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Integrated Annual Report  2024

VALUES, MISSION AND PURPOSE

Vision:

To be a leading figure in the energy world, driving its sustainable evolution and innovating each day to improve  people’s quality of life.

Mission:

We have guaranteed efficient, safe and excellent energy services to the community for over 180 years. We  favour the energy transition, creating the networks of the future and promoting innovative, sustainable  solutions. We take care of local communities. We fuel positive, productive relationships with all of our  stakeholders: individuals, companies, suppliers and shareholders. We enter new markets where we can apply  our distinctive expertise. We promote the growth of individuals and develop talent, creating inclusive,  stimulating work environments.

Purpose:

Pioneers by passion and builders by calling, we bring all our energy to accelerate the ecological transition. We  do it for us. We do it for everyone.

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 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.

The names Italgas, Italgas Group or Group refer to Italgas S.p.A. and the companies included in the scope of consolidation.

5

Corporate bodies

BOARD OF DIRECTORS (a)

BOARD OF STATUTORY AUDITORS (a)

Chairperson

Chairperson

Benedetta Navarra

Giulia Pusterla

Chief Executive Officer and General Manager

Standing auditors

Paolo Gallo

Maurizio di Marcotullio

Paola Maria Maiorana

Directors 

Claudio De Marco  (b)

Alternate auditors

Fabiola Mascardi

Stefano Fiorini

Gianmarco Montanari

Barbara Cavalieri

Lorenzo Parola

Manuela Sabbatini 

Maria Sferruzza 

Qinjing Shen

APPOINTMENTS AND COMPENSATION

COMMITTEE (d)

CONTROL, RISK AND RELATED PARTY 

TRANSACTIONS COMMITTEE (c)

Fabiola Mascardi (Chairperson)  (e)

Gianmarco Montanari (Chairperson)

Claudio De Marco

Claudio De Marco

Manuela Sabbatini

Manuela Sabbatini

SUSTAINABLE VALUE CREATION COMMITTEE  (f)

Lorenzo Parola (Chairperson)  (g)

Maria Sferruzza

Qinjing Shen

SUPERVISORY BODY  (h)

Antonio Gullo (Chairperson)

Romina Guglielmetti

Francesco Profumo

INDEPENDENT AUDITING FIRM  (i) 

6

Deloitte & Touche S.p.A

(a) Appointed by the Shareholders’ Meeting of 26 April 2022. In office until the date of the Shareholders’ Meeting that will be called for the approval of the  financial statements for the year ending 31 December 2024. 

(b) Appointed Lead Independent Director on 9 March 2023, in office until the expiry of the term of the Board of Directors that appointed it, i.e. the date of the  Shareholders’ Meeting that will be called to approve the financial statements for the year ending 31 December 2024.

(c) Committee established by the Board of Directors on 4 August 2016. Members appointed by the Board of Directors on 2 May 2022.

(d) Committee established by the Board of Directors on 23 October 2017. Members appointed by the Board of Directors on 2 May 2022. 

(e)  Appointment conferred by the Board of Directors on 22 February 2023. The position was previously held by Lorenzo Parola.

(f) Committee established by the Board of Directors on 4 August 2016. Members appointed by the Board of Directors on 2 May 2022. 

(g)  Appointment conferred by the Board of Directors on 22 February 2023. The position was previously held by Fabiola Mascardi.

(h) The Supervisory Body was appointed by the Board of Directors on 25 July 2022. In office until the expiry of the term of the Board of Directors that appointed  it, i.e. the date of the Shareholders’ Meeting that will be called to approve the financial statements for the year ending 31 December 2024. In accordance with  the Organisation, Management and Control Model pursuant to Legislative Decree no. 231/2001, the Supervisory Board continues to perform its functions ad  interim until such time as the Board of Directors resolves to appoint the new Supervisory Board.

(i) Engagement assigned by the Shareholders’ Meeting of 12 May 2020 for the period 2020 - 2028.

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Italgas Group structure as at 31 December 2024

The structure of the Italgas Group as at 31 December 2024 changed from the one in place as at 31 December  2023 due to the acquisition of 47.8% from Vianini Lavori S.p.A. and 47.9% from the Veolia Group of Acqua  Campania S.p.A. 1 , resulting in a combined 96.23% ownership.

It should be noted that on 18 December 2024, Acqua subscribed to the capital increase of Idrosicilia, bringing  its shareholding to 99.2%, and on 10 February 2025 the deed of merger of Acqua into Nepta became effective,  with accounting and tax effects from 1 January 2025. 

Below is the structure of the group.

1 Acqua Campania controls the company Laboratorio Acqua Campania holding 51% of the share capital.

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Contents of the Integrated Annual Report

Directors’ Report

Letter to Shareholders and Stakeholders

Page 12

2024 Highlights

Page 15

Methodological note - Integrated Annual Report 2024

Page 17

1\. Italgas profile

1.1 Corporate identity

Page 20

1.2 External context, markets and Italgas stock

Page 21

1.3 Ownership structure

Page 24

1.4 SRI indexes and ratings

Page 25

2\. Governance and risks

2.1 Governance

Page 28

2.2 Risks Management

Page 29

2.3 Internal control system

Page 34

2.4 Ethics and compliance

Page 36

3\. Operating performance

3.1 Main events

Page 46

3.2 Key figures

Page 49

3.3 Infrastructure

Page 50

4\. Comment on the results and other information

4.1 Comment on the economic and financial results

Page 52

4.2 Comment on the economic and financial results of Italgas S.p.A.

Page 63

4.3 Non-GAAP Measures

Page 67

4.4 Other information

Page 76

5\. Operating segment operating performance

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5.1 Gas distribution sector

Page 79

5.2 Water service sector

Page 89

5.3 Energy efficiency sector 

Page 92

6\. Business Outlook

Page 93

7\. Consolidated Sustainability Statement

7.1 General Information

Page 94

7.2 Environmental information

Page 121

7.3 Social information

Page 162

7.4 Governance information 

Page 194

Statements from Management

Page 202

Independent Auditors' Report

Page 203

Consolidated Financial Statements

Financial statements

Page 209

Notes to the consolidated financial statements

Page 217

Statements from Management

Page 305

Independent Auditors' Report

Page 306

Annexes to the notes to the consolidated financial statements

Companies and equity investments of Italgas S.p.A. as at 31 December 2024

Page 315

10

Directors’ Report

11

12

Letter to Shareholders and Stakeholders 

A little less than five years after the first major “check point” on the path to net zero, the ecological transition is  still the subject of debates and questions that seem symptomatic of profound uncertainty about the choices to  be made to reach the goal of decarbonisation expected in 2050. 

A scenario that is a direct consequence of the fragility shown by the main energy paradigms, adopted by the  European Union, in the face of the events – sometimes dramatic – that have been characterising the  geopolitical scenario for some years now.

The consequences of the war in Ukraine, the tensions in the Middle East and the investment choices of the  world's great powers in the energy markets have shown very clearly how the ideological approach, adopted in  the recent past, has generated very limited results, and sometimes contrary to expectations. 

The first limitation of this approach is to focus on the method rather than the result to be achieved, on the “how”  and not the “what”. The path to transition cannot become the target itself, as has happened with the bans and  technological choices made a priori in recent years. 

It is precisely the slowdowns in the path of ecological transition that show, with the evidence of the results,  how much more effective it is to set the target and leave it to industry and innovation to find the best path to  achieving it. The fundamental principle is technological neutrality. This is a principle that we at Italgas have  been upholding and pursuing for some time, and which, with the use of the best digital technologies, starting  with Artificial Intelligence and GenAI, has enabled your Company to impose itself on the global scenario as  one of the most cutting-edge industrial realities, with a path consistent with the new energy scenarios. 

A Network Tech Company and European leader in gas distribution also thanks to the announced acquisition  of 2i Rete Gas, something we will come back to later, which has embraced the profound meaning of technology  neutrality: it is only by leveraging all available technologies that it is possible to accelerate the path to  decarbonisation and limit assessment errors. 

It will be clear how the solution is right in front of us: decarbonise not only the electrons, but also the molecules.  Integrating sustainable molecules such as biomethane, green hydrogen and synthetic methane can in fact  relieve pressure on electricity grids and provide a practical solution for a sustainable, safe and cost-competitive  ecological transition for households and businesses. 

There is no shortage of positive examples. France has the largest number of biomethane production plants in  Europe (731) and an installed capacity of 1.1 billion cubic metres per year, covering about 4% of the country's  final gas demand. The projection is to reach 10% of consumption by 2030, with over 2.3 billion cubic metres  of capacity already under development. A virtuous system that has in its regulatory framework the main driver  for the development of the industrial chain, the attraction of investments in the territories, and the sustainable  and stable growth of the sector.

13

When it comes to renewable gases, the path taken by Japan is also worth mentioning. In Tokyo, they are  focusing on another green gas: synthetic methane, which is produced by combining hydrogen and carbon  dioxide. The result is a CH4 molecule, completely indistinguishable from fossil methane, but with a carbon  footprint of zero. This is a solution that offers many advantages, including cutting CO2 emissions while  continuing to use the existing gas distribution infrastructure. 

These international benchmarks give us valuable insights into the Italian path to energy transition. A path that,  reasserting the importance of an approach based on technological neutrality, uses sector coupling and thus  the integration of green molecules and electrons as the main path leading to net zero. 

In this sense, gas distribution networks are an extraordinary driver of the transition, but subject to one condition:  they must be smart, digital and flexible, so as to accommodate and manage different gases while guaranteeing  system flexibility, efficiency and security.

At Italgas, we have been working on this since 2017, and this year we will reach the milestone of a fully digitised  network, remotely controlled and capable of collecting data, receiving instructions, and reacting locally in the  event of anomalies or service disruptions. Nimbus is the world's most advanced H2-ready smart meter, capable  of processing the amount of hydrogen in gas mixtures better than any other meter. 20,000 Nimbus units have  been active on this network for some time now. But not only that. Picarro's leak detection technology operates  along the network, which has made it possible to reduce methane emissions to zero.

Digital is our compass: having pushed technological innovation to a higher level, it has enabled Italgas to not  only transform a very traditional sector such as gas distribution, but also to be recognised as a leading  benchmark worldwide. We have created the conditions to accommodate increasing shares of renewable gas  to gradually replace fossil gas. 

We have done this on our Italian network, and we are now doing the same in Greece, where state-of-the-art  technology is being applied at a faster pace on the network of our associate company Enaon. And, following  closing, the next goal will be to bring the 2i Rete Gas networks up to the technological excellence of those of  Italgas. 

With the 2i Rete Gas transaction, the Italgas Group marks a historic milestone in its long and prestigious  history. The acquisition of the second gas distributor positions us to become European leader in our sector,  while strengthening our commitment to achieving our decarbonisation goals, with resilient infrastructure and  sustainable energy costs. By extending our digital applications to the entire network, and adopting advanced  technologies such as artificial intelligence, we will be able to monitor and manage all of our infrastructure in  real time, improving operational efficiency and increasing security and reliability: we will create additional value  for you, our shareholders, and all of our stakeholders.

But that is not everything. The digital transformation process has also begun in water distribution, where this  year we have tackled the serious effects of the drought in Sicily with professionalism, proactivity and courage.  The installation of digital devices is producing significant results in terms of reducing water losses and  consumption for network management, as well as returning value to communities and territories. Moreover, in 

14

the energy efficiency sector, once the Superbonus phase is over, we will continue to focus on cutting-edge  technological solutions for a new season of growth and development.

Efficiency, reduced losses and emissions, greater system flexibility, increased internal production of green  energy and network resilience: this is how we could summarise Italgas's path to ecological transition, a  pragmatic and sustainable approach, in many respects, whose only "ideology" is innovation.

With total revenues and other income adjusted of 1,778.8 million euros and an adjusted net profit attributable  to the Group of 506.6 million euros, 2024 confirmed the Group's steady growth trend. These are results  achieved thanks to the contribution of all Italgas people, who have combined change, innovation and  improvement, and which allow us to propose the distribution of a dividend of 0.406, an increase of +15.3%  compared to 2023, to the satisfaction of our Shareholders.

BENEDETTA NAVARRA

Chairperson & Non-Executive Independent Director

PAOLO GALLO

Chief Executive Officer and General Manager

15

2024 Highlights

Consolidated economic and financial highlights 2

- Total revenues and other income adjusted 1,778.8 million euros,  +0.2% compared to 2023;

- Adjusted EBITDA 1,350.9 million euros, +14.1% compared to the 2023 result;

- Adjusted EBIT 820.7 million euros, +20.5% compared to the 2023 result;

- Adjusted net profit attributable to the Group 506.6 million euros , +15.2% compared to the 2023  result;

- Investments 887.0 million euros (906.5 million euros in 2023);

- Cash flow from operating activities 1,098.7 million euros  (555.2 million euros in 2023);

- Net financial debt (excluding the effects of IFRS 16 and IFRIC 12) 6,672.3 million euros (6,555.2  million euros on 2023);

- Net financial debt 6,762.8 million euros (6,634.3 million euros on 2023);

- Proposed dividend of 0.406 euros per share , an increase of +15.3% compared to the dividend paid  in 2024, equivalent to a 65% payout.

Operating highlights 3

- Distribution network laid during the year  755 km for an overall length of approximately 83,811 km;

- Municipalities with gas distribution service concessions increased to 2,099 (2,050 as at 31  December 2023), of which 2,024 operating (1,967 as at 31 December 2023);

- Approximately  6,300 km of drinking water and 2,600 km of sewerage network managed ;

- Approximately 6.3 million inhabitants served directly and indirectly in Lazio, Sicily and Campania  through the water transport and distribution network.

Sustainability highlights 4

- Scope 1 and 2 emissions: 119.2 10 3 tCO 2 eq, -20.7%  compared to 2023 (same scope) 5 ;

- Scope 3 emissions – Supply chain: 86.4 10 3 tCO 2 eq, -51.6%  compared to 2023 (same scope) 6 ;

- Net energy consumption 7 : 395.9 TJ, -6.8%  compared to 2023 (same scope) 8 ;

2 For the economic and financial analyses for the financial year 2024, the company considered it more representative to comment on the adjusted results, i.e.  the recurring results, comparing them with the adjusted recurring results for the financial year 2023.

3 Considering the affiliates over which Italgas does not exercise control.

4 Sustainability highlights referring to the scope of the Group's consolidated companies, in line with what is stated in the section related to the scope of the  Consolidated Sustainability Report.

5 Also considering Acqua Campania (consolidated from 30 January 2024), which contributed 54.4 10 3 tCO 2 eq in market-based Scope 1 and 2 emissions,  total Group emissions in 2024 were 173.6 10 3 tCO 2 eq.

6 Acqua Campania emissions are not counted for the consolidation period of 2024.

7 This refers to total energy consumption, from which any self-produced and self-consumed electricity consumption is subtracted.

8 Also considering Acqua Campania (consolidated from 30 January 2024), which consumed 392.7 TJ of energy, and the consumption of self-generated non- fuel renewable energy for the rest of the Group (0.5 TJ), total Group consumption in 2024 was 789.2 TJ.

16

- Gas Leakage Rate 9 : 0.069% compared to 0.089%  in 2023;

- Networks inspected annually for gas leaks into the atmosphere 10 : 154% compared to 120% in  2023;

- 96.5% of waste produced by the Group and its contractors sent for recovery 11 ;

- 28.8% women in positions of responsibility 12 , in line with 2023; 

- 34.5% women in top management 13 , compared to 21.8 %  in 2023; 

- 7.5% Gender Equity Pay Gap 14 ;

- Combined accident index for employees and contractors 15 : 0.034 ;

- 45 average hours of training per capita provided, +12.5%  compared to 2023;

9 Calculated as the ratio between fugitive emissions of natural gas and volumes of gas distributed.

10 Value calculated as the ratio between the linear extension of the networks inspected in the calendar year and the total extension of the Group's gas  networks.

