2019 FINANCIAL REPORT CONSOLIDATED FINANCIAL STATEMENTS VOLUME 2 2019 Financial Report Report on Operations Consolidated Financial Statements Separate Financial Statements Contents CONSOLIDATED FINANCIAL STATEMENTS (Primary statements and Reclassified Balance Sheet) .................................................................................................. 3 Consolidated Income Statement and Other Components of the Comprehensive Income Statement ......................................... 3 Consolidated Balance Sheet ............................................................................................................................................................ 4 Cash Flow Statement ....................................................................................................................................................................... 5 Changes in Consolidated Shareholders’ Equity .............................................................................................................................. 6 Reclassified Consolidated Balance Sheet ....................................................................................................................................... 7 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS ....................................................................................... 8 1. Introduction ................................................................................................................................................................................... 8 1.1 Newly applied standards ........................................................................................................................................................... 8 1.2 Presentation formats adopted by the Group .............................................................................................................................. 9 1.3 Main changes in the scope of consolidation compared with December 31, 2018 ...................................................................... 9 1.4 Application of accounting standard IFRS 5.............................................................................................................................. 11 2. Performance ................................................................................................................................................................................. 12 2.1 Highlights ............................................................................................................................................................................... 12 2.2 Segment Information .............................................................................................................................................................. 12 2.3 EBITDA .................................................................................................................................................................................. 14 2.4 From EBITDA to Profit (Loss) from continuing operations ....................................................................................................... 18 2.5 Profit (Loss) from discontinued operations and Group interest in profit (loss) .......................................................................... 18 3. Net working capital ...................................................................................................................................................................... 19 3.1 Credit risk management .......................................................................................................................................................... 19 3.2 Operating working capital ...................................................................................................................................................... 19 3.3 Other assets and liabilities ...................................................................................................................................................... 21 4. Market risk management ............................................................................................................................................................. 22 4.1 Market risks and risk management ......................................................................................................................................... 22 4.2 Hedge Accounting and Economic Hedge – Fair Value Hierarchy ............................................................................................ 24 4.3 Effects of derivatives transactions on Income Statement and Balance Sheet at December 31, 2019 ...................................... 25 5. Fixed assets and provisions ....................................................................................................................................................... 29 5.1 Tangible, intangible assets and goodwill ................................................................................................................................ 29 5.2 Equity investments and other non-current financial assets ...................................................................................................... 34 5.3 Provisions for risks and employee benefits ............................................................................................................................. 35 5.4 Contingent assets and liabilities .............................................................................................................................................. 36 6. Shareholders’ equity, financial debt and cost of debt ............................................................................................................... 37 6.1 Shareholders’ equity ............................................................................................................................................................... 37 6.2 Management of financial resources ....................................................................................................................................... 38 6.3 Net financial debt and cost of debt .......................................................................................................................................... 38 6.4 Financial risk management ..................................................................................................................................................... 42 7. Taxation ........................................................................................................................................................................................ 46 7.1 Tax risk management ............................................................................................................................................................. 46 7.2 Taxes ..................................................................................................................................................................................... 46 7.3 Tax assets and liabilities ......................................................................................................................................................... 47 8. Non-Energy Activities 50 9. Other notes .................................................................................................................................................................................. 56 9.1 Information pursuant to IFRS 3 revised ................................................................................................................................... 56 9.2 Information pursuant to IFRS 5 .............................................................................................................................................. 59 9.3 Other commitments ................................................................................................................................................................ 64 9.4 Intercompany and Related-party transactions ......................................................................................................................... 66 10. Criteria and methods .................................................................................................................................................................. 69 10.1 Comparability ....................................................................................................................................................................... 69 10.2 Criteria and methods of consolidation .................................................................................................................................. 71 10.3 Valuation criteria ................................................................................................................................................................... 72 11. Other information ...................................................................................................................................................................... 81 11.1 Significant non-recurring events and transactions ................................................................................................................. 81 11.2 Transactions resulting from atypical and/or unusual activities ............................................................................................... 81 11.3 Information pursuant to Article 1, Sections 125-129,