CHANGING PERSPECTIVES INTEGRATED ANNUAL REPORT Values, Mission and Purpose Every day, for over 180 years, the work of the men and women at Italgas has enabled millions of Italians to use a sustainable, durable, reliable source of energy. A continual commitment, based on expertise, efficiency, innovation, quality and safety and inspired by the transparency of daily activities, integrity of behaviour and responsibility towards the communities served. Promoting the fundamental role of natural gas in the energy transition process towards a decarbonised, circular economy. Contributing to the development of renewable gases such as biomethane and hydrogen, through digitised networks. Ensuring and improving service quality, helping create sustainable and smart cities and generating long-term value for customers, the market, the local area and all its stakeholders, while respecting the environment. These principles, with which we have supported and fostered the economic and social development of Italy, are the cornerstones of Italgas’ purpose, with a view to doing our bit to meet the sustainable development goals of the United Nations’ 2030 Agenda. Italgas, two centuries of history projected into the future. The names Italgas, Italgas Group or Group refer to Italgas S.p.A. and the companies included in the scope of consolidation. Disclaimer The Integrated Annual Report contains forward-looking statements, specifically in the “Business Outlook” section, relating to: investment plans, financial structure evolution, future operating performance and project execution. The forward-looking statements, by their nature, involve risks and uncertainties as they depend on the occurrence of future events and developments. The actual results could therefore differ from those announced in relation to various factors, including: actual operating performance, general macro- economic conditions, geopolitical factors such as international tensions and socio-political instability, the effects of the pandemic, the impact of energy and environmental regulations, the successful development and application of new technologies, changes in stakeholder expectations and other changes in business conditions, action by competitors. CHANGING PERSPECTIVES INTEGRATED ANNUAL REPORT Corporate bodies BOARD OF DIRECTORS (a) BOARD OF STATUTORY AUDITORS (a) Chairman Chairman ALBERTO DELL’ACQUA PIERLUIGI PACE Chief Executive Officer and General Manager Standing auditors PAOLO GALLO MAURIZIO DI MARCOTULLIO MARILENA CEDERNA Directors YUNPENG HE Alternate auditors PAOLA ANNAMARIA PETRONE STEFANO FIORINI MAURIZIO DAINELLI GIUSEPPINA MANZO GIANDOMENICO MAGLIANO VERONICA VECCHI ANDREA MASCETTI SILVIA STEFINI APPOINTMENTS AND REMUNERATION COMMITTEE (c) CONTROL AND RISKS AND Chairman RELATED-PARTY TRANSACTIONS ANDREA MASCETTI COMMITTEE (b) MAURIZIO DAINELLI SILVIA STEFINI Chairwoman PAOLA ANNAMARIA PETRONE GIANDOMENICO MAGLIANO SILVIA STEFINI SUSTAINABILITY COMMITEE (d) Chairman GIANDOMENICO MAGLIANO FINANCE AND SERVICE GENERAL YUNPENG HE MANAGER (e) VERONICA VECCHI ANTONIO PACCIORETTI SUPERVISORY BODY (f) Chairman INDEPENDENT AUDITORS (g) CARLO PIERGALLINI MARCELLA CARADONNA DELOITTE & TOUCHE S.p.A. FRANCESCO PROFUMO (a) Appointed by the Shareholders’ Meeting of 4 April (c) Committee established by the Board of Directors (e) Appointed by the Board of Directors on 26 2019. In office until the date of the Shareholders’ on 23 October 2017. Members appointed by the September 2016 with effect from 7 November 2016. Meeting called for the approval of the financial Board of Directors on 13 May 2019. (f) statements for the year ending 31 December 2021. The Supervisory Body was appointed by the Board (d) Committee established by the Board of Directors of Directors on 23 September 2019. (b) Committee established by the Board of Directors on 4 August 2016. Members appointed by the Board (g) on 4 August 2016. Members appointed by the Board of Directors on 13 May 2019. Engagement assigned by the Shareholders’ of Directors on 13 May 2019. Meeting of 12 May 2020 for the period 2020 - 2028. Italgas Group structure as at 31 December 2020 NFS The structure of the Italgas Group as at 31 December 2020 has changed, compared to 31 December 2019, due to the acquisition of 15% of the company Reti Distribuzione described below: 50% 45% 100% 100% 50,66% 100% 10,00% 15,00% 51,85% 51,85% ITALGAS GROUP STRUCTURE AS AT 31 DECEMBER 2020 AS AT GROUP STRUCTURE ITALGAS 42,96% 30,05% 100% Equity method INTEGRATED ANNUAL REPORT ANNUAL INTEGRATED 2020 3 A. MANAGEMENT REPORT _7 LETTER TO SHAREHOLDERS AND STAKEHOLDERS _8 2020 HIGHLIGHTS _12 METHODOLOGICAL NOTE - CONSOLIDATED NON- FINANCIAL STATEMENT 2020 – ITALIAN LEGISLATIVE DECREE 254/2016 _14 THE ITALGAS GROUP VALUE CREATION PROCESS _27 1.1 Corporate identity 