11 For the definition of 'waste sent for recovery,' refer to what is stated in Directive 2008/98/EC

12 It refers to women in positions as heads of organizational units

13 The definition of Top Management includes the level -1 and -2 reporting to the Chief Executive Officer.

14 Calculated as the change in the average ratio of the hourly basic pay of women to men for comparable groups of employees according to organisational  weight, referred to the Italian scope. 

15 Measured as the product of the frequency index (number of accidents per million hours worked) and severity index (number of days of absence per  thousand hours worked) of accidents recorded at Group and contractors level during the year.

17

Methodological note - Integrated Annual Report  2024 

Objectives of the document

The Italgas Group (hereinafter also referred to as “Italgas” or the “Group”) has presented the annual financial  report in the form of an Integrated Annual Report (hereinafter also referred to as the “Report” or the “Integrated  Report”) as a tool for the reporting of financial and non-financial data. It consists of the Directors’ Report  including the Consolidated Sustainability Statement, the Consolidated Financial Statements and the Separate  Financial Statements of Italgas S.p.A..

In fact, with this document, the Italgas Group also intends to respond to the provisions of the new Legislative  Decree 125/2024, issued in order to implement Directive (EU) 2022/2464, which provides for the introduction  of the Corporate Sustainability Reporting Directive (CSRD), confirming the sustainability reporting obligation  for companies indicated by the Directive itself. This provides for the adoption of the European Sustainability  Reporting Standards (ESRS), developed by the European Financial Reporting Advisory Group (EFRAG), to  ensure greater comparability and reliability of sustainability information.

The Integrated Annual Report makes it possible to provide stakeholders with an accurate, extensive and  transparent report of the Group’s activities, the results achieved and their progress, in addition to the services  provided.

A glossary of financial, commercial and technical terms, as well as units of measurement, is available online  at https://www.italgas.it/glossario/ .

Reference framework and reporting standards

In relation to the financial information, the Italgas Integrated Annual Report was prepared using the following  references:

• International accounting standards (IAS/IFRS); 

• Italian Legislative Decree no. 58 of 24 February 1998, as amended (“Consolidated Law on Finance”  or “TUF”);

• Regulation (EC) No. 1606/2002;

• Italian Legislative Decree no. 125/2024, implementing Directive (EU) 2022/2464, which includes the  European Sustainability Reporting Standards (ESRS).

The document is published annually and is available in the Investors section of the Italgas website  (https://www.italgas.it/en/investors/reports-and-presentations/).

Financial consolidation scope

1. Measured as the product of the frequency rate (number of injuries per million hours worked) and the severity rate (number of lost days per thousand hours worked) of injuries recorded at the Group level during the year.

18

As at 31 December, Italgas exercised control (direct or indirect) and fully consolidated the following companies:  Italgas Reti, Medea, Toscana Energia, Italgas Newco, Enaon, Enaon EDA, Nepta, Acqua 16 , Idrolatina,  Idrosicilia, Acqua Campania, Laboratorio Acqua Campania, Geoside, Bludigit and Immogas.

Metano Sant’Angelo Lodigiano, Gesam Reti, Umbria Distribuzione Gas, Energie Rete Gas, Enerpaper,  Siciliacque and Acqualatina are consolidated using the equity method.

Changes in the scope of consolidation are illustrated under the Chapter entitled Italgas Group Structure as at  31 December 2024.

Reporting scope of the Consolidated Sustainability Statement

The reporting boundary of the Consolidated Sustainability Statement refers to the companies consolidated  using the line-by-line method indicated in the previous paragraph.

For the companies over which the Group has operational control 17 , namely the companies Siciliacque and  Acqualatina, the document includes information on Scope 1 and Scope 2 (as required by the CSRD) GHG 18 emissions and the Group targets related to consumption, Scope 1 and Scope 2 GHG emissions, and water  losses.

Reporting process

Preparation of the Italgas Integrated Annual Report involved across-the-board engagement of all Italgas Group  companies, departments and divisions and the performance of the following activities:

• identification of the reporting boundary for financial and sustainability information;

• preparation and analysis of the double materiality required by the CSRD;

• collecting and consolidating the data and preparing the draft  Integrated Annual Report ;

The process is completed with the approval (on 12 February 2025) by the Board of Directors of the Integrated  Annual Report and the Draft Financial Statements as at 31 December 2024 and the subsequent approval, on  13 May 2025, by the Shareholders' Meeting of the Financial Statements, supported by the reports of the  independent auditing firm appointed.

In particular, the reports issued by the auditing firm Deloitte & Touche S.p.A. are included in this document,  and are as follows:

• Report of the independent Auditors on the limited review of the consolidated sustainability reporting  pursuant to Article 14-bis of Legislative Decree No. 39 of 27 January 2010;

• Reports in accordance with Article 14 of Italian Legislative Decree no. 39 of 27 January 2010 and  Article 10 of Regulation (EU) No 537/2014, drawn up in relation to the financial information in the  Consolidated Financial Statements and Separate Financial Statements.

16 The deed of merger of Acqua into Nepta became effective on 10 February 2025, with accounting and tax effects from 1 January 2025.

17 In compliance with DR E1-6 “Gross Scopes 1, 2, 3 and total GHG emissions". Operational control (over an entity, site, operation or asset) occurs when the  enterprise has the ability to direct the activities and operational relationships of the entity in question.

18 Greenhouse Gas, hereinafter GHG.

19

20

1\. Italgas profile

1.1 Corporate identity

Italgas is the leading operator in the distribution of natural gas in Italy and Greece and the third in Europe. As  at 31 December 2024, through its companies, 19 it operates 83,811 kilometres of gas distribution network, at  medium and low pressure, through which, in 2024, it distributed 8,188 million cubic metres of gas, through  8,020 million re-delivery points, it manages the service in 1,954 municipalities under concession in Italy and  145 in Greece, with a historical presence in the major Italian cities, including Turin, Venice, Florence and  Rome.

With 187 years of history, Italgas is the company that has brought gas into Italian homes, contributing towards  the country’s social and economic development. In 2024, the Group marked a historic milestone in its long and  prestigious history: the planned acquisition of 2i Rete Gas will enable it to become the leading European  operator in the gas distribution sector, after being recognised as a global benchmark in terms of innovation  and digitisation.

Through the major investment plan announced in October 2024 (2024 – 2030 Strategic Plan), the Group has  reaffirmed its commitment to consolidating the gas distribution sector in Italy and Greece with the aim of  guaranteeing important benefits for households and businesses in terms of safety, efficiency, service quality,  while favouring the ecological transition (due to the decarbonisation of end uses) and the reduction of energy  procurement costs. The use of artificial intelligence in all Group activities will also drive a new phase of digital  transformation of the distribution infrastructure, further accelerating the ecological transition.

Digital transformation also remains the main strategic lever for strengthening activities in the water and energy  efficiency sectors. In fact, the Group will continue to work to strengthen its role as a key player in the water  sector and to grow in energy efficiency, which is an indispensable tool in achieving its energy transition goals.

The Group’s business

The core business of Italgas is focused on gas distribution, which it carries out as part of the wider national  system, involving the distribution of gas on behalf of sales companies authorised to sell the gas to end  customers. In addition to the delivery service, carried out using the local pipeline networks from the city-gates  (reduction and metering stations interconnected with the transmission networks), the company carries out  metering activities, which include the collection, processing, validation and provision of consumption data in  order to regulate commercial transactions between operators and users.

The operational activities of the gas distribution business are managed by the following subsidiaries:

• Italgas Reti S.p.A. operating nationwide

• Toscana Energia S.p.A. operating in the Tuscany region

• Medea S.p.A. operating in Sardinia

19 It includes the Parent Company, direct and indirect subsidiaries, associated companies and joint ventures.

21

• Enaon, through its subsidiary Enaon Eda operating in Greece.

In Italy, Italgas is subject to regulation by the Italian Regulatory Authority for Energy, Networks and  Environment (also referred to as the Authority or ARERA), which defines both how to conduct the service and  the tariffs for distribution and metering. The gas distribution business is carried out under concession. A similar  regulatory activity is carried out in Greece by the public body appointed for this purpose (RAEWW).

The Italgas Group also operates: 

− in the management under concession of the integrated water service of 5 municipalities in Campania  through Nepta S.p.A. and of 38 municipalities in ATO 4-Lazio Meridionale through the associate  Acqualatina S.p.A., in the collection, storage, purification and adduction service in the Region of Sicily  through the associate Siciliacque S.p.A., in the collection, purification, adduction and transportation of  drinking water in the Region of Campania through Acqua Campania S.p.A; 

− in the energy efficiency services sector through Geoside S.p.A., its ESCo (Energy Service Company)  specialised in energy consulting and the supply of energy services to both the private residential and  industrial sector and the public administration sector. 

− in Information Technology activities, through Bludigit S.p.A., a company in which all the Italgas Group's  IT activities have been concentrated, offering proprietary digital solutions, making the skills and digital  solutions developed in-house available to other operators both in the energy sector and in other  sectors.

1.2 External context, markets and Italgas stock 

Challenges related to energy transition, competitiveness and energy security have been increasingly at the  centre of the international energy debate in recent years. In a context of increasing geopolitical instability and  volatility of energy production from traditional renewable sources (e.g. wind and solar), exacerbated by the  effects of climate change, it is necessary to find balanced solutions that can simultaneously guarantee the  achievement of the “Net Zero” target while preserving the competitiveness and security of the system. In this  context, Italgas has demonstrated an exceptional capacity for adaptation and resilience, guaranteeing  continuity of service and security for all customers served, due also to its capacity for innovation and the digital  transformation of processes, assets and people that began in 2017, while creating the conditions to support  the ecological transition through various energy efficiency initiatives and the development of technologies  capable of accommodating increasing shares of renewable gas. With an overall performance of more than  100% since its listing (in terms of total shareholder return), Italgas has shown itself capable of continuing its  development and transformation, supporting the country’s economic landscape, contributing to the economic  recovery thanks to important investments, playing a lead role in the energy transition. The year 2024 marked  a fundamental turning point for Italgas and the gas distribution market in Italy, with the historic announcement  of the agreement to acquire 2i Rete Gas and the creation of a European leader in gas distribution, further  strengthening the commitment to the digital transformation of infrastructure to support the energy transition,  for the benefit of the entire country.

Macroeconomic scenario and market trends

22

The year 2024 saw the consolidation of the trends already observed from the previous year, characterised by  a progressive reduction in inflationary pressure and an easing of restrictive monetary policies by the main  Central Banks, in a context of growing geopolitical uncertainty. 

Macroeconomic data confirmed substantial resilience in global growth, driven mainly by the United States and  emerging countries such as India, China and Brazil, while a slowdown in growth was observed in Europe,  although still in positive territory. Political uncertainty in Europe, which began with the government crisis in  France and was followed by Germany in the final months of the year, negatively impacted European markets,  which underperformed the US and Asia.

The decline in interest rates on the main government bonds benefited from the easing of the restrictive  monetary policies applied by Central Banks from 2022 onwards to cope with rising inflation. In fact, between  September and December 2024, the Federal Reserve Bank (FED) cut rates by 100 bps, bringing the Fed Fund  Rate (interbank rate) to 4.25-4.50%, in line with market expectations. The European Central Bank (ECB)  followed a similar strategy to the Fed between June and December, taking its refinancing and deposit rates to  3.15% and 3.0% respectively, down 135 bps and 100 bps respectively.

Over the course of the year, the BTP-Bund spread gradually narrowed, partly due to the relative political  stability and the resilience of macroeconomic data, in contrast to the growing political uncertainty and economic  slowdown that characterised the core Eurozone economies. The yield on ten-year Italian government bonds  reached 3.52% at the end of the year, the lowest since 2022, while the spread compared to German  government bonds of the same maturity stood at 1.16%, close to the lowest in 10 years.

The combination of the escalation of the Russia-Ukraine conflict, with Russia's decision to block all gas export  flows through Ukraine, and a winter characterised by cold temperatures and wind scarcity in Northern Europe,  was reflected in a reduction of gas storage to the lowest levels since the outbreak of the conflict in Ukraine,  bringing it more in line with historical averages. This led to an increase in gas prices in Europe (TTF) back to  their highest level since early 2023. In fact, at the end of 2024, the TTF closed at 48 €/Mwh, up more than 50%  compared to the levels at the end of 2023. 

By contrast, the price of oil remained substantially unchanged. After an initial rise in the first half of the year  supported by the decision by OPEC+ countries to extend production cuts, reaching highs at the beginning of  April, European Brent futures fell back to close, in the region of 74 dollars per barrel, in line with prices at the  beginning of the year, following fears of a slowdown in Chinese growth in 2025. 

The gradual slowdown and normalisation of growth, coupled with the substantial price stability of most major  commodities (energy and non-energy) for much of the year, contributed to a further slight reduction in inflation  levels in the Eurozone. Inflation stood at 2.4% in December 2024 compared to 2.9% in the previous year. A  similar dynamic was seen in the US, where the inflation rate fell from 3.4% to 2.9% over the same period. 

Political and economic developments over the course of 2024 contributed to the depreciation of the euro  against both the US dollar (EUR/USD from 1.1039 to 1.0407, down 5.7%) and the pound sterling (EUR/GBP  from 0.86691 to 0.82916, -4.4%). 

2024 Trend and Italgas share

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During 2024, the Stoxx Europe 600 index appreciated by 9.6%, while the US S&P 500 index rose by +25.0%  (taking into account total shareholder return performance for both indices, adjusted for the detachment and  reinvestment of dividends). This directly reflects the evolution of the macroeconomic environment during the  year, characterised by the gradual slowdown of growth in Europe and the substantial resilience of the US  economy, contrary to initial expectations, as well as the US market’s increased exposure to the technology  sector, which benefited from the growing interest in recent developments related to generative AI.

At the country level, with an increase of 18.9%, the FTSE MIB was among the best European national indices,  partly due to greater exposure to the banking sector, which benefited from interest rate dynamics, and lower  risk perception, reflected also in the contraction of the spread of government bonds. Among the major  European indices, the FTSE MIB was preceded only by the Madrid IBEX 35 index (+20.0%), while  outperforming all other indices including the Frankfurt DAX (+18.8%) and the Paris CAC (+0.9%).

At sector level, the Euro Stoxx Utilities rose 2.5 %, underperforming the European market. This is mainly due  to the uncertainty surrounding the expected reduction in interest rates in 2025, which has a major impact on  the valuations of securities in this sector, in addition to the instability of the European political environment  following the government crises in some key countries such as France and Germany, which is also reflected  in the increased uncertainty surrounding the region's future energy strategy. During the year, integrated utilities  were once again the best performers supported by the normalisation of commodity prices and the consequent  recovery of trading margins, in line with the previous year. Conversely, the uncertainty related to the outcome  of the US elections negatively impacted the companies most exposed to generation from renewable sources.

With regard to the other Eurozone sectors, the banking sector (+35.4%) was among the best performers,  followed by the insurance sector (+24.6%), driven by the resilience of the macroeconomic scenario and the  evolution of interest rates during the year. Among the worst performers in 2024 were the Food & Beverage (- 9.8%) and Basic Resources (-7.7%) sectors, negatively impacted by the deflationary trend in commodity  prices, and the Car sector (-6.8%), which in Europe is suffering from the impact of the progressive electrification  imposed by the EU and increasing competition from emerging Chinese manufacturers.

Italgas shares closed 2024 at 5.41 euros, up 11.7%, adjusted for the payment of 0.352 euros dividend per  share in May. From the date on which it was listed in November 2016 to the end of 2024, the total shareholder  return is 102.7%. 

During the year, the average daily trading volume of the Italgas stock on the electronic market of the Italian  Stock Exchange was over 2.8 million shares.

Comparison of the quotes Italgas, FTSE MIB and EURO STOXX Utilities (1 January 2024 - 31  December 2024, figures adjusted for dividends)

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1.3 Ownership structure 

The share capital of the Company as at 31 December 2024 consisted of 811,242,309 shares without par value,  giving a share capital value of 1,003,843,958.76 euros.

