up to the moment when this significant impact ceases. Shares in other companies are valuated at fair value in accordance with the other components in the comprehensive financial statement. Shares held exclusively for the purpose of subsequent alienation are excluded from this approach, and their fair value is inserted in the profits (losses) of the fiscal year. The risk deriving from any losses exceeding accounting value of the shareholding is identified in a purposely-allocated fund insofar the parent company is committed to comply with the legal obligations or in those that are implicit to the subsidiary or in any case to cover its losses.

To ensure the correctness of the recorded value, the shares in partner companies and other companies were subjected to the impairment test. Operationally, for the purpose of this test, the accounted value of reference for these shares was determined and then compared with the recoverable value identified through valuation performed by an external independent expert. In case the share of competence of the Company of the losses in the participating interest exceeds the accounting value of the participating interest, the value of the participating interest is zeroed and the share of any further losses is identified as a liability fund in case the Company is obliged to respond to it.

The dividends received are recognized in the Income Statement once the right to receive the relevant payment is established. In case the related company has distributed dividends, also the following aspects are considered as potential indicators of loss of value: • The reported value of the participating interest exceeds the accounting value in the consolidated balance sheet of the net assets of the related company, including the relevant goodwill; • The dividend exceeds the overall value of the profit and loss account in the period of time the dividend refers to.

Non-current financial assets Such category includes those assets that are not represented by derivate instruments and are not quoted in an active market, of which fixed or identifiable payments are expected. Such assets are assessed at the depreciated cost based on the actual interest rate method. If there is objective evidence of the value loss indicators, the value of the assets is reduced in such a measure to result equal to the discounted value of the flows that can be obtained in the future: the losses of value determined through the impairment test are reported in the Income Statement. If the reasons of the previous write-downs no longer stand in subsequent periods, the value of the assets is resumed until it reaches the value that would derive from the application of the depreciated cost if the impairment had not been performed. Such assets are classified as current assets, except the shares whose expiry is longer than 1 month, which are included amongst the noncurrent assets. Inventory The inventory is assessed at the lowest value between the average weighed cost for the movement and the corresponding market value, in order to reflect any conditions of technical obsolescence or low turnover, as reported in the purposely-allocated Write-down Fund taken to direct reduction of the inventory to take the cost back to the value that is expected to be achieved. Receivables The credits are initially computed at the “fair value" and - then - at the depreciated cost, where it is significant, using the actual interest rate, reduced for losses of value. The losses of value of the credits are reported in the Income Statement when objective evidence is detected that the Group shall not be able to recover such credit. The amount of the write-down is measured as the difference between the accounting value and the current value of the expected future financial flows. The value of the credits is reported in the financial statement net of the credit write-down fund. Financial assets and other current assets They are initially reported at the “fair value" (including the costs incurred for the acquisition/emission) at the date of the transaction. Then, they are assessed at the depreciated cost, using the actual interest rate criteria, wherever it is significant and assimilating any losses of value into the Income Statement. Industry information The information relevant to the sectors of activity was arranged in compliance with the provisions of IFRS 8 “Operational sectors”, which include the submittal of the information in compliance with the modes adopted by the management for the operational decision-making. Therefore, the identification of the sectors of operation and the information submitted are defined based on the internal reporting used by the management for the allocation of the resources to the different segments and for the analysis of the relevant performance. A sector of operations is defined by IFRS 8 as a component of a body that : I) undertakes entrepreneurial activities that generate cost and revenue (including the revenues and costs concerning operations with other components of the same body ); II) whose operational results are regularly reviewed at the highest operational decision-making level of the body for the purposes of the adoption of decisions as related to the resources to be allocated to the sectors and of the assessment of the results; III) for which separate information is available in the financial statement. The management has identified only one operational sector, into which all the main services and products supplied to the customers flow, since the activity of the company consists of the management of the Integrated Water Service which is no further broken down at the level of the internal strategic reporting. Cash and cash equivalents The liquidity includes the cash on hand, also in the form of checks, and on demand bank deposits. The equivalent means consist of financial investments with a three-month expiry or lower (as from the date of their purchase), which can be promptly converted into liquidity and with an insignificant risk of variation in their value. Such items are calculated at fair value; profits or losses deriving from any changes in the fair value are reported in the Income Statement.

Own shares The own shares are reported at their purchase price and - starting from the fiscal year which is being closed - are reported as a reduction of the Net Equity. Also the counter value deriving from their release is reported with net equity counterpart, with no computing into the Income Statement. Provisions for risks contingencies and charges, benefits to the employees The provisions for contingencies and charges concern charges of a determined nature and whose certain or likely existence that - at the date the Financial Statements is being closed - are undetermined as far as the amount or the date of occurrence are concerned. The provisions are identified when: The provisions are identified when: (i) the existence of a current, legal or implicit obligation deriving from a past event, is likely; (ii) the compliance with subject obligation is likely to be burdensome; (iii) the amount of the obligation can be reliably estimated. The provisions to the funds represent the best estimate of the costs required to face compliance at the date of the Financial Statements (assuming there are sufficient elements to run such estimate) and they are actualized when the effect is significant, and the required information is available. In such cases, the provisions are determined by actualizing the future cash flows at a discount rate before taxes that reflects the current market assessment and take into account the risks connected to the company activity. When the actualization is performed, the increment of the provisions due to time is reported in the financial charges. If the liabilities are due to material activities (e.g.: revamping of sites) the fund is reported in counterpart to the activity it refers to and the identification of the charge in the Income Statement is performed through the depreciation process of the tangible asset the charge refers to. In case of redefinition of the liabilities, the methods provided for by IFRIC 1 are applied. The explanatory notes also illustrate potential liabilities represented by; (i) potential - though not likely - obligations deriving from past events, whose existence shall only be confirmed upon occurrence of one or more uncertain future events that are not under the full control of the Company; (ii) current obligations deriving from past events, whose amount cannot be reliably estimated or whose compliance with is likely not to be onerous.

Benefits to the employees (Severance pay) The liabilities relevant to the defined benefit programs (such as the Severance pay for the amount accrued before January 1st 2017 and the other benefits for the employees) are defined net to any activities at the service of the plan, on the basis of current assumptions and by competences, consistently with the working performance required to obtain such benefits; the assessment of the liabilities is performed with the support of independent actuaries. The value of the current profits and losses is reported into the other components of the total Income Statement. Further to Financial Law of December 27th 2006 n° 296, for companies having more than 50 employees, as related to shares accrued starting from January 1st 2007, the Severance Pay is configured as a plan with defined contributions. Commercial payables and other current liabilities Commercial payables and other debts are initially reported at fair value, net of the accessory costs of direct computing, and they are then detected at the depreciated cost, where significant, applying the criteria of the actual interest rate. The "Other current liabilities" item includes current includes the “bound revenues" share (FoNI ex art. 42 Annex “A” to AEEG Deliberation no. 585/2012) determined by Ente d’Ambito Torinese no. 3 with Deliberation no. 483/2013 and reported to fiscal year 2012. Costs and revenues The costs and revenues are reported net of the amended items, i.e. returns, discounts, reductions and any estimate changes. They are identified at the moment the customer is transferred the risks and benefits relevant to the product sold, i.e. as related to the services, in the accounting period they are rendered. In particular, as far as the revenues are concerned: . The revenues for service performance are acknowledged at the date the performance is completed; . Revenues for the sale of water acknowledged and counted at the time of delivery, including the allocation for deliveries made, but not yet invoiced (estimated according to historical analyses determined in relation to past consumption);

. Revenues for the sale of products are acknowledged at the moment the customer is transferred the risks and benefits relevant to the product sold, generally corresponding to the delivery or shipment of the goods. The costs are accounted for according to the accrual principle. Grant for Plants The grants for plants are reported in the accounts once there is the justification documentation of the imminent collection by the paying body. These concur to form the result of the fiscal year according to the rules of economic accrual, determined as related to the residual economic and technical lifespan of the assets they refer to. Financial income and charges Financial proceeds and charges are calculated according to the accrual principle. The dividends of other companies are recorded in the Income Statement in the moment in which the right to receive payment has been established. Income tax for year Income tax for the year consists of the sum of current and deferred taxes. Income tax is based on profit for the year before taxes. Profit before taxes differs from the result entered in the Income Statement since it excludes positive and negative components that will be taxable or deductible in other fiscal years and - furthermore - it excludes items that will never be taxable or deductible. "Liabilities for current taxes" are calculated using the rates in force as at the date of the Financial Statements. In determining the income taxes, the Company has taken into due consideration the effects deriving from the last fiscal reform introduced by Law no. 244 of December 24th 2007 and - in particular - the strengthened principle of derivation established by art. 83 of TUIR, which requires the entity applying the international accounting principles to apply, even in exceptions to the provisions of the TUIR, “the criteria of qualification, temporary computing and classification of the Financial Statements according to said accounting principles”.

Deferred taxes are calculated as related to the temporary differences in the taxation and are entered under "Deferred tax liabilities". Deferred tax credits are calculated to the extent in which it is deemed probable the existence, in the fiscal years during which the relevant temporary differences will spill over, of a taxable income at least equal to the amount of the differences which will be annulled. The deferred and anticipated taxes are determined on the basis of the tax rates expected to be applicable in the fiscal year in which the tax credit will be realized or the tax debt will be extinguished, on the basis of the tax rates defined by measures in force or substantially in force as at the reference date of the financial statement. Such changes are entered under either the Income Statement or under net equity, as related to the computing made at the origin of the reference difference. Impairment test The accounting values of the Group activities are assessed at every reference date of the statement of account, in order to determine whether there are indications of value reductions, in case you proceed to the estimate of the recoverable value of the activity A loss by value reduction (impairment) is recorded in the Income State- ment when the accounting value of an asset or of a unit that generates financial flows exceeds the recoverable value. The recoverable value of the non-financial activities corresponds to the greatest value between their "fair value" net to the sale cost and the value in present use. To determine the value in present use, the estimated future financial flows are actualized using a discount rate that reflects the market assessment of the money value and of the risks related to the type of activity. In case of activities that do not generate financial flows in input, that are widely independent, we proceed by calculating the recoverable value of the unit that generates financial flows to which the asset belongs.

When, subsequently, a loss on assets other than goodwill and other assets of indefinite useful lifespan, no longer exists or is reduced, the accounting value of the asset and of the asset that generates financial flows is increased until the new estimate of the recoverable value is calculated, which cannot exceed the value that would be determined if no loss were detected by impairment. The recovery of an impairment is immediately recorded in the Income Statement.

Conversion of exchange rate earnings/losses The functional and presentation currency adopted by Smat S.p.A. is Euro. The transactions in foreign currencies are initially identified at the exchange rate at the date of the operation. The assets and liabilities in currency - with the exception of the tangible assets - are reported in the reference exchange rate at the date the fiscal year is closed and the relevant profits and losses on the exchange rate are regularly computed to the Income Statement; the net profit - if any - that might arise is allocated to a purposely-created non-distributable reserve up to the date of use. Use of estimations The drafting of the statement of accounts and relevant explanatory notes requires the administration body to run estimates that impact the values of the balance sheet assets and liabilities and on the information relevant to the potential assets and liabilities to the date of the balance sheet.

The current status of generalized economic and financial crisis involves the need to make assumptions as related to the future trend, which can be characterized by uncertainty. Subsequently, we cannot exclude in the future different results from what has been estimated, that could therefore require amendments that cannot be estimated today or foresee them at the accounting value of the relevant balance sheet items.

The estimates are utilized in different areas, such as the credit write-down fund, the Risk Fund for Potential Liabilities, the depreciations, the assessment of the assets relevant to participating interest in related companies and subsidiaries, the sale revenues, the costs and changes relevant to the management of the Integrated Water Service, and the revenue taxes.

The estimates and assumptions are periodically reviewed by the Group on the basis of the better knowledge of the activity and of other factors that can be reasonably derived from the current circumstances, and the effects of any changes are immediately reflected in the Income Statement.

Additional information Company agreements outside the Statement of Assets and Liabilities Bear in mind there are no agreements resulting from the Financial Statement that can have a significant impact on the equity and financial status, or on the economic result of the Company. Amounts expressed in Supplementary Note Unless otherwise indicated, the amounts reported in the Notes to the Accounts are expressed in Euro units with rounding up to the upper unit for hundredths equal to or greater than 50. Accounting principles, IFRS amendments and interpretations adopted from January 1st 2019 The following IFRS accounting principles, amendments and interpretations were applied for the first time by the Company starting as of January 1st 2019: • On January 13th 2016, IASB published principle IFRS 16 – Leases, which supersedes principle IAS 17 – Leases, as well as IFRIC 4 interpretations Determining whether an Arrangement contains a Lease, SIC-15 Operating Leases—Incentives and SIC-27 Evaluating the Substance of Transactions Involving the Legal Form of a Lease. The principle provides a new definition of lease and introduces a criterion based on control (right of use) of an asset to distinguish the leasing contracts from the service contracts, identifying as discriminating elements of the leasing: the identification of the asset, the right of its replacement, the right to obtain essentially all the economic benefits deriving from the use of the asset and the right to direct the use of the asset represented in the contract. The Principle establishes a sole model to acknowledge and assess the leasing contracts for the lessee, which envisages entry of the asset subject to the lease - also if operational - under assets with the contra item financial charges. On the contrary, the principle does not introduce significant changes for the les- sors The company decided to apply the principle retroactively (not modifying the comparative data for the 2018 fiscal year), according to the information presented in sections IFRS 16:C7-C13. In particular, relative to leasing contracts previously classified as operative, the Company accounted: 52

a) financial liability, equal to the current value of future residual payments on the date of transition, implemented using the applicable incremental borrowing rate on the date of transition for each contract; b) usage right equal to the value of financial liability on the date of the transition, net of any accruals and deferrals in the statement of assets and liabilities on the date of closure for this balance sheet.

The following table reports the estimated impacts of adoption of the IFRS 16 on the date of transition.

Impacts on the date of transition (01.01.2019) ASSETS (Amounts in ,000 Euros) Non-current assets Land and building usage rights € 428 Vehicle usage rights € 1,917 Hardware usage rights € 8 Total 2,353

NET EQUITY AND LIABILITIES Non-current liabilities Financial liability for non-current leases € 1,120 Current liabilities Financial liability for current leases € 1,233 Total 2,353

The weighted average incremental borrowing rate applied to recorded financial liabilities on January 1st 2019 is 2.2%. The Company also intends to take advantage of the right to extinguish granted by IFRS 16:5(b) as concerns contract leases for which the underlying asset is configured as a low-value asset (meaning that the underlying asset of the lease contract does not exceed Euro 5,000, when new). Contracts that are exempt fall mainly into the following categories: o Computers, telephones and tablets; o Printers; o Other electronic devices. For these contracts the introduction of IFRS 16 does not generate any financial liability from the lease and relative usage rights, but the rental contracts will be listed in the financial statement as line items for the duration of the contracts. Furthermore, with reference to the transition rules, the Company will rely on the following expedient practices available when the modified retrospective transition method is selected: st o Use of the assessment made on December 31 2018 according to the IAS 37 Provisions, Contingent Liabilities and Contingent Assets in in relation to accounting onerous contracts in alternative to the application of the impairment test, according to Jas 36, on the value of the usage right on January 1st 2019; o Classification of contracts that expire with 12 months from the date of transition as short-term lease. For these contracts the lease payments are recorded into the financial statement as line items; st o Exclusion of direct initial costs from measuring the usage right on January 1 2019; o Use of the information present on the date of transition for the determination of the lease term, with particular reference to exercising the option to extend or to conclude in advance.

• On December 12th 2017, IASB published the document “Annual Improvements to IFRSs 2015-2017 Cycle” which implements the changes to some principles in the scope of the annual improvement process for the same. The main changes are relative to: o IFRS 3 Business Combinations e IFRS 11 Joint Arrangements: the amendment clarifies that at the moment an entity obtains control of a business that is a joint operation, it must re-measure in 53

previously held interest in that same business. This process is not foreseen in the case of obtaining joint control. o IAS 12 Income Taxes: this amendment explains that all the fiscal effects linked to dividends (including payments on financial instruments classified within net equity) should be accounted in alignment with the transaction that generated the same profits (financial statement, OCI or net equity). o IAS 23 Borrowing costs: this change explains that in the case of financing that remains after the qualifying asset of reference is ready for use or for sale, the same become part of the group of financing loans used to calculate financing costs. The adoption of this amendment did not produce any effects on the consolidated financial statement of the Group.

• On February 7th 2018, IASB published the document “Plant Amendment, Curtailment or Settlement (Amend- ments to IAS 19)”. The document explains how an entity must operate a change (i.e. a curtailment or a settlement) in a plan with defined benefits. The changes require the entity to update their hypotheses and re-measure liabilities or net activity according to the plan. The amendments state that after this event occurs, an entity uses updated hypotheses to measure the current service cost and interests for the rest of the period of reference following the event. The adoption of this amendment did not produce any effects on the consolidated financial statement of the Group.

• On October 12th 2017, IASB published the document “Long-term Interests in Associates and Joint Ventures (Amendments to IAS 28)”. This document explains the requirement to apply IFRS 9, including requirements linked to impairment, other long-term interests in partner companies and joint ventures for which the net equity method is not applied. The adoption of this amendment did not produce any effects on the consolidated financial statement of the Group.

• On June 7th 2017, IASB published the interpretation “Uncertainty over Income Tax Treatments (IFRIC Inter- pretation 23)”. The interpretation deals with uncertainties about the fiscal regimes to be adopted on income taxes. In particular, the interpretation requires an entity to analyse uncertain tax treatments (indi- vidually or as a whole, according to the specifics), always with the assumption that the tax authorities examine the fiscal position in question, with full knowledge of all relevant information. If the entity considers it improbable for that the tax authorities would accept the tax regime being followed, the entity must reflect the uncertainty in a measure of its taxes on current and deferred income. Furthermore, the document does not contain any new reporting obligations, but emphasizes that the entity must establish if it is necessary to provide information about the considerations made by management and relative uncertainty inherent in tax accounting, in accordance with IAS 1. The new interpretation was applied as of January 1st 2019. The adoption of this amendment did not produce any effects on the consolidated financial statement of the Group.

• On October 12th 2017, IASB published an amendment to IFRS 9 “Prepayment Features with Negative Com- pensation”. This document specifies that instruments that require advance reimbursement must respect the Solely Payments of Principal and Interest (“SPPI”) test, also in the case in which the “reasonable additional compensation” to be paid for advance reimbursement on a “negative compensation” for the issuer of financing. The adoption of this amendment did not produce any effects on the consolidated financial statement of the Group. Accounting principles, amendments and interpretations IFRS and IFRIC authorized by the European Union, not yet mandatory and not adopted in advance by the Company on December 31st 2019 • On October 31st 2018, IASB published the document “Definition of Material (Amendments to IAS 1 and IAS 8)”. The document introduced a change in the definition of “relevant” in the IAS 1 – Presentation of Financial Statements and IAS 8 – Accounting Policies, Changes in Accounting Estimates and Errors principles. This amendment has the objective to render the definition of "relevant" more specific and intro-

duced the concept of “obscured information” alongside the concepts of omitted or erroneous information already present in the two principles in question. The amendment clarifies that information is “obscured” if it was described in a way that generates an effect at first reading in a balance sheet similar to what would be produced if the information was omitted or erroneous. The introduced changes were approved on November 29th 2019 and applied to all transactions after January 1st 2020. The Board Members do not expect a significant effect in the SMAT consolidated financial statement from the adoption of this amendment. • On March 29th 2018, IASB published an amendment to the “References to the Conceptual Framework in IFRS Standards”. The amendment is effective for periods starting from January 1st 2020 or later, but advance application is also allowed. The Conceptual Framework defines the fundamental concepts for financial information and guides the Board in developing IFRS standards. The document helps to guarantee that the standards are conceptu- ally aligned and that similar transactions are handled in the same way, to provide useful information to investors, lenders and other credit institutions. The Conceptual Framework supports companies in the development of accounting principles when no IFRS standard is applicable to a specific transaction, and more in general, helps the involved subjects to understand and interpret the standards. • IASB, on September 26th 2019, published an amendment called “Amendments to IFRS 9, IAS 39 and IFRS 7: Interest Rate Benchmark Reform”. The same amendment changed IFRS 9 - Financial Instruments and IAS 39 - Financial Instruments: Recognition and Measurement and IFRS 7 - Financial Instruments: Disclo- sures. In particular, the amendment changes come requirements for application of hedge accounting, allowing for temporary derogations, in order to mitigate the impact derived from uncertainty about the IBOR reform (currently ongoing) on cash flows in the period previous to its completion. The amendment also requires companies to provide additional information in the financial statement about their coverages that are directly impacted by uncertainties generated by the reform and to which said derogations are applied. The amendments will take effect as of January 1st 2020, but the companies can also apply them in advance. At present the administrators are assessing possible effects of introduction of this amendment into the financial statement of the parent company. Accounting principles, IFRS amendments and interpretations not yet certified by the European Union To the date of reference of this document, the competent bodies of the European Union have not yet concluded the certification process required for the adoption of the amendments and principles described herein- under. - On October 22nd 2018, IASB published the document “Definition of a Business (Amendments to IFRS 3)”. The document provides clarifications about the definition of business for the correct application of the IFRS 3 principle. In particular, the amendment states that a business usually produces output, the presence of output is not strictly necessary for identifying a business in the presence of a group of integrated activities/processes and goods. Nevertheless, to satisfy the definition of business, an integrated group of activities/processes and goods must include, as a minimum, input and a substantial process that together contribute significantly to the capacity to create an output. For this purpose, IASB replaced the term "capacity to create output" with "capacity to contribute to the creation of output", to clarify that a business can exist also without the presence of all the input and processes necessary for creating output. The amendment also introduced an optional test ("concentration test") to exclude the presence of a business if the paid price is substantially referable to a single activity or group of activities. The changes are applied to all the business combinations and acquisitions of businesses after January 1st 2020, but advance application is also allowed. The company at present has no planned acquisitions, therefore the administrators do not expect any relevant effects from application of this amendment.

- On May 18th 2017, IASB published the principle IFRS 17 – Insurance Contracts which is destined to replace IFRS 4 – Insurance Contracts. The objective of the new principle is to guarantee that an entity provides pertinent information that faithfully represents the rights and obligations derived from issued insurance contracts. The IASB has developed a standard for elimination of existing incongruities and weaknesses in accounting policies, 55

providing a single principle-based framework for taking into account all types of insurance contracts, including reinsurance contracts held by the insurer. The new principle also includes requirements for presentation and reporting to improve comparability among the entities in this sector. The new principle measures an insurance contract based on a General Model or a simplified version of the same, called the Premium Allocation Approach (“PAA”). The main characteristics of the General Model are: o the estimates and the hypotheses for future cash flows are always current; o the measurement reflects the temporal value of money; o the estimates foresee extensive use of observable information on the market; o there is current and explicit risk measurement; o the expected profile is differentiated and aggregated into groups of insurance contracts at the moment of initial reading; o the expected profit in the period of contractual coverage takes into account changes deriving from variations in the hypothesis relative to financial flows for each group of contracts. The PAA approach includes measurement of liabilities for the residual coverage of a group of insurance contracts on the condition that, at the time of initial reading, the entity expects that this liability represents a reasonable approximation of the General Model. Contracts with a period of coverage of one year or less are automatically suitable for the PAA approach. Simplifications derived from the application of the PAA method are not applied to assessment of liability for claims in general, which are measured using the General Model. Nevertheless, it is not necessary to actualize those cash flows if it is expected that the balance to be paid or received is due within one year from the date of the claim. The entity must apply the new principle to issued insurance contracts, including issued reinsurance contracts, held reinsurance contracts and investment contracts with a discretionary participation feature (DPF). The principle applies starting from January 1st 2021, but an advanced application is allowed, only for those companies which apply IFRS 9 - Financial Instruments - and IFRS 15 - Revenue from Contracts with Customers. The Board Members do not expect a significant effect in the consolidated balance sheet from the adoption of this principle.

- On September 11th 2014, IASB published an amendment to IFRS 10 and IAS 28 Sales or Contribution of Assets between an Investor and its Associate or Joint Venture. The document was published to resolve a current conflict between IAS 28 and IFRS 10. According to IAS 28, the profits or losses resulting from transfer or cessation of a non-monetary asset to a joint venture or connected in exchange to a share of capital of the latter is limited to the share held in the joint venture or connected to other investors outside of the transaction. On the contrary, the IFRS 10 principle foresees the insertion of the entire profits or losses in the case of loss of control of a subsidiary company, also if the entity continues to held a non-controlling share in the same company, also including cessation or transfer of a subsidiary company to a joint venture or partner company. The introduced changes include transfer/assignment of an activity or subsidiary company to a joint venture or partner company, the value of profit or loss inserted into the balance sheet of the transferor/assignor depends on whether the transferred/assigned activity or subsidiary company constitutes a business or not, according to application of the IFRS 3 principle. If the transferred/assigned business or subsidiary company represents a business, the entity must insert the profit or loss from the entire previously held share; in the contrary case, the portion of profit or loss relative to the share in possession by the entity must be eliminated. At present, IASB has suspended application of this amendment. The Board Members do not expect a significant effect in the consolidated financial statement of the Group from the adoption of these changes.

