THE ITALGASSHAREHOLDERAPRIL 2018

HOW TO BECOME A SHAREHOLDER, TO STAY INFORMED, AND TO PLAY AN ACTIVE ROLE IN THE COMPANY

2

DEAR SHAREHOLDERS,

This Guide will give you an overview of Italgas activities,

strategies and performance. It also includes comprehen-

sive data on Italgas shares and stock-market metrics.

The final pages of the document offer practical infor-

mation on how Italgas shareholders can actively exer-

cise their role: how to get information, invest and moni-

tor share performance; finally, how to participate in the

Company’s events through voting at the Shareholders’

Meeting.

The Guide selects a range of important issues, but it is

not all-inclusive: we recommend that you visit the cor-

porate web site (www.italgas.it) and contact the Investor

Relations Department to gain a better knowledge and

understanding of Italgas, and to remain regularly upda-

ted about the Company.

The ITalgas shareholder - Index

How to become a shareholder, to stay informed, and to play an active role in the Company

BUSINESS, STRATEGIES AND PERFORMANCE3 Italgas key figures

4 Italgas profile

5 Governance

6 Strategic levers

7 Early strategic achievements

ITALGAS AND THE STOCK EXCHANGE 8 Italgas on the Stock Exchange

9 Shareholding structure

10 Shareholders’ returns

BEING AN ITALGAS SHAREHOLDER 11 How to invest

12 Participating in the Shareholders’ Meeting

13 Keeping up to date and getting involved

14 Glossary

15 Useful sources

3

Values and Mission

Expertise, efficiency, innovation, reliability, security, proximity to the people. Every day, for more

than 180 years, the work of the men and women at Italgas has drawn inspiration from these va-

lues. Italgas always accompanies the economic and social development of the country promo-

ting sustainable growth. It is currently the leading natural gas distributor in Italy and number

three in Europe. On these strong foundations, the Group is now looking forward and striving

to strengthen its market presence. Investments, quality of service and digitisation are the main

channels of the strategy implemented to achieve these ambitious goals and to continue to

generate value. Italgas, over 180 years of history and a successful future yet to be written.

(2017 DATA)

KM OF NETWORK

66,154KM OF NETWORK

8,381

GAS DISTRIBUTED

9.0 bcmGAS DISTRIBUTED

1.2 bcm

ACTIVE METERS

7.4 mlnACTIVE METERS

0.9 mln

CONCESSIONS

1,609CONCESSIONS

109

EMPLOYEES

4,010EMPLOYEES

426MARKET SHARE

34.0%MARKET SHARE

3.6%

The ITalgas shareholder - ITalgas key fIgures

Italgas key figures

GROUP OPERATING METRICS

OF WHICH AFFILIATES

ITALGAS GROUPMunicipalities under concession

Consolidated companies Affiliates

4

Italgas profile

The main key performance indicators in the 2017 P&L show double-digit growth. The

strong Cash Flow from Operations (549.4 € mln) allowed for funding the significant capex

plan and produced a Free Cash Flow before M&A of 109.2 € mln. After the M&A cash out

of 50.3 € mln – essentially due to the Enerco deal – and the payment of FY2016 dividends

for 161.8 € mln, at the end of 2017 Net Financial Debt stood at 3,720.3 € mln (+102.9 € mln

compared to the level at 2016 year-end).

REVENUES (€ MLN) ADJUSTED EBITDA (€ MLN) ADJUSTED NET PROFIT (€ MLN)

2016

1,077.9

2017

1,124.2

2016

684.4

2017

781.2

2016

221.1

2017

296.4

CASH FLOW FROM OPERATIONS (€ MLN) TECHNICAL INVESTMENTS (€ MLN) NET FINANCIAL DEBT (€ MLN)

2016

371.4

2017

549.4

2016

378.0

2017

521.9

2016

3,617.4

2017

3,720.3

The ITalgas shareholder - ITalgas profIle

During 2017, two changes took place

in the scope of consolidation of Italgas

Group:

the entry of Enerco Distribuzione, fol-

lowing the acquisition, effective from

6 December 2017;

the merger by incorporation of Napo-

letanagas into Italgas Reti, effective

from 1 October 2017.

CONSOLIDATION AREAS

NON-CONSOLIDATED AFFILIATES100%

100% 100%

100%

S.G.S. S.r.l.