As at 31 December 2024, based on the shareholders’ list, the information available and the notices received  pursuant to Article 120 of the Consolidated Finance Act, the owners of significant equity investments are  represented below.

CONSOLIDATING COMPANY

SHAREHOLDERS

% OWNERSHIP

CDP Reti S.p.A (*) (**)

26.0

Snam S.p.A.

13.5

Lazard LLC 

9.8

Blackrock Inc..

3.7

Sun Life Financials 

3.2

Banca D’Italia

1.3

Other institutional shareholders 

32.8

. Italgas S.p.A.

Retail shareholders

9.6

(*)  On 1 August 2019 the Board of Directors of CDP S.p.A., also with a view to considering the control guidelines contained in Consob Communication no.  0106341 of 13 September 2017, reclassified its equity investment in Italgas as de facto control pursuant to Article 2359, subsection 1, no. 2) of the Italian  Civil Code and Article 93 of the TUF, exercising control through CDP Reti with, at the time, a 26.05% equity holding and through Snam with, at the time,  a 13.50% equity holding. CDP does not exercise management and coordination activities over Italgas pursuant to Article 2497 et seq. of the Italian Civil  Code.

(**) A shareholders' agreement between Snam, CDP Reti and CDP Gas was signed on 20 October 2016, effective from the date of the demerger of Italgas  S.p.A. on 7 November 2016. With effect from 1 May 2017, CDP Gas was merged into CDP. Subsequently, on 19 May 2017, CDP sold to CDP Reti, inter  alia, its equity investment in Italgas S.p.A., equal to 0.969% of Italgas S.p.A.'s share capital. CDP Reti is 59.1% owned by CDP, 35% by State Grid  Europe Limited - SGEL, a company of the State Grid Corporation of China group, and 5.9% by a number of Italian institutional investors. On 1 August  2019, the shareholders' agreement was further updated to take account of the aforementioned re-qualification of the shareholding. The shareholders'  agreement is for three years and is automatically renewed for further three-year periods, unless one of the parties gives 12 months' notice. Given such  forecast, in November 2019 and November 2022 the shareholders' agreement was renewed. On 21 March 2023, Snam and CDP Reti signed an  amendment to the Italgas Shareholders' Agreement.

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1.4 SRI indexes and ratings 20

The integration between the Strategic Plan and the Sustainable Value Creation Plan is reflected in the  commitment to improving all aspects of sustainability, from combating climate change to generating shared  value for all stakeholders. The Group's efforts in this area were again recognised in 2024 by the main  sustainability rating agencies. Indeed, during the year Italgas confirmed its position at the top of its sector,  allowing its shares to be included in numerous SRI indices that group together listed companies from all over  the world that stand out for consistently achieving high performance in the area of sustainability.

20 Socially Responsible Investing (SRI).

Italgas Shareholders by type of investor

Italgas Shareholders by geographical area

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In terms of results achieved, in December, Italgas was included for the fourth consecutive year in the Dow  Jones Sustainability Index Europe and for the sixth consecutive year in the Dow Jones Sustainability Index  World. With a rating of 91 points out of 100 (score date 13 December 2024), Italgas ranked first in the Gas  Utilities Sector for the third consecutive year for the rating obtained in the S&P Global Corporate Sustainability  Assessment (CSA) questionnaire. Furthermore, in February 2025 Italgas was also reconfirmed in the  Sustainability Yearbook and included in the “Top 1% S&P Global ESG Score” category.

Italgas continues to be recognised by the CDP (Carbon Disclosure Project) among the companies that stand  out internationally for the strategies and actions implemented to combat climate change. Also in 2024, the  Italgas Group was confirmed in the “A-list”, among the leaders in the fight against climate change (result based  on data acquired through the “Climate Change 2024” questionnaire); regarding the “Water security” section of  that questionnaire, the Group obtained a B rating.

Since 2017, Italgas stock has been included in the FTSE4Good index series. The 2024 review resulted in a  sustainable performance rating for Italgas of 4.3 points (out of a maximum of 5), in line with the previous result,  confirming Italgas above the average of Italian companies and above the average of its sector internationally.

In April 2024, the MSCI agency in its annual assessment confirmed the sustainability rating of “AA” for Italgas  (MSCI ESG Rating), while the ISS (Institutional Shareholder Services) agency assigned a rating of B+ and  Prime rating status for Italgas as part of the ISS ESG Corporate Rating. For ISS, Italgas remains the top utility  company in the sector.

In October 2024, Sustainalytics confirmed Italgas’ low-risk rating, assigning an ESG Risk Rating of 14.6, an  improvement from 16.9 last year (a lower score indicates lower risk). This confirms the assessment of “Low  risk” of experiencing material financial impacts from ESG factors. In the same month, Moody’s ESG Solutions  recognised Italgas' commitment to sustainability, improving the assigned score by one point compared to the  previous year, bringing it to 70/100. The trend was mainly driven by the actions implemented and the additional  commitments made by the Group in the environmental, social and governance fields. In the same month,  GRESB also confirmed its A rating for Italgas in the 2024 GRESB Public Disclosure Report, for the quality of  ESG disclosure. 

As of October 2021, Italgas’ stock was included in the MIB ESG Index, the first blue-chip index for Italy  dedicated to Environmental, Social and Governance (ESG) best practices of Borsa Italiana. Italgas is also 

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listed in the two Euronext Eurozone ESG Large 80 and Euronext Sustainable Europe 120 Indexes. Italgas  shares are also included in the ESG indices of MSCI, Bloomberg, Morningstar and Stoxx, among others.

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2\. Governance and risks

2.1 Governance 

The elements underlying Italgas' governance system are highlighted below. More information is provided in  the “CSRD” chapter below and is published annually in the Investors section on governance on Italgas'  website (https://www.italgas.it/en/investitori/governance/governance-italgas/).

Italgas has adopted the so-called traditional administration and control system 21 , which envisages the  presence of the Board of Directors and Board of Statutory Auditors, in office for three financial years, as well  as the Shareholders’ Meeting and the Independent auditing firm. The corporate governance system is  defined by the Board of Directors in compliance with the provisions of the Italian Civil Code, the regulations  to which the Company is subject as a listed Issuer, the unbundling regulations, and the Corporate  Governance Code of Borsa Italiana S.p.A., with reference to national and international best practices.

The Corporate Governance Code places growing attention on sustainability issues and requires the Board  to guide the company in the pursuit of “sustainable success”, creating long-term value for shareholders while  considering the interests of stakeholders, rather than shareholders, who have a significant role in  guaranteeing the long-term sustainability of the market sector in which the company operates.

For more information please refer to the Report on the Corporate Governance and Ownership Structure of  Italgas for the 2024 financial year (“Corporate Governance and Ownership Structure Report”), drawn up  pursuant to Article 123-bis of Italian Legislative Decree no. 58 of 24 February 1998 (“TUF”) and published  on the Company's website  https://www.italgas.it .

Independent auditing firm

External auditing is entrusted in accordance with the law to an independent auditing firm entered in the relevant  register and appointed by the Shareholders' Meeting on the reasoned proposal of the Board of Statutory  Auditors. The assignment for the period 2020-2028 was awarded to the independent auditing firm Deloitte & Touche S.p.A. by the Shareholders' Meeting of 12 May 2020. 

As statutory auditor, Deloitte & Touche S.p.A. also prepares the declaration of conformity on sustainability  reporting in accordance with the provisions of Article 11 subsection of Legislative Decree no. 39/2010.

Shareholders’ agreements

As regards the shareholder agreements pursuant to Article 122 of the TUF of which Italgas is aware, two  shareholder agreements are currently in force, i.e. the Italgas Shareholders' Agreement, entered into on 20  October 2016 by Snam S.p.A., CDP Reti S.p.A. and CDP Gas S.p.A., and the SGEL Shareholders' Agreement,  entered into by CDP S.p.A., State Grid Europe Limited and State Grid International Development Limited on  27 November 2014. For further information on shareholders' agreements, see the Corporate Governance and 

21 In applying the so-called traditional system of administration and control, the one-tier system and the two-tier system do not apply. 

29

Ownership Structure Report, as well as the relevant section of the Group's website: https://www.italgas.it/en/investors/title-shareholding/shareholders-agreements/ .

2.2 Risks Management

Italgas has an Internal Control and Risk Management System integrated into the organisational, administrative  and accounting structure and, more generally, a corporate governance system that ensures compliance with  the laws and company procedures, protects the company assets and contributes to the management of  activities, solidifying the accounting and financial data processed. 

The Enterprise Risk Management (ERM) Department is tasked with overseeing the Group's integrated  business risk management process. The Enterprise Risk Management activities focus on the definition of a  homogeneous, transversal model for assessing the risks, identifying priority risks, ensuring consolidation of  the mitigation actions and developing a reporting system. 

The ERM methodology adopted by the Italgas Group is in line with the reference models and the existing  international best practices (in particular, the 2017 COSO framework related to Enterprise Risk Management,  issued by the Committee of Sponsoring Organizations of the Treadway Commission, and ISO 31000:2018).  The process for the identification, assessment, measurement and management of the risks is carried out  periodically, at least once a year, on the basis of the importance of the risk and any changes in context. 

The activities directly involve all business departments through dedicated meetings that make it possible to  incorporate updates to the information on the description, significance and management of the risks already  existing in the portfolio, and the detection of new emerging risks. Risk is assessed using a special assessment  scale that sets out the thresholds of relevance for the Group (economic-financial impact dimensions;  operational; legal, governance and compliance; environment, health and safety; reputation and market) that  allow a “rating” to be assigned to each risk and facilitate their prioritisation.

With reference to strategic risks, the ERM Department, in coordination with all relevant departments, carries  out a specific in-depth analysis of risks, opportunities and uncertainties related to the Strategic Plan. The  analysis allows estimation of the overall volatility of the defined economic and financial targets and evaluation  of the level of resilience of the Strategic Plan. The “Strategic Plan” document, which has been approved by  Italgas S.p.A.'s Board of Directors, contains the output of this analysis.

The risks are updated once a quarter, half-year or year, depending on their relevance. The results found in  relation to the main risks and related management plans are presented to the Control, Risk and Related Party  Transactions Committee at each updating. Moreover, the mapping of risks and the relevant management  strategies are presented periodically to the Board of Statutory Auditors and the Supervisory Body of Italgas  and to the Boards of Statutory Auditors and the Supervisory Bodies of the Subsidiaries.

The Officer Responsible and the Internal Audit department periodically receive the results of the risk  assessments performed by the ERM department.

The reconciliation table below shows the main risks mapped in the ERM process being monitored, the main  management methods.

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Category

Risk

Description

Main methods of management

Strategic/business- related

Changes in  Regulation  and legislation

Risk of changes in the regulatory and  institutional context in Europe or  nationally affecting the natural gas  sector.

Risk of a penalising update of the rate  of return on net invested capital  recognised by the Regulator.

Focus on Greece: Risk of review by the  Greek Regulator of the investment and  tariff plans submitted for approval. 

\- Specific structures for monitoring regulation, legislation and  their prospective development plans, including in Europe \- Active participation in the consultations called by the  Regulator, sharing corporate positions and/or proposals for  defining, updating and implementing clear and transparent  regulation criteria \- Active participation in consultations called by the Italian  government or by European community organisations on  relevant topics, including Taxonomy \- Guidance aimed at defining unified trade positions.

Strategic/business- related

Climate  Change 

Physical Risk: increased frequency of  extremely intense natural events in the  places where Italgas operates, with a  negative impact on costs, revenues and  level of service EMERGING RISK: 22 Physical Risk: an  increase in average temperatures in the  areas where Italgas operates with a  possible negative impact on the number  of active re-delivery points served and,  consequently, on revenues EMERGING RISK: Transition risk:  change in the legal and regulatory  environment for greenhouse gases with  the aim of limiting emissions, with a  negative impact on costs. EMERGING RISK: Transition risk:  technological evolution that may have a  negative impact on the number of  active re-delivery points served with a  negative impact on revenues and the  level of expected investments EMERGING RISK: Transition Risk:  uncertainty of the role of natural gas in  the future energy mix with a negative  impact on costs, revenues and level of  expected investments

\- Operational countermeasures as described in the “Service  continuity: malfunctioning, accidents or extraordinary events”  risk, that mitigate impacts and/or reduce response times in  the event of extreme natural events are outlined

\- Targets for reducing net greenhouse gas emissions 23 : 

i) by 2030: reduction of Scope 1 & 2 emissions by 42% and  reduction of Scope 3 emissions by 33%, compared to 2020  values 

ii) by 2050, the target of Net Carbon Zero

\- Target to reduce net energy consumption by 33% by 2030,  compared to 2020 values 

\- Use of Picarro Surveyor technology

\- Process of transforming the network into digital  infrastructure to enable the distribution of gases other than  methane, such as hydrogen, biomethane and  e-gas \- Joining the UN Global Compact and UNEP's OGMP 2.0 \- Carrying out energy efficiency projects and investments in  the water and energy efficiency sectors

\- Actions intended to promote the development and  dissemination of biomethane and power-to-gas technology 

Strategic/business- related

Risks  associated with  the  development  and awarding of  area tenders for  the gas  distribution  service 

Risk of not being awarded concessions  in the planned areas, or being awarded  concessions with less favourable  conditions.  Risk of higher management costs borne  by the Group with respect to its  operating standards in case of  concessions awarded in ATEMs  (Minimum Territorial Areas) previously  managed by other operators.  Risk of legal and/or arbitration disputes  deriving from the complexity of the  legislation that governs the expiry of the  concessions held by Italgas.  Risk that the redemption value of the  concessions for which, following the  assignment process, a third party is an  assignee is lower than the value of the  RAB

\- The existing legislation states that, in the event of failure to  be awarded concessions previously managed, the outgoing  operator is entitled to the redemption value for the networks it  owns. \- Specific procedures that govern the pre-tender activities,  including calculation of the redemption value, and  participation in area tenders \- Monitoring of legislative changes and evaluation of the  potential impacts on the tender process \- Planning of the Tender calendar and the bidding strategy  integrated into the Group’s Strategic Plan.  \- Critical analysis of the quality of the tender bid and  implementation of improvement measures, including through  use of external experts, organisations and universities 

22 Risk for which the potential effects for the company and/or sector refer to a medium to long-term time frame.

23 The targets, approved by the Board of Directors in October 2024, refer to the perimeter of the Group companies consolidated using the line-by-line method  as at June 2024, and also include any change in the perimeter due to the acquisition of 2i Rete Gas. They do not include the water service companies  acquired in 2023 and which subsequently merged into Nepta, or any future changes as a result of ATEM tenders and M&A transactions.

31

Category

Risk

Description

Main methods of management

Strategic/business- related

Worsening of  the geopolitical  context 

Risk of negative changes in the  geopolitical context and/or atypical  events with potential tensions on the  financial markets, impacts on operating  continuity and/or on health and safety  of staff and/or on the supply chain.

\- Group Security Operation Center (G-SOC) and central  platform for correlation of information from security systems.

\- Travel security and operational intelligence platform. 

\- Integrated Security Cloud Command Center and Physical  Security Information Management.

\- With reference to the conflicts in Russia/Ukraine and  Israel/Palestine, the following is confirmed: 

• the absence of production activities and staff located in  the countries involved 

• intensification of controls and monitoring of the supply  chain, conforming that there are no first or second level  suppliers involved in the areas affected, which impact  on the Group’s operating continuity

• there are no significant critical aspects in view of the  non-renewal by Ukraine of the Russian gas transit  agreement.

Financial 

Credit Risk

Risk of potential losses arising from  counterparties failing to fulfil their  obligations or delayed payment of  amounts owed with negative effects on  the financial results and financial  position of the Italgas Group

\- Rules for user access to the gas distribution service  established by the Regulator and set out in the Network  Codes, that establish the rules regulating the rights and  obligations of the parties involved, and that lay down  contractual conditions that reduce the risk of non-compliance,  such as the provision of bank or insurance guarantees 

\- Strong reliability of gas distribution customers as at 31  December 2024:

• in Italy on average 97.4% of trade receivables are  settled on the due date and more than 99.0% within the  next 4 days;

• in Greece on average 95.0% of trade receivables are  settled on the due date and approximately all within the  next 4 days.