Comments on the entries of the Statement of Assets and Liabilities REPORT FOR OPERATIVE CATEGORIES Identification of service types and the information pertaining to each was based on the elements that the management uses to make its own operative decisions. In particular, internal accounting is audited and used periodically by the top decision‐makers of the Group and its takes a single service type as a reference, and all the principal services supplied to customers converge within that service type inasmuch as the Company’s business consists of managing the Integrated Water Service. ASSETS

1. Tangible fixed assets € 149,265,059 The composition of the tangible fixed assets and the relevant movements occurring during the fiscal year are entered in the following table:

Assets under Industrial and construction Land and Plant and ma- 2018 commercial Other assets and Grand total buildings chinery Categories equipment payments on account Historical cost at December 31st 2017 89,884,147 305,737,430 12,468,269 15,827,648 22,414,681 446,332,175 Amortization fund as at December 31st (29,420,028) (225,441,783) (8,956,647) (13,471,446) 0 (277,289,904) 2017 Net value as at December 31st 2017 60,464,119 80,295,647 3,511,622 2,356,202 22,414,681 169,042,271 Reclassifications/accounting adjustments 0 0 0 0 (433,882) (433,882) Works in progress completed in 2018 3,269,935 934,306 349,632 0 (4,553,873) 0 Disinvestments in the fiscal year (25,000) (19,192) (12,507) (68,058) 0 (124,757) Adjustments (70,930) (16,772) 0 0 (217,865) (305,567) Increases in the fiscal year 1,131,192 1,941,118 932,726 670,896 12,379,472 17,055,404 Historical cost as at December 31st 2018 94,189,344 308,576,890 13,738,120 16,430,486 29,588,533 462,523,373 Depreciation in the fiscal year (2,954,026) (11,737,682) (640,013) (787,745) 0 (16,119,466) Use of funds 18,604 21,129 12,372 64,880 0 116,985 Amortization fund as at December 31st (32,355,450) (237,158,336) (9,584,288) (14,194,311) 0 (293,292,385) 2018 Net value as at December 31st 2018 61,833,894 71,418,554 4,153,832 2,236,175 29,588,533 169,230,988

Assets under Industrial construction Land and Plant and and com- Other Leased 2019 and Grand total buildings machinery mercial assets assets Categories payments on equipment account Historical cost as at December 31st 2018 94,189,344 308,576,890 13,738,120 16,430,486 0 29,588,533 462,523,373 Amortization fund as at December 31st 2018 (32,355,450) (237,158,336) (9,584,288) (14,194,311) 0 0 (293,292,385) Net value as at December 31st 2018 61,833,894 71,418,554 4,153,832 2,236,175 0 29,588,533 169,230,988 Reclassifications 344,931 (155,395) 0 0 0 (20,035,041) (19,845,505) Works in progress completed in 2019 1,745,560 4,010,344 0 0 0 (5,755,904) 0 Disinvestments in the fiscal year 0 0 (245,516) (854,263) 0 0 (1,099,779) Adjustments (307,377) (61,792) 0 0 0 0 (369,169) Leasing increments 0 0 0 0 2,934,873 0 2,934,873 Increases in the fiscal year 1,110,772 3,387,723 2,408,804 2,562,615 0 5,332,616 14,802,530 Historical cost as at December 31st 2019 97,083,230 315,757,770 15,901,408 18,138,838 2,934,873 9,130,204 458,946,323 Reclassification/adjustment of amortization 0 3,885 0 0 0 0 3,885 Amortizations in the fiscal year (3,149,227) (11,291,788) (747,463) (975,483) (1,277,952) 0 (17,441,913) Use of funds 17,175 26,104 161,506 844,364 0 0 1,049,149 Amortization fund as at December 31st 2019 (35,487,502) (248,420,135) (10,170,245) (14,325,430) (1,277,952) 0 (309,681,264) Net value as at December 31st 2019 61,595,728 67,337,635 5,731,163 3,813,408 1,656,921 9,130,204 149,265,059

No value adjustment has been operated to the cost of acquisition or production of the assets. As entered in the assessment criteria, the tangible assets also include the recording of the financial charges of direct computing relevant to the great works in progress.

The sources of income owned by the Group as property have been depreciated in the ordinary way in compliance with the assessment criteria detailed in these Notes to the Accounts as well as a function of representative rates of the relevant estimated residual potential for utilization as at the date of this Financial Statements. On the increments developed in the fiscal year, rate reduced by 50% have been applied.

The “Land and buildings” item includes the sub-category “Industrial buildings”, the real estate located in the municipality of Bardonecchia purchased by SMAT S.p.A. at the end of fiscal year 2011 for its future destination as a drinking water treatment plant, which will serve the Acquedotto di Valle.

“Plants and machinery” also include sources of income (for approximately EUR ...) acquired from SAP S.p.A., by the Parent Company, as part of the sale of the business unit of July 1st 2015.

“Assets under construction and payments on account” includes the value in compliance with the progress status of the works that are being developed at the end of the fiscal year as well as of the prepayments paid to system suppliers, for a total amount of approx. EUR 9.1 million.

Subsequent to the application of IFRIC 12, “Service Concession Arrangements”, the revertible assets referred to the waterworks system of the City of Turin have been reclassified under intangible assets.

"Leased assets" include leased assets in the statement assets, in alignment with the nature of the same assets, following the adoption of the new IFRS 16 principle Leases that introduced the new criteria for definition of lease contracts. For more in-depth information refer to the specific comment on IFRS accounting principles adopted as of January 1st 2019.

The following details transactions in the "Leased assets" category: Leasing - Leasing- Leasing – Leasing – Leasing - LEASED AS- Categories Hardware Rentals Rentals Real estate Land rentals SETS rentals Cars Other vehicles rentals

Historical cost as at December 31st 25,704 314,520 1,621,287 671,049 302,313 2,934,873

Depreciation in the fiscal year (7,523) (167,829) (869,815) (199,195) (33,590) (1,277,952) Use of funds 0 0 0 0 0 0 Depreciation fund as at December (7,523) (167,829) (869,815) (199,195) (33,590) (1,277,952)

Net value as at December 31st 2019 18,181 146,691 751,472 471,854 268,723 1,656,921

Intangible fixed assets € 695,743,548 The composition of the intangible assets and the relevant movements during the fiscal year are shown in the following table:

2018 ts Other Categories asse account Goodwill Plant and Grand total payments on property rights expansion costs expansion Industrial patent Industrial Development costs rights & intellectual rights & marks and similar rights Assets under concession under Assets Total Other intangible fixed Concessions, licenses, trade- Assets under construction under and Assets

H A B C D E F G I A+H+I (B+C+D+E+F+G)

Historical cost as at December 31st 2017 5,928,005 60,807 249,266 210,060 18,866,815 1,384,155 561,108 21,332,211 858,939,354 886,199,570 Amortization fund as at De- cember 31st 2017 0 (60,807) (249,266) (210,060) (17,059,377) 0 (168,145) (17,747,655) (279,368,954) (297,116,609) Net value as at December 31st 2017 5,928,005 0 0 0 1,807,438 1,384,155 392,963 3,584,556 579,570,400 589,082,961 Reclassifica- tions/accounting adjustments 0 0 0 0 0 0 0 0 433,882 433,882 Works in progress completed in 2018 0 0 0 0 0 0 0 0 0 0 Disinvestments in the fiscal year 0 0 0 0 0 0 0 0 (20,466) (20,466)

Adjustments 0 0 0 0 0 0 0 0 (1,257,650) (1,257,650) Increases in the fiscal year 0 0 0 0 1,241,823 226,441 0 1,468,264 72,220,682 73,688,946 Historical cost as at December 31st 2018 5,928,005 60,807 249,266 210,060 20,108,638 1,610,596 561,108 22,800,475 930,315,802 959,044,282 Amortization in the fiscal year 0 0 0 0 (1,473,537) 0 (11,936) (1,485,473) (40,177,233) (41,662,706)

Use of funds 0 0 0 0 0 0 0 0 341,695 341,695 Amortization fund as at De- cember 31st 2018 0 (60,807) (249,266) (210,060) (18,532,914) 0 (180,081) (19,233,128) (319,204,492) (338,437,620) Net value as at December 31st 2018 5,928,005 0 0 0 1,575,724 1,610,596 381,027 3,567,347 611,111,310 620,606,662

2019 Other Categories assets account Goodwill Plant and Grand total payments on property rights expansion costs expansion Industrial patent Industrial Development costs rights & intellectual rights & marks and similar rights Assets under concession under Assets Total Other intangible fixed Concessions, licenses, trade- Assets under construction under and Assets

H A B C D E F G I A+H+I (B+C+D+E+F+G)

Historical cost as at Decem- 5,928,005 60,807 249,266 210,060 20,108,638 1,610,596 561,108 22,800,475 930,315,802 959,044,282 ber 31st 2018 Amortization fund as at 0 (60,807) (249,266) (210,060) (18,532,914) 0 (180,081) (19,233,128) (319,204,492) (338,437,620) December 31st 2018 Net value as at December 31st 5,928,005 0 0 0 1,575,724 1,610,596 381,027 3,567,347 611,111,310 620,606,662 2018 Reclassifica- 0 0 0 0 10,000 0 0 10,000 19,835,505 19,845,505 tions Works in progress com- 0 0 0 0 0 0 0 0 0 0 pleted in 2019 Disinvestments in the fiscal 0 0 0 0 0 0 0 0 (18,683) (18,683) year

Adjustments 0 0 0 0 0 0 0 0 (918,112) (918,112)

Increases in 0 0 0 0 2,627,106 50,387 0 2,677,493 103,822,716 106,500,209 the fiscal year Historical cost as at Decem- 5,928,005 60,807 249,266 210,060 22,745,744 1,660,983 561,108 25,487,968 1,053,037,228 1,084,453,201 ber 31st 2019 Reclassifica- tion/ adjustment of 0 0 0 0 0 0 0 0 (4,474) (4,474) amortization fund Depreciation in the fiscal 0 0 0 0 (2,040,818) 0 (11,944) (2,052,762) (48,463,115) (50,515,877) year

Use of funds 0 0 0 0 0 0 0 0 248,018 248,018

Depreciation fund as at De- 0 (60,807) (249,266) (210,060) (20,573,732) 0 (192,025) (21,285,890) (367,424,063) (388,709,953) cember 31st 2019 Net value as at December 31st 5,928,005 0 0 0 2,172,012 1,660,983 369,083 4,202,078 685,613,165 695,743,248 2019

2. Goodwill € 5,928,005 The value of the goodwill to December 31st 2019 can be ascribed to the acquisition of the SAC business unit (January 1st 2014), amounting to EUR 96,000 and the SAP S.p.A. business unit (July 1st 2015) regarding the Municipalities of ATO 3 Torinese amounting to EUR 5,832,005, entered under the intangible assets with the approval of the Board of Auditors.

Starting on January 1st 2015, through the adoption of the international accounting principles, the goodwill is no longer subject to depreciation, but submitted to impairment test, in compliance with the provisions of IAS

36. For further details, reference is to be made to what is commented in the purposely-allocated section of the Consolidated Balance Sheet. The goodwill was allocated to the reference Cash Generating Unit (CGU) in compliance with IAS 36 and as such it is not subject to amortization, but to verification by impairment on a yearly basis, or more fre- quently, should an event or circumstances arise that may lead to the assumption of a value reduction. The impairment test is developed through the comparison between the net accounting value and the recoverable value of the CGU the goodwill was allocated to, determined with reference to the greatest value between the fair value net of the costs of sale and the value of use of the CGU. The value used was determined by applying the synthetic income method, actualizing operating income net of taxes (Net operating profit after tax: Nopat) relative to the CGU in the Economic Financial Plan 2015-2033, approved by the Ordinary Shareholder Meeting on 29.06.2015. The Economic and Financial Plan also highlights the results expected for the whole duration of the license and - even though it is drafted on a time horizon longer than 5 years - it constitutes the representative document to identify the prospect cash flows Furthermore, since the license has a pre-defined useful life, the "terminal value" has not been defined.

The discount value utilized is represented by the WACC identified with reference to the sector the identified CGU operates within. The discount rate (WACC) utilized reflects the market assessments on the cost of money and the specific risks of the sector of activities and of the reference geographic area. In particular, in determining the actualization rate, the following parameters have been utilized: • Real risk-free rate, equal to the revenue rate of the 10-year BTP, issued 12/30/2019, equal to 1.35%; • Risk premiums at 5.20% • Beta unleveraged for the “water utilities” sector at 0.28 • Specific risk premiums at 3.48% • Cost of debt net of taxes at 1.73%. The estimated discount rate (WACC) is therefore 4.55%

With reference to fiscal years 2018 and 2019, the impairment tests run do not show any value reductions in the goodwill entered. The results of the impairment tests have been submitted to a sensitivity analysis aimed at verifying their variability with the change of the main assumptions at the basis of the estimate. To this purpose, two different scenarios have been assumed as at December 31st 2019. • scenario 1: actualization rate = 6.75%, with a decrement of approx. 220 base points with respect to the base scenario; • scenario 2: actualization rate = 5.65%, with a decrement of approx. 110 base points with respect to the base scenario; The sensitivity analysis shows little sensitivity of the test with the change of assumptions at the basis of the estimate. More precisely, neither of the scenarios above would determine a loss of value of the goodwill.

3. Other intangible assets € 4,202,078 The intangible assets are entered amongst the statement of account assets, since they are part of the assets allocated to be durably used. No value adjustment has been applied to the cost of acquisition or production of the intangible assets. “Concessions, licenses, trademarks and similar rights” includes the cost incurred for the acquisition of software licenses depreciated in three fiscal years, and for the deposit of trademarks, which are depreciated in ten fiscal years. “Assets under construction and payments on account” records the value – according to the state of progress - of the design costs to adapt the safeguard areas and studies to install flow rate metering instruments in the sewers to detect anomalous inputs. Furthermore, since 2014, the entry “Other” also includes the "Surface right" regarding the parking places at the “Palazzo" car park.

4. Concessions € 685,613,165

2018 assets tem tem Total

Categories ueduct by CIACT the City of Turin of City the Revertible for the City of Turin of City the for on assets of external of on assets Usage rights granted assets in management assets in Improvements on assets Improvements Usage rights constituting rights Usage the aqueduct system for for system the aqueduct Assets under concession under Assets

on assets constituting the the constituting assets on aqueducts in management in aqueducts aqueduct of the City of Turin of the City aqueduct Ongoing improvement works improvement Ongoing Ongoing improvement works works improvement Ongoing constituting the aqueduct sys- aqueduct the constituting Improvements on external aq- external on Improvements Historical cost as at De- cember 31st 2017 3,834,635 50,871,004 169,030,358 469,863,137 10,487,670 149,446,186 5,406,364 858,939,354 Depreciation fund as at December 31st 2017 (2,525,741) (34,696,633) (64,898,492) (172,957,519) 0 0 (4,290,569) (279,368,954) Net value as at December 31st 2017 1,308,894 16,174,371 104,131,866 296,905,618 10,487,670 149,446,186 1,115,795 579,570,400 Reclassifications/accounting adjustments 0 0 0 433,882 0 0 0 433,882 Works in progress completed in 2018 0 0 2,356,993 57,322,749 (2,356,993) (57,322,749) 0 0 Disinvestments in the fiscal year 0 0 0 (20,466) 0 0 0 (20,466) Adjustments 0 0 (394,213) (675,243) (15,077) (173,117) 0 (1,257,650) Increases in the fiscal year 0 0 5,063,583 16,985,762 8,212,747 41,958,590 0 72,220,682 Historical cost as at De- cember 31st 2018 3,834,635 50,871,004 176,056,721 543,909,821 16,328,347 133,908,910 5,406,364 930,315,802 Depreciation in the fiscal year (81,805) (1,010,898) (8,097,577) (30,771,339) 0 0 (215,614) (40,177,233) Use of funds 0 0 121,380 220,315 0 0 0 341,695 Depreciation fund as at December 31st 2018 (2,607,546) (35,707,531) (72,874,689) (203,508,543) 0 0 (4,506,183) (319,204,492) Net value as at Decem- ber 31st 2018 1,227,089 15,163,473 103,182,032 340,401,278 16,328,347 133,908,910 900,181 611,111,310

2019

Categories Total by CIACT ucts in management the City of Turin Revertible assets Revertible for the City of Turin on assets of external of assets on Usage rights granted assets in management Improvements on assets Usage rights constituting the aqueduct system for Assets under concession under Assets

on assets constituting the aqued aqueduct of the City of Turin Ongoing improvement works Ongoing improvement works constitutingthe aqueduct system Improvements externalon aqueduct Historical cost as at De- 3,834,635 50,871,004 176,056,721 543,909,821 16,328,347 133,908,910 5,406,364 930,315,802 cember 31st 2018 Amortization fund as at (2,607,546) (35,707,531) (72,874,689) (203,508,543) 0 0 (4,506,183) (319,204,492) December 31st 2018 Net value as at Decem- 1,227,089 15,163,473 103,182,032 340,401,278 16,328,347 133,908,910 900,181 611,111,310 ber 31st 2018 Reclassifications 0 0 0 15,216,819 0 4,618,686 0 19,835,505 Works in progress com- 0 0 5,304,310 59,770,161 (5,304,310) (59,770,161) 0 0 pleted in 2019 Disinvestments in the 0 0 0 (18,683) 0 0 0 (18,683) fiscal year Adjustments 0 0 (25,339) (787,760) 0 (105,013) 0 (918,112) Increases in the fiscal 0 0 11,821,140 37,429,649 9,646,657 44,925,270 0 103,822,716 year Historical cost as at De- 3,834,635 50,871,004 193,156,832 655,520,007 20,670,694 123,577,692 5,406,364 1,053,037,228 cember 31st 2019 Reclassification/adjustment 0 0 0 (4,474) 0 0 0 (4,474) of amortization fund Depreciation in the fis- (81,939) (1,010,898) (8,875,649) (38,279,010) 0 0 (215,619) (48,463,115) cal year Use of funds 0 0 3,706 244,312 0 0 0 248,018 Depreciation fund as at (2,689,485) (36,718,429) (81,746,632) (241,547,715) 0 0 (4,721,802) (367,424,063) December 31st 2019 Net value as at Decem- 1,145,150 14,152,575 111,410,200 413,972,292 20,670,694 123,577,692 684,562 685,613,165 ber 31st 2019

Subsequent to the adoption of IFRIC 12, such category includes the improvements for the enhancement of the assets received in use by the City of Turin as well as the system of the well water systems entrusted in direct management to the Company and depreciated on the basis of the estimated residual economic and technical lifespan This entry also refers to “Revertible assets” which show the values of the extensions, realized by the former Shareholder AAM Torino S.p.A., to add to the aqueduct system of the City of Turin and received by the same in provision, for which the constraint for free transmission at the end of the relative lease was stipulated. Moreover, it includes the value of the “Right of use of the assets that constitute the waterworks system”, which is mandatory and already acknowledged by the City of Turin when they are given to the former Shareholder AAM Torino S.p.A. and then given by the latter to SMAT Torino S.p.A. The entry also includes the value of the right to use the waterworks system received in provision as at 1/01/2003 by the C.I.A.C.T. in liquidation. The values are represented in compliance with the expert appraisals drafted for the purposes of the conferrals and amortized as a function of the new expiration date of the pact between Ente d’Ambito n. 3 Torinese and SMAT S.p.A. The value of usage rights is amortized based on the relative agreement deed. Amortizations on improvements and revertible assets were determined with reference to the estimated economic-technical lifespan.

5. Investments € 13,395,887 In accordance with IAS 36, the value of the shares was the object of an impairment test by an independent consultant, which permitted verification of the durability of the accounting value for SMAT group shares.

Other enter- Categories Associates Grand total prises Historical cost as at December 31st 2018 43,102,340 3,536,923 46,639,263 Value adjustments as at 12/31/2018 (32,885,275) (78,126) (32,963,401) Net value as at December 31st 2018 10,217,065 3,458,797 13,675,862 Increases in 2019 30,000 30,000 Decreases in 2019 Value adjustment in 2019 (309,975) (309,975) Net value in 2019 9,907,090 3,488,797 13,365,887 Historical cost as at December 31st 2019 43,102,340 3,566,923 46,669,263 Value adjustment as at December 31st 2019 (33,195,250) (78,126) (33,273,376) Net value as at December 31st 2019 9,907,090 3,488,797 13,395,887

The shareholding in Acque Potabili S.p.A. has been assessed to Euro 9.9 million as related to the fraction of Net Equity from Parent Company SMAT S.p.A., as already described in detail in the Management Report. This value is supported by the impairment test carried out by an external independent expert based on the equity method. Through Acque Potabili S.p.A. SMAT S.p.A. has undirected joint control on: . Acquedotto del Monferrato S.p.A..

The shareholding in Acque Potabili Siciliane S.p.A. after the filing of the Extraordinary Administration Procedure of February 7th, 2012, in bankruptcy since October 10th 2013, has been reclassified as "Other companies” in- stead of shareholding in related companies, even though it was fully depreciated in the previous fiscal years.

As it is better entered in the Management Report, it is completely out of SMAT Group consolidation area.

Pursuant to art. 2427, paragraph 1, no. 5 of the Italian Civil Code, the shareholding in subsidiaries, existing as at December 31st, refers to: . Shareholding in Acque Potabili S.p.A., registered office in Turin, Corso XI Febbraio n. 22, with the following characteristics:

Shareholding in Acque Potabili S.p.A. a) Share capital of the investee company € 7,633,096 b) Shares held No. 3,429,125 c) Nominal value per share € 1 d) Purchase cost € 43,102,341 e) Stake held % 45 f) Consolidated Book Value € 9,907,090 g) Consolidated Net Equity K/€ 22,053 h) Consolidated result of previous fiscal year K/€ (690)

The value of other shares is supported by the impairment test carried out by an external independent expert, who used the income method, where applicable, based on the weighted average cost of capital (WACC) of 4.55% foreseeing a perpetual growth rate (g) of 0.6%. The fair value valuation of the other shares determined a value that is substantially aligned with the cost of investment, already recorded on December 31 st 2018, at 3.5 million Euros. Even though the profitability of some investees in the medium term results positive, the values were not changed because they were not considered significant. The parent company SMAT S.p.A. renounced the receivables due from the Hydroaid Association, for non-interest bearing financing of 30,000 Euros accounted in the Endowment Fund. Therefore, SMAT converted the aforesaid credit into shares.

6. Deferred tax assets € 15,565,728 This item (€15,374,579 in the previous fiscal year) includes the credit deriving from the active deferred taxes calculated on the allocations for costs with future deductibility and on revenues for which taxes were paid in advance. The entry shows an increase of over EUR 191,000 from the previous fiscal year, due to the combined effect of: deductibility of costs accrued in the fiscal year in progress, future fiscal years and deduction of the costs recorded in previous fiscal years, in the present fiscal year.

These effects are itemized in the table below.

Description 2019 IRES/IRAP 12/31/2018 12/31/2019 % IRES/IRAP 12/31/2019 % Adjustments Balance as at Balance as at transfer as at Payable IRES/IRAP IRES/IRAP Payable Repayment in 2019 itsas at 12/31/2019 Incremental costs in in costs Incremental New IRES/IRAP cred- Multi-year accrued liabilities – 3,354,596 (1,184,932) 28.20% (334,150) 3,020,446 F.O.N.I. Risk and charges down-payment 5,526,185 (3,769,349) 28.20% (1,062,949) (115,688) 717,772 28.20% 202,410 4,549,958

Provision for Bad Debts 6,315,095 (4,096,784) 24.00% (983,228) 10,503,471 24.00% 2,520,833 7,852,699 Provision for Amortization Good- will 4,888 4,888 and trademarks SAP/SAC Compensation to Directors 25,189 (104,951) 24.00% (25,189) 0 not paid Payable interest arrears 70,685 (105,029) 24.00% (25,206) 103,792 24.00% 24,910 70,389 Maintenance costs 3,579 (5,117) 24.00% (1,229) 1,075 24.00% 258 2,608 exceeding deductible amount Reportable ACE 6,675 24.00% 1,602 1,602

Reportable losses 3,822 24.00% 917 917 Tax effects on infra-group opera- 74,362 (43,520) 27.90% (12,142) 62,221 tions TOTAL 15,374,579 (9,309,682) (2,444,093) (115,688) 11,336,607 2,750,930 15,565,728

TOTAL CHANGE IN DEFFERED TAX CREDITS 191,149 64

7. Non-current financial assets € 1,400,001 12/31/2019 12/31/2018 − Receivable caution money € 1,220,228 985,669 − Customers 179,773 0 Total € 1,400,001 985,669

The non-current financial assets towards customers are represented by credits registered following the under-signing of the agreement for governing the use of land in the Municipalities of Scalenghe and Airasca, for the years 2011 - 2018 with a payable plan up to 2031. The receivables are recorded in the financial statement, as required by IFRS 9 – Financial Instruments, net of the amortized cost.

8. Inventory € 8,623,844 The item includes: 12/31/2019 12/31/2018 - Raw, subsidiary materials and consumables € 8,582,699 7,560,218 - Finished products and goods € 41,145 41,145 Total € 8,623,844 7,601,363

The total changes in inventory from the previous fiscal year amounted to € 1,022,481. The value of the inventory is adjusted by a depreciation fund regarding slow turnover materials for an amount of € 770,000, which has not changed from the previous year. The Inventory consists of materials whose use does not contain features of multi-year usefulness. It is assessed in the financial statement at the lowest price between the average weighted price and the market price. No financial charges were attributed to the inventory value.

9. Trade and other receivables € 227,498,439 The book value of the trade receivables breaks down as follows: 12/31/2019 12/31/2018 Due from customers • Bills and invoices issued € 193,435,434 193,472,381 • Bills and invoices to be issued € 55,827,875 66,492,546 • Bad debt provision € (34,586,580) (28,253,358) Total due from customers € 214,676,729 231,711,569 Due from associates € 38,409 57,325 Due from holding companies € 2,275,952 3,655,770 Due from other € 10,507,349 8,150,919 Net book value € 227,498,439 243,575,583

DUE FROM CUSTOMERS € 214,676,729 The net value of receivables towards customers demonstrates decrease of approximately 17 million Euros in respect to the previous fiscal year as a consequence of rate changes that reduced applied rates and decreased consumption in 2019, and prudent evaluation of receivables due from higher risk users. These receivables are entered at their estimated realizable value, taking into account a prudential write-down of approximately Euro 34.6 million, allocated in accordance with the provisions set forth in IFRS 9.

DUE FROM ASSOCIATES € 38,409 The item (€ 57,325 in the previous fiscal year) is represented by receivables due to the SAP Group.

DUE FROM HOLDING COMPANIES € 2,275,952 This item includes receivables from the City of Turin deriving from normal trade transactions executed at market conditions for water supply, rentals and accessory jobs. In respect to the previous year (€ 3,655,770) the item decreased by approximately 1,380 thousand Euros following the lower rate applied to consumption for the year 2019.

DUE FROM OTHER € 10,507,349 These consist of residual trade receivables The increase in respect to the previous fiscal year is correlated to the variation in advance payments to suppliers for tenders in accordance with amendments to law 98/2013.

10. Current tax assets € 6,499,452 This item (€ 6,424,908 in the previous fiscal year) refers mainly to the IRES and IRAP credits emerging from the accounts paid in 2019, calculated based on the historical method (approximately 6.2 million Euros).

11. Current financial assets € 39,127 12/31/2019 12/31/2018 - Towards clients € 39,127 0 - Due from subsidiaries € 0 0 - Due from associates € 0 0 - Due from other € 0 0 Total € 39,127 0

The financial receivables due from customers refer to the share, expiring within 12 months, of the credit for which details are set forth in the comment of the specific section of non-current financial receivables.