50% 45%

5

Governance

The Board of Directors was appointed by the Shareholders’ Meeting held on 4 August 2016,

with the exception of Federica Lolli, co-opted by the Board of Directors held on 27 July 2017

to replace Barbara Borra. The Board will remain in office until the date of the Shareholders’

Meeting for the approval of the Financial Statements as at 31 December 2018.

The Committees are composed of three Non-Executive Directors, in the majority indepen-

dent, except for the Committee for Control and Risks and Transactions with Related Parties,

which is composed of only Independent Directors, and the Sustainability Committee, which

is composed in the majority of Non-Executive Directors.

COMMITTEES

CONTROL AND RISKS

AND RELATED-PARTY

TRANSACTIONS COMMITTEE

Paola Annamaria Petrone (Chairman)

Nicola Bedin

Federica Lolli

APPOINTMENTS

AND REMUNERATION COMMITTEE

Cinzia Farisè (Chairman)

Maurizio Dainelli

Federica Lolli

SUSTAINABILITY COMMITTEE

Nicola Bedin (Chairman)

Yunpeng He

Paolo Mosa

Control and Risk and Related-Party

Transactions Committee

Appointments

and Remuneration Committee

Sustainability Committee

BOARD OF DIRECTORS 9 members

Independent directors: 4 out of 9 members

Gender representation: 1/3 women

BOARD OF STATUTORY AUDITORS 3 members

Shareholders’ Meeting

BOARD OF DIRECTORS

CHAIRMAN

AND NON-EXECUTIVE DIRECTOR Lorenzo Bini Smaghi

CHIEF EXECUTIVE OFFICER

AND GENERAL MANAGER Paolo Gallo

NON-EXECUTIVE DIRECTORS

Nicola Bedin, independent

Federica Lolli, independent

Maurizio Dainelli

Cinzia Farisè, independent

Yunpeng He

Paolo Mosa

Paola Annamaria Petrone, independent

The ITalgas shareholder - governance

6

2014 2015 2016 2017 2018 2019 2020 2021 2022

Intermediate update of parameters

IV REGOLATORY PERIOD Set parameters:

beta, X factor, reference opex

WACC PERIOD Set parameters: risk free rate, country risk premium, inflation, gearing, cost of debt, tax rate

Strategic levers

LEADERSHIP IN GAS DISTRIBUTION IN ITALY Italgas can already count on a network

that is extensive and well-diversified from

a geographic perspective. The Company

aims to strengthen such competitive

advantage, by increasing its market share

in Italy from 30 to 40%. The Italian gas di-

stribution market is undergoing a radical

change, which has already led to a sizea-

ble reduction in the number of operators.

In the coming years, higher concentration

will be driven by the transition to the ATEM

system – a process that at the moment is

slowed down by procedural difficulties.

Today Italgas has a presence in 114 ATEMs

(113 at 2017 year-end) out of a total of 177,

in which the new 12-year concessions will

be assigned over the next few years. Du-

ring 2017, the Company submitted its offer

for the ATEM of Torino 2 and for that of

Belluno. With a view to consolidating its

presence in strategic geographical areas

and entering regions in which infrastructu-

res for gas distribution are not yeat availa-

ble, in November 2017 Italgas launched its

process of acquiring new companies.

The M&A transactions have brought

70,000 new active customers and present

potential growth of up to 150,000 new cu-

stomers in the coming years.

CLARITY AND VISIBILITY OF THE REGULATORY FRAMEWORK Given the regulatory structure in the Ita-

lian gas distribution market, Italgas will be

able to count on predictable revenues and

returns. The current regulatory period will

conclude at the end of 2019, whereas the

WACC period, which establishes the rate of

return on invested capital, runs for six years,

namely, until the end of 2021, with an inter-

mediate revision of certain parameters that

will take place starting from January 2019.

With 97.6% of 2017 revenues deriving

from regulated operations, Italgas can de-

velop and execute its plans within a very

well-defined regulatory environment.

Italgas presented its 2017-2023 Strategic Plan on 31 May 2017. The Plan leverages two im-

portant competitive advantages: the leadership in the Italian gas distribution market and

the clarity and visibility offered by regulation.

The ITalgas shareholder - sTraTegIc levers

ENERCO S.p.A.*

CPL RETIMEDEA S.p.A.