Financial 

Changes in  interest rates,  inflation and  deflation

Risk of fluctuations in interest rates,  impacting the market value of the  Company’s financial assets and  liabilities and its net financial expense.  The risk that an extended period of  inflation lower than the Group's  forecasts could have adverse effects in  the long-term on the RAB value and  expected regulated revenues. Risk of  an unexpected increase in the inflation  rate with possible adverse effects on  expected costs

\- Process for the preparation and monitoring of the financial  and management plan, control and reporting of Financial  Risks \- High incidence of fixed-rate financial and bond debts (as at  31 December 2024, 85.4% of the gross financial debt was at  a fixed rate and 14.6% was at floating rate) \- Mix of external financial resources  \- Monitoring of the main economic and financial indicators,  including financial structure indices used by rating agencies,  liquidity indicators and indicators of debt mix/composition,  risk indicators of counterparty liabilities, and of certain key  parameters, such as the ratio between debt and the RAB. 

Financial 

Liquidity Risk

Risk that new financial resources may  not be available (funding liquidity risk)  or that the company may be unable to  convert assets into cash on the market  (asset liquidity risk), meaning that it  cannot meet its payment commitments.  This may affect profit or loss should the  company incur extra costs to meet its  commitments or, in extreme cases, lead  to insolvency and threaten the  company’s future as a going concern

\-  Countermeasures as described in the “ Changes in Interest  rate, inflation and deflation ” risk 

\- Adequate level of cash held in current accounts and fixed- term deposits with leading banks \- The EMTN programme, in addition to funding from the  banking system, which presently allows issue of the  remaining bonds worth a nominal 4.4 billion euros to be  placed with institutional investors

Financial 

Credit rating  risk

Risk of a downgrade in Italgas’ credit  rating due to worsening in the economic  and financial parameters or due to a  downgrade of the rating of the Italian  Republic, which, based on the  methodologies adopted by the rating  agencies, could trigger a downward  adjustment in Italgas’ rating

\-  Countermeasures as described in the “ Changes in Interest  rate, inflation and deflation ” risk \- Constant dialogue with rating agencies

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Category

Risk

Description

Main methods of management

Financial 

Debt covenant  and default risk

Risk of failure to comply with financial  covenants for existing loans (in some  cases only when this non-compliance is  not remedied within a set time period,  and the occurrence of other events,  such as cross-default events, some of  which are subject to specific threshold  values), which could result in Italgas’  failure to comply and could trigger the  early repayment of the related loan

\- Absence of financial covenants and/or collateral in the loan  agreements (as at 31 December 2024, there were no loan  agreements with these characteristics, except for the EIB  loan taken out by Toscana Energia, for an original nominal  amount of 90 million euros, which requires compliance with  certain financial covenants). \- Monitoring of compliance with the following types of  contractual clauses: (i) negative pledge undertakings,  pursuant to which Italgas and its subsidiaries are subject to  limitations regarding the creation of real rights of guarantee  or other restrictions concerning all or part of the respective  assets, shares or goods; (ii) pari passu and change of control  clauses; (iii) limitations on some extraordinary transactions  that the company and its subsidiaries may carry out (as at 31  December 2024, these commitments appear to have been  respected).

Operational

Anomalies in  smart meter  performance 

Risk of increased levels of  malfunctioning of remote-reading  meters with lost/failed reading of the  use and/or requiring replacement or  regeneration

\- Adoption of Nimbus, the new generation smart meter  (prototype released in November 2023, tested in the field in  2024 and installed on a wide scale from 2025).

\- Maintenance of an adequate fund to cover malfunctions

\- Issue of adequate guarantees by suppliers 

\- Resolution ARERA/DINE 01/2023 which requires, for  G4/G6 smart meters produced by 2016 and installed by  2018, the recognition of the residual value 

\- Audits on suppliers and supply tests

Operational

Service  continuity:  malfunctioning,  accidents or  extraordinary  events

Risks of malfunctioning and  unforeseeable distribution service  disruptions from unintended events,  such as accidents, breakdowns or  malfunctioning of equipment or control  systems, the underperformance of  plants, and extraordinary events such  as explosions, fires, earthquakes,  landslides or other similar events  beyond Italgas’ control

\- Third Party Liability Insurance and Asset Protection  coverage \- Procedures and systems for emergency management,  emergency plans with measures defined to make plants safe  and guarantee service continuity \- Health and safety procedures, communication campaigns,  training and meetings to raise awareness \- Command and Control Centre for Plants and Networks  (CIR) \- Gradual adoption of DANA – Digital Advanced Network  Automation – the network command and control system 

\- Smart Maintenance: GIS model for the intelligent  maintenance of Italgas networks. 

\- Scheduled gas leakage detection 

Operational

Cyber attacks

Risks of cyber attacks on the IT  (Information Technology), OT  (Operational Technology) and IoT  (Internet of Things) sectors 

\- Cybersecurity insurance coverage \- Bludigit ISO 27001 certification 

\- Group Policy on Integrated Security, Resilience and Crisis  Management, Cybersecurity, business continuity, network  and information security, and emergency and crisis  management organisational and operational model

\-  Security measures to protect endpoints, access, information 

\- Specific training on cyber risks, common vulnerabilities,  phishing and spam and phishing simulations 

\- Secure Product Development Lifecycle process, regular IT  and OT vulnerability assessment and penetration tests 

\- Real-time monitoring of IT and OT systems using the  Security Information and Event Management (SIEM) \- Leading sector suppliers with maximum levels of security  defined and monitored -“Cybersecurity Awareness for third parties” 

\- Cyber Threat Intelligence 

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Category

Risk

Description

Main methods of management

Operational

Risks  associated with  the health and  safety of people  and  environmental  protection

Risk of incidents and/or injuries  involving employees and partner  companies 

Risk that Italgas may incur costs or  liability, including to a significant extent,  arising from any environmental  damage, including in consideration of  changes in legislation on protecting the  environment and the possible  occurrence of disputes.

Risks associated with the spread of  pandemics or new diseases that have  repercussions on health and safety, on  the operating context and on the  resulting economic and financial  framework of reference of Italgas

\- Insurance policies for “individuals” (professional and non- professional accidents, death by illness) \- HSE system in compliance with the reference standards,  certified according to international legislation for aspects of  health, safety, environment and energy efficiency \- Monitoring of HSE legislation 

\- Digital applications for reporting and recording “near  misses” and for waste management

\- Communication campaigns and HSE awareness meetings,  training sessions with suppliers/contractors on HSE topics  and for creating standardised operating procedures \- Internal procedures providing for specific measures against  suppliers/contractors in the event of non-compliance in the  HSE field 

\- Audits on contractors during qualification and activities

\- Activities to promote health and well-being \- Specific operating measures that may be activated in the  event of a need to minimise contacts With particular reference to reclamation activities:  \- Specific provision to cover the estimated liabilities in relation  to the formalities required by the law in effect  \- Reclamation process of contaminated sites, which defines  the tasks, operating procedures and indications in operations  of waste removal, land analysis, establishing safe conditions  and/or reclamation of sites contaminated by previous  activities \- Audits on sites being reclaimed, carried out internally and  by third parties

Operational

Risks  associated with  human  resources

Risks associated with the development  of human resources, including risk of  resources in key roles leaving, lack of  technical and specialist know-how,  increase in the age of company  personnel, drop in the level of  satisfaction and/or increase in  workplace disputes

\- Top Employers certification 

\- Italgas Academy, Training courses in partnerships with  universities, Multimedia with group training initiatives in the  “Excellence”, “People” and “Innovation” areas

\- Knowledge transfer system 

\- I-Grow Programme and Smart Rotation System \- Succession plan for senior roles

\- Personnel scouting and recruitment process, performance  management system and development plans for resources  \- Italgas Human Rights Policy  \- Italgas Diversity and Inclusion Policy

\- UNI/PdR 125:2022 certification for gender equality 

\- Survey on climate extended to all Group employees

\- Welfare system 

Operational

Risks  associated with  the quality and  level of service

Risk of non-compliance of the  commercial levels of service for  services to sales companies and/or risk  of delayed or partial compliance with  the obligations assumed, such as  execution of the investments plan  related to concessions involving  obligations borne by the concession  holder

\- Continuous monitoring of Key Performance Indicators on  commercial processes, Operating procedures and  instructions for Commercial Management of the Service

\- Capexforce software for digital oversight of the investment  process \- Surveys at sales companies \- Mapping the existing concession obligations, monitoring  and activating for prompt interventions \- Constant dialogue with contracting parties

Operational

Supply chain  risks

Risks associated with the availability  and cost of materials, services and  supplies, the operating capacity and  scalability and the reputational and  compliance reliability (including respect  for human rights) of the suppliers and  contractors of the Group

\- Planning of procurement, analysis and monitoring of  department KPIs \- Supplier qualification process with economic-financial,  reputational and ESG audits 

\- On-site, technical and ESG checks for the qualification  purposes of Critical/Strategic Suppliers

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Category

Risk

Description

Main methods of management

\- “Supplier Code of Ethics” 

\- Standardised tender processes and regulations

\- ESG reward criteria during the tender phase, ESG audits  and implementation of the Action Plan

\- Anti-mafia audits in tender procedures relating to special  sectors

\- Supplier performance evaluation, including in terms of  sustainability

\- Procurement diversification and scouting activities for  innovative assets, produced with alternative materials 

\- “Anti-Bribery” and “Cybersecurity” Policy for third parties 

Legal and non- compliance

Risk of non- compliance and  legislative  changes

Risk of non-compliance with legislation  at European, national, regional and  local level with which Italgas must  comply in relation to the activities that it  carries out and/or risk of failure to  intercept and transpose new  regulations falling under the scope of  application 

\- Internal control and risk management system and areas of  responsibility defined in terms of compliance \- Code of Ethics, Model 231, Policy for the prevention of and  fight against corruption, ISO 37001 anti-bribery certification

\- ISO 37301 compliance system certification 

\- Training for personnel on compliance issues \- Analysis and monitoring of the reputational requirements of  the Group’s counterparties \- “Supplier Code of Ethics”

2.3 Internal control system

In order to ensure the correctness 24 , accuracy 25 , reliability 26 and timeliness of the information communicated  to shareholders and the market, Italgas is committed to promoting and maintaining an adequate Corporate  Reporting Internal Control System (hereinafter also referred to as the “SCIS”). The SCIS represents the set of  all instruments necessary or useful to guiding, managing and verifying the corporate business.

The Corporate Internal Control System adopted by Italgas and its subsidiaries was defined in accordance with  the provisions of the above-mentioned Article 154-bis of the TUF that Italgas is required to ensure compliance  with, and is based in methodological terms on the “COSO Framework” (“Internal Control - Integrated  Framework”, issued by the Committee of Sponsoring Organisations of the Treadway Commission), the  international reference model for the establishment, updating, analysis and assessment of the control system  in respect of both financial and non-financial information.

The reference “COSO Framework” for Italgas is updated to May 2013 and this is the last version available. 

The design, establishment and maintenance of the Corporate Reporting Internal Control System are  guaranteed through scoping, identifying and assessing risks and controls (at corporate and process level,  through risk assessment and monitoring activities), and the relevant information flows (reporting).

The control system structure provides for entity-level controls (CELCs - Company Entity Level  Controls) which apply across the entire entity in question (Group/individual company), and process-

24 Reporting reliability: reporting that is correct, complies with generally accepted accounting standards and fulfils the requirements of the applicable laws and  regulations.

25 Disclosure accuracy: error-free information.

26 Reporting reliability: reporting that is clear and complete that would enable investors to make conscious investment decisions.

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level controls (PLCs). It also includes pervasive controls performed on the management activities of  corporate IT systems (ITGC – Information Technology General Controls) and controls governing the  criteria for the segregation of duties and responsibilities of employees (SOD – Segregation of Duties).

The controls, both at the entity level and process level, are subject to regular evaluation (monitoring) to verify  the adequacy of the design and actual operability over time. For that purpose, there is provision for ongoing  monitoring activities, assigned to the management responsible for the relevant procedures/ activities, as well  as independent monitoring assigned to Internal Audit, which operates according to an annual plan agreed with  the Officer responsible for the preparation of financial reports (DP), which aims to define the scope and  objectives of its actions through concerted audit procedures.

Italgas regulatory system

The Regulatory System is characterised by a tiered structure, corresponding to different types of regulatory  instruments. Each regulatory instrument is applied with reference to the processes defined in the map of Group  processes.

The By-Laws, Code of Ethics, Model 231, Certified Management Systems and other compliance models  constitute the general reference framework of the Group's Regulatory System, because the inspiring principles  are recognised as founding principles of the behaviour the personnel of the Italgas Group and, therefore, form  part of the general reference framework of the entire Regulatory System. These regulatory tools are part of  the efficient handling of the Management and Coordination activities performed by Italgas concerning  Subsidiaries and, where envisaged, they are subject to regular delivery to, and/or formal adoption by, the  Boards of Directors of the Subsidiaries.

The regulatory system also includes as an integral part thereof, documents belonging to certified management  systems in the areas of health, safety, environment, quality, energy, anti-corruption and, finally, integrated  compliance, all in accordance with the international ISO standard.

The elements of the Group's Regulatory System are as follows:

Italgas Enterprise System (IES) - constitutes the guide and reference for the Group's organisation and  operation;

Policies - regulatory instruments drawn up for specific issues that contain declarations of intent, define  reference principles and identify behaviours that each Group company must adopt, share and promote;

Quality Manuals and Plans - regulatory instruments drawn up, where necessary, in accordance with the  requirements of the specific reference standard and that describe the processes, activities, reference structure,  departments involved and related responsibilities with which the Certified Management Systems achieve their  objective and direct their work processes.

Regulations  – regulatory instruments that, depending on their specificity, can:

• define regulatory rules across several business processes in order to implement provisions issued, for  instance, by the Legislator, independent authorities or Certification Bodies or best practices;

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• define, with a more or less operational level of detail, the roles, responsibilities and activities of the  various Departments involved in the individual business processes;

Regulatory circulars - regulatory instruments that regulate or expand on specific issues, including those of  temporary significance. They provide indications, including of a prescriptive nature, concerning:

• conduct to be adopted in the performance of specific activities typically falling within the competence  of a single Department or Business Unit;

• provisions of a contingent/transitory or in any case residual nature that cannot be directly/immediately  regulated through dedicated regulations;

The day-to-day implementation of policies is ensured through the general rules dictated by the Italgas  Enterprise System and by organisational and regulatory instruments that specify the responsibilities and  operating methods to be followed by each process owner. In particular, the responsibility for implementing the  commitments is set out in the Organisational Notices within the missions of the individual organisational  structures of each Group Company, whereas, the process aspects are incorporated within the individual  company procedures on the basis of an intricate map of Group processes.

2.4 Ethics and compliance

The Italgas Group operates on the basis of a Corporate Management System comprising an Organisational  System and a Regulatory System that defines roles, responsibilities, powers and rules of conduct to be upheld  in going about the corporate business. The Corporate Management System is updated continuously with a  view to guaranteeing the effectiveness and efficiency of processes, safeguarding the company’s assets and  ensuring compliance with legislation, thereby allowing Italgas to also direct the management and coordination  of the subsidiaries.

Fairness and transparency in business management are not only aimed at the implementation of a correct  management model and dialogue with stakeholders, but also at the prevention of unlawful acts.

The Code of Ethics

On 14 December 2023, the Italgas S.p.A. Board of Directors approved the update of the Code of Ethics  (general essential principle of the 231 Model adopted by Italgas and by the Group companies in accordance  with Italian Legislative Decree no. 231/2001) in order to optimise the Italgas Group commitment to protecting  cultural and landscape heritage.