12. Other current assets € 3,545,294 12/31/2019 12/31/2018 • Accrued income € 173,151 0 • Deferred charges € 620,254 958,644 • Other assets € 2,751,889 2,963,450 - Due from employees for amounts to be recovered through with holding € 161,951 240,300 - Due from Ambito for rentals and contributions € 0 21,433 - Due from other € 2,589,938 2,701,717 Total € 3,545,294 3,922,094

The Accrued income is represented by the pertinent share of the interest on deposits expiring 01/24/2020.

The item Other activities refers mainly to receivables from users with the right to the Water bonus for approximately 650 thousand Euros, due from GSE for incentived rates (formerly Green Certificates) for approximately 461 thousand Euros, due from other parties in the amount of approximately 709 thousand Euros for credit notes to be received and various receivables for approximately 742 thousand Euros. Other deferrals include accrued amounts of subsequent fiscal years of other costs liquidated in the fiscal year.

13. Cash and cash equivalents € 55,033,557 The liquid assets include: 12/31/2019 12/31/2018 - Bank and Post Office deposits € 9,988,232 120,299,418 - Short term deposits € 45,000,000 0 - Checks € 0 4,663 - Cash at hand € 45,325 40,166 Total € 55,033,557 120,344,247

The remarkable increase from the previous fiscal year derives from the partial use of the nonconvertible debenture loan required to finance the investments envisaged by the Investment Plan of the Autorità d’Ambito 3 Torinese, in progress since last fiscal year. All the aforementioned remainders are liquid and fully available as at the date of the Financial Statements without any constraints whatsoever, except for the usual subject to collection clause on checks.

NET EQUITY AND LIABILITIES The value in the Financial Statements takes into account the deliberations taken by the Ordinary Assembly of Shareholders of June 28th 2019 as related to the destination of the Parent Company results of fiscal year 2018.

14. Net Equity € 646,282,237

Net Equity belonging to the Group € 645,959,771 The book value takes into account the determinations assumed by the Ordinary Meeting of Shareholders of June 28th 2019 as related to the destination of the Parent Company results of fiscal year 2018.

SHARE CAPITAL € 345,533,762 The Share Capital is fully subscribed, paid and recorded in the Register of Enterprises in compliance with the law and is made, as at the date of the Financial Statements, of 5,352,963 ordinary shares of the nominal value of EUR 64.55 each, owned by the Associates. No movements regarding the shares and share capital have occurred during the fiscal year.

LEGAL RESERVE 20,909,251 The Legal reserve of EUR 18,319,415 as at 12/31/2018 increased by EUR 2,589,836 during the year as per the resolution of the Meeting of Shareholders of 06/28/2019.

RESERVE RESTRICTED TO PEF IMPLEMENTATION € 238,874,674 This reserve amounted to Euro a 199,509,171 as at 12/31/2018 and increased in the course of the fiscal year by EUR 39,365,503 deriving from the Resolution of the Ordinary Meeting of Shareholders of 06/28/2019.

FTA RESERVE € (2,845,993) This reserve includes the effects to Net Equity of FTA resulting from adoption of the international accounting principles, whose comment is entered in the specific paragraph of the Directors’ Report.

OTHER RESERVE AND RETAINED EARNINGS € 3,358,321 Other Reserves include: 12/31/2019 12/31/2018 • Optional reserve € 34,342,562 34,342,562 • Consolidation reserve € 5,026,588 5,026,588 • Severance pay discount reserve € 184,551 834,432 • Negative reserve of own shares in portfolio € (32,993,340) (32,993,340) • Reserve for rounding up € (7) (5) • Retained earnings € (3,202,033) (3,317,250) Total € 3,358,321 3,892,987

The reserve for the actualization of the Severance Pay includes the profits/losses for the Group that result from the actuarial assessments performed in application of IAS 19 to the Severance Pay and pensions accrued as at 12/31/2019. The negative Reserve for own shares in portfolio equal to € 32,993.340 refers to 492,965 own share purchased according to conforming authorization of the Ordinary Meeting of Shareholders The available reserves in the 2019 balance sheet, following acquisition of its own shares, are almost completely exhausted. Profits carried forward decreased in the fiscal year by EUR 115,217.

PROFIT FOR THE YEAR € 40,129,756 12/31/2019 12/31/2018 Profit for the year € 40,129,756 51,873,573

It corresponds to the balance of the Income Statement as the difference between the total revenues and costs and it has been fully submitted to ordinary and deferred taxation for IRES and IRAP purposes.

NET EQUITY BELONGING TO NON-CONTROLLING INTERESTS € 322,466 This item refers to non-controlling interests in the Net Equity in the subsidiaries in the consolidation and includes: 12/31/2019 12/31/2018 - Capital & reserves of non-controlling interests € 262,707 271,810 - Profit for the year € 59,759 89,893 Total € 322,466 361,703

SCHEDULE OF CORRELATION BETWEEN NET EQUITY AND OPREATING INCOME OF PARENT COMPANY AND CONSOLIDATED NET EQUITY AND PROFIT FOR THE YEAR 12/31/2019 12/31/2018 of which: of which: Net Net the Profit for the Profit for Equity Equity the year the year Net equity and Profit for the year as entered in the fiscal year statement of accounts of the Parent Company 645,697,947 40,102,229 615,974,778 51,796,714 From elimination of load value of the consolidated - Effect of consolidation operations 172,290 (87,282) 179,603 (79,600) Pro-quota results obtained from the investees 89,785 89,785 153,809 153,809 From net equity method evaluation of non‐consolidated companies: (251) 25,024 (25,275) 2,650 Net equity and Profit for the year of the Group 645,959,771 40,129,756 616,282,915 51,873,573 Net equity and fiscal year results of competence of third parties 322,466 59,759 361,703 89,893 Net equity and Profit for the year as entered in the consolidated balance sheet 646,282,237 40,189,515 616,644,618 51,963,466

LIABILITIES € 530,327,399

15. Current and non-current fiscal liabilities € 286,701,357 Financial debts on 31.12.2019 are presented in detail by type in the following table: 12/31/2019 12/31/2018 Non-current financial liabilities Bonds 134,142,009 133,983,809 Payable loans 100,049,325 148,718,816 Debts for leased assets 576,033 0 Total 234,767,367 282,702,625 Current financial liabilities Short-term payable loans 48,706,799 48,943,133 Due to banks and accrued financial payables 2,135,242 2,162,264 Debts for short term leased assets 1,091,949 0 Total 51,933,990 51,105,397

Total financial liabilities 286,701,357 333,808,022

Total financial liabilities are made up of: • loans (bonds and mortgages) with total value amounting to Euro 282,898,133, net of the amortized residual cost of Euro 857,991 for the debenture loan of Euro 62,071 for payable loans. • the entry “Due to banks and financial charges” amounting to EUR 2,135,242 which includes other short term operations for EUR 77,140 and accrued financial charges amounting to EUR 2,058,102, which mainly include interest on the debenture loan in the accrued amount; • debts for leased assets, of which the total value amounts to 1,667,982 Euros, net of the residual amortized cost 63,462 Euros.

Movement of financial liabilities during the fiscal year is the following:

Bonds Amortized cost Total Balance as at December 31st 2018 € 133,983,809 197,661,949 331,645,758 New loans € 0 0 0 Amortized cost reduction € 158,200 37,308 195,508 Repayments in the period € 0 (48,943,133) (48,943,133) Balance as at December 31st 2019 € 134,142,009 148,756,124 282,898,133

The debt for medium to long term funding, gross to the depreciated cost, is detailed in the following table: Funding Debt to December 31st 2019 Bonds € 135,000,000 Payable loans Banco BPM (formerly Italease) € 1,802,057 Intesa Sanpaolo € 3,870,535 European Investment Bank € 39,000,000 European Investment Bank € 32,595,000 Cassa Depositi e Prestiti € 17,500,000 European Investment Bank € 53,846,154 Other10 € 204,449 Total Payable loans 148,818,195 Total € 283,818,195

The table below shows the liabilities broken down according to type as at December 31st 2019, with an indication of the installments due within the next fiscal year, due between the 2nd and 5th year and due after the 5th year.

Due between Residual Due within next Due after the Type the 2nd and 5th amount fiscal year 5th year year Bonds 135,000,000 135,000,000 Payable loans 148,818,195 48,706,799 100,111,396 Due to banks and accrued financial payables 2,135,242 2,135,242 Debts for leased assets 1,731,444 1,091,949 444,733 194,762 Total 287,684,881 51,933,990 235,556,129 194,762

Below are the major contractual conditions.

Line of credit Duration in Funding Due date Instalment Rate value years Ordinary non-convertible loans 135,000,000 7 04/13/2024 annual fixed Variable (Euribor 6m + Banco BPM (formerly Italease) 12,546,059 7 12/31/2020 biannual spread) Variable (Euribor 6m + Intesa Sanpaolo 36,125,000 15 06/30/2021 six months, constant equity spread) Variable (Euribor 6m + European Investment Bank 130,000,000 15 12/19/2022 six months, constant equity spread) Variable (Euribor 6m + European Investment Bank 80,000,000 14 12/30/2022 six months, constant equity spread) Variable (Euribor 6m + Cassa Depositi e Prestiti 50,000,000 15 06/30/2023 six months, constant equity spread)

European Investment Bank 100,000,000 9 06/30/2023 six months, constant equity fixed

fixed/Variable (Euribor Other 4,724,432 miscellaneous 2019-2022 six months constant/six months 6m + spread)

10 A total of six loans mainly from Cassa Depositi e Prestiti 69

The ordinary nonconvertible debenture loan was issued on April 13th 2017. The bonds are assisted by a rating released by Standard & Poor’s “BBB-“(for details see the Directors’ Report), and have a duration of seven years with a coupon of 1.95% and they are quoted on the regulated Dublin Stock Market (ISE – Irish Stock Exchange), rating confirmed on 11/27/2019. Activation of the loan from financial institutions, to finance the investments in expansion and upgrading of the networks, water production, distribution, collection and treatment plants envisaged in the Investment Plan of ATO3, did not require any guarantee by the shareholders and envisages for its entire duration maintenance of the following financial parameter calculated based on the data of the Consolidated Financial Statement closed as of 12/31 of the previous year and according to the definitions in the contractual stipulations: • Net Financial Debt/EBITDA (EBIT+Amortization): lower than or equal to 5. The Banco BPM (formerly Italease) loan was contracted by assumption in 2013.

The loan contracted with Intesa Sanpaolo (ex B.I.I.S.) is unsecured.

The loan taken in the form of guaranteed credit line, with the European Investment Bank for the provision of the resources required by the investment plan introduced in the Ambito Plan, are assisted by an appropriate guarantee issued by National Credit Institutions, third parties from EIB and by assignment of receivables, which can be claimed at the Ente d’Ambito and third parties as related to the award agreement for management of the Integrated Water System within Ambito 3 Torinese. Such credit lines have been fully utilized as a result of the progress of the activities, for which minimum portions of drawing have been stipulated. More specifically: - As related to the EUR 130 million loan taken for the development of the works of the investment plan for small and medium-sized infrastructures, the spread was agreed upon at each drawing and the guarantee released is remunerated by a commission calculated on the guaranteed amount. - As related to the EUR 80 million loan taken for the development of the works included in the investment plan for large infrastructures, the spread was agreed upon at each drawing and the guarantee contract includes the obligation of maintaining - throughout the duration of the loans - of the following parameters, which are calculated on the Company Statement of Accounts for the Fiscal Year closed on December 31st of last year according to the definitions included in the contract clauses: • Net Financial Debt/EBITDA (EBIT+Amortization): lower than or equal to 5. • Net Financial Position/Net Equity: lower than or equal to 1. The commissions paid every year vary within a predefined range lower than 100 bps as related to the position of the aforementioned ratio between Net Financial Position/MOL (EBIT + Depreciations)- - As related to the EUR 100 million loan, taken for the development of works included in the investment plan for small and medium-sized infrastructures, the following financial parameters apply for the whole duration of the loans, calculated on the data of the Fiscal Year Statement of Accounts of the Company that was closed on December 31st of last year and in compliance with the definitions included in the contract agreements. • Net Financial Position MOL (EBIT+depreciations): lower than or equal to 5. • Net Financial Position/Net Equity: lower than or equal to 1. • •EBITDA (EBIT+ Depreciation)/Net financial expenses (excluding the value adjustment of financial assets) greater than 5 as well as the keeping of the Residual value/Gross Financial Debt ratio greater than or 1.30 where the residual value calculated on the net accounting value, star-up expenses excluded The ratio is negative because Financial Income and Financial Expenses show a positive balance, since the financial income is greater than the financial expenses. Therefore, the covenant is complied with.

The guarantee released is remunerated by a commission calculated on the guaranteed amount.

Such loan involves the obligation to keep - throughout its duration - the following financial parameters, which are calculated on the data of the Company’s Financial Statement for the fiscal year closed as at December 31st of the previous year and in compliance with the definitions included in the contract provisions. • Net Financial Debt/EBITDA (EBIT+Amortization): lower than or equal to 5. • Net Financial Position/Net Equity: lower than or equal to 1. In cases of noncompliance with even only one of said financial parameters, the delivering institutions have the right to terminate the contract in advance. It is worth highlighting that - as at December 31st 2019 - all the aforementioned financial parameters are complied with. Other loans includes the mortgages received as a transfer and mainly stipulated with Cassa Depositi Prestiti.

16. Provision for employee benefits € 16,605,147 The Provisions for employee benefits as at December 31st 2019 reflects the indemnity accrued by the employees up as at December 31st 2006, which will be exhausted by the payments to be made at the end of the work relations, or of any advance in compliance with the law. The movements of the fund (which is not influence by the shared accrued during the fiscal year in favour of the employees throughout the year) has been as follows:

Employee Severance Provision st - Balance as at December 31 2018 € 15,709,972 - Service cost € 68,097 - Utilizations, adjustments, indemnities and advances paid out in the period € (1,281,313) - Interest cost deriving from IAS 19 € 237,620 - Profits (losses) actuarial € 614,604 Balance as at December 31st 2019 € 15,348,980

Other benefits refer to the estimated quantification of the seniority bonuses potentially due to employees that accrue the relevant requirements stipulated in in the company regulations entered below

Pension fund st - Balance as at December 31 2018 € 1,237,493 - Service cost € 58,284 - Utilizations, adjustments, indemnities and advances paid out in the period € (93,582) - Interest cost deriving from IAS 19 € 18,695 - Profits (losses) actuarial € 35,277 Balance as at December 31st 2019 € 1,256,167

The following tables illustrate, respectively, the economic, financial and demographic assumptions made for the actuarial assessment of the liabilities in exam.

Economic-financial assumption - Yearly actualization rate 0.77% - Yearly inflation rate 1.20% - Yearly Severance Provision increase rate 2.40%

Demographic assumptions - Mortality Tables RG 48 - Disability INPS tables by age and sex - Retirement age Attainment of the requirements - % of advance payment frequency 1.50% - Turn-over 0.50%

17. Provisions for risks € 19,959,092 These provisions are made up of:

A) Allocations for litigation and charges € 11,047,886

The allocations for litigations and charges reflect the prudent assessment - on the basis of valuation elements available - of the potential additional liabilities due to judicial and extra-judicial litigations which are currently in progress, as well as of other charges of various kinds which are certain or likely to occur in the future.

The handling of such provisions has been as follows:

st - Balance as at December 31 2018 € 14,183,301 - Provisions of the fiscal year € 813,795 - Use in the fiscal year € (540,715) - Estimate adjustment € (3,408,495) Balance as at December 31st 2019 € 11,047,886

The balance of the provisions for litigations and charges as at 12/31/2019 is considered to be congruous to cover the following estimated potential liabilities:

B) Provisions for cyclical maintenance charges € 959,844

The provisions for 2019 have not varied from the previous fiscal year, since it has been considered to be congruous:

st - Balance as at December 31 2018 € 959,844 - Provisions of the fiscal year € 0 - Use in the fiscal year € 0 Balance as at December 31st 2019 € 959,844

C) Allocations Regione Piemonte Law No. 61 of 12/29/2000 € 451,362

These reflect the destination of the administrative sanctions applied pursuant to art. 54 Legislative Decree 152/99 to be applied to fund the development of actions aimed at preventing and reducing the pollution of the bodies of water. The movements, which has been computed to the Profit & Loss Account in the fiscal year has been as follows:

st - Balance as at December 31 2018 € 451,362 - Provisions of the fiscal year € 0 Balance as at December 31st 2019 € 451,362

D) Provisions for Ambito management charges € 6,850,000

The amount reflects the best estimate of the charges and of the potential risks connected to the Ambito management activities. st - Balance as at December 31 2018 € 6,789,763 - Provisions of the fiscal year € 60,237 - Use in the fiscal year € - Adjustment of estimate in the fiscal year € Balance as at December 31st 2019 € 6,850,000

E) Provisions for charges to other companies € 650,000

st - Balance as at December 31 2018 € 650,000 - Provisions of the fiscal year € 0 - Adjustment of estimate in the fiscal year € 0 Balance as at December 31st 2019 € 650,000

18. Deferred tax liabilities € 314,986 The amount includes the deferred charges for income taxes (IRES and IRAP), which are computed at the rates in force on revenues with deferred taxation and on the advanced deduction costs. The entry (EUR 337,834 in the previous fiscal year) shows a reduction from the previous fiscal year, due to the combined effect of de-taxation of significant taxable revenues in future fiscal years, taxation of revenues that were computed in previous fiscal years and taxed in the current fiscal year.

These effects are itemized in the table below: IRES/IRAP debts Costs New payable Balance as at % transferred Capital costs % Balance as at Description transferred IRES/IRAP as 12/31/2018 IRES/IRAP IRES/IRAP as at in 2019 IRES/IRAP 12/31/2019 in 2019 at 12/31/2019 12/31/2018 Advanced Depreciation 155,966 155,966 Receivable interest in arrears 158,018 (208,764) 24.00% (50,103) 150,867 24.00% 36,208 144,123 Depreciated cost of FTA financial liabilities 23,850 (37,308) 24.00% (8,953) 14,897 TOTAL 337,834 (246,072) (59,056) 150,867 36,208 314,986

CHANGE IN DEFERRED TAX DEBTS (22.848)

19. Other non-current liabilities € 52,275,183 This item is made up as follows: 12/31/2019 12/31/2018 • Acquapoint caution money € 519,767 470,022 • Contributions to pay out € 20,747 68,747 • Multiannual deferred income € 51,734,669 50,081,776 Total € 52,275,183 50,620,545

In application of IAS 16, item “Multi-year unearned income” includes the contribution shares for systems which were cashed and computed to the fiscal years of competence, as related to the depreciation of the assets they refer to.

The item "Multi-year unearned income" also includes the amount "bound revenues" destined for covering investments (FoNI) of 10,710,797 Euros following assignment in the economic statement relative to amortization of the referred income.

20. Commercial payables € 78,720,031

PREPAYMENTS € 128,261 The entry (EUR 151,282 in the previous fiscal year) includes the amounts advanced by users for works still to be completed as at closing date of the financial statement

DUE TO SUPPLIERS € 56,894,704 Due to suppliers refers to: 12/31/2019 12/31/2018 • Italian suppliers € 23,385,804 27,875,759 • Foreign suppliers € 10,018 99,241 • Invoices to be received € 33,498,882 32,328,048 Total € 56,894,704 60,303,048 73

All payables to suppliers fall due within the end of one year and in no case are they assisted by guarantees, in addition to the withholding amount of 0.5% on the jobs.

DUE TO ASSOCIATES € 15,657 12/31/2019 12/31/2018 • Due to associates € 15,657 15,591

The entry itemized in the section dedicated to it in the Directors’ Report, includes the payables to the SAP Group deriving from the residual trade transactions operated at normal market conditions.

DUE TO HOLDING COMPANIES € 1,504,860 12/31/2019 12/31/2018 • DUE TO HOLDING COMPANIES € 1,504,860 1,249,214

The entry referred to the section dedicated to it in the Directors’ Report refers to trade payables to the City of Turin, and none of them is assisted by a real guarantee on the corporate assets.

DUE TO OTHERS € 20,176,549 12/31/2019 12/31/2018 • Due to others € 20,176,549 22,193,362

This item consists mainly of trade payables to the Operative Management Subjects for invoices to be received for contractual obligations undertaken with the same.

21. Current tax liabilities € 3,340,635 12/31/2019 12/31/2018 • Withholding taxes held from employees and third 1,844,307 1,826,182 parties as tax substitute according to the law € • VAT ACCOUNT FOR TAX AGENCY € 1,496,328 2,029,858 • IRAP/IRES € 0 0 Total € 3,340,635 3,856,040

These liabilities refer mainly to VAT due from the Parent Company for the fourth quarter of 2019, after the advance payment. The tax due in application of the VAT split payment system extended to subsidiaries by Public Entities from 07/01/2017, has been paid regularly by the due date established by current law. Current fiscal liabilities are also entered under payables for Withholding tax held for employees and third parties in the amount of approximately EUR 1.8 million, this to paid on the due date.

22. Other current liabilities € 72,410,968 The other payables include: 12/31/2019 12/31/2018 • Due to Social Security Administration € 3,975,458 4,251,355 • Accrued charges € 0 0 • Deferred income € 151,933 172,786 • From other: € 68,283,577 68,156,523 • Local Authority fees € 5,254,925 5,543,852 • Mountain Union Contributions € 47,162,712 44,824,173 • Due to SOG and Municipalities for accessory services € 536,366 528,971 • Other due to Entities and Municipalities for F/D received 2,748,983 3,097,344 on behalf € • Accruals to liquidate to employees € 6,051,393 6,541,300 • Other payables € 6,529,198 7,487,233 • Dividends to pay € 0 133,650 Total € 72,410,968 72,580,664

Payables to social security institutions all accrue by the end of one year and in no case are they assisted by guarantee or encumbered with interest. At the time of drawing up the present financial statement these payables were paid on their due date.

The debt concerning the Local Authority Fees and the Levies to the Unioni Montane (Mountain Unions), which have been increased by approx. EUR 2 million include the relative assessments and represent the best estimation of the balance that will have to be paid after the order is made to pay the awarding Municipalities and the Mountain Unions deriving from the determinations made by the Ente d’Ambito and on the basis of the amounts from the same communicated, adjustments excluded. With specific reference to the contributions to the Comunità Montane, these are paid on the basis of ad hoc communications by the Ente d’Ambito. In particular the Local Entity Rentals refer mainly to the amounts due for 2017 as required by Ente d’Ambito n. 3 Torinese only during the first few months of fiscal year 2020 and in amounts referring to past periods, for some of which it was requested to pay with the corresponding receivables.

Payables to SOG and Municipalities for accessory services represent the best estimate of the fees due — based on the volumetries that will be determined by the billing processes and jobs assigned — to the SOG which is charged with special service contracts for operations on their given territory.

The amount of Other Payables to Entities and Municipalities includes payables to Entities for rentals and contributions, payables for sewer and water treatment fees due to Provider Entities for the periods preceding direct assumption of the corresponding services resulting from the collection times of the fees from the users affected, as established by the current law and by specific conventional agreements.

Notes of commentary to the entries of the Financial Statement Revenues

23. Revenues € 320,058,378

Revenues are made up as follows: 2019 2018 − Aqueduct service € 135,446,135 137,805,239 − Sewer service € 43,876,731 45,974,813 − Water treatment service € 126,872,585 129,666,419 − Hydrants € 4,162,994 4,290,631 − Other revenues € 9,699,933 9,477,639 Total € 320,058,378 327,214,741

Revenues decreased by approximately 7.1 million in respect to the previous fiscal year, in particular due to contraction in consumption and reduction in the rate by 2.3% in respect to the previous three years as set forth in the rate schedule. The revenues from the aqueduct, sewer and water treatment services are net of the 50% rate reduction for public municipal and provincial users for a total of Eur 5,297,835. All the revenues inherent to the institutional activity were obtained in the reference territory ATO 3 Torinese, as determined by the Piemonte Regional Law no. 13 of 01/20/1997 and include the best estimate of revenues accrued in the fiscal year for aqueduct, sewers, water treatment services and hydrants provided in the 289 Municipalities acquired by effect of the reunification process (resulting from the establishment of the municipalities of Val di Chy and Valchiusa starting from 1/1/2019)..

“Other revenues” mainly consists of accessory from users, the industrial aqueduct, those obtained for jobs performed on behalf of users and third parties, in particular for alterations to the water network and sewer network, revenues per analyses and treatments, water points, sale of energy and services for non-core activities performed on the free market. The increase in respect to the previous fiscal year is due to the combined effect of greater revenues from reimbursement of payment reminders, industrial aqueduct (from 2019 the parent company has managed the industrial aqueduct in Rivalta, previously managed by the former SOG Ac- quagest), analysis and treatment, as well as revenues from water points because of reduction due to works, users and third parties.

24. Revenues for planning and construction activities € 103,822,716 2019 2018 − Revenues for planning and construction activities € 103,822,716 72,243,129

This item refers to the “planning and construction” of assets under concession, which, as envisaged by IFRIC 12, is entered under revenues; the corresponding costs, net of the capitalized costs for internal increases, are entered under the entry “Costs for planning and construction”.

25. Other revenues € 21,268,069 The other operational revenues are composed as follows: 2019 2018 − Contributions for current expenses (A) € 3,859,273 2,776,214 − Other . Contribution shares in production facilities € 4,990,270 3,112,886 . Other revenues € 3,742,400 4,798,294 . Contingent assets and non-existent liabilities € 5,267,631 3,635,233 . Adjustments/allocations to provisions for liabilities and other € 3,408,495 4,076,127 charges (B) € 17,408,796 15,622,540 Total other revenues (A+B) € 21,268,069 18,398,754 76

The item "Contribution for current expenses" mainly includes the incentive for production of solar power, the incentive rate formerly called Green Certificates, as well as the contributions paid by the Piemonte Region for the water emergency in 2017 and 2018. The increase in respect to the previous fiscal year is due to the liquidation of the aforesaid water emergency contribution. “Other” includes the accrued economic amounts of contributions in the plants account, already commented on under the entry “Multiannual deferred income” in these Notes to the Accounts as well as other revenues, among which receivables lease payments, stamp reimbursements and other reimbursements), contingent gains and non-existence of liabilities except for the adjustments made to the liabilities fund, as already commented on in the Liabilities section of these Notes to the Accounts and includes changes for consolidation adjustments. The comprehensive variation in this item in respect to the previous fiscal year is due to the combined effect of the increase in distribution of contributions in the systems account (correlated to large infrastructure interventions) and contingent gains and non-existence of liabilities. and a decrease in other reimbursements and adjustments to the risk fund.