AMALFITANA GAS

ICHNUSA GAS

PORTOPALO

ACQUISITIONS SINCE NOVEMBER 2017

*Company already consolidated in 2017 Financial Statements

ITALGAS GROUPMunicipalities under concession

Consolidated companies Affiliates 2018 acquisitions

7

Early strategic achievements

3 € bn for organic growth:

focus on development, maintenan-

ce and digitalization of the network

and installation of smart meters.

2 € bn for non-organic growth:participation in ATEMs tenders and

M&A, included additional capex

needed, in order to achieve a mar-

ket share close to 40%.

RAB increase over the Plan’s pe-

riod, including the impact of gas

concession tenders and M&A.

Program launched at the begin-

ning of 2017, with the aim of redu-

cing operating costs by 15% vs. the

2016-level by the year 2018.

Focus on the optimization of the

structure and cost of debt.

Thanks to robust cash generation,

aiming to keep the leverage (Debt-

to-RAB) below 65% over the Plan’s

period.

4% annual increase over the 2016

dividend per share, which was 20

euro cents.

Technical investments of

521.9 € mln in 2017 (+38.1%

vs. 2016).

50.3 € mln: cash out for

M&A deals.

135 € mln: the considera-

tion in terms of EV.

Over 200 € mln: opportuni-

ties of future organic capex

in the acquired companies.

120 mln: additional RAB

from M&A.Over 5.8 € bn:

2017 estimated RAB (+2%

vs. 2016).

2018 target for the extrac-

tion of operational efficien-

cies already achieved in

2017.

At the end of 2017, 71% of

debt concentrated on fixed

rate. 25.2% decrease in net

adjusted financial expenses

vs. 2016.

At 2017 year-end, leverage

around 61%, including affi-

liates.

2017 dividend proposed of

20.8 euro cents (+4% vs.

2016).

OVERALL INVESTMENTS OF 5 BILLION EURO

4.5% GROWTHIN CONSOLIDATED RAB

PROGRAMOF OPERATIONAL EFFICIENCY

FINANCIAL EFFICIENCY

MAINTAINING A SOLID CAPITAL STRUCTURE

2017-2019 DIVIDEND POLICY

TARGETS OF THE 2017-2023 STRATEGIC PLAN RESULTS ALREADY ACHIEVED

The ITalgas shareholder - early sTraTegIc achIevemenTs

8

t

Italgas on the Stock Exchange

Official listing: Italian Stock Exchange - MTA

Segment: Blue Chips

Type: ordinary shares

Index membership: FTSE MIB, FTSE Italy

All-Share, Euro Stoxx, Euro Stoxx Utility, FTSE4Good

Number of outstanding shares as at 29 March 2018: 809,135,502

Market capitalization as at 29 March 2017: 3.93 € bn

ISIN code: IT0005211237

Reuters code: IG.MI

Bloomberg code: IG IM

In 2017 the Italgas shares were included in the series of FTSE4Good indices, following the

review of last June. The inclusion proves that the Company meets the strict FTSE criteria

in the Environmental, Social and Governance (ESG) areas. Moreover, during the year, Ital-

gas was recognized by CDP (Carbon Disclosure Project) among the leading companies in

addressing climate change, obtaining its inclusion in the “Climate Change A-List”.

As at 2017 year-end, Italgas has is-

sued bonds for 2.65 billion euro, at an

average cost of 1.25%, with an avera-

ge maturity exceeding 7 years.

Within the EMTN program approved

by the BoD held on 23 October 2017,

on 18 January 2018 Italgas has suc-

cessfully reopened the bond issued

on 18 September 2017, maturing on 18

January 2029, for a further amount of

250 € mln. At the latter issue, the spre-

ad was 58 basis points (vs. 72 basis

points of the original issue).