The Code of Ethics, available on the Company’s website, is a collection of the values that the Group  recognises, accepts and shares and the responsibilities it assumes within and outside of its organisation. The  Code of Ethics recalls the principles of corporate responsibility that must be respected, inter alia , in the areas  of sustainability, the prevention and fight against corruption, health and safety in the workplace, relations with  stakeholders and suppliers, and personal data protection.

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The Code of Ethics applies with regard to all “Italgas people”, i.e. directors, statutory auditors, management  and employees of the Group, as well as all of those who work to achieve its objectives, each within the scope  of their functions and responsibilities. 

The Supervisory Bodies of each Group company, reporting on a half-yearly basis to the Control, Risk and  Related Party Transactions Committee and the Board of Statutory Auditors on the implementation and need  for update of the Code of Ethics, are assigned the tasks of “Guarantors” of the Code of Ethics. Furthermore,  the Code of Ethics is also subject to periodic external audits carried out by independent bodies on the  implementation of the Company's internal management systems (e.g. Management System for Preventing  and Combating Corruption, certified in accordance with UNI ISO 37001:2016).

Since March 2023, the Greek companies Enaon and Enaon EDA have also adopted the Italgas Code of Ethics. 

Organisational and management model pursuant to Italian Legislative Decree no. 231/2001

In accordance with Italian Legislative Decree no. 231/2001, Italgas has adopted its own Model 231 aimed at  mitigating the risks of committing the offences referred to in the aforementioned decree. Model 231, periodically  updated in line with regulatory and/or organisational changes, is intended for members of the corporate bodies,  management and employees of Italgas, as well as for all those operating to achieve Italgas' objectives. 

The most recently updated version of the Model was approved by the Company's Board of Directors on 20  February 2024 to reflect the current organisational structure and scope of the Company's activities, also in  light of the recent corporate acquisitions, and the regulatory changes affecting Legislative Decree no.  231/2001.

In application of its Model 231, Italgas appoints a Supervisory Body consisting of three external members, one  of whom, acting as Chairperson, was chosen from scholars and professionals with proven expertise and  experience on legal, corporate and economic issues and corporate organisation. 

The term of office of members of the Supervisory Body is aligned with that of the Board of Directors which  appointed them. The term of office of the members expires on the date of the Shareholders' Meeting called for  the approval of the financial statements for the last year of their office, although they continue to carry out their  functions over the ad interim period, until new members of the Supervisory Body are appointed.

Each subsidiary adopts and updates its own 231 Model (available for consultation on the website), taking  into account the indications and implementing methods defined by Italgas S.p.A..

Certified management systems and accreditations

For Group companies, Italgas promotes the adoption of Management Systems structured and implemented  according to the requirements of the international standards of reference. Commitments to these topics are  expressed in the related corporate policies in order to inspire activities and conduct in specific regulatory and  market contexts.

The Management Systems of the Group Companies pursue continuous improvement in the following main  areas:

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• the ability to regularly provide products and services that meet the applicable mandatory requirements  and customer requirements while improving satisfaction levels; 

• their environmental performance with a view to protecting the environment;

• the prevention of accidents and work-related diseases by providing safe and healthy workplaces and  guaranteeing the health and safety of people (employees, end customers, contractors, etc.);

• their energy performance by promoting the efficient use of energy, while reducing consumption and  optimising its end use;

• activities and measures to prevent and combat corruption, to manage integrated compliance and the  whistleblowing system;

• measures to ensure gender equality in the workplace;

• measures and controls to ensure information security.

To verify compliance of the Management systems with the requirements set by the standards, Italgas uses the  DNV Certification Body, which, in 2024, carried out the relevant audits and issued the relevant certificates, or  the relevant maintenance. The Companies’ accreditations, or of some sectors of such, are verified and issued  by ACCREDIA (single accreditation entity).

According to their corporate purpose and business activities, Italgas Group companies hold the following  certifications, attestations and accreditations as of 2024:

CERTIFICATIONS, ACCREDITATIONS AND ATTESTATIONS OF ITALGAS S.p.A.

Degree of certification coverage

Reference standard 

Year of first certification 

Company/Group

UNI ISO 37001

2018

Company/Group

UNI ISO 37002

2024

Company

UNI ISO 37301

2024

Company

UNI PdR 125

2023

CERTIFICATIONS AND ACCREDITATIONS OF ITALGAS RETI S.p.A.

Degree of certification/accreditation coverage

Reference standard

Year of first  certification/accreditation

UNI CEI EN ISO 50001

2012

UNI EN ISO 14001

2001

SOA

2001

UNI ISO 45001

2019 27

UNI EN ISO 9001

1996

Company

UNI ISO 37001

2018

Calibration laboratory

UNI CEI EN ISO/IEC 17025

2009

Test laboratory

UNI CEI EN ISO/IEC 17025

1994

Type C Inspection Body

UNI CEI EN ISO/IEC 17020

2014

27 Since 2001 for the former reference standard OHSAS 18001

39

CERTIFICATIONS, ATTESTATIONS AND ACCREDITATIONS OF TOSCANA ENERGIA S.p.A.

Degree of certification/accreditation coverage

Reference standard

Year of first  certification/accreditation

UNI CEI EN ISO 50001

2017

UNI EN ISO 14001

2003

UNI ISO 45001

2019 28

UNI EN ISO 9001

1998

UNI ISO 37001

2020

UNI ISO 37002

2024

Company

SOA 

2001

Type C Inspection Body

UNI CEI EN ISO/IEC 17020

2016

CERTIFICATIONS OF MEDEA S.p.A.

Degree of certification coverage

Reference standard

Year of first certification

UNI CEI EN ISO 50001

2021

UNI EN ISO 14001

2021

UNI ISO 45001

2021

UNI EN ISO 9001

2021 29

UNI ISO 37001

2020

Company

UNI ISO 37002

2024

CERTIFICATIONS OF NEPTA S.p.A.

Degree of certification coverage

Reference standard

Year of first certification

UNI CEI EN ISO 50001

2021

UNI EN ISO 14001

2021

UNI ISO 45001

2020

UNI EN ISO 9001

2020

UNI ISO 37001

2020

Company

UNI ISO 37002

2024

CERTIFICATIONS AND ATTESTATIONS OF GEOSIDE S.p.A.

Degree of certification coverage

Reference standard

Year of first certification

UNI CEI EN ISO 50001

2022

UNI EN ISO 14001

2021

Company

UNI ISO 45001

2021

28 Since 2003 for the former reference standard OHSAS 18001

29 Since 2014 for the Sassari site only

40

UNI EN ISO 9001

2021 30

UNI ISO 37001

2020

SOA

2022

UNI ISO 37002

2024

UNI CEI 11352

2015

F-GAS (Italian Presidential  Decree 43/12)

2013

UNI PdR 125

2024

SA8000

2007

CERTIFICATIONS OF BLUDIGIT S.p.A.

Degree of certification coverage

Reference standard

Year of first certification

UNI ISO 45001

2022

UNI EN ISO 9001

2022

UNI CEI EN ISO IEC 27001

2023

UNI ISO 37001

2022

Company

UNI ISO 37002

2024

The Enaon Group adapted its Integrated Management System following the merger of the Distribution  Companies, in accordance with the requirements of the international standards of reference and the legal and  regulatory requirements, as well as taking into account its own operational needs. The following table shows  the certifications held by Enaon and Enaon EDA:

CERTIFICATIONS OF ENAON S.A.

Degree of certification coverage

Reference standard

Year of first certification

Company

ELOT 31 ISO 37001

2024

CERTIFICATIONS OF ENAON EDA S.A.

Degree of certification coverage

Reference standard

Year of first certification

EN ISO 9001

2023

ELOT EN ISO 14001

2023

ELOT ISO 45001

2023

ELOT EN ISO 50001

2023

Company

ELOT ISO 37001

2023

For newly acquired water associates, the relevant certifications are listed below:

CERTIFICATIONS OF ACQUA CAMPANIA S.p.A.

Degree of certification coverage

Reference standard

Year of first certification

30 Since 2014 for the Bologna site only

31 Hellenic Organisation for Standardisation

41

UNI EN ISO 9001

2001

UNI EN ISO 14001

2024

UNI ISO 45001

2017

Company

UNI CEI EN ISO 50001

2020

CERTIFICATIONS OF ACQUALATINA S.p.A.

Degree of certification coverage

Reference standard

Year of first certification

UNI EN ISO 9001

2006

UNI EN ISO 9001 (legal)

2017

UNI EN ISO 14001

2010

UNI ISO 45001

2019

UNI CEI EN ISO 50001

2017

UNI ISO 37001

2019

Company

UNI CEI EN ISO/IEC 17025

2018

CERTIFICATIONS OF SICILIACQUE S.p.A.

Degree of certification coverage

Reference standard

Year of first certification

UNI EN ISO 9001

2007

UNI EN ISO 14001

2012

UNI ISO 45001

2009

UNI CEI EN ISO 50001

2011

Company

UNI CEI EN ISO/IEC 17025

2019

Anti-corruption 

The Italgas Group prohibits and actively cooperates in preventing and opposing, without exception, any form  of corruption, public or private, active or passive, direct or indirect, both nationally and internationally. 

In this context, Italgas adopts and implements specific measures to prevent and combat corruption risks  potentially connected to company activities, including: 

− the Model 231;

− the management System for preventing and combating corruption in compliance with the UNI ISO  37001:2016 standard (“Anti-Corruption System”); 

− the Corporate Compliance Policy, which defines, among other things, the objectives and principles of  the Anti-Corruption System;

− the Standard for the prevention of and fight against corruption that provides a systemic overview of  reference of the regulatory tools adopted by Italgas to prevent and fight corruption; 

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− the Compliance Standard “ Reports received by Italgas and its Subsidiaries ” which governs the process  for handling reports, including anonymous reports.

Adherence to and compliance with the anti-corruption measures adopted by Italgas is required of all  stakeholders with whom the Group has relations, including employees, suppliers, intermediaries, business  partners etc.

During 2024, no incidents of corruption were recorded.

Whistleblowing

Italgas S.p.A. and the subsidiaries Italgas Reti, Toscana Energia, Medea, Geoside, Bludigit, Nepta and the  jointly controlled company Metano Sant’Angelo Lodigiano, were awarded a certificate of compliance of the  Whistleblowing Management System with technical standard UNI ISO 37002:2021 on 18 September 2024 by  the certification body DNV-GL Business Assurance Italia S.r.l.

This award certifies compliance with regulations and best practices and demonstrates the Group's ongoing  commitment to a corporate culture based on transparency, ethical governance and the prevention of illegal  activities.

Compliance

Italgas S.p.A. achieved certification of its Compliance Management System pursuant to technical standard  UNI ISO 37301:2021 on 17 December 2024, awarded by certification body DNV-GL Business Assurance Italia  S.r.l.

The Management System implemented allows Italgas to adopt a structured and integrated approach to the  management of risks of non-conformity and non-compliance, in relation to all areas of compliance identified,  so that company activities can take place in accordance with the applicable legislation. 

Conflict of Interest

The Board of Directors periodically assesses the independence and integrity of the Directors and verifies that  there are no grounds for ineligibility and incompatibility. On 14 June 2021, Italgas' Board of Directors updated  a procedure which establishes the principles and rules which Italgas and its Subsidiaries should adhere to in  order to ensure the transparency and essential and procedural correctness of transactions conducted by  Italgas Group companies with related parties or "parties of interest" (the "Italgas Related-Party Transactions  Procedure"). For more details , please refer to the Corporate Governance and Ownership Structure Report.

Antitrust

In 2016, the Italgas Group adopted instruments intended to disseminate the culture of compliance in relation  to antitrust and consumer protection, including: 

• the Antitrust Code of Conduct;

• the Antitrust Unit (within the legal department).

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Due to the evolution of the Italgas Group, on 27 July 2020, the Board of Directors approved the update of the  “Antitrust” Compliance Standard. 

The Antitrust and Consumer Protection Manual is attached to the Antitrust and Consumer Protection Code of  Conduct, which provides an overview of the most important decision-making practices of the Italian Competiton  Authority. 

The evolution of the Italgas Group, the organisational changes, as well as the regulatory and judicial changes that  have occurred over the years led Italgas to initiate further activity to review and update the mapping of antitrust  risks, conducting interviews with some managers of internal departments that were deemed to be more exposed to  the risk of relevant antitrust conduct. 

In December 2024, the Antitrust Code of Conduct and the Antitrust Manual were updated in line with  regulatory/legal developments and the results of the risk assessment conducted. 

Integrated security

The Group has a security system characterised by an active protection approach that can involve and correlate  all corporate events from different domains and areas, with the aim of preventing, acknowledging and  mitigating potential security incidents (including cyber incidents) from simple signals and evidence. 

The Group developed an approach that enables for the integrated management of different information levels  and, in particular: 

• The level of digital data and information infrastructures (Logical Domain), relating to all the technical  and organisational safeguards aimed at safeguarding the confidentiality, integrity and availability of  information; 

• The level of material assets an staff (the “Physical Domain”) or rather the set of measures, controls  and solutions whose aim, is to guarantee suitable protection of the Group’s people and infrastructures  (offices and operative sites);

• The level of information (the “Information Domain”) related to all measures that analyses seek to  collect, manage and distribution information and instructions for the protection of the organisation’s  reputation, assets and for personal safety.

A specific example of this vision of security is the new Italgas centre called ISC, Integrated Security Cloud  Command Centre, located within the Turin Largo Regio Parco 9 site and in the Disaster Recovery facility  located at the Rome Monte Mario site. 

In 2024, Italgas developed the Dynamic Risk Layer, which uses an artificial intelligence algorithm capable of  informing the company population about the urban context and having a forecast analysis of areas at risk of  energy fraud in order to protect the Group's business.

Cybersecurity

The Italgas procedures establish that at least once a year, the Chief Security Officer (CSO) shall report to the  Board of Directors and Control Bodies on the level of conformity with national and international regulations on

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cybersecurity and the corporate policies on technical-organisational measures able to manage risks and  prevent cyber incidents.

Italgas implements procedures and technical controls to allow internal and external staff to connect remotely  and securely, and to protect access and digital identities. 

The Group guarantees 24-hour monitoring and management of security events through a Next Generation  Security Operation Centre (Next Generation-SOC), which also guides and supports the incident management  process according to established industry practices.

The Security Operation Centre is constantly working to improve security monitoring activities. In the last two  years, Italgas has: 

• Implemented a Dynamic Threat Map, for real-time monitoring of attack vectors on the exposed digital  perimeter; 

• Implemented new features and capabilities to protect sensitive data inside and outside company  premises in order to protect against unauthorised access or the transmission of confidential  information;

• Adopted a platform that simulates different types of attacks in an automated manner to detect breach  points within company perimeters;

• Implemented mechanisms for the authentication of e-mail messages.

In line with digital transformation initiatives and with respect to information and data management, the Group  conducts training courses and awareness sessions on cyber risks to all staff and suppliers. 

In the last three years (2022-2024), there were no cybersecurity incidents that generated data breach events  or compromised corporate systems. As a means of greater protection, Italgas has an insurance policy to cover  cyber incidents. 

The maturity level of its cyber security and supplier chain is constantly monitored through cyber security rating  and risk exposure services; the Group also consolidated Enaon's security level, aligning its Greek rating with  the Italian one.

In relation to the management of so-called “Third Parties”, Italgas defines the information security requirements  necessary to limit the risks associated with access to information. Italgas also regulates supplier access to  equipment used for processing information, implementing adequate security controls. 

In order to consolidate the public-private collaboration network, Italgas systematically holds meetings with  government authorities and defined memorandums of understanding with the Postal Service Police (CNAIPIC)  and the national CSIRT; since 2021, it has been a member of the European Cyber Security Organisation  (ECSO) in order to implement and strengthen its collaboration with the EU Commission, the European Union  Agency for Cybersecurity (ENISA), Competence Centres and academia.