Operating costs

26. Consumption of raw materials and consumables € 13,811,573 This entry includes: 2019 2018 − Materials for maintenance net of changes in stock € 7,502,222 5,499,284 − Chemicals € 4,439,206 4,606,450 − Other materials € 2,021,235 2,016,829 − Increases for in-house jobs € (151,090) (128,877) Total € 13,811,573 11,993,686

This item demonstrates increase in respect to the previous year due mainly to consumption relative to materials for works connected to capitalized investments indirectly and for maintenance on properties of the City of Turin and other Municipalities.

27. Costs for leased assets and services € 110,409,556 This entry includes: 2019 2018 - Electricity: (A) € 32,442,432 30,946,810 - Maintenance, works and services & industrial (B) € 55,600,545 53,785,363 - General services: . Services € 11,247,167 10,908,756 . Allocation to Provision for liabilities and other charges € 204,595 819,737 (C) € 11,451,762 11,728,493 - Rentals to local entities (D) € 7,603,831 8,065,992 - Rentals and payable concessions, leases and hires (E) € 3,310,986 4,676,931 Total costs for services and leased assets (A+B+C+D+E) € 110,409,556 109,203,589

With regard to electricity, consumption was more efficient, with a decrease in draw from the external mains network and increase in self-produced power; in contrast, the cost per kWh increased, because the group opted to acquire power produced through renewable sources. As regards the consumption of electricity, bear in mind that the energy recovery technologies operating at the water treatment plants have allowed an overall 15.36% savings on consumption

The energy balance of the Parent company shows the following data: 2019 2018 MWh % MWh % - Heat . Self-produced by gas engines 18,525 49.64 18,505 42.96 . Self-produced by boilers 400 1.07 450 1.04 . Self-produced by DEMOSOFC plant 188 0.50 143 0.33 . Produced by methane 18,205 48.79 23,980 55.67 Total 37,318 100.00 43,078 100.00 - Electricity: . Self-produced by gas engines 21,490 9.07 21,420 8.89 . Self-produced by solar cells 1,294 0.55 1,176 0.49 . Self-produced by DEMOSOFC plant 216 0.09 177 0.07 . Total uptake from external suppliers 213,887 90.29 218,076 90.55 Total 236,887 100.00 240,849 100.00 Total consumption 274,205 100.00 283,926 100.00 Total recovery 42,113 15.36 41,870 14.75 Self-produced and sold electricity - 7,063 6,777 (Balme hydroelectric power station) Total self-production 49,176 48,647 Total self-produced electricity 30,063 29,549 Self-produced electricity in relation to total electricity - 12.69 12.27 consumed

The variation in "Maintenance works and industrial services" is mainly due to the combined effect of the reduction in maintenance services in outdoor park areas, SOG services (transfer of operating management of the aqueduct service of the Rivalta Torinese Municipality by Acquagest starting on January 1st 2019) compensated by an increase in maintenance costs correlated with technical quality and management of infrastructures dedicated to disposal of rainwater, costs for transport and disposal of sludge, services for works assigned to third parties and reading services. The increase in costs for General Services is correlated to higher costs for maintenance subscriptions, agency commission for subcontracted works, and personnel training. Rentals to local entities recorded a reduction in relation to the amortization plans on mortgage contracts between Municipalities and communicated by ATO 3 Torinese. The reduction in costs for deferred rentals and concessions derives from the application of accounting principle IFRS 16, attributed to amortizations and financial charges, as well as recovery of VAT that cannot be detracted for vehicles.

28. Payroll costs € 63,568,346 The payroll cost composition is the following: 2019 2018 − Wages and salaries € 43,260,240 43,245,658 − Social charges € 14,344,717 14,122,284 − Severance package € 2,817,478 2,813,627 − Pension and similar funds € 58,284 63,669 − Other costs € 3,087,627 1,845,692 − Increases for in-house jobs € 0 0 Total € 63,568,346 62,090,930

Relative to the accounting period, the average staff was composed as follows: Top Manag- Middle Office work- Labourers Apprentices Total ers Managers ers Staff as at 12/31/2018 9 33 601 325 41 1009 Staff as at 12/31/2019 9 33 588 314 47 991 Change 0 0 -13 -11 6 -18

Relative to the accounting period, the average staff was composed as follows: - Top Managers 9 - Middle Managers 33 - Office workers 599 - Labourers 324 - Apprentices 42

Cost records an increase of approximately 1.48 million Euros in respect to the previous year, mainly due to the effects of acquisition of personnel from the company Acquagest (formerly managed company) following the aggregation program, adjustments for renewal of the national labour contract, facilitated early retirement, INAIL contributions and higher costs for overtime and subcontracted personnel for the implementation of operations correlated to technical quality. Savings derived from transfer of personnel mitigated all of this. Outsourced work contracts, 36 units as at 12/31/2018, increased in number to 46 units as at 12/31/2019 and their costs weighed on the fiscal year for a total of EUR 1,956,988.

29. Other operating expenses € 22,952,778 This entry includes: 2019 2018 − Other tax charges € 987,699 870,203 − Ambito fees € 17,364,237 17,594,462 − Other charges € 3,495,583 2,827,388 − Allocation to provisions for liabilities and charges € 669,437 650,567 − Integrated water bonus 435,822 290,889 Total € 22,952,778 22,233,509

“Other tax charges” mainly includes charges for stamp fees, IMU, government concession taxes and other local taxes.

The item “Ambito fees” includes over 15.77 million Euros, the best estimate for the contributions to the Moun- tain Unions(calculated as indicated by the Territory Authority on revenues for the year 2017) and the operational costs of the Territory Authority and the contributions to the ARERA, depending on the resolutions passed and communications sent.

The item "Other fees" mainly includes fees for association dues, reimbursement of damages and indemnity, and contingent and non-existent assets.

Since last year, this item includes the cost for the "Supplementary bonus" introduced by ARERA Resolution 897/2017/R/IDR and ATO Resolution 697/2018. In respect to 2018 there is an increase due to a greater number of applications received.

30. Costs for planning and construction activities € 99,422,784 2019 2018 − Costs for planning and construction activities € 99,422,784 69,670,035

This item refers to “Costs for planning and construction” of assets under construction, net of capitalized costs for internal increases that, according to IFRIC 12, is entered under costs; the corresponding revenues are entered under the entry “Revenues for planning and construction”.

31. Amortization, provisions and write-downs € 80,024,772 The composition of this entry is as follows: 2019 2018 − Depreciation tangible fixed assets € 17,441,913 16,119,466 − Depreciation other intangible fixed assets € 2,052,762 1,485,473 − Depreciation assets under concession € 48,463,115 40,177,233 − Credits write-downs € 11,757,006 5,639,269 − Other provisions € 309,976 5,497,350 Total € 80,024,772 68,918,791

Taking into account the presentation regarding valuation criteria, and the systematicity criterion, for calculating depreciation in the fiscal year the following ordinary rates were used:

Intangible fixed assets: Depending on the estimated technical − Assets under concession (improvement of third-party’s assets and revertible economic- profit life of various types assets) of reference assets As a function of the durations of the ATO3 and − Assets under concession (use rights) SMAT S.p.A. service convention (2033) − Software licenses of use 33.33% − Patents 50.00% − Expansion and development costs 20.00% − Trademarks 10 years As a function of the estimated profit life equivalent − Surface rights to the durations of the Company from the date of the Articles of Association Tangible fixed assets: − Buildings and fences 3.50% − Solar power plants 9.00% − Light constructions 10.00% − Specific plants and filtering plants 8.00% − Metering devices 10.00% − Laboratory and other equipment 10.00% − Furniture and furnishings 12.00% − Office equipments 12.00% • Electronic machinery 20.00% • Hardware 20.00% • Cars 25.00% • Motor vehicles for transport and other vehicles 20.00% • Carbon assets 20.00% • Polarite 11.00% − Tanks 4.00% − Fixed waterworks 2.50% − Sewers 5.00% − Water treatment plants 15.00% − Machinery 12.00% − Leased assets Based on the contract duration

To the Increases of 2019 of tangible fixed assets the rates applied amount to 50% of the ones shown above, representing with the best estimate average rates as a function of the months of use. The increase in respect to the 2018 financial statement derives from amortizations on investments concluded and implemented during the fiscal year, among which the large aqueduct in Valle di Susa and the treatment plant in Ivrea Ovest, and amortizations on leased assets applying the IFRS 16 principle. The entry also includes the allocations deriving from prudential valuations of the trade receivables. This allocation amounts to approximately 11.7 million Euros, with application of the IFRS 9 principle - Financial instruments and consequence of length of receivables towards users as already referenced in the dedicated item under Assets in this Supplementary Note. The item “Other allocations” reports the depreciation of shares in the partner SAP S.p.A., in consideration of the results of the SAP Group. The management depreciated for permanent impairment of value the aforesaid share to align its value to the pro-rata of the Consolidated Net Equity of the SAP Group S.p.A. This depreciation is confirmed by the impairment test carried out by an independent consultant. 80

Financial income and expenses

32. Financial income € 5,755,403 This entry includes: 2019 2018 − Receivable interest and other proceeds € 5,755,403 5,538,219 Total € 5,755,403 5,538,219

“Receivable interests and other financial proceeds” include receivable interest on current accounts in banks and post offices, interest arrears and other financial proceeds and dividends from other companies. The increase is due to interest on IRES credits reimbursed to the parent company by the Revenue Agency.

33. Financial expenses € 4,957,162 The item includes: 2019 2018 − Payable interest and commissions on loans € 4,528,074 4,974,574 − Other receivable interests and charges € 429,088 300,476 Total € 4,957,162 5,275,050

The Other payable interests and charges include, on the other hand, the prudential count of interest on arrears for overdue debts (according to current law) and financial charges deriving from the actuarial valuation of the Severance Fund and other benefits to employees according to IAS 19, and those on leased assets following application of the IFRS 16 principle.

34. Income taxes € 15,568,080 This entry includes: 2019 2018 - IRAP € 2,745,152 3,579,428 - IRES € 13,347,244 18,722,597 - Taxes relative to previous fiscal year € (310,319) (115,373) - Change in payable deferred taxes € (191,149) (3,964) - Change in receivable deferred taxes € (22,848) (136,901) Total € 15,568,080 22,045,787

In the scope of current taxes, IRES decreased following a decrease in the gross tax amount, as well as in the relative base taxable income. The fiscal variations on pre-tax income also produced an improvement in respect to the previous tax period (specifically, a decrease in non-deductible costs in the fiscal year). The reduction in IRAP in respect to the previous fiscal year is due to the lesser result gross of taxes. The taxes relative to the previous fiscal year (lesser taxes) are mainly referred to the additional Financial State- ments SC 2018 and IRAP 2018, from which the increased deductible costs in respect to the previous transmission emerged.

Other information Below is the information regarding the commitments undertaken by the Company (I), to determine “Fair value” (II), to manage financial risks (III), to fees to the Directors and Auditors (IV), to the fees paid to the Au- diting Firm (V), to the relationships with related parties (VI) and to the significant events occurring after De- cember 31st 2019 (VII).

I. Commitments undertaken by the Group The Company issued, equally to IRETI S.p.A., letter of commitment to financial support of Acque Potabili S.p.A. in the amount of EUR 2.5 million with validity until 12/31/2019.

II. Determination of the “fair value”: supplementary information In regard to the valuation at fair value of the financial instruments in conformity with the requirements of IFRS7 we specify the following:

Assets - Non-current financial assets – receivables: Book value in financial statement is the “fair value” of the same - Cash and cash equivalents: Book value in financial statement is the “fair value” of the same - Shareholdings available for sale: Book value in financial statement is the “fair value” of the same

Liabilities - Loans at variable rate: Book value in financial statement is the “fair value” of the same - Trade payables: Book value in financial statement is the “fair value” of the same

III. Financial risk management In conformity with the aforesaid IFRS 7, we specify that SMAT S.p.A., in the ordinary development of own operating assets, is potentially exposed to financial liabilities already commented on in the Directors’ Report.

IV. Fees to Directors and Auditors Below is the itemization of fees to the Directors and Auditors of SMAT Torino S.p.A.: for the financial statements closed as at December 31st 2019 and 2018. 2019 2018 Directors € 276,826 290,999 Auditors € 124,904 124,904

The fees correspond to the amounts deliberated by the Meetings of Shareholders and the obligatory contribution.

V. Fees to the Auditing Firm The fees owed to the Auditing Firm Deloitte & Touche S.p.A. for its services of accounting audit of the financial statement and consolidated financial statement as of December 31st 2019 amounts to Euro 86,000 and Euro 8,000 for the Territorial Balance Sheet report for 2017.

VI. Operations with related parties The relations between the companies of the Group are regulated at market conditions. The relations between SMAT Torino S.p.A. and its subsidiaries and associates, and among these companies, are mainly of a business and financial nature. Below is the itemization of the capital and economic balances inherent to operations with related parties for the fiscal year closed as at December 31st 2019.

Fiscal year 2019 Trade Total Receivables payables and

Total revenues receivables and cur- current operating rent other assets other costs liabilities CITY OF TURIN 3,631,087 1,837,314 2,275,952 1,504,860 SAP SPA formerly SVILUPPO IDRICO 83,119 65 33,407 15,657 ACQUEDOTTO MONFERRATO 5,002 - 5,002 - Total related parties 3,719,208 1,837,379 2,314,361 1,520,517 Total balance position 445,149,163 310,165,037 231,043,733 151,130,999 Weight % on total balance position 0.84% 0.59% 1.00% 1.01%

VII. Contributions pursuant to Law August 4th 2017 no. 124, art. 1, section 125 Over the course of the fiscal year now concluding, SMAT collected the following contributions from Public Administrations, net of contributions for private hook-ups collected from users.

Grants for Collection Grant for Dispensing subject Memo Amount current ex- data Plants penses

WATER EMERGENCY. SUPPLY INTERVENTIONS WITH TANKER TRUCKS TERRITORY AUTHORITY 09/27/2019 TO GUARANTEE CONTINUITY OF DRINKING WATER SERVICE IN THE 76,955 76,955 No. 3 MUNICIPALITY CAPRIE-CODE TO_ATO3_526_18_A17 TERRITORY AUTHORITY No. 3 - DISPENSING INTERV. BALANCE MUNICI- TERRITORY AUTHORITY 11/26/2019 PALITY OF 127,819 - 127,819 No. 3 PIANEZZA COD.ATO 3795 RESOLUTION.N.287/2019 TERRITORY AUTHORITY TERRITORY AUTHORITY No. 3 - DISPENSING INTERV. MUNICIPALITY OF 11/2/2019 500,000 - 500,000 No. 3 CHIVASSO COD.ATO 3787 RESOLUTION.N.286/2019 RESOLUTION OF INTERFERENCE INHERENT TO WORKS ON THE ROAD- 07/24/2019 CITY OF TURIN WAY PROJECT "G2 CIRCONVALLAZIONE 357,304 - 357,304 VENARIA-BORGARO" - LOT I AND LOT II RESOLUTION OF INTERFERENCE INHERENT TO WORKS ON THE ROAD- 09/19/2019 CITY OF TURIN WAY PROJECT "G2 CIRCONVALLAZIONE 384,552 384,552 VENARIA-BORGARO" - LOT I AND LOT II CITY OF BORGARO TORI- 05/24/2019 TENDER COSTS FOR THE INSTALLATION OF THE SMAT WATER POINT 2,000 2,000 NESE CITY OF BORGARO TORI- 05/24/2019 TENDER COSTS FOR THE INSTALLATION OF THE SMAT WATER POINT 2,000 2,000 NESE CITY OF CASTIGLIONE TO- 02/21/2019 TENDER COSTS FOR THE INSTALLATION OF THE SMAT WATER POINT 2,000 2,000 RINESE

11/27/2019 CITY OF FELETTO TENDER COSTS FOR THE INSTALLATION OF THE SMAT WATER POINT 2,000 2,000

CITY OF MONTALDO TORI- 03/26/2019 TENDER COSTS FOR THE INSTALLATION OF THE SMAT WATER POINT 2,000 2,000 NESE CITY OF RIVA PRESSO 09/30/2019 SHORELINE NEAR CHIERI - SEWER REPORT EMBRACO AREA 342,802 - 342,802 CHIERI

02/28/2019 CITY OF RIVOLI TENDER COSTS FOR THE INSTALLATION OF THE SMAT WATER POINT 2,000 2,000

01/24/2019 CITY OF ROSTA TENDER COSTS FOR THE INSTALLATION OF THE SMAT WATER POINT 2,000 2,000

CITY OF SAN 03/27/2019 TENDER COSTS FOR THE INSTALLATION OF THE SMAT WATER POINT 2,000 2,000 FRANCESCO AL CAMPO CITY OF 03/27/2019 TENDER COSTS FOR THE INSTALLATION OF THE SMAT WATER POINT 1,000 1,000 SANT'ANTONINO DI SUSA CITY OF SETTIMO 03/13/2019 TENDER COSTS FOR THE INSTALLATION OF THE SMAT WATER POINT 2,000 2,000 TORINESE REALIZATION OF NEW BLACK WATER SEWER NETWORK IN LAKE AREA 07/17/2019 CITY OF VAL DI CHY IN MUNICIPALITY VAL DI CHY FORMERLY ALICE SUPERIORE - PROT. ATO 37,998 - 37,998 1421

12/20/2019 CSEA CSEA-CASH FUND FOR ENERGY SERVICES AMB - 720,000 - 720,000

Grants for Collection Grant for Dispensing subject Memo Amount current ex- data Plants penses

CONTRIBUTION 124 - 311 POR FESR 14 20 POLI AG STRATE GALLERIA 02/22/2019 FINPIEMONTE 15,215 - 15,215 S:E2E:IDWF000000140621 CONTRIBUTION 124 - 311 POR FESR 14 20 POLI AG STRATE GALLERIA 11/19/2019 FINPIEMONTE 12,600 - 12,600 S:E2E:IDWF000000140621 CFA FOR TRAINING SCHEDULE "IAS-IFRS ACCOUNTING PRINCIPLES" 07/11/2019 FONSERVIZI 1,232 1,232 CODE CFA 176/2018

01/31/2019 GSE INCENTIVE FOR SOLAR POWER PRODUCTION CASTIGLIONE 24,868 24,868

02/28/2019 GSE INCENTIVE FOR SOLAR POWER PRODUCTION CASTIGLIONE 24,868 24,868

02/28/2019 GSE INCENTIVE FOR SOLAR POWER PRODUCTION CASTIGLIONE 36,084 36,084

02/28/2019 GSE INCENTIVE FOR SOLAR POWER PRODUCTION ROSTA 934 934

03/29/2019 GSE INCENTIVE FOR SOLAR POWER PRODUCTION BALME 230,722 230,722

03/29/2019 GSE INCENTIVE FOR SOLAR POWER PRODUCTION CASTIGLIONE 350,058 350,058

04/01/2019 GSE INCENTIVE FOR SOLAR POWER PRODUCTION CASTIGLIONE 24,284 24,284

04/30/2019 GSE INCENTIVE FOR SOLAR POWER PRODUCTION CASTIGLIONE 24,284 24,284

05/31/2019 GSE INCENTIVE FOR SOLAR POWER PRODUCTION CASTIGLIONE 24,284 24,284

06/28/2019 GSE INCENTIVE FOR SOLAR POWER PRODUCTION BALME 212,934 212,934

06/28/2019 GSE INCENTIVE FOR SOLAR POWER PRODUCTION CASTIGLIONE 470,009 470,009

07/01/2019 GSE INCENTIVE FOR SOLAR POWER PRODUCTION CASTIGLIONE 25,431 25,431

07/31/2019 GSE INCENTIVE FOR SOLAR POWER PRODUCTION CASTIGLIONE 25,431 25,431

09/02/2019 GSE INCENTIVE FOR SOLAR POWER PRODUCTION CASTIGLIONE 25,431 25,431

09/30/2019 GSE INCENTIVE FOR SOLAR POWER PRODUCTION BALME 354,133 354,133

09/30/2019 GSE INCENTIVE FOR SOLAR POWER PRODUCTION CASTIGLIONE 871,356 871,356

09/30/2019 GSE INCENTIVE FOR SOLAR POWER PRODUCTION CASTIGLIONE 27,455 27,455

10/31/2019 GSE INCENTIVE FOR SOLAR POWER PRODUCTION BALME 71,672 71,672

10/31/2019 GSE INCENTIVE FOR SOLAR POWER PRODUCTION CASTIGLIONE 72,229 72,229

10/31/2019 GSE INCENTIVE FOR SOLAR POWER PRODUCTION CASTIGLIONE 27,455 27,455

11/29/2019 GSE INCENTIVE FOR SOLAR POWER PRODUCTION BALME 57,466 57,466

11/29/2019 GSE INCENTIVE FOR SOLAR POWER PRODUCTION CASTIGLIONE 99,642 99,642

12/02/2019 GSE INCENTIVE FOR SOLAR POWER PRODUCTION CASTIGLIONE 27,455 27,455

12/31/2019 GSE INCENTIVE FOR SOLAR POWER PRODUCTION BALME 48,965 48,965

12/31/2019 GSE INCENTIVE FOR SOLAR POWER PRODUCTION CASTIGLIONE 120,930 120,930

12/31/2019 GSE INCENTIVE FOR SOLAR POWER PRODUCTION CASTIGLIONE 27,246 27,246

09/16/2019 POLITECNICO DI TORINO DEMOSOFC - SYSTEM WITH FUELS CELLS SUPPLIED WITH BIOGAS 109,822 - 109,822

Grants for Collection Grant for Dispensing subject Memo Amount current ex- data Plants penses

02/20/2019 REGIONE PIEMONTE RENOVATION INTERVENTIONS INCL. SOUTH-WEST IVREA LOT 1 57,121 - 57,121

RENOVATIONS ON TREATMENT PLANT CONCENTRIC AND BUILDING 08/05/2019 REGIONE PIEMONTE MAIN SEWER MUNICIPALITY OF VESTIGNE'(TO)-BALANCE-CUP 16,614 - 16,614 G61B09000 RENOVATIONS ON TREATMENT PLANT CONCENTRIC AND BUILDING 08/05/2019 REGIONE PIEMONTE MAIN SEWER MUNICIPALITY OF VESTIGNE'(TO)-BALANCE-CUP 1,842 - 1,842 G61B09000 BLACK WATER SEWER SYSTEM AND LIFTING BORGATE MALPERTUS 08/05/2019 REGIONE PIEMONTE AND CAMPI COMUNE BOBBI O PELLICE (TO)-BALANCE-CUP 50,841 - 50,841 G73J0900607000 DECOMMISSIONING MUNICIPAL SEWER SYSTEM TO NETWORKS 08/05/2019 REGIONE PIEMONTE FORNO CANAVESE-MUNICIPALITY PRATIGLIONE '(TO)-BALANCE-CUP 63,686 - 63,686 G86D09000040

08/08/2019 REGIONE PIEMONTE WATER EMERGENCY 44,412 44,412

08/08/2019 REGIONE PIEMONTE WATER EMERGENCY 30,768 30,768

08/08/2019 REGIONE PIEMONTE WATER EMERGENCY 37,074 37,074

08/12/2019 REGIONE PIEMONTE RENOVATION INTERVENTIONS INCL. SOUTH-WEST IVREA LOT 1 867,872 - 867,872

08/28/2019 REGIONE PIEMONTE WATER EMERGENCY 2017 - ALPETTE - ATO3 526-18-A15 36,152 36,152

08/28/2019 REGIONE PIEMONTE WATER EMERGENCY 2017 - SPARONE - ATO3 - 526-18-A20 22,749 22,749

INTERVENTION PIES 09 ADJUSTMENT SYS. CARMAGNOLA CEIS FOR 09/16/2019 REGIONE PIEMONTE 6,614 - 6,614 ABATEMENT NUTRIENTS-1 2 E3 DEPOSIT-CUP G47H11001270003 INTERVENTION PIES 08 REINFORCEMENT SYSTEM IVREA EST FOR 09/16/2019 REGIONE PIEMONTE 462,839 - 462,839 ABATEMENT NUTRIENTS-1 2 DEPOSIT-CUP G77H11001060003 INTERVENTION PIES 09 ADJUSTMENT SYS. CARMAGNOLA CEIS FOR 09/16/2019 REGIONE PIEMONTE 610,440 - 610,440 ABATEMENT NUTRIENTS-1 2 E3 DEPOSIT-CUP G47H11001270003

10/03/2019 REGIONE PIEMONTE WATER EMERGENCY 386,045 386,045

WATER EMERGENCY - REPLACEMENT OF CHANNEL FOR RUN-OFF MIN- 10/23/2019 REGIONE PIEMONTE 24,216 - 24,216 IMISATION

10/28/2019 REGIONE PIEMONTE WATER EMERGENCY 229,074 229,074

10/30/2019 REGIONE PIEMONTE WATER EMERGENCY 69,282 69,282

10/30/2019 REGIONE PIEMONTE WATER EMERGENCY 81,759 81,759

11/18/2019 REGIONE PIEMONTE RESTORATION OF BERTOLLA MOVEMENT CHAMBER 166,000 - 166,000

12/16/2019 REGIONE PIEMONTE AQUEDUCT VALLE SUSA 1 LOT-5 DEPOSIT 164,224 - 164,224

12/16/2019 REGIONE PIEMONTE AQUEDUCT VALLE SUSA 1 LOT-5 DEPOSIT 734,570 - 734,570

UNIVERSITA' DEGLI STUDI PERSEO - PERSONAL RADIATION SHIELDING FOR INTERPLANETARY MIS- 04/05/2019 4,098 4,098 DI PAVIA DEP. OF PHYSICS SIONS

Total 10,179,215 4,728,775 5,450,440

*The Turin Polytechnic Institute fills the role of coordinator for the project DEMOSOFC financed by the European Union as part of the Horizon 2020 program initiated on Septem- ber 1st 2015, which foresees partnering with five Italian and European members, including SMAT and the subsidiary Risorse Idriche S.p.A. in the role of “Linked Third Party”, which in 2018 collected Euro 109.822.

VIII. Significant events occurring after December 31st 2019 Significant events occurring after 12/31/2019, are itemized in the dedicated section of the Directors’ Report.