ITALGAS SHARES

ITALGAS BONDS

Issuer rating Issuer rating

Last update: 12 Oct. 2017

Long term: Baa1

Short term: not rated

Outlook: negative

Assignment: 4 Aug. 2017

Long term:BBB+

Short term: F2

Outlook:stable

5-year bond 10-year bond 7-year bond 12-year bond

Amount 750 € mln 750 € mln 650 € mln 500 € mln

Maturity 19 January 2022 19 January 2027 14 March 2024 18 January 2029

Annual coupon 0.50% 1.625% 1.125% 1.625%

Re-offer price 99.123% 99.170% 99.123% 99.746%

Spread on mid-swap rate 60 basis points 105 basis points 75 basis points 72 basis points

Listing Luxembourg

Stock ExchangeLuxembourg

Stock ExchangeLuxembourg

Stock ExchangeLuxembourg

Stock Exchange

The ITalgas shareholder - ITalgas on The sTock exchange

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t

INSTITUTIONAL INVESTORS BY INVESTMENT STYLE

GEOGRAPHICAL DISTRIBUTION OF INSTITUTIONAL INVESTORS

SHAREHOLDERS STRUCTURE

SHAREHOLDING GEOGRAPHICAL BREAKDOWN

The stake of strategic holders includes CDP Reti, Snam, Bank of Italy. The stake of Italy-Retails includes Romano Minozzi.

Shareholding structure

Share capital at the end of March 2018

amounts to€1,001,231,518.44, represented by

809,135,502 shares without indication of no-

minal value, while free float is 60.5%.

At the end of March 2018, investment funds

including socially responsible investing (SRI)

criteria in their screening process represent

approximately 6% of total Italgas sharehol-

ders and approximately 12% of Italgas institu-

tional investors. Relevant participations, relati-

ve to holders owning more than 3% of Italgas

share capital, according to the shareholder re-

gister, the information available and commu-

nications received pursuant to Art. 120 of the

Consolidated Financial Act (TUF), updated as

at 31 March 2017, are as follows:

CDP S.p.A.: 210,738,424, no. of shares held

Snam S.p.A.: 109,233,293 no. of shares held

Lazard Asset Management LLC: 61,253,269,

no. of shares held

Romano Minozzi: 40,406,531, no. of shares

held.

0.46% Bank of Italy4.99% Romano Minozzi7.60% Retail investors13.50% Snam26.05% CDP Reti47.40% Institutional investors

5% Rest of the World7% Italy - Institutionals23% UK and Ireland32% Continental Europe33% USA and Canada

2.4% Rest of the World3.5% Italy - Institutionals10.7% UK and Ireland12.6% Italy - Retails15.0% Continental Europe15.8% USA and Canada40.0% Italy - Strategic holders

6% Hedge Fund10% Other15% Index17% GARP21% Growth31% Value

(MARCH 2018 UPDATE)

The ITalgas shareholder - shareholdIng sTrucTure

10

Shareholder returns

In light of the good results achieved in

the 2017 fiscal year and in line with the

2017-2019 dividend policy set out in the

2017-2023 Strategic Plan, the Board of Di-

rectors proposes to the Shareholders’ Me-

eting, called for 19 April 2018, to approve

the distribution of a € 0.208 dividend per

share, a 4% increase over the 2016 dividend.

Dividend yield, calculated on the official

price at the end of 2017, amounts to 4.1%.

The 2017 dividend will be paid as of 23 May

2018, with an ex-dividend date of 21 May

2018 and record date of 22 May 2018.

From 7 November 2016, when Italgas sha-

res were re-listed, to the end of March 2018,

Total Shareholder Return amounted to

27.7%.

ITALGAS OFFICIAL SHARE PRICE (EURO)

ITALGAS VS. FTSE MIB ED EURO STOXX 600 UTILITIES (2 JANUARY 2017 – 29 MARCH 2018) BASE 2 JAN.2017 = 100

DIVIDEND PER SHARE (EURO CENTS)

The ITalgas shareholder - shareholder reTurns

150.0

140.0

130.0

120.0

110.0

100.0

90.0

Jan. Feb. Mar. Apr. May Jun. Jul. Aug. Sep. Oct. Nov. Dec. Jan. Feb. Mar.

2017 2018

ITALGAS STOXX EURO 600 UTILITIES FTSEMIB

29 Mar. 2018

29 Dec.2017

30 Dec.2016

07 Nov.2016

6

5

4

3

2

1

0

4.8535.1085

3.73143.9716

24

20

16

12

8

4

02017 2016

20.820.0

11

How to invest

Anyone acquiring Italgas shares becomes an owner of a portion of the Company’s capital.

The status of shareholder not only entitles the investor to be remunerated through the di-

stribution of earnings, but also to take an active part in the Company’s life, contributing to

decisions that are discussed and voted upon in the Shareholders’ Meeting.