Information and personal data security

Since 2018, Italgas has standardised the roles and responsibilities regarding the protection of personal data  processed as part of its corporate activities through the adoption of a specific Organisational Model and has  appointed a Data Protection Officer. With a view to accountability, Italgas has defined its own Data Protection  policy in a compliance standard and regulated the main data protection activities in the Data Protection Manual,  which was integrated and updated in 2024. There is also a specific document dedicated to data breach 

45

management. Furthermore, with reference to the provisions of Article 28 of the GDPR, all contractual  agreements with suppliers that process personal data on behalf of Italgas include a specific “Data Protection  Agreement”.

The Data Protection Organisational Model is integrated into the internal control and risk management system  of the Italgas Group. 

All the Subsidiaries have defined and approved, and implement their own Data Protection Model, based on  the one defined by Italgas, adapted taking into account the specificities of each company. In particular, in 2024  the Data Protection Model was also adopted by the Group's Greek companies and by Acqua Campania.

During the three-year period (2022-2024), Italgas updated its information mapping and classification process  with the aim of implementing differentiated data protection strategies regarding the characteristics of  confidentiality, integrity and availability of data.

Bludigit's information security management system is certified to ISO/IEC 27001:2022, and is therefore  compliant with the requirements of the main international standard of reference on information security.

With reference to all Italgas Group companies, in the 2022-2024 three-year period, no data breach reports or  requests of any kind were received from the Protection Authority; no penalties were applied with reference to  violations of personal data protection regulations.

Italgas carries out audits to verify the degree of adequacy of its Data Protection Organisational Model in terms  of compliance with applicable regulations. This activity is carried out through third-party audits, Internal Audit  and other surveillance activities, which are directly undertaken by the DPO.

Finally, at least once a year the Group Chief Security Officer reports to the Board of Directors and the Control  Bodies on the context of cyber risks, the level of compliance with national and international regulations, and  the technical-organisational measures adopted.

46

3\. Operating performance

3.1 Main events

Extraordinary transactions and area tenders 32

• On 5 October, Italgas announced that F2i SGR S.p.A. and Finavias S.à r.l. accepted the binding offer  relating to the purchase of their shareholding in 2i Rete Gas S.p.A., Italy's second largest gas distribution  operator, and the related purchase and sale contract was signed (SPA, Share Purchase Agreement). The  positive outcome follows the start of exclusive negotiations announced to the market on 13 May 2024.

The consideration (equity value) of the transaction was agreed at 2.060 billion euros. Net financial debt  and other net liabilities as at 31 December 2023 (the reference date under the so-called “locked box”  mechanism) amounted to 3.246 billion euros. 

The transaction is expected to close following receipt of the necessary regulatory approvals.

Italgas will meet the payment of the consideration through recourse to a bridge loan, which will also be  refinanced by means of a nominal 1 billion euros capital increase, with the aim of reducing leverage  following the acquisition and maintaining its current rating profile.

• As part of the Group’s development in the water industry, on 30 January 2024, Italgas completed its  acquisition from Vianini Lavori S.p.A. of 47.8% of Acqua Campania S.p.A.. In addition, on 24 April 2024,  a further acquisition of 47.9% of the same company held by the Veolia Group was finalised, bringing its  total holding to 96.23%.

• Following the award of the tender in 2020 and the signing of the Service Contract, the transfer of the  management of the natural gas distribution networks of the Belluno ATEM to Italgas Reti was made official  on 1 February 2024. The concession has a duration of 12 years and provides for the implementation of  an important investment programme totalling approximately 135 million euros.

• In November 2024, Italgas Reti was officially awarded the tender for the assignment of the gas distribution  service in the CATANZARO – CROTONE Territorial Area, which includes 107 municipalities and a total  of 109 thousand redelivery points. In its offer, the company envisaged an investment of 165 million euros  intended to extend the network by 174 km to serve approximately 8,000 new users, and upgrades and  interconnections for approximately 100 km.

• Following the award of the tender in 2023 and the signing of the Service Contract, the transfer of the  management of the natural gas distribution networks of the La Spezia ATEM to Italgas Reti was made  official on 13 November 2024. The concession has a duration of 12 years and provides for the  implementation of an investment programme totalling approximately 230 million euros.

Rating and optimization of the debt structure 

• On 1 February 2024, as part of its EMTN Programme renewed by resolution of the Board of Directors on  29 September 2023, Italgas successfully completed the launch of a bond issue maturing on 8 February  2029, with a fixed rate and for a total amount of 650 million euros, with an annual coupon of 3.125%.

32 For more details, see the section on “Municipal territories under concession and tenders for territorial areas”.

47

On 24 September 2024, Italgas also completed the market launch of a bond issue in the amount of 350  million euros, reopening the aforementioned bond already in circulation. The placement was aimed at  institutional investors only and the bonds are listed on the Luxembourg Stock Exchange.

• On 8 March 2024, Italgas signed a 600 million euros Sustainability Linked Revolving Credit Facility with a  pool of leading financial institutions with a maximum maturity of five years.

• On 5 October 2024, Italgas signed a loan agreement, by virtue of which J.P. Morgan Chase Bank, N.A. –  Milan Branch, Banco BPM S.p.A., Bank of America Europe Designated Activity Company – Milan Branch,  Citibank N.A. – Milan Branch, Morgan Stanley Bank AG and Société Générale – Milan Branch, undertook  to grant a credit facility denominated in Euro and in the amount of 2,000 million euros, intended for the total  or partial payment of the consideration for acquiring 2i Rete Gas.

• On 9 October 2024, the rating agency Fitch confirmed the long-term credit rating of Italgas S.p.A as BBB+,  with Stable outlook. The rating confirmation follows the agreement reached for the acquisition of 2i Rete  Gas S.p.A, and reflects the improved business risk profile of the combined entity, the expected funds from  operations (FFO) net leverage in line with the current rating (partly due to the planned capital increase),  and the management's commitments to deleveraging. In addition, the rating reflects Italgas' positive track  record in executing acquisitions and improving operating profitability, recognising the Group's ability to  anticipate evolving trends in the gas sector, with a view to efficiently receiving and managing renewable  gas.

• On 10 October 2024, the rating agency Moody’s confirmed the Baa2 long-term credit rating, with Stable  outlook. The rating confirmation follows the announcement by Italgas on the agreement reached for the  acquisition of 2i Rete Gas S.p.A., highlighting that, following the transaction, Italgas will continue to benefit  from the low risk profile of its activities, supported by the high share of revenues generated within the Italian  regulatory framework, assessed as stable and predictable. Furthermore, the rating confirmation takes into  account Italgas' operational efficiencies, low average cost of debt and limited exposure to volume risk.  Moody's emphasises that the Italgas rating remains tied to the company's exposure to the country risk of  the Italian state (Baa3 stable).

• It should be noted that on 9 October 2024, the rating agency S&P confirmed its BBB long-term rating on 2i  Rete Gas and its senior unsecured bonds. Furthermore, on the basis of the activity and financial position  of the combined entity, the agency placed 2i Rete Gas under positive credit watch, reflecting the possibility  to raise the rating by a notch once the acquisition by Italgas is complete.

• On 24 October 2024, Italgas' Board of Directors resolved on the renewal of the EMTN Programme,  launched in 2016, for a maximum nominal amount of 10 billion euros.

Capital transactions

• On 12 March 2024, in execution of the 2021-2023 Co-Investment Plan approved by the Ordinary and  Extraordinary Shareholders' Meeting of 20 April 2021, the Board of Directors resolved on the free  allocation of a total of 497,089 new ordinary shares of the Company to the beneficiaries of said Plan (first  cycle of the Plan) and executed the first tranche of the capital increase resolved on by the aforesaid  Shareholders' Meeting, for a nominal amount of 616,390 euros, taken from retained earnings reserves.

48

• On 6 May 2024, the Italgas Shareholders' Meeting approved the 2024-2025 Co-investment Plan and the  proposed free share capital increase, in one or more tranches, for the purposes of the aforesaid 2024- 2025 Co-investment Plan for a maximum nominal amount of 3,720,000 euros, by means of the issuance  of up to 3,000,000 new ordinary shares. These shares are to be assigned, in accordance with Article 2349  of the Italian Civil Code, for a corresponding maximum amount taken from retained earning reserves, to  the beneficiaries of the Plan only; in other words, only to employees of the Company and/or of the  companies in the Group.

Innovation, digitisation of the corporate networks and processes

In 2024, Italgas strengthened its commitment to innovation and digitisation of networks and business  processes, with projects and initiatives that further consolidated its leadership position in the sector. 

Bludigit, the Group's digital company, continues to drive digital transformation by harnessing the potential  offered by AI, including generative AI (GenAI), for:

- operational efficiency, with the support of fluid-dynamic simulations and advanced algorithms for  scheduling and automatic optimisation of on-call shifts;

- smart maintenance, enabling more efficient, safe and sustainable management of the gas network.  Collaboration with excellent suppliers has enabled the successful development and testing of this  cutting-edge technology.

The DANA (Digital Advanced Network Automation) system has been consolidated as the single point of access  to the IoT world, optimising the control and management of the digitised gas network through the remote  control of cathodic protection systems and the development of artificial intelligence features for network remote  control and smart document search.

Leveraging the expertise developed for the innovation and digitisation of the natural gas distribution  infrastructure, the Group also aims to bring about a significant reduction in the leakage of its water network  with its digitisation programme launched as early as 2018.

Other events

• On 18 September 2024, the Italgas Group obtained certification of its Whistleblowing Management  System from DNV, in accordance with the ISO 37002:2021 standard “Whistleblowing Management  Systems – Guidelines”.

• On 12 November 2024, Italgas and SOCAR (State Oil Company of Azerbaijan Republic) signed, in the  context of COP29, a Cooperation Agreement that relaunches and strengthens the collaboration between  the two industrial groups to consolidate the strategic partnership aimed at promoting innovation, efficiency  and sustainability in the gas distribution sector.

• On 15 November 2024, for the fourth consecutive year, Italgas received the important Gold Standard  award in the 2024 report by the International Methane Emissions Observatory (IMEO) entitled “An Eye  on Methan”, published by the United Nations Environment Programme with the support of the European  Commission. The award recognises the ongoing commitment of Italgas in monitoring and reducing 

49

methane emissions, highlighting the advanced level of expertise acquired in their measurement thanks  also to the use of innovative technologies and the digital transformation of assets.

3.2 Key figures

To allow for a better assessment of the economic and financial performance, in addition to the conventional  formats and indicators provided for by IAS/IFRS, the Directors’ Report includes the reclassified financial  statements and some alternative performance indicators, including, in particular, EBITDA, EBIT and net  financial debt. These figures are presented in the tables below, the related notes and the reclassified financial  statements. For the definition of the terms used, when not directly specified, please refer to the chapter  “Financial results, Non-GAAP Measures”.

Key share figures

As of 31 December  2023

As of 31 December  2024

Number of shares of share capital 

810,745,220

811,242,309

Closing price at the end of period

(€)

5.18

5.41

Average closing price in the period (a)

(€)

5.3288

5.2046

Market capitalisation (b)

(€ millions)

4,320

4,222

Exact market capitalisation (c)

(€ millions)

4,200

4,389

(a) Non-adjusted for dividends paid.

(b) The product of the number of shares outstanding (exact number) multiplied by the average closing price in the period. 

(c) The product of the number of shares outstanding (exact number) multiplied by the closing price at the end of the period.

Key financial figures (*)

(€ millions)

For the year ended 31  December 2023

For the year ended 31  December 2024

Total revenues and other income adjusted

1,774.8 

1,778.8 

Adjusted EBITDA 

1,183.7 

1,350.9 

Adjusted EBIT

681.2 

820.7 

Adjusted profit before Tax

586.1 

711.3 

Adjusted net profit

467.5 

535.2 

Adjusted net profit attributable to the Group

439.6 

506.6 

Adjusted Earnings per share (**)

0.542 

0.624 

(*) Unlike the legal statement, the adjusted reclassified income statement requires the listing of Total revenues and other income and Operating costs net of  the impact of IFRIC 12 “Service concession agreements” (787.1 e 746.5 million euros respectively in 2023 and 2024), connection contributions (19.2 e 19.0  million euros respectively in 2023 and 2024), repayments from third parties (14.6 e 31.0 million euros respectively in 2023 and 2024) and other residual  components (0.4 e 2.8 million euros respectively in 2023 and 2024). It also excludes special items (for more information, please refer to Chapter 4 under  “Special Items”).

(**) The indicator is calculated as a ratio between the adjusted net profit attributable to the Group and the total number of shares, which is 810,745,220 at 31  December 2023 and 811,242,309 at 31 December 2024. 

50

(€ millions)

As of 31 December  2023

As of 31 December  2024

Net invested capital at the end of the end of period 

9,235.0 

9,556.3 

Equity 

2,600.7 

2,793.5 

Net financial debt

6,634.3

6,762.8

Lease liabilities - IFRS 16 and IFRIC 12 

79.1

90.5

Net financial debt (excluding the effects pursuant to IFRS 16 and IFRIC 12)

6,555.2

6,672.3

3.3 Infrastructure

Italgas is the leader in Italy and Greece in the natural gas distribution industry and is the third largest operator  in Europe. The distribution service consists of transporting gas through local pipeline networks, from points of  delivery at the reduction and measurement stations interconnected with the transport networks (“city-gates”)  up to the final delivery points to customers (households, enterprises, etc.). Furthermore, Italgas is engaged in  metering activities, which consist of determining, gathering, making available and archiving metering data on  natural gas withdrawn over the distribution networks.

Collection cabins are equipment that link local distribution networks to the national gas pipeline network. They  are complex systems that must perform different functions, including the measurement of the gas collected  and a first reduction of the pressure to allow routing through the urban network. Currently Italgas has collection  cabins equipped with advanced remote control and smart metering systems. Remote control allows the fastest  possible intervention in case of anomalies; smart metering allows the continuous detection of a series of  parameters related to the management of gas flows as well as the detection of the quantity of gas entering the  networks.

The systems for the reduction of pressure are devices placed along the distribution network and have the task  to bring the pressure of the gas at the right level in relation to the type of use. 

Additions

In 2024, technical investments were made for 887.0 million euros (31 December 2023: 906.5 million euros),  of which 46.6 million euros were related to investments for right of use and concessions.

(€ millions)

As of 31  December 2023

As of 31  December 2024

Abs. change

% Change

Distribution

538.9

538.7

(0.2)

-

Network maintenance and development 

420.7

438.8

18.1

4.3

New networks 

118.2

99.9

(18.3)

(15.5)

Digitisation

283.4

243.3

(40.1)

(14.1)

Other assets

152.4

100.1

(52.3)

(34.3)

Metering

110.0

115.9

5.9

5.4

Processes

21.0

27.3

6.3

30.0

Other investments

84.2

105.0

20.8

24.7

51

\- of which Real Estate 

13.3

22.5

9.2

69.2

\- of which ICT 

26.2

22.9

(3.3)

(12.6)

\- of which right of use and concessions

37.0

46.6

9.6

25.9

906.5

887.0

(19.5)

(2.2)

Investments in distribution (538.7 million euros) remain virtually unchanged compared with the corresponding  period in 2023. The repurposing offset the reduction in new networks due to the completion of the networks in  Sardinia.

Investments in digitisation (243.3 million euros) decreased by 14.1% compared to the same period in 2023  due to the gradual completion of network digitisation in Italy.

The item Other investments (105.0 million euros), which also includes investments in the water sector,  increased by 24.7% compared to 2023 due to the inclusion of Acqua Campania in the consolidation scope.

Operating figures

The key operating figures are presented in the chapter “Operating segment operating performance” of this  Integrated Annual Report.