COVID-19 emergency For a more detailed description of the measures enacted as a consequence of the health emergency caused by the international spread of Covid-19, which also involved our country starting in February 2020, refer to the Management Report, confirming that this extraordinary event did not have repercussions on the 2019 Finan- cial Statement.

SMAFINANCIAL TORINO S.P.A. FISCAL YEAR BALANCE SHEET

TO DECEMBER 31st 2019 STATEMENTS

SMAT S.P.A.

IAS/IFRS FRAMEWORKS

SUPPLEMENTARY NOTES

XIX FISCAL YEAR

STATEMENT OF FINANCIAL POSITION Euro Remarks 12/31/2019 12/31/2018 ASSETS Non-current assets Tangible fixed assets 1 149,127,257 169,161,815 Goodwill 2 5,928,005 5,928,005 Other intangible assets 3 4,196,595 3,562,231 Concessions 4 685,613,165 611,111,310 Investments 5 13,815,845 14,120,845 Deferred tax assets 6 15,449,270 15,232,705 Non-current financial assets 7 1,400,001 985,029 Other non-current assets 0 0 Total non-current assets 875,530,138 820,101,940

Current assets Inventory 8 8,623,844 7,601,363 Trade and other receivables 9 227,725,387 245,371,326 Current tax assets 10 6,403,743 6,293,978 Current financial assets 11 632,828 2,565,589 Other current assets 12 3,498,729 3,793,692 Cash and cash equivalents 13 54,294,178 119,811,450 Total current assets 301,178,709 385,437,398

Assets intended for sale 0 0

TOTAL ASSETS 1,176,708,847 1,205,539,338

STATEMENT OF FINANCIAL POSITION Euro Remarks 12/31/2019 12/31/2018 NET EQUITY AND LIABILITIES NET EQUITY Share capital 345,533,762 345,533,762 Legal reserve 20,909,251 18,319,415 Reserve restricted for PEF implementation 238,874,674 199,509,171 FTA reserve (2,677,452) (2,677,452) Other reserves and retained earnings 2,955,483 3,493,168 Profit for the year 40,102,229 51,796,714 TOTAL NET EQUITY 14 645,697,947 615,974,778

LIABILITIES Non-current liabilities Non-current financial liabilities 15 234,740,335 282,702,625 Provisions for employee benefits 16 15,095,807 15,614,375 Provisions for risks 17 19,920,439 22,984,928 Deferred tax liabilities 18 314,986 337,834 Other non-current liabilities 19 52,275,183 50,620,545 Total non-current liabilities 322,346,750 372,260,307

Current liabilities Current financial liabilities 15 51,890,624 51,105,158 Commercial payables 20 81,784,198 90,399,314 Current tax liabilities 21 3,267,035 3,780,787 Other current liabilities 22 71,722,293 72,018,994 Other current financial liabilities 0 0 Total current liabilities 208,664,150 217,304,253

Liabilities intended for sale 0 0

TOTAL LIABILITIES 531,010,900 589,564,560 TOTAL NET EQUITY AND LIABILITIES 1,176,708,847 1,205,539,338

INCOME STATEMENT Remarks 2019 2018

REVENUES Revenues 23 320,116,769 327,179,680 Revenues for planning and construction activities 24 103,822,716 72,243,129 Other revenues 25 19,013,910 15,479,665 Total revenues 442,953,395 414,902,474

COSTS Consumption of raw materials and consumables 26 13,712,693 11,884,918 Costs for leased assets and services 27 110,844,918 109,059,965 Payroll costs 28 61,551,383 59,998,633 Other operating expenses 29 22,738,158 21,978,257 Costs for planning and construction activities 30 99,422,784 69,670,035 Total operating costs 308,269,936 272,591,808

Gross operating margin 134,683,459 142,310,666

Amortization, provisions and write-downs 31 (79,988,948) (68,905,639)

Operating income (EBIT) 54,694,511 73,405,027

Financial income 32 5,846,184 5,601,346 Financial expense 33 (4,935,773) (5,258,196) Total financial management 910,411 343,150

Result before taxes 55,604,922 73,748,177 Income Taxes 34 (15,502,693) (21,951,463) PROFIT (LOSS) FOR THE YEAR 40,102,229 51,796,714

COMPREHENSIVE INCOME STATEMENT Remarks 2019 2018

A. Profit for the year 40,102,229 51,796,714 Current profit (loss) on Severance Fund (561,863) 556,127 Tax effect on Profits/(losses) that will not 0 0 subsequently be reclassified in the Income Statement

B. Profits/(losses) entered directly under Net Equity and that (561,863) 556,127 will not later be reclassified in the Income Statement

Amount of other profits/(losses) by the enterprises valuated by the 0 0 Net Equity method

Fiscal effect on profits/(losses) that will later be subsequently reclassified in the Income Statement 0 0 when certain conditions will be met

Profits/(losses) entered directly under Net Equity that 0 0 Will not later be reclassified in the Income Statement

D. Total profit for the year (A + B + C) 39,540,366 52,352,841

CASH-FLOW STATEMENT FOR THE FISCAL YEAR Re- Euro 2019 2018 marks

A Financial flows of operating assets 114,172,452 132,387,547

Net Profit (loss) for the year 40,102,229 51,796,714

Adjustments for non-monetary costs and revenues Amortization of intangible assets 2,051,715 1,484,898 Depreciation of tangible assets 17,384,213 16,104,239 Depreciation of assets under concession 48,463,115 40,177,233 Change in provisions for liabilities and charges (3,064,489) (3,601,689) Change in provisions for benefits to employees (518,568) (1,677,758) Change in advance deferred taxes (239,413) (159,082) Change in other non-current assets/liabilities 1,239,667 (1,760,846)

Change in Net Equity reserves Difference in conversion 0 0 Actuarial profit and loss 0 0 Other movements (561,865) (2,335,369)

Change in net working capital (Increase)/Decrease in trade receivables 17,645,939 23,975,158 (Increase)/Decrease in other assets 2,117,959 3,685,253 (Increase)/Decrease in inventory (1,022,481) (185,960) (Increase)/Decrease in trade payables (8,615,116) 5,989,842 Increase/(Decrease) in other liabilities (810,453) (1,105,086)

B. Financial flows of investment assets (122,695,704) (83,983,615) Disinvestments /(investments) of intangible fixed assets (2,686,079) (1,467,798) Disinvestments/(investments) of tangible fixed assets 2,650,345 (16,297,674) Disinvestments /(investments) of assets under concession (122,964,970) (71,718,143) Changes in the investments 305,000 5,500,000 Changes in the consolidation area

C. Financial flows of financial assets (56,994,020) (60,179,667) Cash from the issue of share capital 0 0 (Purchase)/Release of shares 0 0 Change of the financial payables (47,149,818) (48,686,440) Other changes in financial liabilities (27,006) (33,550) (Dividends paid) (9,817,196) (11,459,677)

D. Net flow generated by the management (A ± B ± C) (65,517,272) (11,775,735)

E. Initial liquid assets 119,811,450 131,587,185

F. Final liquid assets (D ± E) 54,294,178 119,811,450

CHANGES IN NET EQUITY

Allocation of Distribution of Other Result for the (Units in Euro) 12/31/2017 12/31/2018 result dividends movements year

Share capital 345,533,762 345,533,762 Legal reserve 15,298,020 3,021,395 18,319,415 Reserve restricted for PEF implementation 153,583,962 45,925,209 199,509,171 FTA reserve (2,677,452) 0 (2,677,452) Other reserves and retained earnings:

• Optional reserve 34,342,562 0 34,342,562

• Severance actualization reserve 235,055 0 556,127 791,182

• Negative reserve for own shares in portfolio (30,101,844) (2,891,496) (32,993,340)

• Reserve for rounding up units (4) 0 (4)

• Retained earnings 1,331,142 11,481,303 (11,459,677) 0 1,352,768 Total other reserves and retained earnings 5,806,911 11,481,303 (11,459,677) (2,891,496) 556,127 3,493,168 Profit for the year 60,427,907 (60,427,907) 51,796,714 51,796,714 TOTAL NET EQUITY 577,973,110 0 (11,459,677) (2,891,496) 52,352,841 615,974,778

Allocation of Distribution of Other Result for the (Units in Euro) 12/31/2018 12/31/2019 result dividends movements year

Share capital 345,533,762 345,533,762 Legal reserve 18,319,415 2,589,836 20,909,251 Reserve restricted for PEF implementation 199,509,171 39,365,503 238,874,674 FTA reserve (2,677,452) 0 (2,677,452) Other reserves and retained earnings:

• Optional reserve 34,342,562 0 34,342,562

• Severance actualization reserve 791,182 0 (561,863) 229,319

• Negative reserve for own shares in portfolio (32,993,340) 0 (32,993,340)

• Reserve for rounding up units (4) 0 (4)

• Retained earnings 1,352,768 9,841,375 (9,817,196) (1) 1,376,946 Total other reserves and retained earnings 3,493,168 9,841,375 (9,817,196) (1) (561,863) 2,955,483 Profit for the year 51,796,714 (51,796,714) 40,102,229 40,102,229 TOTAL NET EQUITY 615,974,778 0 (9,817,196) (1) 39,540,366 645,697,947

SMA TORINO S.P.A. SUPPLEMENTARY NOTE

Application of IAS/IFRS and its effects European (CE) Regulations no. 1606/2002 of July 19th 2002 introduced the obligation, starting from fiscal year 2005, to apply the International Financial Reporting Standards (“IFRS”), as amended by the International Ac- counting Standards Board (“IASB”), and adopted by the European Union (“IFRS” or "International Accounting Principles”) for the drafting of the statements of account of the companies holding capital and/or debt shares quoted in one of the markets regulated by the European Community. On April 13th 2017, SMAT issued a bond loan for a rated amount of a Euro 135 million subscribed by institutional investors and it provided for quotation at the Irish Stock Exchange. In compliance with the aforementioned legislative provisions, SMAT is therefore supposed to draft the consolidated and fiscal year financial statement in compliance with the IFRS starting from the fiscal year closed on December 31st 2016.

This Financial Statements has been set in the perspective of corporate continuity and on the bases of the contractual criteria of the historical cost, with the exception of some book entries, which are calculated at the fair value, in compliance with the provisions of the International Accounting Principles.

Structure and contents of the financial statement The diagram used for the profit and loss account is in scale with the different items analysed according to their type. We believe this presentation, which is aligned with international procedure, is the one that best represents the company results. The total Income Statement is presented, as allowed by the revised IAS 1, in a document separate from net equity, and distinguishes between the components that can be reclassified in the Income Statement and those that cannot. The other components of the total Income Statement are highlighted separately also in the schedule of the net equity changes. The diagram of the equity and financial positions highlights the separation between the current and non-current assets and liabilities. The financial reporting is drafted according to the indirect method, as allowed by IAS 7.

The statement of accounts diagrams reports separately any costs and revenues of non-recurrent nature.

The general principle adopted in setting up this financial statement is the cost one, with the exception of the financial assets and liabilities (including the derivative instruments) which are assessed at fair value. The preparation of the Financial Statements has required the use of estimates by the management; the main areas characterized by particularly significant assessments and assumptions, together with those that have remarkable effects on the situations presented, are reported in section "Use of Estimates”. All the accounting prospects of the equity and financial status and of the Income Statement are expressed in Euro unit, whilst the data entered in the explanatory comments are expressed in thousand Euros, except when it is otherwise indicated.

Valuation criteria The valuation of the financial sheet items was drawn up based on the general criteria of prudence and accrual, in the prospect of continuation of the business. For the purposes of accounting determinations, priority is given to the economic substance of operations rather than to the legal status. As regards the economic aspect, we specify that the costs and revenues shown include the figures of the end of the year that match the contra items of the Financial Position. In relation to this, profits are included only if realized by the date of closure in the fiscal year, while the risks and losses were taken into account even if known after that date. Tangible fixed assets The tangible assets are identified at the purchase or production cost including the accessory charges, or at the value based on appraisals of the company equity, in case of acquisitions of companies, net to the relevant depreciation fund and to any losses of value. The production cost included the direct and indirect costs for the share that can be reasonably ascribed to the assets (e.g.: personnel costs, transport, customs duties, expenses for the preparation of the area of installation, testing costs, notary and land register expenses) The cost includes any professional fees and - for some goods, the financial charges capitalized up to the coming into service of the good. The cost includes any cost for site reclaiming, on which the tangible asset lays, complies with the provisions of IAS 37.

The expenses for the ordinary maintenance are fully charged to the Income Statement. The costs for improvements, modernization and transformation of incremental nature are computed to the capital assets. The accounting value of the tangible assets is submitted to verification to identify any losses of value, in particular when events or changes of condition identify that the charged value cannot be recovered.

The tangible assets are entered gross to the system revenue grants which are identified in the Income State- ment throughout the period of time required to refer them to the relevant costs; they are represented in the equity and financial status by reporting the grant as deferred revenue.

The depreciation starts when the assets enter the production cycle and - for the new acquisitions – it is calculated at 50% of the full rate part, since it is considered as representative of the actual use of the goods. The current assets include the costs relevant to intangible assets whose economic utilization process has not started yet. The tangible assets are systematically depreciated every fiscal year based on economic and technical rate parts that are considered as representative of the residual potential of use of the assets. We report herein under the tables with the depreciation rate parts that have been taken into account for the depreciation of the assets.

As required by IAS 16, the estimated useful lifespan of the tangible assets is reviewed every fiscal year, in order to assess the need of an overhaul. In case it is ascertained that the estimated useful lifespan does not represent as appropriate the future expected benefits, the relevant depreciation plans must be redefined based on the new assumptions. Such changes are reported in a prospect to the Income Statement. During the fiscal year that has been closed, no change was entered under the depreciation plans for any of the categories of tangible assets. The land is not depreciated, The profits or losses that derive from the alienation or dismissals of a tangible asset are identified as the difference between the sale revenue and the net accounting value of the asset and they are identified in the Income Statement at the moment the buyer is transferred the risks and benefits connected to the ownership of said asset. Goodwill and other Intangible fixed assets The identifiable controllable intangible assets are identified in the accounting; their cost can be reliably determined provided that such activities generate economic benefits in the future. Such assets are identified at cost value in compliance with the criteria indicated for the tangible assets and - if their useful lifespan is defined - they are depreciated throughout the period of such estimated lifespan. The depreciation starts at the moment the asset is ready to be used or - in any case - it starts producing economic benefits for the enterprise. The current assets include the costs relevant to intangible assets for which the economic utilization process as not started yet.

The intangible assets with defined useful lifespan are systematically depreciated starting from when the asset is available for use throughout the period of expected usefulness. The intangible assets with defined useful lifespan are systematically depreciated starting from when the asset is available for use throughout the period of expected usefulness. The goodwill and the other activities whose useful lifespan is not defined are not subject to systematic depreciation, but they are subject to yearly verifications of recoverability (the so-called impairment test) rung at the level of the individual Cash Generating Unit (CGU) or groups of CGU's whose indefinite useful lifespan assets can be reasonably allocated. The test is described hereinafter in "Reduction of the value of the assets". Any write-down ascribed to goodwill cannot be subject to subsequent return to default values.

The extension includes the rights on networks, systems and other equipment relevant to the Integrated Water Service and connected to services managed by SMAT S.p.A. The implementation of ’IFRIC 12 has required the application to the same infrastructures - of IAS 11, since, if the licensee builds or upgrades an infrastructure it does not control, the relevant services of building and upgrading developed on behalf of the licensor are considered as actual activities developed against purchase order. Since a large part of the activities is sub-contracted and that the margin of benefit acknowledged in the remuneration of the service rate cannot be identified separately on the building activities that were developed in-house, such infrastructures are identified based on the cost that was actually sustained. Shareholdings The Investment in subsidiaries and related companies is identified at cost, adjusted in case of losses of value to adapt it to the relevant recoverable value, in compliance with the provisions of IAS 36 – Reduction of the asset value. When the losses no longer exist or reduces, the accounting value is incremented up to the new estimate of the recoverable values, which cannot in any case exceed the original cost. The resuming of the value is entered under the Income Statement. Shares in other companies are valuated at fair value in accordance with the other components in the comprehensive financial statement. Shares held exclusively for the purpose of subsequent alienation are excluded from this approach, and their fair value is inserted in the profits (losses) of the fiscal year. The risk deriving

from any losses exceeding accounting value of the shareholding is identified in a purposely-allocated fund insofar the parent company is committed to comply with the legal obligations or in those that are implicit to the subsidiary or in any case to cover its losses.

The financial assets the Company intends to and can keep until the expiry are reported at the cost represented by the fair value of the initial amount given in exchange, incremented by the transaction cost. As a result of the initial identification, the financial assets are assessed through the criteria of depreciated cost, using the method of the actual interest rate. Non-current financial assets Such category includes those assets that are not represented by derivate instruments and are not quoted in an active market, of which fixed or identifiable payments are expected. Such assets are assessed at the depreciated cost based on the actual interest rate method. If there is objective evidence of the value loss indicators, the value of the assets is reduced in such a measure to result equal to the discounted value of the flows that can be obtained in the future: the losses of value determined through the impairment test are reported in the Income Statement. If the reasons of the previous write-downs no longer stand in subsequent periods, the value of the assets is resumed until it reaches the value that would derive from the application of the depreciated cost if the impairment had not been performed. Such assets are classified as current assets, except the shares whose expiry is longer than 1 month, which are included amongst the noncurrent assets. Inventory The stocks are assessed at the lowest value between the average weighed cost for the movement and the corresponding market value, in order to reflect any conditions of technical obsolescence or low turnover, is reported in the purposely-allocated devaluation fund taken to direct reduction of the stocks to take the cost back of the expected realisable value. Trade receivables This item refers to assets deriving from the trade relations of supply of goods and services, which are assessed at the depreciated cost adjusted for losses of value compared to the degree of the risk of non-collection. Financial assets and other current assets These are entered at their nominal value - adjusted for losses of value if required - corresponding to the depreciated cost. Cash and cash equivalents The liquidity includes the cash on hand, also in the form of checks, and on demand bank deposits. The equivalent means consist of financial investments with a three-month expiry or lower (as from the date of their purchase), which can be promptly converted into liquidity and with an insignificant risk of variation in their value. Such items are calculated at fair value; profits or losses deriving from any changes in the fair value are reported in the Income Statement.

Own shares Own shares are entered as a reduction of the Net Equity. Also the counter value deriving from their release is reported with net equity counterpart, with no computing into the Income Statement. Provisions for liabilities and charges, employee benefits The provisions for contingencies and charges concern charges of a determined nature and whose certain or likely existence that - at the date the Financial Statements is being closed - are undetermined as far as the amount or the date of occurrence are concerned. The provisions are identified when: The provisions are identified when: (i) the existence of a current, legal or implicit obligation deriving from a past event, is likely; (ii) the compliance with subject obligation is likely to be burdensome; (iii) the amount of the obligation can be reliably estimated. The provisions to the funds represent the best estimate of the costs required to face compliance at the date of the Financial Statements (assuming there are sufficient elements to run such estimate) and they are actualized when the effect is significant, and the required information is available. In such cases, the provisions are determined by actualizing the future cash flows at a discount rate before taxes that reflects the current market assessment and take into account the risks connected to the company activity. When the actualization is performed, the increment of the provisions due to time is reported in the financial charges. If the liabilities are due to material activities (e.g.: revamping of sites) the fund is reported in counterpart to the activity it refers to and the identification of the charge in the Income Statement is performed through the depreciation process of the tangible asset the charge refers to. In case of redefinition of the liabilities, the methods provided for by IFRIC 1 are applied. The explanatory notes also illustrate potential liabilities represented by; (i) potential - though not likely - obligations deriving from past events, whose existence shall only be confirmed upon occurrence of one or more uncertain future events that are not under the full control of the Company; (ii) current obligations deriving from past events, whose amount cannot be reliably estimated or whose compliance with is likely not to be onerous.

Benefits to the employees (Severance pay) The liabilities relevant to the defined benefit programs (such as the Severance pay for the amount accrued before January 1st 2017 and the other benefits for the employees) are defined net to any activities at the service of the plan, on the basis of current assumptions and by competences, consistently with the working performance required to obtain such benefits; the assessment of the liabilities is performed with the support of independent actuaries. The value of the current profits and losses as required by JAS19, is reported into the other components of the total Income Statement. Further to Financial Law of December 27th 2006 n° 296, for companies having more than 50 employees, as related to shares accrued starting from January 1st 2007, the Severance Pay is configured as a plan with defined contributions. Trade payables These refer to financial liabilities deriving from trade relationships of supply and they are calculated at the depreciated cost. Other liabilities Other liabilities refer to various types of relationships and they are entered at nominal value, corresponding to the depreciated cost. The item includes current includes the “bound revenues" share ” (FoNI ex art. 42 Annex “A” to AEEG Delib- beration no. 585/2012) determined by Ente d’Ambito Torinese no. 3 with Deliberation no. 483/2013 and reported to fiscal year 2012. Costs and revenues The costs and revenues are recorded net of adjustments, or returns, discounts, allowances and possible variations in estimates, and assessed according to the principles of prudence and competence.

In particular, as far as the revenues are concerned: - The revenues for service performance are acknowledged at the date the performance is completed; - Revenues for the sale of water acknowledged and counted at the time of delivery, including the allocation for deliveries made, but not yet invoiced (estimated according to historical analyses determined in relation to past consumption); 98

- the revenues for the sale of products are recognized at the moment of the ownership takeover, which generally corresponds to the delivery or shipment of the goods. The costs are accounted for according to the accrual principle. Contributions for Plants The contributions for plants are reported in the accounts once there is the justification documentation of the imminent collection by the paying body. These concur to form the result of the fiscal year according to the rules of economic accrual, determined as related to the residual economic and technical lifespan of the assets they refer to. Financial income and expenses Financial proceeds and charges are calculated according to the accrual principle. The dividends of other companies are recorded in the Income Statement in the moment in which the right to receive payment has been established. Income taxes for the year Income tax for the year consists of the sum of current and deferred taxes. Income tax is based on profit for the year before taxes. Profit before taxes differs from the result entered in the Income Statement since it excludes positive and negative components that will be taxable or deductible in other fiscal years and - furthermore - it excludes items that will never be taxable or deductible. "Liabilities for current taxes" are calculated using the rates in force as at the date of the Financial Statements. In determining the income taxes, the Company has taken into due consideration the effects deriving from the last fiscal reform introduced by Law no. 244 of December 24th 2007 and - in particular - the strengthened principle of derivation established by art. 83 of TUIR, which requires the entity applying the international accounting principles to apply, even in exceptions to the provisions of the TUIR, “the criteria of qualification, temporary computing and classification of the Financial Statements according to said accounting principles”.

The recoverable value of the non-financial activities corresponds to the greatest value between their "fair value" net to the sale cost and the value in present use. To determine the value in present use, the estimated future financial flows are actualized using a discount rate that reflects the market assessment of the money value and of the risks related to the type of activity. In case of activities that do not generate financial flows in input, that are widely independent, we proceed by calculating the recoverable value of the unit that generates financial flows to which the asset belongs.

Conversion of assets/liabilities into foreign currency The functional and presentation currency adopted by SMAT S.p.A. is Euro. The transactions in foreign currencies are initially identified at the exchange rate at the date of the operation. The assets and liabilities in currency - with the exception of the tangible assets - are reported in the reference exchange rate at the date the fiscal year is closed and the relevant profits and losses on the exchange rate are regularly computed to the Income Statement; the net profit - if any - that might arise is allocated to a purposely-created non-distributable reserve up to the date of use. Use of estimations The drafting of the Financial Statements and relevant Notes to the Accounts requires the administration body to run estimates that influence the values of the financial statement assets and liabilities and on the information regarding the potential assets and liabilities as at the date of the financial statement.

The status of generalized economic and financial crisis involves the need to make assumptions as related to the future trend, which can be characterized by uncertainty. Subsequently, we cannot exclude in the future different results from what has been estimated, that could therefore require amendments that cannot be estimated today or forecast at the accounting value of the relevant financial statement items.

Estimates are used in different areas, such as the credit depreciation Fund, the provisions for contingencies and charges, the depreciations, the assessment of the assets regarding shareholding in related companies and subsidiaries the sale revenues, the cost and charges regarding the management of the Integrated Water Ser- vice and the income taxes. The estimates and assumptions are periodically reviewed by the Group based on the better knowledge of the activity and of other factors that can be reasonably derived from the current circumstances, and the effects of any changes are immediately reflected in the Income Statement.

Other information Corporate agreements outside the Statement of Assets and Liabilities Bear in mind there are no agreements resulting from the Financial Statement that can have a significant impact on the equity and financial status, or on the economic result of the Company. Amounts expressed in Notes to the Accounts Unless otherwise indicated, the amounts reported in the Notes to the Accounts are expressed in Euro units with rounding up to the upper unit for hundredths equal to or greater than 50. Accounting principles, IFRS amendments and interpretations adopted from January 1st 2019 The following IFRS accounting principles, amendments and interpretations were applied for the first time by the Company starting as of January 1st 2019:

• On January 13th 2016, IASB published principle IFRS 16 – Leases, which supersedes principle IAS 17 – Leases, as well as IFRIC 4 interpretations Determining whether an Arrangement contains a Lease, SIC-15 Operating Leases—Incentives and SIC-27 Evaluating the Substance of Transactions Involving the Legal Form of a Lease. The principle provides a new definition of lease and introduces a criterion based on control (right of use) of an asset to distinguish the leasing contracts from the service contracts, identifying as discriminating elements of the leasing: the identification of the asset, the right of its replacement, the right to obtain essentially all the economic benefits deriving from the use of the asset and the right to direct the use of the asset represented in the contract. The Principle establishes a sole model to acknowledge and assess the leasing contracts for the lessee, which envisages entry of the asset subject to the lease - also if operational - under assets with the contra item financial charges. On the contrary, the principle does not introduce significant changes for the les- sors The company decided to apply the principle retroactively (not modifying the comparative data for the 2018 fiscal year), according to the informations presented in sections IFRS 16:C7-C13. In particular, relative to leasing contracts previously classified as operative, the Company accounted:

100

The following table reports the impacts derived from the adoption of the IFRS 16 on the date of transition. Impacts on the date of transition (01.01.2019) ASSETS (Amounts in ,000 Euros) Non-current assets Land and building usage rights € 353 Vehicle usage rights € 1,886 Hardware usage rights € 8 Total 2,247

NET EQUITY AND LIABILITIES Non-current liabilities Financial liability for non-current leases € 1,054 Current liabilities Financial liability for current leases € 1,193 Total 2,247

The weighted average incremental borrowing rate applied to recorded financial liabilities on January 1st 2019 is 2.2%. The Company also intends to take advantage of the right to extinguish granted by IFRS 16:5(b) as concerns contract leases for which the underlying asset is configured as a low-value asset (meaning that the underlying asset of the lease contract does not exceed Euro 5,000, when new). Contracts that are exempt fall mainly into the following categories: o Computers, telephones and tablets; o Printers; o Other electronic devices. For these contracts the introduction of IFRS 16 does not generate any financial liability from the lease and relative usage rights, but the rental contracts will be listed in the financial statement as line items for the duration of the contracts. Furthermore, with reference to the transition rules, the Company will rely on the following expedient practices available when the modified retrospective transition method is selected: st o Use of the assessment made on December 31 2018 according to the IAS 37 Provisions, Contin- gent Liabilities and Contingent Assets in in relation to accounting onerous contracts in alternative to the application of the impairment test, according to Jas 36, on the value of the usage right on January 1st 2019; o Classification of contracts that expire with 12 months from the date of transition as short-term lease. For these contracts the lease payments are recorded into the financial statement as line items; st o Exclusion of direct initial costs from measuring the usage right on January 1 2019; o Use of the information present on the date of transition for the determination of the lease term, with particular reference to exercising the option to extend or to conclude in advance.

o IAS 12 Income Taxes: this amendment explains that all the fiscal effects linked to dividends (including payments on financial instruments classified within net equity) should be accounted in alignment with the transaction that generated the same profits (financial statement, OCI or net equity). o IAS 23 Borrowing costs: this change explains that in the case of financing that remains after the qualifying asset of reference is ready for use or for sale, the same become part of the group of financing loans used to calculate financing costs. The adoption of this amendment did not produce any effects on the consolidated financial statement of SMAT.