REQUISITES In order to become an Italgas shareholder,

you will need a securities deposit account

with an authorized intermediary, such as a

bank or a brokerage firm (“SIM”).

PURCHASING SHARES Italgas shares are purchased on the Italian

Stock Exchange, with the investor indica-

ting to the intermediary the quantity of

shares that he/she wishes to put into his/

her portfolio. It is also possible to specify

a maximum price limit for the purchase, as

well as a time period for the order’s validity.

If the order is submitted without any ma-

ximum price being specified, the purchase

will be done on the basis of best execution,

namely, at the lowest price available for the

quantity of shares being sold.

The intermediary will provide a notification

of order execution when completed. At

that time, the Italgas shares will be booked

to the securities deposit account.

MONITORING INVESTMENT PERFORMANCE The Investors section of the corporate web

site contains a sub-section dedicated to

the Share, which makes it possible to track

Italgas’ stock-market performance, compa-

re the Italgas shares with those of peers,

and calculate an updated value of an inve-

stor’s holding at any time.

COLLECTING DIVIDENDS All investors who own Italgas shares at the

record date (i.e. on 22 May 2018) are entit-

led to receive the annual dividend appro-

ved by the 2018 Shareholders’ Meeting. The

amount of the dividend payment will be

automatically credited to the shareholder’s

current account through the financial inter-

mediary with whom the securities account

is held.

Italgas dividends paid to physical persons

who are tax residents of Italy are subject to

a source withholding tax at a rate of 26%.

Additional information on the subject can

be found on the web site of the Italian Re-

venue Agency (www.agenziaentrate.gov.it).

In order to avoid dual taxation, Italgas sha-

reholders who receive dividends and are

not residents in Italy may file for a tax reim-

bursement. Such reimbursement is gover-

ned by specific treaties between Italy and

the foreign country of residence. Additional

information on the subject can be found on

the web site of the Italian Ministry of the

Economy and Finance (www.mef.gov.it).

The ITalgas shareholder - how To InvesT

12

Participating in the Shareholders’ Meeting

The ITalgas shareholder - parTIcIpaTIng In The shareholders’ meeTIng

NOTICE OF SHAREHOLDERS’ MEETINGS The Shareholders’ Meeting is convened

through a notice that indicates the day, time

and location of the meeting, and the meeting

agenda. The meeting notice is published on

the web sites of Italgas and Borsa Italiana,

and possibly, including in abbreviated form,

in one national daily newspaper, usually 30

days prior to the date of the first or single

session of the meeting. When a Sharehol-

ders’ Meeting is convened for the purpose

of appointing the Board of Directors and the

Board of Statutory Auditors, the meeting no-

tice is published at least 40 days prior to the

date of the meeting. The Italgas Sharehol-

ders’ Meetings are held in a single session.

CONFIRMING ATTENDANCE In order to participate and vote at the Sha-

reholders’ Meeting, the shareholder must

own the Italgas shares at the record date,

which is the seventh open market day prior

to the date of the Shareholders’ Meeting (10

April 2018 – record date), and must send a

notice to the Company, through the autho-

rized intermediary, of participation in the

Shareholders’ Meeting. The notice must be

received by Italgas no later than on the third

open market day prior to the Shareholders’

Meeting (16 April 2018).

PARTICIPATING IN THE SHAREHOLDERS’ MEETINGShareholders may participate in person at

the Shareholders’ Meeting, following the

instructions outlined in the meeting notice

and attending the meeting with a valid iden-

tification document, or they may elect to be

represented by another person. Sharehol-

ders can download the proxy form from

the Italgas web site (in the sub-section: Go-

vernance/ Shareholders’ Meetings/19 April

2018). The proxy should be sent to Italgas at

least two days prior to the date of the Sha-

reholders’ Meeting (17 April 2018), by:

1) post to the following address:

Italgas S.p.A.

Corporate Affairs

Via Carlo Bo, 11 - 20143 Milan Italy

(Proxy for Shareholders’ Meeting on 19 April 2018)

2) certified electronic mail at the address:

italgas.assemblea@pec.italgas.it.