52

4\. Comment on the results and other information

4.1 Comment on the economic and financial results 33

Reclassified income statement (*)

(€ millions)

For the year  ended 31  December  2023

For the year  ended 31  December  2024

Abs. change 

% Change 

Gas distribution regulated revenues 

1,493.9 

1,583.1 

89.2 

6.0 

Other revenues 

323.6 

157.2 

(166.4)

(51.4)

Total revenues and other income

1,817.5 

1,740.3 

(77.2)

(4.2)

of which special items 

(42.7) 

38.5

81.2

\- 

Total revenues and other income adjusted

1,774.8 

1,778.8 

4.0 

0.2 

Operating costs 

(609.9)

(427.9)

182.0 

(29.8)

of which special items 

18.8

\- 

(18.8) 

\- 

Adjusted operating costs

(591.1)

(427.9)

163.2 

(27.6)

EBITDA 

1,207.6 

1,312.4 

104.8 

8.7 

Adjusted EBITDA 

1183.7 

1,350.9 

167.2 

14.1 

Amortisation, depreciation and impairment of assets 

(526.4)

(530.2)

(3.8)

0.7 

of which special items 

23.9

\- 

(23.9) 

\- 

Adjusted amortisation, depreciation and impairment 

(502.5)

(530.2)

(27.7)

5.5 

EBIT 

681.2 

782.2 

101.0 

14.8 

Adjusted EBIT

681.2 

820.7 

139.5 

20.5 

Net financial expense 

(98.2)

(120.6)

(22.4)

22.8 

Net income from equity investments 

3.1 

11.2 

8.1 

\- 

of which gas distribution

1.5 

1.7 

0.2 

13.3 

of which integrated water service

1.6 

9.5 

7.9 

\- 

Profit before Tax 

586.1 

672.8 

86.7 

14.8 

Adjusted profit before Tax

586.1 

711.3 

125.2 

21.4 

Income taxes 

(118.6)

(165.3)

(46.7)

39.4 

Taxation related to special items 

\- 

(10.8) 

(10.8) 

\- 

Adjusted income taxes 

(118.6)

(176.1)

(57.5)

48.5 

Profit 

467.5 

507.5 

40.0 

8.6 

Profit attributable to the Group 

439.6 

478.9 

39.3 

8.9 

Profit attributable to non-controlling interests 

27.9 

28.6 

0.7 

2.5 

Adjusted net profit

467.5 

535.2 

67.7 

14.5 

Adjusted net profit attributable to the Group

439.6 

506.6 

67.0 

15.2 

Adjusted net profit attributable to non-controlling interests 

27.9 

28.6 

0.7 

2.5 

33 This paragraph refers to the Italgas Group, which includes: Italgas S.p.A., Italgas Reti S.p.A., Medea S.p.A., Nepta S.p.A., Acqua S.r.l., Idrosicilia S.p.A.,  Idrolatina S.r.l., Acqua Campania S.p.A., L.A.C. Laboratorio Acqua Campania S.r.l., Toscana Energia S.p.A., Immogas S.r.l., Geoside S.p.A., Bludigit S.p.A.,  Italgas Newco S.p.A, and the Enaon Group.

53

(*) Unlike the legal statement, the adjusted reclassified income statement requires the listing of Total revenues and other income and Operating costs net of  the impact of IFRIC 12 “Service concession agreements” (787.1 e 746.5 million euros respectively in 2023 and 2024), connection contributions (19.2 e 19.0  million euros respectively in 2023 and 2024), repayments from third parties (14.6 e 31.0 million euros respectively in 2023 and 2024) and other residual  components (0.4 e 2.8 million euros respectively in 2023 and 2024). It also excludes special items (for more information, please refer to the following paragraph  “Special Items”).

For a broader representation of the sectors, reference should be made to the chapter “Operating segment  operating performance”.

Special items

Italgas’ management assesses Group performance on the basis of alternative performance indicators 34 not  envisaged by IFRS ("Alternative performance measures 35 "), obtained by excluding special items from  operating profit and net profit.

The income components are classified as special items, if significant, when: (i) they result from non-recurring  events or transactions or from transactions or events which do not occur frequently in the ordinary course of  business; or (ii) they result from events or transactions which are not representative of the normal course of  business. The tax rate applied to the items excluded from the calculation of adjusted net profit is determined  on the basis of the nature of each revenue item subject to exclusion. Adjusted operating profit and adjusted  net profit are not provided for by either IFRS or other standard setters. These performance metrics allow for  analysis of the business trends, making it easier to compare results. The NON-GAAP financial report must be  considered complementary to and not replacing the reports prepared according to IFRS.

The income components classed among special items in 2024 referred to:

• the reduction in gas distribution regulated revenues following Resolution no. 207/2024/R/gas, which  retroactively, for the period 2011-2016, did not recognise the costs previously approved for the natural  gas metering service, relating to smart reading/remote management systems and concentrators. The  amount charged to Italgas Reti was 9.9 million euros, before the related tax effect (2.8 million euros).

The company does not agree with the contents of this Resolution and has, on additional grounds,  appealed against this provision before the Regional Administrative Court of Lombardy, disputing its  illegitimacy.

• the reduction in gas distribution regulated revenues of 4.6 million euros (with a tax effect of 1.3 million  euros) as a result of Resolution no. 704/2016/R/gas, supplemented by Resolution no. 525/2022/R/gas,  relating to the tariff recognition of capital costs in start-up locations starting from the 2018 financial  year in which Italgas Reti did not reach the ceiling (re-delivery point density per km of network)  expected in the years following the first gas supply. The amount relates to the period 2018-2023.

• the reduction in gas distribution regulated revenues following the implementation of Resolution no.  490/2024/R/gas, which cancelled the gas distribution service safety premiums for the year 2020, and  therefore the non-recognition of approximately 24.0 million euros (with a tax effect of 6.7 million euros).

34 For the definition of alternative performance indicators, please refer to the chapter "Non-GAAP Measures" of this document.

54

The company does not agree with the contents of this Resolution and has, on additional grounds,  appealed against this provision before the Regional Administrative Court of Lombardy, disputing its  illegitimacy.

Taking into account the non-recurring nature of these items, management deemed it appropriate to classify  the related amounts under special items.

The income components classified in the special items for the year 2023, with an impact of 23.9 million euros  on EBITDA and nil on EBIT, related to the effects arising from the implementation of Resolution no.  737/2023/R/gas in terms of the recognition of the residual value of smart meter of a class not exceeding G6  produced up to the year 2016 and entered into operation by the year 2018 (revenue: 42.7 million euros and  charges and impairments relating to defective smart meters in the same amount overall).

Below is the reconciliation table between reclassified and adjusted values:

(€ millions)

For the year ended  31 December 2023

For the year ended  31 December 2024

Total revenues and other income

1,817.5 

1,740.3 

of which special items

(42.7)

38.5 

\- contribution pursuant to ARERA Resolution no. 737/2022/R/gas

(42.7)

\- 

\- distribution for start-up locations

\- 

4.6 

\- reimbursements for smart metering/remote management for the years 2011-2016 

\- 

9.9 

\- gas distribution service safety awards for the year 2020

\- 

24.0 

Total revenues and other income adjusted

1,774.8 

1,778.8 

Total operating costs

(609.9)

(427.9)

of which special items

18.8

\- 

\- smart meter charges

18.8 

\- 

Adjusted total operating costs

(591.1)

(427.9)

EBITDA

1,207.6 

1,312.4 

of which special items

(23.9)

38.5 

Adjusted EBITDA

1183.7 

1,350.9 

Amortisation, depreciation and impairment of assets 

(526.4)

(530.2)

of which special items

23.9

\- 

\- depreciation and impairment related to smart meters

23.9 

\- 

Adjusted amortisation, depreciation and impairment

(502.5)

(530.2)

EBIT

681.2 

782.2 

of which special items

\- 

38.5 

Adjusted EBIT

681.2 

820.7 

Net financial expense 

(98.2)

(120.6)

Net income from equity investments 

3.1 

11.2 

Profit before Tax

586.1 

672.8 

of which special items

\- 

38.5 

Adjusted profit before tax

586.1 

711.3 

55

Income taxes 

(118.6)

(165.3)

of which special items

\- 

(10.8)

Profit 

467.5 

507.5 

Profit attributable to the Group 

439.6 

478.9 

Profit attributable to non-controlling interests 

27.9 

28.6 

Adjusted net profit

467.5 

535.2 

Adjusted net profit attributable to the Group

439.6 

506.6 

Adjusted net profit attributable to non-controlling interests 

27.9 

28.6 

Analysis of the Reclassified Income Statement items

TOTAL REVENUES AND OTHER INCOME

(€ millions)

For the year  ended 31  December  2023

For the year  ended 31  December  2024

Abs.  change 

% Change 

Distribution revenues 

1,363.2 

1,521.6 

158.4 

11.6 

of which special items 

\- 

14.5

14.5

\- 

Adjusted distribution revenues 

1,363.2 

1,536.1 

172.9 

12.7 

Other distribution revenues 

130.7 

61.5 

(69.2)

(52.9)

of which special items 

(42.7) 

24.0

66.7

\- 

Other adjusted distribution revenues 

88.0 

85.5 

(2.5)

(2.8)

Total gas distribution regulated revenues 

1,493.9 

1,583.1 

89.2 

6.0 

Total adjusted gas distribution regulated revenues 

1,451.2 

1,621.6 

170.4 

11.7 

Other revenues 

323.6 

157.2 

(166.4)

(51.4)

Total revenues and other income 

1,817.5 

1,740.3 

(77.2)

(4.2)

Total revenues and other income adjusted 

1,774.8 

1,778.8 

4.0 

0.2 

Adjusted gas distribution regulated revenues increased by 170.4 million euros compared to 2023, due to  higher distribution revenue (+172.9 million euros) as a result of the increase in RAB resulting from investments  made (+40.2 million euros), WACC (+75.1 million euros), the deflator (+48.3 million euros) and remunerated  operating costs (+16.9 million euros). 

Other revenues decreased by 166.4 million euros compared to 2023 due to lower revenues related to energy  efficiency activities linked to the Superbonus (-251.3 million euros, against a corresponding reduction in  operating costs), partially offset by the increase in water revenues (+85.9 million euros) deriving from the  completion of the acquisition of Acqua Campania and its consequent inclusion in the consolidation scope.

It therefore follows that total revenues and other income adjusted came to 1,778.8 million euros (+4.0 million  euros).

OPERATING COSTS

56

(€ millions)

For the year  ended 31  December  2023

For the year  ended 31  December  2024

Abs.  change 

% Change 

Fixed gas distribution costs 

263.8

249.7

(14.1)

(5.4)

Net personnel costs

162.8

157.7

(5.1)

(3.1)

Net external costs

101.0

92.0

(9.0)

(8.9)

Other assets

250.5

95.6

(154.9)

(61.8)

Net personnel costs

7.7

14.7

7.0

90.9

Net external costs

242.8

80.9

(161.9)

(66.7)

Other costs and provisions

27.1

8.4

(18.7)

(68.9)

of which special items 

18.8

-

(18.8)

-

EEC

1.6

-

(1.6)

-

Concession-related expenses

66.9

74.2

7.3

10.9

Operating costs 

609.9

427.9

(182.0)

(29.8)

Adjusted operating costs

591.1 

427.9 

(163.2)

(27.6)

Adjusted Operating costs amounted to 427.9 million euros, down by 163.2 million euros compared with the  same period in 2023. Energy efficiency activities recorded a reduction of 200.9 million euros, while the first- time consolidation of Acqua Campania resulted in higher costs of 43.4 million euros.

On a like-for-like basis, adjusted operating costs therefore decreased by 0.5% compared to 2023.

AMORTISATION, DEPRECIATION AND IMPAIRMENT

(€ millions)

For the year  ended 31  December  2023

For the year  ended 31  December  2024

Abs. change 

% Change 

Amortisation and depreciation

503.4

530.2

26.8

5.3

Intangible assets IFRIC 12 

413.4

435.2

21.8

5.3

Other Intangible Assets

42.6

42.0

(0.6)

(1.4)

Property, plant and equipment 

47.4

53.0

5.6

11.8

of which, depreciation as per IFRS 16

29.7

32.5

2.8

9.4

Depreciation and impairment (net of utilisations)

23.0 

-

(23.0)

-

of which special items 

23.9

\- 

(23.9)

\- 

Amortisation, depreciation and impairment of assets

526.4 

530.2 

3.8 

0.7 

Adjusted amortisation, depreciation and impairment

502.5 

530.2 

27.7 

5.5 

Adjusted amortisation, depreciation and impairment came to 530.2 million euros, up 27.7 million euros  (+5.5%) compared with 2023, mainly due to the investments made and the business combination following the  acquisition of Acqua Campania (+25.7 million euros).

NET FINANCIAL EXPENSE

57

(€ millions)

For the year  ended 31  December  2023

For the year  ended 31  December  2024

Abs. change 

% Change 

Expense (income) on short-term and long-term financial debt

94.8

113.6

18.8

19.8

Upfront fee

6.1

10.6

4.5

73.8

Other net financial expense (income)

(1.3)

(2.3)

(1.0)

76.9

Expenses (income) related to the discounting of environmental  provisions and provisions for employee benefits

4.0

3.8

(0.2)

(5.0)

Other net financial expense (income)

(5.3)

(6.1)

(0.8)

15.1

Financial expense capitalised

(1.4)

(1.3)

0.1

(7.1)

Net financial expense 

98.2 

120.6 

22.4 

22.8 

Net financial expense increased by 22.4 million euros compared to 2023 as a result of the effects of the bond  issues carried out in February and September 2024, which refinanced the bond that matured in March 2024,  and the full-year impact of the expenses of the issue carried out in June 2023.

NET INCOME FROM EQUITY INVESTMENTS

Net income from equity investments amounted to 11.2 million euros and refer to the contribution of  investments accounted for using the equity method.

In particular, companies in the water sector contribute 9.5 million euros. For more details, please refer to the  analysis by operating segment.

INCOME TAXES

(€ millions)

For the year  ended 31  December  2023

For the year  ended 31  December  2024

Abs. change 

% Change 

Current taxes

152.7

164.0

11.3

7.4

Net deferred taxes

(34.1)

1.3

35.4

-

Taxation related to special items 

\- 

10.8 

10.8 

\- 

Income taxes 

118.6

165.3

46.7

39.4

Adjusted income taxes

118.6

176.1

57.5

48.5

Effective tax rate (%)

20.2%

24.6%

Adjusted effective tax rate (%)

20.2%

24.8%

Adjusted income taxes amounted to 176.1 million euros, an increase of 57.5 million euros compared to the  previous year, due to the lower benefit associated with the patent box (21.9 million euros for the financial year  2024 and 39.4 million euros for the financial year 2023) and higher profit before tax for the period.

The  Adjusted tax rate  thus stands at 24.8% (20.2% in the financial year 2023).

The reconciliation of the theoretical tax rate with the effective tax rate is described in the note “Income taxes”  in the Notes to the consolidated financial statements.

58

Reclassified Statement of Financial Position

The Reclassified Statement of Financial Position combines the assets and liabilities of the mandatory format  included in the consolidated financial statements based on the criterion of how the business operates,  conventionally split into the three basic functions of investment, operations and financing.

The statement provided represents useful information for the investor because it makes it possible to identify  the sources of financial resources (own and third-party funds) and uses of financial resources in fixed and  working capital.

The Italgas’ Reclassified Statement of Financial Position as at 31 December 2024, compared with that as at  31 December 2023, is summarised below: 

(€ millions) 

As of 31 December  2023

As of 31 December  2024

Abs.  change 

Fixed capital (*) 

8,421.4

8,777.1

355.7

Property, plant and equipment 

386.0

383.3

(2.7)

Intangible assets 

8,250.3

8,305.6

55.3

Equity investments 

153.0

176.1

23.1

Financial receivables and securities instrumental to  operations 

2.6

319.5

316.9

Net payables for investing activity 

(370.5)

(407.4)

(36.9)

Net working capital 

872.3

835.1

(37.2)

Provisions for employee benefits 

(65.3)

(61.3)

4.0

Assets held for sale and directly related liabilities 

6.6

5.4

(1.2)

NET INVESTED CAPITAL 

9,235.0

9,556.3

321.3

Equity 

2,600.7

2,793.5

192.8

\- attributable to the Italgas Group 

2,280.0

2,457.9

177.9

\- attributable to non-controlling interests 

320.7

335.6

14.9

Net financial debt

6,634.3

6,762.8

128.5

FUNDING 

9,235.0

9,556.3

321.3

(*) Net of the effects deriving from the application of IFRS 15.