• On February 7th2018, IASB published the document “Plant Amendment, Curtailment or Settlement (Amendments to IAS 19)”. The document explains how an entity must operate a change (i.e. a curtailment or a settlement) in a plan with defined benefits. The changes require the entity to update their hypotheses and re-measure liabilities or net activity according to the plan. The amendments state that after this event occurs, an entity uses updated hypotheses to measure the current service cost and interests for the rest of the period of reference following the event. The adoption of this amendment did not produce any effects on the consolidated financial statement of SMAT. • On October 12th2017, IASB published the document “Long-term Interests in Associates and Joint Ventures (Amendments to IAS 28)”. This document explains the requirement to apply IFRS 9, including requirements linked to impairment, other long-term interests in partner companies and joint ventures for which the net equity method is not applied. The adoption of this amendment did not produce any effects on the consolidated financial statement of SMAT. • On June 7th 2017, IASB published the interpretation “Uncertainty over Income Tax Treatments (IFRIC Inter- pretation 23)”. The interpretation deals with uncertainties about the fiscal regimes to be adopted on income taxes. In particular, the interpretation requires an entity to analyse uncertain tax treatments (indi- vidually or as a whole, according to the specifics), always with the assumption that the tax authorities examine the fiscal position in question, with full knowledge of all relevant information. If the entity considers it improbable for that the tax authorities would accept the tax regime being followed, the entity must reflect the uncertainty in a measure of its taxes on current and deferred income. Furthermore, the document does not contain any new reporting obligations, but emphasizes that the entity must establish if it is necessary to provide information about the considerations made by management and relative uncertainty inherent in tax accounting, in accordance with IAS 1. The new interpretation was applied as of January 1st 2019. The adoption of this amendment did not produce any effects on the consolidated financial statement of SMAT. • On October 12th2017, IASB published an amendment to IFRS 9 “Prepayment Features with Negative Com- pensation”. This document specifies that instruments that require advance reimbursement must respect the Solely Payments of Principal and Interest (“SPPI”) test, also in the case in which the “reasonable additional compensation” to be paid for advance reimbursement on a “negative compensation” for the issuer of financing. The adoption of this amendment did not produce any effects on the consolidated financial statement of SMAT.

Accounting principles, amendments and interpretations IFRS and IFRIC authorized by the European Union, not yet mandatory and not adopted in advance by the Group on December 31st2019 • On October 31st2018, IASB published the document “Definition of Material (Amendments to IAS 1 and IAS 8)”. The document introduced a change in the definition of “relevant” in the IAS 1 – Presentation of Fi- nancial Statements and IAS 8 – Accounting Policies, Changes in Accounting Estimates and Errors principles. This amendment has the objective to render the definition of "relevant" more specific and introduced the concept of “obscured information” alongside the concepts of omitted or erroneous information already present in the two principles in question. The amendment clarifies that information is “obscured” if it was described in a way that generates an effect at first reading in a balance sheet similar to what would be produced if the information was omitted or erroneous.

102

The introduced changes were approved on November 29th 2019 and applied to all transactions after January 1st 2020. The Board Members do not expect a significant effect in the SMAT consolidated financial statement from the adoption of this amendment. • On March 29th 2018, IASB published an amendment to the “References to the Conceptual Framework in IFRS Standards”. The amendment is effective for periods starting from January 1st 2020 or later, but advance application is also allowed. The Conceptual Framework defines the fundamental concepts for financial information and guides the Board in developing IFRS standards. The document helps to guarantee that the standards are conceptu- ally aligned and that similar transactions are handled in the same way, to provide useful information to investors, lenders and other credit institutions. The Conceptual Framework supports companies in the development of accounting principles when no IFRS standard is applicable to a specific transaction, and more in general, helps the involved subjects to understand and interpret the standards. • IASB, on September 26th2019, published an amendment called “Amendments to IFRS 9, IAS 39 and IFRS 7: Interest Rate Benchmark Reform”. The same amendment changed IFRS 9 - Financial Instruments and IAS 39 - Financial Instruments: Recognition and Measurement and IFRS 7 - Financial Instruments: Disclosures. In particular, the amendment changes come requirements for application of hedge accounting, allowing for temporary derogations, in order to mitigate the impact derived from uncertainty about the IBOR reform (currently ongoing) on cash flows in the period previous to its completion. The amendment also requires companies to provide additional information in the financial statement about their coverages that are directly impacted by uncertainties generated by the reform and to which said derogations are applied. The amendments will take effect as of January 1st2020, but the companies can also apply them in advance. At present the administrators are assessing possible effects of introduction of this amendment into the financial statement of the parent company. Accounting principles, IFRS amendments and interpretations not yet certified by the European Union To the date of reference of this document, the competent bodies of the European Union have not yet concluded the certification process required for the adoption of the amendments and principles described herein- under. • On October 22nd2018, IASB published the document “Definition of a Business (Amendments to IFRS 3)”. The document provides clarifications about the definition of business for the correct application of the IFRS 3 principle. In particular, the amendment states that a business usually produces output, the presence of output is not strictly necessary for identifying a business in the presence of a group of integrated activities/processes and goods. Nevertheless, to satisfy the definition of business, an integrated group of activities/processes and goods must include, as a minimum, input and a substantial process that together contribute significantly to the capacity to create an output. For this purpose, IASB replaced the term "capacity to create output" with "capacity to contribute to the creation of output", to clarify that a business can exist also without the presence of all the input and processes necessary for creating output. The amendment also introduced an optional test ("concentration test") to exclude the presence of a business if the paid price is substantially referable to a single activity or group of activities. The changes are applied to all the business combinations and acquisitions of businesses after January 1st 2020, but advance application is also allowed. The company at present has no planned acquisitions, therefore the administrators do not expect any relevant effects from application of this amendment. • On May 18th2017, IASB published the principle IFRS 17 – Insurance Contracts which is destined to replace IFRS 4 – Insurance Contracts. The objective of the new principle is to guarantee that an entity provides pertinent information that faithfully represents the rights and obligations derived from issued insurance contracts. The IASB has developed a standard for elimination of existing incongruities and weaknesses in accounting policies, providing a single principle-based framework for taking into account all types of insurance contracts, including reinsurance contracts held by the insurer. The new principle also includes requirements for presentation and reporting to improve comparability among the entities in this sector.

103

The new principle measures an insurance contract based on a General Model or a simplified version of the same, called the Premium Allocation Approach (“PAA”). The main characteristics of the General Model are: o the estimates and the hypotheses for future cash flows are always current; o the measurement reflects the temporal value of money; o the estimates foresee extensive use of observable information on the market; o there is current and explicit risk measurement; o the expected profile is differentiated and aggregated into groups of insurance contracts at the moment of initial reading; o the expected profit in the period of contractual coverage takes into account changes deriving from variations in the hypothesis relative to financial flows for each group of contracts. The PAA approach includes measurement of liabilities for the residual coverage of a group of insurance contracts on the condition that, at the time of initial reading, the entity expects that this liability represents a reasonable approximation of the General Model. Contracts with a period of coverage of one year or less are automatically suitable for the PAA approach. Simplifications derived from the application of the PAA method are not applied to assessment of liability for claims in general, which are measured using the General Model. Nevertheless, it is not necessary to actualize those cash flows if it is expected that the balance to be paid or received is due within one year from the date of the claim. The entity must apply the new principle to issued insurance contracts, including issued reinsurance contracts, held reinsurance contracts and investment contracts with a discretionary participation feature (DPF). The principle applies starting from January 1st 2021, but an advanced application is allowed, only for those companies which apply IFRS 9 - Financial Instruments - and IFRS 15 - Revenue from Contracts with Cus- tomers. The administrators do not expect a significant effect in the SMAT financial statement from the adoption of this amendment. • On September 11th2014, IASB published an amendment to IFRS 10 and IAS 28 Sales or Contribution of Assets between an Investor and its Associate or Joint Venture. The document was published to resolve a current conflict between IAS 28 and IFRS 10. According to IAS 28, the profits or losses resulting from transfer or cessation of a non-monetary asset to a joint venture or connected in exchange to a share of capital of the latter is limited to the share held in the joint venture or connected to other investors outside of the transaction. On the contrary, the IFRS 10 principle foresees the insertion of the entire profits or losses in the case of loss of control of a subsidiary company, also if the entity continues to held a non-controlling share in the same company, also including cessation or transfer of a subsidiary company to a joint venture or partner company. The introduced changes include transfer/assignment of an activity or subsidiary company to a joint venture or partner company, the value of profit or loss inserted into the balance sheet of the transferor/assignor depends on whether the transferred/assigned activity or subsidiary company constitutes a business or not, according to application of the IFRS 3 principle. If the transferred/assigned business or subsidiary company represents a business, the entity must insert the profit or loss from the entire previously held share; in the contrary case, the portion of profit or loss relative to the share in possession by the entity must be eliminated. At present, IASB has suspended application of this amendment. The administrators do not expect a significant effect in the SMAT financial statement from the adoption of these changes.

104

Remarks on the Financial Position and Results NON-CURRENT ASSETS

1. Tangible fixed assets € 149,127,257 The composition of the tangible fixed assets and the relevant movements occurring during the fiscal year are entered in the following table: Assets under Commercial construction Land and Plants and Other Total 2018 & industrial and buildings machinery assets Total Categories equipment payments on account

Historical cost as at December 31st 2017 89,879,828 305,728,436 12,270,355 15,618,600 22,414,681 445,911,900

Amortization fund as at December 31st 2017 (29,415,709) (225,441,446) (8,808,610) (13,277,755) 0 (276,943,520)

Net value as at December 31st 2017 60,464,119 80,286,990 3,461,745 2,340,845 22,414,681 168,968,380

Works in progress completed in 2018 0 0 0 0 (433,882) (433,882)

Works in progress completed in 2018 3,269,935 934,306 349,632 0 (4,553,873) 0

Disinvestments in the fiscal year (25,000) (19,192) (11,995) (24,601) 0 (80,788)

Adjustments (70,930) (16,772) 0 0 (217,865) (305,567)

Increases in the fiscal year 1,131,192 1,941,117 925,042 664,938 12,379,472 17,041,761

Historical cost as at December 31st 2018 94,185,025 308,567,895 13,533,034 16,258,937 29,588,533 462,133,424

Depreciation in the fiscal year (2,954,026) (11,737,457) (629,660) (783,096) 0 (16,104,239)

Use of funds 18,604 21,129 11,860 24,557 0 76,150

Depreciation fund as at December 31st 2018 (32,351,131) (237,157,774) (9,426,410) (14,036,294) 0 (292,971,609)

Net value as at December 31st 2018 61,833,894 71,410,121 4,106,624 2,222,643 29,588,533 169,161,815

Assets under Commercial Leased Land and Plants and Other construction and Total 2019 & industrial assets buildings machinery assets payments on Total Categories equipment (see detail) account

Historical cost as at December 31st 94,185,025 308,567,895 13,533,034 16,258,937 0 29,588,533 462,133,424 2018

Depreciation fund as at (292,971,609 (32,351,131) (237,157,774) (9,426,410) (14,036,294) 0 0 December 31st 2018 )

Net value as at 61,833,894 71,410,121 4,106,624 2,222,643 0 29,588,533 169,161,815 December 31st 2018

Reclassifications 344,931 (155,395) 0 0 0 (20,035,041) (19,845,505)

Works in progress completed 1,745,560 4,010,344 0 0 0 (5,755,904) 0 in 2019

Disinvestments in the fiscal year 0 0 (220,328) (846,231) 0 0 (1,066,559)

Adjustments (307,377) (61,791) 0 0 0 0 (369,168)

Leasing increments 0 0 0 0 2,820,967 0 2,820,967

Increases in the fiscal year 1,110,772 3,387,724 2,401,026 2,547,710 0 5,332,616 14,779,848

Historical cost as at December 97,078,911 315,748,777 15,713,732 17,960,416 2,820,967 9,130,204 458,453,007

Reclassification/adjustment of 0 3,885 0 0 0 0 3,885 amortization fund

Depreciation in the fiscal year (3,149,227) (11,291,564) (739,339) (969,412) (1,234,671) 0 (17,384,213)

Use of funds 17,175 26,104 146,576 836,332 0 0 1,026,187

Depreciation fund as at (309,325,750 (35,483,183) (248,419,349) (10,019,173) (14,169,374) (1,234,671) 0 December 31st 2019 )

Net value as at December 31st 2019 61,595,728 67,329,428 5,694,559 3,791,042 1,586,296 9,130,204 149,127,257

105

As indicated in the valuation criteria, the tangible fixed assets also include the entry of the financial changes of direct imputation pertaining to large works in progress.

The sources of income owed by the Company as ownership have been amortized in the ordinary way in compliance with the criteria of itemized evaluation in the present Notes to the Accounts as well as a function of the rates representative of the estimated residual possibility of utilization as at the date of the present financial statement. On the increments developed in the fiscal year, rate reduced by 50% have been applied.

For the fixed assets deriving from the acquisitions of business units of SAP S.p.A. (2015) and SCA S.r.l. (2016), by the Parent Group, we enacted an amortization proportional to the actual time of utilization.

“Plants and machinery” also includes the value of spare parts at the service of gas motors also includes the spare parts that sere gas motors subject to the self-production of energy at the water treatment plant of Castiglione Torinese, whose utilization fulfils characteristics of multiannual utility.

“Other tangible fixed assets” include furniture and furnishings, ordinary office equipment, electromechanical and electronic equipment, hardware, cars, motor vehicles for transport and other vehicles. “Assets under construction and payments on account” includes the value, according to the state of advance- ment, of works in progress to be realized at the end of the year, as well as the advances paid to plant suppliers for a total value of over EUR 9.1 million.

"Leased assets" include leased assets in the statement assets, in alignment with the nature of the same assets, following the adoption of the new IFRS 16 principle Leases that introduced the new criteria for definition of lease contracts. For more in-depth informations refer to the specific comment on IFRS accounting principles adopted as of January 1st2019.

The following details transactions in the "Leased assets" category: Leasing - Leasing- Leasing – Leasing – Leasing - LEASED Categories Hardware Rentals Rentals Real estate Land ASSETS rentals Cars Other vehicles rentals rentals

Historical cost as at December 31st 2019 25,704 282,417 1,621,287 589,246 302,313 2,820,967 Depreciation in the fiscal year (7,523) (151,816) (869,815) (171,927) (33,590) (1,234,671) Use of funds 0 0 0 0 0 0 Depreciation fund as at December 31st 2019 (7,523) (151,816) (869,815) (171,927) (33,590) (1,234,671) Net value as at December 31st2019 18,181 130,601 751,472 417,319 268,723 1,586,296

106

Intangible fixed assets € 695,737,765

The intangible assets are summarized in the following table:

2018 Other account Categories rights similar Plant and Plant Goodwill under concession under Grand total payments on property rights property expansion costs expansion Industrial patent Industrial and Development costs Development rights & intellectual & rights Assets Assets (see detailed transactions) detailed (see Total Other intangible assets intangible Total Other Assets under construction and construction under Assets Concessions, licenses, trademarks trademarks licenses, Concessions,

H A B C D E F G I A+H+I (B+C+D+E+F+G)

Historical cost as at December 31st 5,928,005 39,142 249,266 154,000 18,845,570 1,384,155 510,210 21,182,343 858,939,354 886,049,702 2017

Depreciation fund as at December 0 (39,142) (249,266) (154,000) (17,038,628) 0 (121,976) (17,603,012) (279,368,954) (296,971,966) 31st 2017

Net value as at De- 5,928,005 0 0 0 1,806,942 1,384,155 388,234 3,579,331 579,570,400 589,077,736 cember 31st 2017

Works in progress 0 0 0 0 0 0 0 0 433,882 433,882 completed in 2018

Works in progress 0 0 0 0 0 0 0 0 0 0 completed in 2018

Disinvestments in 0 0 0 0 0 0 0 0 (20,466) (20,466) the fiscal year

Adjustments 0 0 0 0 0 0 0 0 (1,257,650) (1,257,650)

Increases in the 0 0 0 0 1,241,357 226,441 0 1,467,798 72,220,682 73,688,480 fiscal year

Historical cost as at December 31st 5,928,005 39,142 249,266 154,000 20,086,927 1,610,596 510,210 22,650,141 930,315,802 958,893,948 2018

Depreciation in the 0 0 0 0 (1,473,134) 0 (11,764) (1,484,898) (40,177,233) (41,662,131) fiscal year

Use of funds 0 0 0 0 0 0 0 0 341,695 341,695

Depreciation fund as at December 0 (39,142) (249,266) (154,000) (18,511,762) 0 (133,740) (19,087,910) (319,204,492) (338,292,402) 31st 2018

Net value as at De- 5,928,005 0 0 0 1,575,165 1,610,596 376,470 3,562,231 611,111,310 620,601,546 cember 31st 2018

107

2019 Other

Categories account Plant and Plant Goodwill concession Grand total similar rights similar payments on Assets under Assets property rights property expansion costs expansion Industrial patent Industrial Development costs Development rights & intellectual & rights (see detailed transactions) detailed (see Total Other intangible assets intangible Total Other Assets under construction and construction under Assets Concessions, licenses, trademarks and and trademarks licenses, Concessions,

H A B C D E F G I A+H+I (B+C+D+E+F+G)

Historical cost as at December 31st 5,928,005 39,142 249,266 154,000 20,086,927 1,610,596 510,210 22,650,141 930,315,802 958,893,948 2018

Depreciation fund as at December 0 (39,142) (249,266) (154,000) (18,511,762) 0 (133,740) (19,087,910) (319,204,492) (338,292,402) 31st 2018

Net value as at De- cember 31st 2018 5,928,005 0 0 0 1,575,165 1,610,596 376,470 3,562,231 611,111,310 620,601,546

Reclassifications 0 0 0 0 10,000 0 0 10,000 19,835,505 19,845,505

Ongoing works 0 0 0 0 0 0 0 0 0 0 concluded in 2019

Disinvestments in 0 0 0 0 0 0 0 0 (18,683) (18,683) the fiscal year

Adjustments 0 0 0 0 0 0 0 0 (918,112) (918,112)

Increases in the 0 0 0 0 2,625,692 50,387 0 2,676,079 103,822,716 106,498,795 fiscal year

Historical cost as at December 31st 5,928,005 39,142 249,266 154,000 22,722,619 1,660,983 510,210 25,336,220 1,053,037,228 1,084,301,453 2019

Reclassification/ adjustment 0 0 0 0 0 0 0 0 (4,474) (4,474) amortization fund

Depreciation in the 0 0 0 0 (2,039,943) 0 (11,772) (2,051,715) (48,463,115) (50,514,830) fiscal year

Use of funds 0 0 0 0 0 0 0 0 248,018 248,018

Depreciation fund as at December 0 (39,142) (249,266) (154,000) (20,551,705) 0 (145,512) (21,139,625) (367,424,063) (388,563,688) 31st 2019

Net value as at De- 5,928,005 0 0 0 2,170,914 1,660,983 364,698 4,196,595 685,613,165 695,737,765 cember 31st 2019

For detailed transactions in the category “Assets under concession” refer to the section of reference.

2. Goodwill € 5,928,005 The value of the goodwill to December 31st 2019 can be ascribed to the acquisition of the SAC business unit (January 1st 2014), amounting to Eur 96,000 and the SAP S.p.A. business unit (July 1st 2015) regarding the Mu- nicipalities of ATO 3 Torinese amounting to EUR 5,832,005, entered under the intangible assets with the approval of the Board of Auditors.

108

36. For further details, reference is to be made to what is commented in the purposely-allocated section of the Consolidated Balance Sheet.

The goodwill was allocated to the reference Cash Generating Unit (CGU) in compliance with IAS 36 and as such it is not subject to amortization, but to verification by impairment on a yearly basis, or more fre- quently, should an event or circumstances arise that may lead to the assumption of a value reduction. The impairment test is developed through the comparison between the net accounting value and the recoverable value of the CGU the goodwill was allocated to, determined with reference to the greatest value between the fair value net of the costs of sale and the value of use of the CGU. The value used was determined by applying the synthetic income method, actualizing operating income net of taxes (Net operating profit after tax: Nopat) relative to the CGU in the Economic Plan 2015-2033, approved by the Ordinary Shareholder Meeting on 06/29/2015. The Economic and Financial Plan also highlights the results expected for the whole duration of the license and - even though it is drafted on a time horizon longer than 5 years - it constitutes the representative document to identify the prospect cash flows Furthermore, since the license has a pre-defined useful life, the "terminal value" has not been defined.

The discount value utilized is represented by the WACC identified with reference to the sector the identified CGU operates within. The discount rate I(WACC) utilized reflects the market assessments on the cost of money and the specific risks of the sector of activities and of the reference geographic area. In particular, in determining the actualization rate, the following parameters have been utilized: • Real risk-free rate, equal to the revenue rate of the 10-year BTP, issued 30/12/2019, equal to 1.35%; • Risk premiums at 5.20% • Beta unleveraged for the “water utilities” sector at 0.28 • Specific risk premiums at 3.48% • Cost of debt net of taxes at 1.73%. The estimated discount rate (WACC) is therefore 4.55%

The sensitivity analysis shows little sensitivity of the test with the change of assumptions at the basis of the estimate. More precisely, neither of the scenarios above would determine a loss of value of the goodwill.

3. Other Intangible assets € 4,196,595 The intangible assets are entered amongst the statement of account assets, since they are part of the assets allocated to be durably used. No value adjustment has been applied to the cost of acquisition or production of the intangible assets. “Concessions, licenses, trademarks and similar rights” includes the cost incurred for the acquisition of software licenses depreciated in three fiscal years, and for the deposit of trademarks, which are depreciated in ten fiscal years. “Assets under construction and payments on account” records the value – according to the state of progress - of the design costs to adapt the safeguard areas and studies to install flow rate metering instruments in the sewers to detect anomalous inputs. Furthermore, since 2014, the entry “Other” also includes the "Surface right" regarding the parking places at the “Palazzo" car park.

109

4. Concessions € 685,613,165 The item Assets under concession progressed as follows:

Turin 2018 Categories Total aqueduct aqueduct Usage rights the City of Turin of City the the City of Turin of City the Revertible assets for the City of the City for aqueduct system for for system aqueduct on assets of external of on assets assets in management assets in assets constituting the assets constituting assets granted by CIACT by assets granted on assets Improvements Usage rights constituting rights Usage the aqueduct system for for system the aqueduct Assets under concession under Assets

Improvements on external external on Improvements aqueducts in management in aqueducts Ongoing improvement works improvement Ongoing Ongoing improvement works on on works improvement Ongoing constituting the aqueduct system system aqueduct the constituting Historical cost as at December 31st 2017 3,834,635 50,871,004 169,030,358 469,863,137 10,487,670 149,446,186 5,406,364 858,939,354 Depreciation fund as at December 31st 2017 (2,525,741) (34,696,633) (64,898,492) (172,957,519) 0 0 (4,290,569) (279,368,954) Net value as at December 31st 2017 1,308,894 16,174,371 104,131,866 296,905,618 10,487,670 149,446,186 1,115,795 579,570,400 Works in progress completed in 2018 0 0 0 433,882 0 0 0 433,882 Works in progress completed in 2018 0 0 2,356,993 57,322,749 (2,356,993) (57,322,749) 0 0 Disinvestments in the fiscal year 0 0 0 (20,466) 0 0 0 (20,466) Adjustments 0 0 (394,213) (675,243) (15,077) (173,117) 0 (1,257,650) Increases in the fiscal year 0 0 5,063,583 16,985,762 8,212,747 41,958,590 0 72,220,682 Historical cost as at December 31st 2018 3,834,635 50,871,004 176,056,721 543,909,821 16,328,347 133,908,910 5,406,364 930,315,802 Depreciation in the fiscal year (81,805) (1,010,898) (8,097,577) (30,771,339) 0 0 (215,614) (40,177,233) Use of funds 0 0 121,380 220,315 0 0 0 341,695 Depreciation fund as at December 31st 2018 (2,607,546) (35,707,531) (72,874,689) (203,508,543) 0 0 (4,506,183) (319,204,492) Net value as at December 31st 2018 1,227,089 15,163,473 103,182,032 340,401,278 16,328,347 133,908,910 900,181 611,111,310

2019 duct Turin Categories Total Usage rights the City of Turin of City the Revertible assets for the City of Turin of City the for on assets of externa of on assets assets in management assets in assets constituting the assets constituting assets granted by CIACT by assets granted Improvements on assets Improvements Usage rights constituting rights Usage the aqueduct system for for system the aqueduct Assets under concession under Assets

aqueducts in management in aqueducts Ongoing improvement works improvement Ongoing aqueduct system for the City of the City for system aqueduct Ongoing improvement works on on works improvement Ongoing Improvements on external aque- external on Improvements constituting the aqueduct system system aqueduct the constituting Historical cost as at 3,834,635 50,871,004 176,056,721 543,909,821 16,328,347 133,908,910 5,406,364 930,315,802 December 31st 2018 Depreciation fund as at (2,607,546) (35,707,531) (72,874,689) (203,508,543) 0 0 (4,506,183) (319,204,492) December 31st 2018 Net value as at 1,227,089 15,163,473 103,182,032 340,401,278 16,328,347 133,908,910 900,181 611,111,310 December 31st 2018 Reclassifications 0 0 0 15,216,819 0 4,618,686 0 19,835,505 Works in progress 0 0 5,304,310 59,770,161 (5,304,310) (59,770,161) 0 0 completed in 2019 Disinvestments in the 0 0 0 (18,683) 0 0 0 (18,683) fiscal year Adjustments 0 0 (25,339) (787,760) 0 (105,013) 0 (918,112) Increases in the fiscal 0 0 11,821,140 37,429,649 9,646,657 44,925,270 0 103,822,716 year Historical cost as at 3,834,635 50,871,004 193,156,832 655,520,007 20,670,694 123,577,692 5,406,364 1,053,037,228 December 31st 2019 Reclassification/ adjustment 0 0 0 (4,474) 0 0 0 (4,474) of amortization fund Amortization (81,939) (1,010,898) (8,875,649) (38,279,010) 0 0 (215,619) (48,463,115) in fiscal year Use of funds 0 0 3,706 244,312 0 0 0 248,018 Depreciation fund as at (2,689,485) (36,718,429) (81,746,632) (241,547,715) 0 0 (4,721,802) (367,424,063) December 31st 2019 Net value as at 1,145,150 14,152,575 111,410,200 413,972,292 20,670,694 123,577,692 684,562 685,613,165 December 31st 2019

110

This entry also refers to “Revertible assets” which show the values of the extensions, realized by the former Shareholder AAM Torino S.p.A., to add to the aqueduct system of the City of Turin and received by the same in provision, for which the constraint for free transmission at the end of the relative lease was stipulated.