1.0 1.2 Business model 1.3 External context, markets and Italgas stock 1.3.1 Macroeconomic scenario and market trends 1.3.2 2020 Trend and Italgas stock 1.4 Shareholders 1.5 SRI indexes and ratings 2.0 STRATEGY AND FORWARD-LOOKING VISION _43 GOVERNANCE, RISKS AND OPPORTUNITIES _49 3.1 Governance 3.0 3.2 Risks management 3.3 Internal control system 3.4 Ethics and compliance SUMMARY FIGURES AND INFORMATION _79 4.1 Main events 4.0 4.2 Key figures 4.3 Operating performance TABLE OF CONTENTS TABLE ITALGAS GROUP PERFORMANCE _89 5.1 Transparent relations 5.0 5.2 Putting people first 5.3 Value for customers and the market 5.4 Value for the territory and communities 5.5 Attention to the environment 5.6 Coronavirus emergency and Business Outlook INTEGRATED ANNUAL REPORT ANNUAL INTEGRATED 2020 4 COMMENT ON THE ECONOMIC AND FINANCIAL RESULTS AND OTHER INFORMATION _149 6.0 6.1 Legislative and regulatory framework 6.2 Comment on the economic and financial results 6.2.1 Reclassified income statement 6.2.2 Reconciliation of reported EBIT and net profit with adjusted EBIT and net profit 6.2.3 Analysis of the Reclassified Income Statement items 6.2.4 Reclassified Statement of Financial Position 6.2.5 Reclassified Statement of Cash Flows 6.3 Comment on the economic and financial results of Italgas S.p.A. 6.3.1 Reclassified income statement 6.3.2 Analysis of the Reclassified Income Statement items 6.3.3 Reclassified Statement of Financial Position 6.3.4 Reclassified Statement of Cash Flows 6.4 Non-GAAP Measures 6.4.1 Reconciliation of the Income Statement, Statement of Financial Position and Statement of Cash Flows 6.5 Other information “INFORMATION ON THE RECOMMENDATIONS OF THE TASK FORCE ON CLIMATE-RELATED FINANCIAL DISCLOSURES (TCFD)” TABLE _194 INDEPENDENT AUDITORS’ REPORT RELATED TO THE CONSOLIDATED NON-FINANCIAL STATEMENT _196 GLOSSARY _200 CONSOLIDATED FINANCIAL B. STATEMENTS _205 Financial statements Notes to the consolidated financial statements Statements from Management Independent Auditors’ Report INTEGRATED ANNUAL REPORT ANNUAL INTEGRATED 2020 5 INTEGRATED ANNUAL REPORT 6 2020 A. MANAGEMENT REPORT 7 LETTER TO SHAREHOLDERS AND STAKEHOLDERS NFS Dear Shareholders and Stakeholders, Last year marked a change from - or rather, a profound break with - the eras that came before it. The most serious health emergency since the Second World War completely changed the course of history as we know it, pushing the world’s economies to the brink of a crisis that has spared no fields or sectors. Many established models were broken, most of the paradigms of reference became outmoded from one day to the next and we had to reorganise our daily lives and work, from the most basic activities to the most complex, by trial and error in many cases, given the exceptional natural of the event. Against this backdrop of great instability, Italgas and its affiliates continued to grow, taking swift action to ensure the safety of their over 4,000 employees and guarantee essential services for more than 7.7 million customers in the 1,887 municipalities they serve. We have moreover helped our supply chain by guaranteeing it all our support and the tools needed to resume activities quickly and effectively. All this was possible thanks to an extremely fast-paced organisational structure that was able to act and react with speed, and to the far-sighted strategic decisions that enabled us to transfer the management of most of our activities remotely in just one click. LETTER TO SHAREHOLDERS AND STAKEHOLDERS TO LETTER INTEGRATED ANNUAL REPORT ANNUAL INTEGRATED 2020 8 The main financial and especially non-financial performance indicators clearly reflect the results of our actions. The publication of this year’s reports will enable a concise and comprehensive analysis of performance in just one document. We have in fact decided to open our new reporting season by publishing Italgas’ very first Integrated Annual Report. The aim is to paint an effective and transparent picture of the company’s ability to create value over time, as well as of the underlying link between the strategic priorities, governance decisions, risks management and financial performance, and the social, environmental and economic context in which the company operates. It is an important integration process that has involved the entire corporate structure with the aim of permeating “sustainability” into the all corporate operating processes to achieve the so called “embedded sustainability”. Our choices are guided by the situation in which we find ourselves, and Italgas, as the leading gas distribution company in Italy and number three in Europe, intends to use its infrastructures to play a key role in the energy transition pathway towards the decarbonisation of the economy and consumption,