Should any shareholder not have a person

to delegate as proxy holder, the proxy along

with voting instructions on all or some of

the proposals on the meeting agenda may

be conferred, without charge, to the Sha-

reholder Representative designated by the

Company. For the 2018 shareholders’ me-

eting, Italgas Designated Representative is

Georgeson. The special proxy form, which

can be downloaded from the Italgas web

site, must be received by the Designated

Representative by no later than the end of

the second open market day prior to the

date of the Shareholders’ Meeting (17 April

2018), together with a copy of a valid iden-

tification document:

by fax, to +39 06 99332795;

by email to: georgeson@legalmail.it;

by  hand, Priority Mail, or courier, to:

Georgeson S.r.l., Via Emilia 88, 00187,

Rome.

Georgeson S.r.l., Via Emilia 88, 00187, Rome.

If a copy of the proxy is sent by fax or email,

the original proxy shall be sent to the De-

signated Representative at the address

shown above.

For all other information concerning the

Designated Representative, a freepho-

ne number has been made available, 800

123794, for those calling from Italy, and

phone number + 39 06 42171834, for tho-

se calling from abroad, on business days

Monday through Friday from 09:00 to

18:00, as well as a dedicated email account

(rappresentanteitalgas@georgeson.com).

The documentation related to the mat-

ters on the meeting agenda is available

at the Italgas registered office, on the Bor-

sa Italiana web site (www.borsaitaliana.it),

at the mechanism for storage of regu-

latory information, eMarket STORAGE

(www.emarketstorage.com), as well as on

the corporate web site (www.italgas.it) in

the section: Governance/Shareholders’ Me-

eting/19 April 2018.

13

Keeping up to date and getting involved

HOW TO STAY INFORMED The corporate web site (www.italgas.it) is

the main reference point for staying infor-

med on a real-time basis and for learning

more about Italgas.

The Investors section of the web site con-

tains disclosure documents, such as Fi-

nancial Statements and Presentations, as

well as information about share performan-

ce and financials, all of which is useful for

evaluating investment decisions. The sub-

section entitled Publications for Investors

allows for consulting documents that assist

shareholders in better understanding Ital-

gas, the natural gas distribution business,

and the way in which the financial markets

reflect the Company’s and the sector’s hi-

storical performance and prospects. In

addition to this Guide, the publications in-

clude the Financial Markets Overview, and,

starting in May 2017, the IG focus newslet-

ter dedicated to investors.

Price-sensitive Press Releases can be found

in the Media section, which also features a

sub-section dedicated to News.

Finally, the Governance section contains the

Company’s By-laws, and its Ethics Code,

while the 2017 Shareholders’ Meeting sub-

section presents the Shareholders’ Meeting

Regulations and documentation useful for

participating in the Shareholders’ Meeting

and finding out about voting results.

Shareholders may also consult social-media

channels for continuous updates of news.

Italgas is present on Twitter, Linkedin, You-

Tube and Flickr e Instagram.

FINANCIAL CALENDAR Consolidated Financial Statements and Draft

Financial Statements as at 31 December 2017;

Dividend proposal for 2017; Report on Remu-

neration 2018; Report on Corporate Gover-

nance and Ownership Structure 2017; Sustai-

nability Report 2017

12 MARCH 2018Board of Directors

Press Release and Conference Call*

Shareholders’ Meeting

19 APRIL 2018Press Release**

First quarter 2018 Report

7 MAY 2018Board of Directors

8 MAY 2018Press Release and Conference Call***

FY2017 dividend

23 MAY 201Payment date

21 MAY 2018Ex-dividend date

2018-2024 Strategic Plan

12 JUNE 2018Board of Directors

13 JUNE 2018Press Release and Conference call***

Second quarter 2018 Report and Interim

Financial Report as at 30 June 2018

30 JULY 2018Board of Directors

31 JULY 2018Press Release and Conference Call***

Third quarter 2018 Report

5 NOVEMBER 2018Board of Directors

6 NOVEMBER 2018Press Release and Conference Call***

* Press release and conference call for the presentation of results to the financial community at the end of the Board of Directors’ meeting.** Press release issued at the end of Shareholders’ Meeting.*** Press release issued in the morning (non-trading hours); the Conference Call/Strategy Presentation for the pre-sentation of results to the financial community will be held in the afternoon on the same day.

The ITalgas shareholder - keepIng up To daTe and geTTIng Involved

14

Glossary

FINANCIAL TERMS

CASH FLOW INet cash flow from operating activities (cash flow ) is represented by the cash ge-nerated by a company over a certain period of time. Specifically, the difference between current inflows (mainly cash revenue) and current cash outflows (costs in the period that generated cash outflows).