Moreover it includes the value of the “Right of use of the assets that constitute the waterworks system”, which is mandatory and already acknowledged by the City of Turin when they are given to the former Shareholder AAM Torino S.p.A. and then given by the latter to SMAT Torino S.p.A. The item also includes the value of the right to use the waterworks system transferred to January 1st 2003 by C.I.A.C.T. in liquidation. The values are represented in compliance with the expert appraisals drafter to transfer them and depreciated as a function of the new agreement between Ente d’Ambito n. 3 Torinese and SMAT S.p.A. the new agreement between Ente d’Ambito n. 3 Torinese and SMAT S.p.A..

The value of usage rights is amortized based on the relative agreement deed. Amortizations on improvements and revertible assets were determined with reference to the estimated economic-technical lifespan.

5. Investments € 13,815,845

Other Categories Subsidiaries Associates Grand total enterprises Historical cost as at December 31st 2018 1,491,322 43,102,341 3,536,923 48,130,586 Value adjustments as at 12/31/2018 (1,071,615) (32,860,000) (78,126) (34,009,741) Net value as at December 31st 2018 419,707 10,242,341 3,458,797 14,120,845 Extraordinary Operations in 2019 Subscriptions/acquisitions in 2019 30,000 30,000 Payments in capital account 2019 Disposals/reductions in 2019 Value adjustment in 2019 (335,000) (335,000) Historical cost as at December 31st 2019 1,491,322 43,102,341 3,566,923 48,160,586 Value adjustment as at December 31st (1,071,615) (33,195,000) (78,126) (34,344,741) Net value as at December 31st 2019 419,707 9,907,341 3,488,797 13,815,845

In general terms, the statement of account values do not significantly exceed the ones that correspond to the fractions of Net Equity reported in the statements of account to December 31st 2019 of the related companies. The shareholding in Acque Potabili S.p.A. has been assessed to Eur 9.9 million as related to the fraction of Net Equity from Parent Company SMAT S.p.A., as already described in detail in the Management Report.

This value is supported by the impairment test carried out by an external independent expert based on the equity method. Through Acque Potabili S.p.A. SMAT S.p.A. has undirected joint control on: . Acquedotto del Monferrato S.p.A..

111

In compliance with art. 2427, comma 1, no. 5 of the Italian Civil Code, the participating interest in subsidiaries related companies in force to December 31st 2019, respectively consists of: . Shareholding in Risorse Idriche S.p.A., having its registered office in Torino, Corso XI Febbraio 14 and having the following characteristics:

Shareholding in Risorse Idriche S.p.A. a) Share capital of the investee (€) 412,769 b) Shares held (Qty.) 727,305 c) Nominal value per share (€) 0.52 d) Purchase cost (€) 1,440,322 e) Stake held (%) 91.62 f) Book value (€) 368,707 g) Net Equity of the investee (€) 669,346 h) Result of previous fiscal year (€) 3,493 . Shareholding in AIDA Ambiente S.r.l.., having its registered office in Pianezza, via Collegno 60, and having the following characteristics:

Shareholding in AIDA Ambiente S.r.l. a) Share capital of the investee (€) 100,000 b) Shares held (Qty.) N/A c) Nominal value per share (€) N/A d) Purchase cost (€) 51,000 e) Stake held (%) 51.00 f) Book value (€) 51,000 g) Net Equity of the investee (€) 636,181 h) Result of previous fiscal year (€) 115,815

. Shareholding in Acque Potabili S.p.A., having its registered office in Torino, Corso XI Febbraio 22, and having the following characteristics:

Shareholding in Acque Potabili S.p.A. a) Share capital of the investee (€) 7,633,096 b) Shares held (Qty.) 3,429,125 c) Nominal value per share (€) 1.00 d) Purchase cost (€) 43,102,341 e) Stake held (%) 44.92 f) Book value (€) 9,907,341 g) Net Equity of the investee K/€ 21,516 h) Result of previous fiscal year K/€ (709)

The value of other shares is supported by the impairment test carried out by an external independent expert, who used the income method, where applicable, based on the weighted average cost of capital (WACC) of 4.55% foreseeing a perpetual growth rate (g) of 0.6%. The fair value valuation of the other shares determined a value that is substantially aligned with the cost of investment, already recorded on December 31st 2018, at 3.5 million Euros. Even though the profitability of some investees in the medium term results positive, the values were not changed because they were not considered significant.

On July 19th .2016, a specific Notary Deed defined the establishment of the Water Alliance – Acque del Pie- monte (now Utility Alliance del Piemonte) network of enterprise, whose registered office is in Turin– Viale Maestri del Lavoro n. 4. As at December 31st 2019 the Equity Fund amounted to Euro 70,000 in which SMAT holds a 7.14% interest. This network of enterprises is established by 12 Piedmontese water service companies, that signed a "network agreement" aimed at upgrading their competitive capacity through a shared representation of interests on behalf of institutional stakeholders and associations, as well as shared decision-making processes.

112

SMAT S.p.A. renounced the receivables due from the Hydroaid Association, for non-interest bearing financing of 30,000 Euros accounted in the Endowment Fund. Therefore, SMAT converted the aforesaid credit into shares.

6. Deferred tax assets € 15,449,270 This item (€ 15,232,705 n the previous fiscal year) includes the credit deriving from the active deferred taxes mainly calculated on the provisions for costs to be deduced in the future and t the revenues for anticipated taxation. The entry shows an increase of over EUR 217,000 from the previous fiscal year, due to the combined effect of: deductibility of costs accrued in the fiscal year in progress, future fiscal years and deduction of the costs recorded in previous fiscal years, in the present fiscal year.

Such effects are reported in the following detail table:

Description credits Costs Balance in 2019 in IRES/IRAP IRES/IRAP Receivables 12/31/2019 New 12/31/2019 % IRES/IRAP % IRES/IRAP Adjustments Balance as at transferred as at as at 12/31/2018 as at 12/31/2019 Incremental costs Incremental transferred to 2019

Multi-year accrued liabilities – F.O.N.I. 3,354,596 (1,184,932) 28.20% (334,150) 3,020,446 (115,688 Risk and charges down-payment 5,476,764 (3,767,211) 28.20% (1,062,353) 717,772 28.20% 202,410 4,501,133 ) 10,502,30 Allocation of Provision for Bad Debts 6,315,094 (4,096,784) 24.00% (983,228) 24.00% 2,520,553 7,852,419 6 Depreciation Amortization Goodwill and trademarks 4,888 4,888 SAP/SAC Compensation to Directors 10,683 (44,511) 24.00% (10,683) 0 not paid Payable interest arrears 70,680 (105,029) 24.00% (25,206) 103,792 24.00% 24,910 70,384 (115,688 11,323,87 TOTAL 15,232,705 (9,198,467) (2,415,620) 2,747,873 15,449,270 ) 0

CHANGES IN DEFFERED RECEIVABLE TAXES CREDITS 216,565

7. Non-current financial assets € 1,400,001 12/31/2019 12/31/2018 • Receivable caution money € 1,220,228 985,029 • Customers € 179,773 0 Total € 1,400,001 985,029

The non-current financial assets towards customers are represented by credits registered following the under- signing of the agreement for governing the use of land in the Municipalities of Scalenghe and Airasca, for the years 2011 - 2018 with a payable plan up to 2031. The receivables are recorded in the financial statement, as required by IFRS 9 – Financial Instruments, net of the amortized cost.

CURRENT ASSETS

8. Inventory € 8,623,844 The item includes: 12/31/2019 12/31/2018 • Raw, subsidiary materials and consumables € 8,582,699 7,560,218 • Finished products and goods € 41,145 41,145 Total € 8,623,844 7,601,363

The total changes in inventory from the previous fiscal year amounted to € 1,022,481.

113

The value of the inventory is adjusted by a depreciation fund regarding slow turnover materials for an amount of € 770.000, which has not changed from the previous year. The Inventory consists of materials whose use does not contain features of multi-year usefulness. It is assessed in the financial statement at the lowest price between the average weighted price and the market price. No financial charges were attributed to the inventory value.

9. Trade and other receivables € 227,725,387 The book value of the trade receivables breaks down as follows: 12/31/2019 12/31/2018 Due from customers • Bills and invoices issued € 193,323,792 193,391,961 • Bills and invoices to be issued € 55,824,079 66,489,453 • Provision for bad debts € (34,579,490) (28,248,369) Total due from customers € 214,568,381 231,633,045 Due from subsidiaries € 335,296 1,874,267 Due from associates € 38,409 57,325 Due from holding companies € 2,275,952 3,655,770 Due from other € 10,507,349 8,150,919 Net book value € 227,725,387 245,371,326

DUE FROM CUSTOMERS € 214,568,381 The net value of receivables towards customers demonstrates decrease of approximately 17 million Euros in respect to the previous fiscal year as a consequence of rate changes that reduced applied rates and decreased consumption in 2019, and prudent evaluation of receivables due from higher risk users. These receivables are entered at their estimated realizable value, taking into account a prudential write-down of approximately Euro 34.6 million, allocated in accordance with the provisions set forth in IFRS 9.

DUE FROM SUBSIDIARIE € 335,296 The item (€ 1.874,267 n the previous fiscal year) is represented by the credit towards subsidiaries Risorse Idriche S.p.A. and AIDA Ambiente S.r.l as highlighted in the present note. The reduction is the consequence of collection of debts due from the subsidiary Risorse Idriche S.p.A.

DUE FROM ASSOCIATES € 38,409 The item (€ 57,325 in the previous fiscal year) is represented by receivables due to the SAP Group.

10. Current tax assets € 6,403,743 This item (€ 6,293,978 in the previous fiscal year) refers mainly to the IRES and IRAP credits emerging from the accounts paid, calculated based on the historical method (approximately 6.1 million Euros).

114

11. Current financial assets € 632,828 12/31/2019 12/31/2018 • Towards clients € 39,127 0 • Due from subsidiaries € 593,701 2,565,589 • Due from associates € 0 0 • Due from other € 0 0 Total € 632,828 2,565,589

The receivables due from subsidiaries are represented by debts to Risorse Idriche S.p.A., based on cash pooling contracts stipulated between the parent company and the subsidiary on 30.01.2015 to optimise financial de- mands. The substantial decrease is due to collection of receivables due to the subsidiary.

12. Other current assets € 3,498,729 The credits to others refer to: 12/31/2019 12/31/2018 • Accrued income € 173,151 0 • Deferred charges € 603,060 935,386 • Other assets € 2,722,518 2,858,306 - Due from employees for amounts to be recovered through With € 160,540 237,648 holding - Due from Ambito for rentals and contributions € 0 21,433 - Due from other € 2,561,978 2,599,225 Total € 3,498,729 3,793,692

The Accrued income is represented by the pertinent share of the interest on deposits expiring 24/01/2020.

13. Cash and cash equivalents € 54,294,178 The liquid assets include: 12/31/2019 12/31/2018 • Bank and Post Office deposits € 9,249,413 119,767,150 • Short term deposits € 45,000,000 0 • Checks € 0 4,663 • Cash and cash equivalents € 44,765 39,637 Total € 54,294,178 119,811,450

The remarkable increase from the previous fiscal year derives from the partial use of the nonconvertible debenture loan required to finance the investments envisaged by the Investment Plan of the Autorità d’Ambito 3 Torinese, started in the last fiscal year. All the aforementioned remainders are liquid and fully available as at the date of the Financial Statements without any constraints whatsoever, except for the usual subject to collection clause on checks.

115

NET EQUITY AND LIABILITIES

14. Net Equity € 645,697,947 The value in the Financial Statements takes into account the deliberations taken by the Ordinary Assembly of Shareholders of June 28th 2019 as related to the destination of the Parent Company results of fiscal year 2018.

COMPOSITION OF THE NET EQUITY POSSIBILITY OF Nature/Description 12/31/2019 AVAILABLE AMOUNT UTILIZATION Share capital 345,533,762 Legal reserve 20,909,251 X Reserve restricted for PEF implementation 238,874,674 FTA reserve (2,677,452) Other reserves and retained earnings: • Optional reserve 34,342,562 X (1,328,230) • Severance actualization reserve 229,319 • Negative reserve for own shares in portfolio (32,993,340) • Reserve for rounding up (4) • Retained earnings 1,376,946 X 1,376,946 Total other Reserves and retained earnings 2,955,483 Operating income 40,102,229 Total Net Equity 645,697,947 48,716

LEGAL RESERVE € 20,909,251 The Legal reserve of EUR 18,319,415 as at 12/31/2018 increased by EUR 2,589,836 during the year as per the resolution of the Meeting of Shareholders of 06/28/2019.

RESERVE RESTRICTED TO IMPLEMENTATION PEF € 238,874,674 This reserve of EUR 199,509,171 as at 12/31/2019, was increased in the fiscal year by Eur 39,365,503 as per Resolution of the Meeting of Shareholders of 06/28/2019.

FTA RESERVE € (2,677,452) This reserve includes the effects of FTA on the Net Equity deriving from the adoption of the international accounting principles.

OTHER RESERVE AND RETAINED EARNINGS € 2,955,483 Other Reserves include: 12/31/2019 12/31/2018 • Optional reserve € 34,342,562 34,342,562 • Severance pay discount reserve € 229,319 791,182 • Negative reserve of own shares in portfolio € (32,993,340) (32,993,340) • Reserve for rounding up € (4) (4) • Retained earnings € 1,376,946 1,352,768 Total € 2,955,483 3,493,168

The reserve for the actualization of the Severance Pay includes the profits/losses that result from the actuarial assessments performed in application of IAS 19 to the Severance Pay and pensions accrued as at 12/31/2019. The negative reserve for own shares in portfolio as at 12/31/2019 equal to € 32,993,340 refers to 492,965 own share purchased according to conforming authorization of the Ordinary Meeting of Shareholders The available reserves in the Financial Statement 2019 amount to EUR 48,716 116

Profits carried forward were increased in the fiscal year by EUR 24,180, as per resolution of the Meeting of Shareholders of 06/28/2019, by effect of destination of the result to the fiscal year 2018.

PROFIT FOR THE YEAR € 40,102,229 12/31/2019 12/31/2018 Profit for the year € 40,102,229 51,796,714

LIABILITIES € 531,010,900

15. Current and non-current fiscal liabilities € 286,630,959 Financial debts on 31.12.2019 are presented in detail by type in the following table:

12/31/2019 12/31/2018 Non-current financial liabilities Bonds 134,142,009 133,983,809 Payable loans 100,049,325 148,718,816 Debts for leased assets 549,001 0 Total 234,740,335 282,702,625

Current financial liabilities Short-term payable loans 48,706,799 48,943,133 Due to banks and accrued financial payables 2,135,019 2,162,025 Debts for short term leased assets 1,048,806 0 Total 51,890,624 51,105,158

Total financial liabilities 286,630,959 333,807,783

Total financial liabilities are made up of: • loans (bonds and mortgages) with total value amounting to Euro 282,898,133, net of the amortized residual cost of Euro 857,991 for the debenture loan of Euro 62,071 for payable loans; • the entry “Due to banks and financial charges” amounting to EUR 2,135,019 which includes other short term operations for EUR 76,917 and accrued financial charges amounting to EUR 2,058,102, which mainly include interest on the debenture loan in the accrued amount; • debts for leased assets, of which the total value amounts to 1,597,807 Euros, net of the residual amortized cost 61,478 Euros.

Movement of financial liabilities during the fiscal year is the following:

117

The debt for medium to long term funding, gross to the depreciated cost, is detailed in the following table:

Funding Debt to December 31st 2019 Bonds € 135,000,000

Payable loans Banco BPM (formerly Italease) € 1,802,057 Intesa Sanpaolo € 3,870,535 European Investment Bank € 39,000,000 European Investment Bank € 32,595,000 Cassa Depositi e Prestiti € 17,500,000 European Investment Bank € 53,846,154 Others € 204,449 Total Payable loans 148,818,195

Total € 283,818,195

Residual Due within next Due between the Due after the Type amount fiscal year 5th year 5th year Bonds 135,000,000 135,000,000 Payable loans 148,818,195 48,706,799 100,111,396 Due to banks and accrued financial payables 2,135,019 2,135,019 Debts for leased assets 1,659,285 1,048,806 415,717 194,762 Total 287,612,499 51,890,624 235,527,113 194,762

Below are the major contractual conditions.

Value Duration Funding line of Due date Instalment Rate in years credit Ordinary non-convertible loans 135,000,000 7 04/13/2024 annual fixed Variable (Euribor 6m + Banco BPM (formerly Italease) 12,546,059 7 12/31/2020 biannual spread) Variable (Euribor 6m + Intesa Sanpaolo 36,125,000 15 06/30/2021 six months, constant equity spread) Variable (Euribor 6m + European Investment Bank 130,000,000 15 12/19/2022 six months, constant equity spread) Variable (Euribor 6m + European Investment Bank 80,000,000 14 12/30/2022 six months, constant equity spread) Variable (Euribor 6m + Cassa Depositi e Prestiti 50,000,000 15 06/30/2023 six months, constant equity spread)

European Investment Bank 100,000,000 9 06/30/2023 six months, constant equity fixed

miscella- fixed/Variable (Euribor Other 4,724,432 2019-2022 six months constant/six months neous 6m + spread)

The ordinary nonconvertible debenture loan was issued on April 13th 2017. The bonds are assisted by a rating released by Standard & Poor’s Senior Unsecured “BBB-“ (for details see the Directors’ Report), and have a duration of seven years with a coupon of 1.95% and they are quoted on the regulated Dublin Stock Market (ISE – Irish Stock Exchange), rating confirmed on 11/27/2019.

Activation of the loan from financial institutions, to finance the investments in expansion and upgrading of the networks, water production, distribution, collection and treatment plants envisaged in the Investment Plan of ATO3, did not require any guarantee by the shareholders and envisages for its entire duration maintenance of the following financial parameter calculated based on the data of the Consolidated Financial Statement closed as of 12/31 of the previous year and according to the definitions in the contractual stipulations: 118

• Net Financial Debt/EBITDA (EBIT+Amortization): lower than or equal to 5.

The Banco BPM (formerly Italease) loan was contracted by assumption in 2013.

The loan contracted with Intesa Sanpaolo (ex B.I.I.S.) is unsecured.

The guarantee released is remunerated by a commission calculated on the guaranteed amount.

The loan taken with Cassa Depositi and Prestiti S.p.A for the provision of EUR 50 million, as an integration of the aforementioned EIB loan for the total coverage of the needs connected to large infrastructures, is assisted by the assignment of receivables that can be claimed at the Ente d’Ambito and the third parties as related to the execution of the agreement that awards the management of the Integrated Water Service in Ambito 3 Torinese. Such loan involves the obligation to keep - throughout its duration - the following financial parameters, which are calculated on the data of the Company’s Financial Statement for the fiscal year closed as at December 31st of the previous year and in compliance with the definitions included in the contract provisions. • Net Financial Debt/EBITDA (EBIT+Amortization): lower than or equal to 5. • Net Financial Position/Net Equity: lower than or equal to 1.

In cases of noncompliance with even only one of said financial parameters, the delivering institutions have the right to terminate the contract in advance.

119

It is worth highlighting that - as at December 31st 2019 - all the aforementioned financial parameters are complied with. Other loans includes the mortgages received as a transfer and mainly stipulated with Cassa Depositi Prestiti.

16. Provisions for employee benefits € 15,095,807 The Provisions for employee benefits as at December 31st 2019 reflects the indemnity accrued by the employees up as at December 31st 2006, which will be exhausted by the payments to be made at the end of the work relations, or of any advance in compliance with the law. The movements of the fund (which is not influence by the shared accrued during the fiscal year in favour of the employees throughout the year) has been as follows:

Employee Severance Provision st - Balance as at December 31 2018 € 14,420,855 - Service cost € 0 - Utilizations, adjustments, indemnities and advances paid out in the period € (1,281,313) - Interest cost deriving from IAS 19 € 217,382 - Actuarial Profits/losses € 528,496 Balance as at December 31st 2019 € 13,885,420

Other benefits refer to the estimated quantification of the seniority bonuses potentially due to employees that accrue the relevant requirements stipulated in in the company regulations entered below

Pension fund st - Balance as at December 31 2018 € 1,193,520 - Service cost € 56,268 - Utilizations, adjustments, indemnities and advances paid out in the period € (90,793) - Interest cost deriving from IAS 19 € 18,025 - Actuarial Profits/losses € 33,367 Balance as at December 31st 2019 € 1,210,387

The following tables illustrate, respectively, the economic, financial and demographic assumptions made for the actuarial assessment of the liabilities in exam.

Economic-financial assumption - Yearly actualization rate 0.77% - Yearly inflation rate 1.20% - Yearly Severance Provision increase rate 2.40%

Demographic assumptions - Mortality Tables RG 48 - Disability INPS tables by age and sex - Retirement age Attainment of the requirements - % of advance payment frequency 1.50% - Turn-over 0.50%

120

17. Provisions for risks € 19,920,439 These provisions are made up of:

A) Provisions for litigations and charges € 11,009,233

The provisions for litigations and charges reflect the prudent assessment - on the basis of valuation elements available - of the potential additional liabilities due to judicial and extra-judicial litigations which are currently in progress, as well as of other charges of various kinds which are certain or likely to occur in the future.

The handling of such provisions has been as follows:

st - Balance as at December 31 2018 € 14,133,959 - Provisions of the fiscal year € 813,795 - Use in the fiscal year € (530,026) - Estimate adjustment € (3,408,495) Balance as at December 31st 2019 € 11,009,233

The balance of the allocations for litigations and charges as at 12/31/2019 is considered consistent for covering the following estimated potential liabilities.

B) Allocation for cyclical maintenance charges € 959,844

The provisions for charges of routine maintenance reflects the valuation of the charge that was technically accrued but not yet liquidated as at the date of the Financial Statements because of the routine maintenance programs repeated over several years. Such program cannot be planned with certainty since they concern systems in continuous production cycle. The provisions for 2019 have not varied from the previous fiscal year, since it has been considered to be congruous: st - Balance as at December 31 2018 € 959,844 - Provisions of the fiscal year € 0 - Use in the fiscal year € 0 Balance as at December 31st 2019 € 959,844

C) Allocations Regione Piemonte Law No. 61 of 12/29/2000 € 451,362

D) Provisions for Ambito management charges € 6,850,000

The amount reflects the best estimate of the charges and of the potential risks connected to the Ambito management activities. st - Balance as at December 31 2018 € 6,789,763 - Provisions of the fiscal year € 60,237 - Use in the fiscal year € 0 - Adjustment of estimate in the fiscal year € 0 Balance as at December 31st 2019 € 6,850,000

121

E) Provisions for charges to other companies € 650,000

The provisions reflect the potential charges deriving from the commitments made by the shareholders for patronage of the Dexia-BIIS loan to APS S.p.A. in bankruptcy since 2013. The provisions were not subject to any movements during the current fiscal year, st - Balance as at December 31 2018 € 650,000 - Provisions of the fiscal year € 0 - Adjustment of estimate in the fiscal year € 0 Balance as at December 31st 2019 € 650,000

18. Deferred tax liabilities € 314,986 The amount includes the deferred charges for income taxes (IRES and IRAP), which are computed at the rates in force on revenues with deferred taxation and on the advanced deduction costs. The entry (EUR 337,834 n the previous fiscal year) shows a reduction from the previous fiscal year, due to the combined effect of de-taxation of significant taxable revenues in future fiscal years, taxation of revenues that were computed in previous fiscal years and taxed in the current fiscal year. These effects are itemized in the table below:

Description as at at as 2019 costs Costs in 2019 Balance Payable Payable IRES/IRAP transfer as

12/31/2018 12/31/2019 % IRES/IRAP% Incremental IRES/IRAP% IRES/IRAP as New payable New Balance at as Balance transferred totransferred at 12/31/2019 at 12/31/2019

Advanced Depreciation 155,966 155,966 Receivable interest in arrears 158,018 (208,764) 24.00% (50,103) 150,867 24.00% 36,208 144,123 amortized cost 23,850 (37,308) 24.00% (8,953) 14,897 FTA financial liabilities TOTAL 337,834 (246,072) (59,056) 150,867 36,208 314,986

CHANGE IN DEFERRED TAX DEBTS (22,848)

The item "Multi-year unearned income", in addition to ongoing investments, also includes the amount "bound revenues" destined for covering investments (FoNI) of 10,710,797 Euros following assignment in the economic statement relative to amortization of the referred income.

20. Commercial payables € 81,784,198

PREPAYMENTS € 128,261 The entry (EUR 151,282 in the previous fiscal year) includes the amounts advanced by users for works still to be completed as at closing date of the financial statement

DUE TO SUPPLIERS € 56,688,365 Due to suppliers refers to: 12/31/2019 12/31/2018 • Italian suppliers € 23,285,971 27,741,747 • Foreign suppliers € 10,018 99,241 • Invoices to be received € 33,392,376 31,975,855 Total € 56,688,365 59,816,843 122

All payables to suppliers fall due within the end of one year and in no case are they assisted by guarantees, in addition to the withholding amount of 0.5% on the jobs.

DUE TO SUBSIDIARIES € 3,270,518 12/31/2019 12/31/2018 • Due to subsidiaries € 3,270,518 6,973,022

The itemized entry in the dedicated section of the directors report includes the payables to the subsidiaries Risorse Idriche S.p.A. and AIDA Ambiente S.r.l. and in particular includes the payables for invoices and N.C. to be received in the amount of EUR 2,966,888 (EUR 6,288,669 in the previous fiscal year).

DUE TO ASSOCIATES € 15,657 12/31/2019 12/31/2018 • Due to associates € 15,657 15,591

DUE TO HOLDING COMPANIES € 1,504,860 12/31/2019 12/31/2018 • DUE TO HOLDING COMPANIES € 1,504,860 1,249,214

The entry referred to the section dedicated to it in the Directors’ Report refers to trade payables to the City of Turin, and none of them is assisted by a real guarantee on the corporate assets.

DUE TO OTHER € 20,176,537 12/31/2019 12/31/2018 • Due to others € 20,176,537 22,193,362 This item consists mainly of trade payables to the Operative Management Subjects for invoices to be received for contractual obligations undertaken with the same.

21. Current tax liabilities € 3,267,035 These liabilities consist mainly of VAT owed in the fourth quarter of 2019 after the advance paid. The tax due in application of the VAT split payment system extended to subsidiaries by Public Entities from 07/01/2017, has been paid regularly by the due date established by current law. Current fiscal liabilities are also entered under payables for Withholding tax held for employees and third parties in the amount of approximately EUR 1.7 million, this to paid on the due date.

22. Other current liabilities € 71,722,293 The other payables include: 12/31/2019 12/31/2018 • Due to Social Security Administration € 3,788,933 4,067,677 • Accrued charges € 0 0 • Deferred income € 151,933 172,786 • From other: € 67,781,427 67,778,531 • Local Authority fees € 5,254,925 5,543,852 • Contributions to Comunità Montane € 47,162,712 44,824,173 • Due to SOG and Municipalities for accessory services € 524,847 520,857 • Other due to Bodies and Municipalities for F/D received 2,748,983 3,097,344 on behalf € • Accruals to liquidate to employees € 5,818,826 6,299,465 • Other payables € 6,271,134 7,416,865 • Dividends to pay € 0 75,975 Total € 71,722,293 72,018,994

123

The debt concerning the Local Authority Fees and the Levies to the Unioni Montane (Mountain Authorities), which have been increased by approx. EUR 2 million include the relative assessments and represent the best estimation of the balance that will have to be paid after the order is made to pay the awarding Municipalities and the Mountain Unions deriving from the determinations made by the Ente d’Ambito and on the basis of the amounts from the same communicated, adjustments excluded.

With specific reference to the contributions to the Comunità Montane, these are paid on the basis of ad hoc communications by the Ente d’Ambito.

In particular the Local Entity Rentals refer mainly to the amounts due for 2017 as required by Ente d’Ambito n. 3 Torinese only during the first few months of fiscal year 2020 and in amounts referring to past periods, for some of which it was requested to pay with the corresponding receivables.

124

Notes of commentary to the entries of the Income Statement Revenues

23. Revenues € 320,116,769

Revenues are made up as follows: 2019 2018 − Aqueduct service € 135,447,791 137,807,362 − Sewer service € 43,876,731 45,974,813 − Water treatment service € 126,872,585 129,666,419 − Hydrants € 4,162,994 4,290,631 − Other revenues € 9,756,668 9,440,455 Total € 320,116,769 327,179,680

Revenues decreased by approximately 7 million in respect to the previous fiscal year, in particular due to contraction in consumption and reduction in the rate by 2.3% in respect to the previous three years as set forth in the rate schedule. The revenues from the aqueduct, sewer and water treatment services are net of the 50% rate reduction for public municipal and provincial users for a total of Eur 5,297,835. All the revenues inherent to the institutional activity were obtained in the reference territory ATO 3 Torinese, as determined by the Piemonte Regional Law no. 13 of 01/20/1997 and include the best estimate of revenues accrued in the fiscal year for aqueduct, sewers, water treatment services and hydrants provided in the 289 Municipalities acquired by effect of the reunification process (resulting from the establishment of the municipalities of Val di Chy and Valchiusa starting from 1/1/2019).

"Other Revenues" mainly includes accessory revenues from users, industrial waterworks, those that are obtained for activities performed on behalf of users and third parties, in particular as related to modification to the water and sewerage networks, revenues from analysis and treatment, Punti Acqua, sale of energy and services for no-core activities performed on the free market. The increase in respect to the previous fiscal year is due to the combined effect of greater revenues from reimbursement of payment reminders, industrial aqueduct (from 2019 the parent company has managed the industrial aqueduct in Rivalta, previously managed by the former SOG Acquagest), analysis and treatment, as well as revenues from water points because of reduction due to works, users and third parties.

24. Revenues for planning and construction activities € 103,822,716 2019 2018 − Revenues for planning and construction activities € 103,822,716 72,243,129

25. Other revenues € 19,013,910 The other operational revenues are composed as follows: 2019 2018 − Contribution for current expenses (A) € 3,858,137 2,776,214 − Other . Contribution shares in production fa- € 4,990,270 3,112,886 cilities . Other revenues € 1,442,902 1,937,917 . Contingent assets and non-existent liabilities € 5,314,106 3,576,521 . Adjustment to provisions for liabilities and other € 3,408,495 4,076,127 charges (B) € 15,155,773 12,703,451 Total other revenues (A+B) € 19,013,910 15,479,665 125

The item "Contribution for current expenses" mainly includes the incentive for production of solar power, the incentive rate formerly called Green Certificates, as well as the contributions paid by the Piemonte Region for the water emergency in 2017 and 2018. The increase in respect to the previous fiscal year is due to the liquidation of the aforesaid water emergency contribution. “Other” includes the economic accrual amount of contributions into the plants accounts, already commented on under the entry “ multiannual deferred income” have these notes to the accounts, in addition to the other revenues ( among which receivable lease payments, reimbursements for stamps and other reimbursements),contingent assets and non-existent liabilities in addition to the adjustments made to the provision of liabilities, as already commented in the dedicated section of Liabilities in these notes to the accounts. The comprehensive variation in this item in respect to the previous fiscal year is due to the combined effect of the increase in distribution of contributions in the systems account (correlated to large infrastructure interventions) and contingent gains and non-existence of liabilities. and a decrease in other reimbursements and adjustments to the risk fund. Operating costs

26. Consumption of raw materials and consumables € 13,712,693 This entry includes: 2019 2018 • Materials for maintenance net of changes in stock € 7,499,673 5,539,556 • Chemicals € 4,383,131 4,546,359 • Other materials € 1,980,979 1,927,880 • Increases for in-house jobs € (151,090) (128,877) Total € 13,712,693 11,884,918

27. Costs for leased assets and services € 110,844,918 This entry includes: 2019 2018 • Electricity: (A) € 32,223,051 30,763,064 • Maintenance, works and services & industrial (B) € 56,695,734 54,856,219 • General services: . Services € 10,844,513 10,036,798 . Allocation to Provision for liabilities and other charges € 204,595 819,737 (C) € 11,049,108 10,856,535 • Rentals to local entities (D) € 7,603,831 8,065,992 • Rentals and payable concessions, leases and hires (E) € 3,273,194 4,518,155 Total costs for leased assets and services (A+B+C+D+E) € 110,844,918 109,059,965

126

The energy balance is demonstrated as follows: 2019 2018 MWh % MWh % - Heat . Self-produced by gas engines 18,525 49.64 18,505 42.96 . Self-produced by boilers 400 1.07 450 1.04 . Self-produced by DEMOSOFC plant 188 0.50 143 0.33 . Produced by methane 18,205 48.79 23,980 55.67 Total 37,318 100.00 43,078 100.00 - Electricity: . Self-produced by gas engines 21,490 9.07 21,420 8.89 . Self-produced by solar cells 1,294 0.55 1,176 0.49 . Self-produced by DEMOSOFC plant 216 0.09 177 0.07 . Total uptake from external suppliers 213,887 90.29 218,076 90.55 Total 236,887 100.00 240,849 100.00 Total consumption 274,205 100.00 283,926 100.00 Total recovery 42,113 15.36 41,870 14.75 Self-produced and sold electricity - 7,063 6,777 (Balme hydroelectric power station) Total self-production 49,176 48,647 Total self-produced electricity 30,063 29,549 Self-produced electricity in relation to total electricity - 12.69 12.27 consumed

28. Payroll costs € 61,551,383 The payroll cost composition is the following: 2019 2018 − Wages and salaries € 41,588,883 41,572,127 − Social charges € 13,779,724 13,550,456 − Severance package € 2,705,303 2,701,367 − Pension and similar funds € 56,268 61,591 − Other costs € 3,421,205 2,113,092 − Increases for in-house jobs € 0 0 Total € 61,551,383 59,998,633

127

Relative to the accounting period, the average staff was composed as follows:

Top Manag- Middle Office work- Labourers Apprentices Total ers Managers ers Staff as at 12/31/2018 9 28 576 321 39 973 Staff as at 12/31/2019 9 28 563 310 45 955 Change 0 0 -13 -11 6 -18 Relative to the accounting period, the average staff was composed as follows:

- Top Managers 9 - Middle Managers 28 - Office workers 573 - Labourers 320 - Apprentices 40

The cost records an increase of approximately 1.55 million Euros in respect to the previous year, mainly due to the effects of acquisition of personnel from the company Acquagest (formerly managed company) following the aggregation program, adjustments for renewal of the national labour contract, facilitated early retirement, INAIL contributions and higher costs for overtime and subcontracted personnel for the implementation of operations correlated to technical quality. Savings derived from transfer of personnel mitigated all of this.

Total Staff as at 12/31/2018 973 Terminations -40 Hires 16 Acquagest 6 Staff as at 12/31/2019 955

Outsourced work contracts, 36 units as at 12/31/2018, increased in number to 46 units as at 12/31/2019 and their costs weighed on the fiscal year for a total of EUR 1,956,988. The transfer contracts, amounting to 4 as at 12/31/2018, increased to 6 as at 12/31/2019 (from the subsidiaries Risorse Idriche S.p.A. And Aida Ambiente S.r.l.) and their costs weighed in the amount of Eur 337,028.

29. Other operating expenses € 22,738,158 This entry includes: 2019 2018 − Other tax charges € 981,355 863,460 − Ambito fees € 17,364,237 17,594,462 − Other charges € 3,287,307 2,578,879 − Allocation to provisions for liabilities and charges € 669,437 650,567 − Integrated water bonus € 435,822 290,889 Total € 22,738,158 21,978,257

“Other tax charges” mainly includes charges for stamp fees, IMU, government concession taxes and other local taxes.

The item “Ambito fees” includes over 15.77 million Euros, the best estimate for the contributions to the Moun- tain Unions (calculated as indicated by the Territory Authority on revenues for the year 2017) and the operational costs of the Territory Authority and the contributions to the ARERA, depending on the resolutions passed and communications sent.

The item "Other fees" mainly includes fees for association dues, reimbursement of damages and indemnity, and contingent and non-existent assets.

128

“Allocations to provisions for liabilities and charges” cover liabilities and costs involving taxation, administration and other that are certain or probable but whose exact amount or date of occurrence are not yet deter- minable at this moment. Since last year, this item includes the cost for the "Supplementary bonus" introduced by ARERA Resolution 897/2017/R/IDR and ATO Resolution 697/2018. In respect to 2018 there is an increase due to a greater number of applications received.

30. Costs for planning and construction activities € 99,422,784 2019 2018 − Costs for planning and construction activities € 99,422,784 69,670,035

This entry refers to “Costs for planning and construction” of assets under concession, net of capitalized costs or in-house increases that, as contemplated by IFRIC 12, is entered under costs, corresponding revenues are entered under “Revenues for planning and construction”

31. Amortization, depreciation and write-downs € 79,988,948 The composition of this entry is as follows: 2019 2018 − Depreciation tangible fixed assets € 17,384,213 16,104,239 − Depreciation other intangible fixed assets € 2,051,715 1,484,898 − Depreciation assets under concession € 48,463,115 40,177,233 − Credits write-downs € 11,754,905 5,639,269 − Other provisions € 335,000 5,500,000 Total € 79,988,948 68,905,639

Taking into account the presentation regarding valuation criteria, and the systematicity criterion, for calculating depreciation in the fiscal year the following ordinary rates were used: Intangible fixed assets: Depending on the estimated technical − Assets under concession (improvement of third-party’s assets and revertible economic- profit life of various types assets) of reference assets Based on the duration of the service − Assets under concession (use rights) agreement ATO 3 and SMAT S.p.A. (2,033) − Software licenses of use 33.33% − Patents 50.00% − Expansion and development costs 20.00% − Trademarks 10 years As a function of the estimated profit life equivalent − Surface rights to the durations of the Company from the date of the Articles of Association Tangible fixed assets: − Buildings and fences 3.50% − Solar power plants 9.00% − Light constructions 10.00% − Specific plants and filtering plants 8.00% − Metering devices 10.00% − Laboratory and other equipment 10.00% − Furniture and furnishings 12.00% − Office equipments 12.00% • Electronic machinery 20.00% • Hardware 20.00% • Cars 25.00% • Motor vehicles for transport and other vehicles 20.00% • Carbon assets 20.00% • Polarite 11.00% − Tanks 4.00% − Fixed waterworks 2.50% − Sewers 5.00% − Water treatment plants 15.00% − Machinery 12.00% − Leased assets Based on the contract duration 129

To the Increases of 2019 of tangible fixed assets the rates applied amount to 50% of the ones shown above, representing with the best estimate average rates as a function of the months of use. The increase in respect to the 2018 financial statement derives from amortizations on investments concluded and implemented during the fiscal year, among which the large aqueduct in Valle di Susa and the treatment plant in Ivrea Ovest, and amortizations on leased assets applying the IFRS 16 principle. The entry also includes the allocations deriving from prudential valuations of the trade receivables. This allocation amounts to approximately 11.7 million Euros, with application of the IFRS 9 principle - Financial instruments and consequence of length of receivables towards users as already referenced in the dedicated item under Assets in this Supplementary Note. The item “Other allocations” reports the depreciation of shares in the partner SAP S.p.A., in consideration of the results of the SAP Group. The management depreciated for permanent impairment of value the aforesaid share by Euro 335,000 to align its value to the pro-rata of the Consolidated Net Equity of the SAP Group S.p.A. This depreciation is confirmed by the impairment test carried out by the independent consultant. Financial income and expenses

32. Financial income € 5,846,184 This entry includes: 2019 2018 − Earnings from related parties € 90,841 63,170 − Receivable interest and other proceeds € 5,755,343 5,538,176 Total € 5,846,184 5,601,346

“Proceeds from related parties” consist of the dividends paid to the parent company SMAT S.p.A.by the subsidiary AIDA Ambiente S.r.l., from interests for cash pooling with the subsidiary Risorse Idriche. The increase is due to higher dividends received. “Receivable interests and other financial proceeds” include receivable interest on current accounts in banks and post offices, interest arrears and other financial proceeds and dividends from other companies. The increase is due to interest on IRES credits reimbursed by the Revenue Agency.

33. Financial expense € 4,935,773 The entry includes: 2019 2018 − Payable interest and commissions on loans € 4,528,074 4,974,574 − Other receivable interests and charges € 407,699 283,622 − Write-down shareholdings € 0 0 Total € 4,935,773 5,258,196

Payable interest and commissions on loans include the charges on loans received in as investments and then purchases, in addition to the amount pertaining to interest on the debenture loan. The entry also includes adjustment of the charges as a function of the amortized cost method. The Other payable interests and charges include, on the other hand, the prudential count of interest on arrears for overdue debts (according to current law) and financial charges deriving from the actuarial valuation of the Severance Fund and other benefits to employees according to IAS 19, and those on leased assets following application of the IFRS 16 principle.

34. Income Taxes € 15,502,693 This entry includes: 2019 2018 - IRAP € 2,734,599 3,566,582 - IRES € 13,306,601 18,660,082 - Taxes relative to previous fiscal year € (299,094) (116,119) - Change in payable deferred taxes € (22,848) (3,964) - Change in receivable deferred taxes € (216,565) (155,118) Total € 15,502,693 21,951,463

130

In the scope of current taxes, IRES decreased following a decrease in the gross tax amount, as well as in the relative base taxable income. The fiscal variations on pre-tax income also produced an improvement in respect to the previous tax period (specifically, a decrease in non-deductible costs in the fiscal year). The reduction in IRAP in respect to the previous fiscal year is due to the lesser result before taxes. The taxes relative to the previous fiscal year (lesser taxes) are mainly referred to the additional Financial State- ments SC 2018 and IRAP 2018, from which the increased deductible costs in respect to the previous transmission emerged.

The reconciliation between the ordinary rate and the actual rate is shown in the following schedule:

2019 2018 - Result before taxes € 55,604,922 73,748,177 - Applicable theoretical rate % 24 24 - Theoretical IRES € 13,345,181 17,699,562

Effects of the variations in increase (diminution) versus the theoretical aliquots

- IRES on non-deductible costs € 3,835,325 4,801,908 - IRES on other permanent differences € (3,871,762) (3,841,389) - Total effect of changes (increase/decrease) in revenue € (36,437) 960,520 - IRES detraction (2,143) - Current IRES (theoretical IRES + IRES on revenue changes) € 13,306,601 18,660,082 - Deferred IRES € (532,944) (95,341) - Current + deferred IRES (total actual) € 12,773,656 18,564,741 Actual aliquots % 22.97 25.17

In consideration of the special nature of the correlated taxable basis, no consideration was given to IRAP as for the purposes of the previous table, which refers only to IRES.

131

I. Commitments undertaken by the Company The Company issued, equally to IRETI S.p.A., letter of commitment to financial support of Acque Potabili S.p.A. in the amount of EUR 2.5 million with validity until 12/31/2019.

Assets Non-current financial assets – receiva- - Book value in financial statement is the “fair value” of the same bles: - Cash and cash equivalents: Book value in financial statement is the “fair value” of the same - Shareholdings available for sale: Book value in financial statement is the “fair value” of the same

Liabilities - Loans at variable rate: Book value in financial statement is the “fair value” of the same - Trade payables: Book value in financial statement is the “fair value” of the same

IV. Fees to Directors and Auditors Below is the itemization of fees to the Directors and Auditors of SMAT Torino S.p.A.: for the financial statements closed as at December 31st 2019 and 2018.

2019 2018 Directors € 253,474 267,647 Auditors € 98,800 98,800

The fees for the amounts deliberated by the Meeting of Shareholders in addition to the obligatory contribution. In light of the line taken by the Constitutional Court and the opinion of Utilitalia relative to application of art. 4 of Legislative Decree 95/2012, the Shareholder Meeting on December 6th 2018 resolved:

- to cancel the reduction of emoluments for Members of the Board of Directors implemented on 26.01.2015, equal to a gross total of Euro 35,608.80, since the company managing general services is not required to implement this reduction; - to subsequently acknowledge to the Board of Directors, with application as of the appointment of the Board of Directors on September 27th2017, total annual gross compensation of Euro 225,000.00, attrib- uting to the Board of Directors the right to divide the amount among the corporate roles set forth in the Articles of Association.

132

Following the issue on the regulated market of the nonconvertible debenture loan, as of April 13th2017, the company acquired the new status of Public Interest Entity in accordance with art. 16 of Legislative Decree January 27th2010 no. 39 and art. 17 of Reg. UE 537/2014. The Board of Statutory Auditors is required to take on the role attributed by the law as Committee for internal control and review of accounting, and therefore perform new functions, which are more complex and require more responsibility. The Shareholders Meeting on December 6th2018 therefore resolved: to adjust the compensation of the Board of Statutory Auditors, for the increased activities derived from the new status of Public Interest Entity, acknowledging, with application as of April 11th2017, the Chairman of the Board of Statutory Auditors annual gross compensation of Euro 40,000.00 and each of the two Board Members annual gross compensation of Euro 27,500.00.

V. Fees to the Auditing Firm The fees owed to the Auditing Firm Deloitte & Touche S.p.A. for its accounting audit of the financial statement and consolidated financial statement as of December 31st2019 amounts to Euro 66,000 and Euro 8,000 for the Territorial Balance Sheet report for 2017.

VI. Relationships with “related parties” The operations developed with the related parties have been performed at standard market conditions and are based on rules that ensure their transparency and well as their substantial procedural fairness. Below is the itemization of the equity and economic balances inherent to operations with related parties for fiscal year ending as at December 31st 2019

Fiscal year 2019

Trade Trade payables Total Current Financial Receivables and other Total revenues operating financial proceeds and other current costs assets current assets liabilities

CITY OF TURIN 3,631,087 1,837,314 - 2,275,952 1,504,860 - RISORSE IDRICHE 202,945 2,678,051 2,562 270,049 3,198,309 593,701 AIDA AMBIENTE 89,734 1,342,025 88,279 65,247 72,209 - SAP SPA 83,119 65 - 33,407 15,657 - formerly SVILUPPO IDRICO ACQUEDOTTO MONFERRATO 5,002 - - 5,002 - - Total related parties 4,011,887 5,857,455 90,841 2,649,657 4,791,035 593,701 Total items of the state of ac- 442,953,395 308,269,936 5,846,184 231,224,116 153,506,491 632,828 count % impact on total 0,91% 1,90% 1,55% 1,15% 3,12% 93,82% book items

133

VII. Contributions pursuant to Law August 2017 4thno. 124, art. 1, section 125 Over the course of the fiscal year now concluding, SMAT collected the following contributions from Public Administrations, net of contributions for private hook-ups collected from users.

Grants for Collection Grant for Dispensing subject Memo Amount current ex- data Plants penses

WATER EMERGENCY. SUPPLY INTERVENTIONS WITH TANKER TRUCKS TERRITORY AUTHORITY 09/27/2019 TO GUARANTEE CONTINUITY OF DRINKING WATER SERVICE 76,955 76,955 No. 3 IN THE MUNICIPALITY CAPRIE-CODE TO_ATO3_526_18_A17 TERRITORY AUTHORITY No. 3 - DISPENSING INTERV. BALANCE MUNICI- TERRITORY AUTHORITY 11/26/2019 PALITY OF 127,819 - 127,819 No. 3 PIANEZZA COD.ATO 3795 RESOLUTION.N.287/2019 TERRITORY AUTHORITY TERRITORY AUTHORITY No. 3 - DISPENSING INTERV. MUNICIPALITY OF 11/26/2019 500,000 - 500,000 No. 3 CHIVASSO COD.ATO 3787 RESOLUTION.N.286/2019 RESOLUTION OF INTERFERENCE INHERENT TO WORKS ON THE ROAD- 07/24/2019 CITY OF TURIN WAY PROJECT "G2 CIRCONVALLAZIONE 357,304 - 357,304 VENARIA-BORGARO" - LOT I AND LOT II RESOLUTION OF INTERFERENCE INHERENT TO WORKS ON THE ROAD- 09/19/2019 CITY OF TURIN WAY PROJECT "G2 CIRCONVALLAZIONE 384,552 384,552 VENARIA-BORGARO" - LOT I AND LOT II CITY OF BORGARO TO- 05/24/2019 TENDER COSTS FOR THE INSTALLATION OF THE SMAT WATER POINT 2,000 2,000 RINESE CITY OF BORGARO TO- 05/245/2019 TENDER COSTS FOR THE INSTALLATION OF THE SMAT WATER POINT 2,000 2,000 RINESE CITY OF CASTIGLIONE 02/21/2019 TENDER COSTS FOR THE INSTALLATION OF THE SMAT WATER POINT 2,000 2,000 TORINESE

11/27/2019 CITY OF FELETTO TENDER COSTS FOR THE INSTALLATION OF THE SMAT WATER POINT 2,000 2,000

CITY OF 03/26/2019 TENDER COSTS FOR THE INSTALLATION OF THE SMAT WATER POINT 2,000 2,000 MONTALDO TORINESE CITY OF RIVA PRESSO 09/30/2019 SHORELINE NEAR CHIERI - SEWER REPORT EMBRACO AREA 342,802 - 342,802 CHIERI

02/28/2019 CITY OF RIVOLI TENDER COSTS FOR THE INSTALLATION OF THE SMAT WATER POINT 2,000 2,000

01/24/2019 CITY OF ROSTA TENDER COSTS FOR THE INSTALLATION OF THE SMAT WATER POINT 2,000 2,000

CITY OF SAN 03/27/2019 TENDER COSTS FOR THE INSTALLATION OF THE SMAT WATER POINT 2,000 2,000 FRANCESCO AL CAMPO CITY OF 03/27/2019 SANT'ANTONINO DI TENDER COSTS FOR THE INSTALLATION OF THE SMAT WATER POINT 1,000 1,000 SUSA SETTIMO TORINESE 03/13/2019 TENDER COSTS FOR THE INSTALLATION OF THE SMAT WATER POINT 2,000 2,000 MUNICIPALITY REALIZATION OF NEW BLACK WATER SEWER NETWORK IN LAKE AREA 07/17/2019 CITY OF VAL DI CHY MUNICIPALITY VAL DI CHY FORMERLY ALICE SUPERIORE - PROT. ATO 37,998 - 37,998 1421

12/20/2019 CSEA CSEA-CASH FUND FOR ENERGY SERVICES AMB - 720,000 - 720,000

01/31/2019 GSE INCENTIVE FOR SOLAR POWER PRODUCTION CASTIGLIONE 24,868 24,868

02/28/2019 GSE INCENTIVE FOR SOLAR POWER PRODUCTION CASTIGLIONE 24,868 24,868

02/28/2019 GSE INCENTIVE FOR SOLAR POWER PRODUCTION CASTIGLIONE 36,084 36,084

02/28/2019 GSE INCENTIVE FOR SOLAR POWER PRODUCTION ROSTA 934 934

03/29/2019 GSE INCENTIVE FOR SOLAR POWER PRODUCTION BALME 230,722 230,722

134