EBIT (OPERATING PROFIT)Result of the operating performance, cal-culated as the sum of the values related to Net income, Income taxes, and Net finance costs excluding Net income from financial investments.

ADJUSTED EBIT (ADJUSTED OPERATING PROFIT)EBIT that components of the total income classified as special item will be subtracted from (as defined in the chapter “Comment on the economic and financial results” of this report).

EBITDA (GROSS OPERATING PROFIT)EBITDA, calculated as the sum of values re-lating to the Operating profit and Deprecia-tion and amortisation.

FREE CASH FLOWThe free cash flow represents the free cash flow of the company and is the difference between the cash flow from operating ac-tivities and the cash flow for investments in fixed assets.

NET FINANCIAL DEBTIndicator of capacity to cope with financial obligations, determined as the sum of the values relating to Short and long-term lo-ans, net of Cash and cash equivalents.

COMMERCIAL AND TECHNICAL TERMS

ATEM Minimum Geographical Areas for conducting tenders and assigning the gas distribution ser-vice calculated as 177 pursuant to the defini-tion of Article 1 of the Ministerial Decree of 19 January 2011. The Municipalities belonging to each area are listed in the Ministerial Decree of 18 October 2011.

CONCESSION The deed by which a Local authority entrusts a company to the management of a service which falls within the scope of the prerogati-ves of this Authority, and for which said com-pany assumes the operating risk.

LOCAL TENDERThe local tender is the only tender for the con-cession of the gas distribution service carried out in each of the 177 ATEM identified by De-cree of the Ministry of Economic Development on 19 January 2011, pursuant to Arts. 1 and 2 of the Decree of the Ministry of Economic Deve-lopment on 19 January 2011.Gas distributed or circulated Amount of gas redelivered to users of the distribution net-work at the redelivery points.

REGULATORY PERIODThis is the time period (usually four years) for which criteria are defined for setting tariffs for gas distribution services. The third regulation period ended on 31 December 2013. We are currently in the fourth regulatory period, which runs from 1 January 2014 to 31 December 2019.

REDELIVERY POINTThis is the point of demarcation between the gas distribution plant and the plant owned or ma-naged by the end user at which the distribution company redelivers gas transported for supply to the end user, and at which metering occurs.

GAS DISTRIBUTION SERVICEService of transporting natural gas through networks of local methane pipelines from one or more delivery points to redelivery points, generally at low pressure and in urban areas, for delivery to end users.

REGULATORY ASSET BASE (RAB)The term RAB (Regulatory Asset Base) refers to the value of net invested capital for regula-tory purposes, calculated on the basis of the rules defined by the Electricity, Gas and Water Authority (AEEGSI) for determining the refe-rence tariff. WACCWeighted Average Cost of Capital. Rate of re-turn on net invested capital

The following glossary focuses on financial, commercial and technical terms used in this publi-

cations. A comprehensive glossary is available online at www.italgas.it.

The ITalgas shareholder - glossary

15

CONTACTS:Investor Relations Department Corporate Secretary

investor.relations@italgas.it segreteriasocietaria@italgas.it

T. +39 02 8187 2012 T. +39 02 8187 2027

Via Carlo Bo, 11 Via Carlo Bo, 11

20143 Milano 20143 Milano

Shareholders who wish to get more information about the Italgas

shareholders’ meeting may also contact the Company by telephone

(+39 06 4217 1805).

ITALGAS S.p.A.Registered Office: Via Carlo Bo, 1120143 Milan

Share Capital Euro 1,001,231,518.44

VAT registration number 09540420966

www.italgas.it

This document has been published with information updated through 29 March 2018.

BORSA ITALIANAwww.borsaitaliana.it

CONSOBwww.consob.it

AUTORITÀ PER L’ENERGIA ELETTRICAIL GAS E IL SISTEMA IDRICOwww.autorita.energia.it

EMARKET STORAGE SYSTEM OF REGULATED INFORMATIONwww.emarketstorage.com

The Italgas Shareholder is a publication managed

by the Investor Relations Department.

Concept, editorial support and layout: Blue Arrow, Milan

Useful sources

The ITalgas shareholder - useful sources

ITALGAS.IT