Below is an analysis of the change in  Property, plant and equipment and  Intangible assets :

(€ millions) 

Property, plant  and  equipment 

IFRIC 12  assets 

Intangible  assets 

Total 

Balance at 31 December 2023

386.0 

7,914.3 

336.0 

8,636.3 

Additions

55.5 

774.6 

56.9 

887.0 

\- of which IFRS 16

22.0 

\- 

\- 

22.0 

59

Amortisation and depreciation

(53.0)

(435.2)

(42.0)

(530.2)

\- of which, depreciation as per IFRS 16

(32.5)

\- 

\- 

(32.5)

Awarding of the ATEM tenders

\- 

47.2 

\- 

47.2 

Business combination

1.7 

35.4 

\- 

37.1 

Grants

\- 

(45.7)

\- 

(45.7)

Net disposals and sales

(6.9)

(37.1)

\- 

(44.0)

Residual concession value Rome

\- 

(299.6)

\- 

(299.6)

Other changes

\- 

1.8 

(1.0)

0.8 

Balance at 31 December 2024 

383.3 

7,955.7 

349.9 

8,688.9 

Equity investments (176.1 million euros) increased by 23.1 million euros mainly due to the subscription to a  capital increase in the associate Siciliacque.

Financial receivables and securities instrumental to operations (319.5 million euros) increased by 316.9  million euros, mainly due to the financial receivable due from the Municipality of Rome, contractually provided  for in the gas distribution concession and which became due following its expiry during the year (299.6 million  euros).

Net working capital as at 31 December 2024 amounts to 835.1 million euros and is broken down as follows:

(€ millions) 

As of 31 December 2023

As of 31 December 2024

Abs. change 

Trade receivables 

694.3 

751.9 

57.6 

Inventories 

79.1 

57.2 

(21.9)

Tax assets 

319.6 

420.8 

101.2 

Other assets 

434.5 

596.6 

162.1 

Trade payables 

(278.3)

(249.7)

28.6 

Provisions for risks and charges 

(109.9)

(92.1)

17.8 

Deferred tax liabilities 

(47.8)

(48.3)

(0.5)

Tax payables

(30.2)

(39.3)

(9.1)

Other liabilities 

(189.0)

(562.0)

(373.0)

872.3 

835.1 

(37.2)

The change in net working capital is due to the first-time consolidation of the working capital of Acqua  Campania (-30.0 million euros).

Net financial debt

(€ millions) 

As of 31 December  2023

As of 31 December  2024

Abs.  change 

Financial and bond debt 

6,920.3

7,185.8

265.5

Short-term financial debt (*) 

1,000.3

934.2

(66.1)

Long-term financial debt 

5,840.9

6,161.1

320.2

Lease liabilities - IFRS 16 and IFRIC 12 

79.1

90.5

11.4

60

Funding derivative contracts Cash flow Hedge 

(31.8)

(16.9)

14.9

Short-term contracts 

(18.1)

(5.9)

12.2

Long-term contracts 

(13.7)

(11.0)

2.7

Financial receivables and cash and cash equivalents 

(254.2)

(406.1)

(151.9)

Cash and cash equivalents 

(250.0)

(402.7)

(152.7)

Financial receivables 

(4.2)

(3.4)

0.8

Net financial debt

6,634.3

6,762.8

128.5

Lease liabilities - IFRS 16 and IFRIC 12 

79.1

90.5

11.4

Net financial debt (excluding the effects pursuant to IFRS 16 and  IFRIC 12) 

6,555.2

6,672.3

117.1

(*) These include the short-term portions of long-term financial debt.

Financial and bond debt as at 31 December 2024 amounted to 7,185.8 million euros ( 6,920.3 million euros  as at 31 December 2023) and refer to: bonds ( 5,632.2 million euros), European Investment Bank/EIB loan  agreements ( 855.9 million euros), payables to banks (607.2 million euros) and financial liabilities pursuant to  IFRS 16 and IFRIC 12 ( 90.5 million euros).

As at 31 December 2024, fixed-rate debt accounted for 85.4% of financial and bond debt (91.9% as at 31  December 2023), while floating-rate debt stood at 14.6% (8.1% as at 31 December 2023). 

The reduction in fixed-rate liabilities was due to the maturity in December 2024 of a fixed-rate derivative on an  EIB loan, an effect partially offset by the bond issues in 2024 (with a total nominal value of 1 billion euros),  which refinanced the repayment of the bond that matured in March (381.3 million euros) as well as certain  bank loans.

Some of these contracts provide, inter alia, for the following: (i) negative pledge undertakings, pursuant to  which Italgas and the subsidiaries are subject to limitations regarding the creation of real rights of guarantee  or other restrictions concerning all or part of the respective assets, shares or goods; (ii) pari passu and change  of control clauses; (iii) limitations on some extraordinary transactions that the company and its subsidiaries  may carry out.

As at 31 December 2024, there were no loan agreements containing financial covenants, with the exception  of an EIB loan with a residual nominal value of approximately 53 million euros signed by Toscana Energia. As  at 31 December 2024, these commitments were respected.

Statement of comprehensive income 

(€ millions)

As of 31  December  2023

As of 31  December  2024

Profit

467.5

507.5

Other comprehensive income

Components that may be reclassified subsequently to the income statement: 

Fair value gain/(loss) arising from hedging instruments during the period (Effective portion)

(21.6)

(15.3)

Tax effect 

5.2

3.7

61

(16.4)

(11.6)

Components that will not be reclassified to the income statement: 

Actuarial gains (losses) from remeasurement of defined benefit plans for employees

0.2

(0.6)

Change in fair value of investments measured at FVTOCI

(0.5)

0.1

Tax effect

0.1

0.1

(0.2)

(0.4)

Total other components of comprehensive income, net of tax effect 

(16.7)

(12.0)

Total comprehensive income for the year

450.8

495.5

Attributable to:

\- Italgas

423.8

466.9

\- Non-controlling interests

27.0

28.6

450.8

495.5

Equity

(€ millions)

Equity as of 31 December 2023

2,600.7 

of which:

\- Group Equity

2,280.0 

\- Equity of non-controlling interests

320.7 

Increase for:

\- 2024 profit for the year

507.5 

of which:

Profit attributable to the Group

478.9 

Profit attributable to non-controlling interests

28.6 

\- Stock grant reserve

(1.2)

\- IAS 19 valuation reserve

(0.4)

\- Cash Flow Hedge valuation reserve

(16.4)

\- Fair value valuation reserve for equity investments

0.1 

\- Reserve for costs directly attributable to capital transactions

3.0 

Decrease for:

\- Italgas 2023 dividend distribution

(257.2)

\- 2023 dividend distributed to non-controlling interests

(12.8)

\- Other changes 

of which:

\- Attributable to the Group

(13.3)

\- Attributable to non-controlling interests

(0.1)

62

Group Equity

2,457.9 

Equity of non-controlling interests

335.6 

Equity as of 31 December 2024

2,793.5 

Reclassified Statement of Cash Flows

The reclassified statement of cash flows provided is the summary of the legally required cash flow statement.  The reclassified statement of cash flows makes it possible to reconcile the change in cash and cash equivalents  at the start and end of the period with the change in net financial debt at the start and end of the period. The  measure which allows for the reconciliation between the two statements is the free cash flow 36 , i.e. the cash  surplus or deficit remaining after the financing of investments.

(€ thousands)

As of 31  December  2023

As of 31  December  2024

Profit 

467.5 

507.5 

Correction: 

\- Amortisation, depreciation and other non-monetary components 

525.5 

518.0 

\- (Gains)/Losses arising from the disposal of fixed assets and eliminations 

19.1 

5.6 

\- Interest and income taxes 

216.6 

285.9 

Change in working capital due to operating activities 

(470.7)

(97.7)

Dividends, interest and income taxes cashed in (paid) 

(202.8)

(120.6)

Cash flow from operating activities

555.2 

1,098.7 

Technical investments 

(844.3)

(845.4)

Other changes related to investments activities 

61.5 

37.0 

Net financial investments instrumental to operations

-

(1.9)

Divestments and other changes 

20.6 

27.6 

Free cash flow before Merger and Acquisition transactions

(207.0)

316.0 

Companies included in the scope of consolidation

(76.9)

19.8 

Net acquisition of business units, plant and other financial assets

(1.4)

(77.8)

Free cash flow

(285.3)

258.0 

Change in short- and long-term financial debt and financial receivables

384.9 

228.6 

Repayment of lease liabilities

(31.0)

(34.1)

Equity cash flow

(270.5)

(299.8)

Net cash flow for the year

(201.9)

152.7 

(*) Net of the effects deriving from the application of IFRS 15.

Change in net financial debt

36 The free cash flow alternatively represents: (i) the change in cash for the period, after the addition/subtraction of cash flows relating to financial  payables/receivables (usage/repayment of financial receivables/payables) and equity (payment of dividends/capital contributions); (ii) the change in net  financial debt for the period, after the addition/subtraction of flows of debt relating to equity (payment of dividends/capital contributions).

63

(€ thousands)

As of 31  December  2023

As of 31  December  2024

Free cash flow before Merger and Acquisition transactions 

(207.0)

316.0 

Change due to acquisitions of equity investments, business units and assets 

(78.3)

(58.0)

Increase in lease liabilities and fees 

(36.9)

(45.5)

Equity cash flow 

(270.5)

(299.8)

Other changes (Difference between interest accounted for, and paid fair value of derivatives) 

(41.5)

(41.2)

Change in net financial debt 

(634.2)

(128.5)

The cash flow from operating activities as at 31 December 2024 of 1,098.7 million euros increased by 543.5  million euros compared to 2023, also due to the utilisation of the annual instalment of tax credits from the  “Superbonus” as a tax offset, and allowed for the full coverage of investments and Merger and Acquisition  transactions as well as the partial coverage related to the payment of dividends in the amount of 299.8 million  euros.

4.2 Comment on the economic and financial results of Italgas S.p.A.

Italgas S.p.A. was incorporated on 1 June 2016 and listed on the Milan Stock Exchange from 7 November  2016.

Reclassified income statement

In view of Italgas S.p.A.’s nature as an industrial investment holding, the following reclassified Income  Statement has been prepared, which inverts the order of the income statement items under Leg. Decree  127/1991, presenting first those which relate to the financial operations, as this is the most significant income  component for those companies 37 .

(€ millions)

For the year ended 31  December 2023

For the year ended 31  December 2024

Abs.  change 

%  Change

Income from investments

296.1

428.2

132.1

44.6

Interest income 

103.7

133.9

30.2

29.12 

Interest expenses and other financial  expenses 

(84.2)

(130.3)

(46.1)

54.75 

Total financial income and expenses

315.6

431.8

116.2

36.8

Income from services

77.7

79.7

2.0

2.6

Other operating income

77.7

79.7

2.0

2.6

For staff

(48.7)

(49.3)

(0.6)

1.2

For performance of non-financial services  and other costs

(32.5)

(31.9)

0.6

(1.8)

Amortisation

(2.7)

(2.7)

\- 

\- 

37 See Consob Communication 94001437 of 23 February 1994.

64

Total of other operating costs

(83.9)

(83.9)

\- 

\- 

Profit before Tax

309.4

427.6

118.2

38.2

Income taxes

(8.0)

(5.1)

2.9

(36.3)

Profit 

301.4

422.5

121.1

40.2

Analysis of the Reclassified Income Statement items 

FINANCIAL INCOME AND EXPENSES

Income from equity investments (428.2 million euros) essentially includes the dividends paid by Italgas Reti  subsidiaries (415.0 million euros) and Toscana Energia (13.1 million euros). 

Interest income (133.9 million euros) essentially relates to income from the intragroup loans granted by Italgas  to its subsidiaries.

Interest expense and other financial expense (130.3 million euros) refers to the costs relating to financial  debt, and essentially concerns bond loan expense 38 (87.8 million euros) and loans from banks (42.5 million  euros). 

OTHER OPERATING INCOME

Other operating income (79.7 million euros) refers mainly to chargebacks to subsidiaries of the costs incurred  for the provision of services centrally managed by Italgas S.p.A.. These services are regulated by contracts  stipulated between Italgas S.p.A. and its subsidiaries and concern the following areas: personnel and  organisation; planning, administration, finance and control; procurement; general, property and security  services; legal and corporate affairs and compliance; health, safety and environment; institutional relations and  regulation; external relations and communication; internal audit, enterprise risk management (ERM) and Data  Protection Officer.

OTHER OPERATING EXPENSES

Other operating expenses (83.9 million euros) refer to personnel costs (49.3 million euros), and to costs for  non-financial services and other costs (31.9 million euros), depreciation and amortisation (2.7 million euros).  Costs for non-financial services and other costs include consulting and professional services (10.8 million  euros), costs for service contracts within the Group mainly related to ICT services provided by Bludigit and  technical services provided by Italgas Reti (10.4 million euros), costs for insurance and banking services (2.2  million euros), and other costs for miscellaneous services (8.5 million euros).

Reclassified Statement of Financial Position

(€ millions) 

As of 31 December  2023

As of 31 December  2024

Abs.  change 

Fixed capital

8,105.5

7,969.9

(135.6)

38 The details of bond issues during the year and related terms are provided in the note “Current and non-current financial liabilities” in the Notes to the  separate financial statements.

65

Property, plant and equipment 

13.0

12.3

(0.7)

Intangible assets 

1.5

1.9

0.4

Equity investments 

3,386.3

3,441.4

55.1

Financial receivables and securities instrumental to operations 

4,704.9

4,514.4

(190.5)

Net payables related to investments

(0.2)

(0.1)

0.1

Net working capital 

(7.8)

97.2

105.0

Provisions for employee benefits 

(8.8)

(8.4)

0.4

NET INVESTED CAPITAL 

8,088.9

8,058.7

(30.2)

Equity 

1,838.8

1,961.9

123.1

Net financial debt 

6,250.1

6,096.8

(153.3)

FUNDING 

8,088.9

8,058.7

(30.2)

Net invested capital amounted to 8,058.7 million euros, down 30.2 million euros from 31 December 2023,  mainly due to lower financial receivables and securities instrumental to operations (190.5 million euros)  partially offset by the increase in net working capital (105.0 million euros) and equity investments (55,1 million  euros).

Equity investments amounting to 3,441.4 million euros relate to the subsidiaries Italgas Reti, Nepta, Toscana  Energia, Geoside, Italgas NewCo and Bludigit (3,424.9 million euros), to the jointly controlled company Metano  S. Angelo Lodigiano (1.0 million euros) and to associates and other companies (15.5 million euros).

Net working capital at 31 December 2024 is broken down as follows:

(€ millions) 

As of 31 December 2023

As of 31 December 2024

Abs. change 

Trade receivables 

37.5

76.2

38.7

Tax assets 

19.0

86.8

67.8

Other assets 

4.0

5.4

1.4

Trade payables 

(15.8)

(19.9)

(4.1)

Provisions for risks and charges 

(5.7)

(4.8)

0.9

Deferred tax liabilities

(4.6)

(1.1)

3.5

Tax payables

(29.1)

(32.6)

(3.5)

Other liabilities 

(13.1)

(12.8)

0.3

(7.8)

97.2

105.0 

Compared to 31 December 2023, net working capital increased by 105.0 million euros, mainly due to the higher  tax credit and the increase in receivables from subsidiaries for intra-group services performed by the holding  company. 

Net financial debt

(€ millions) 

As of 31 December  2023

As of 31 December  2024

Abs.  change 

Financial and bond debt 

6,925.3

7,294.9

369.6

Short-term financial debt (*) 

1,334.6

1,356.8

22.2

66

Long-term financial debt 

5,580.7

5,930.2

349.5

Lease liabilities - IFRS 16 

10.0

7.9

(2.1)

Funding derivative contracts Cash flow Hedge

(30.5)

(15.1)

15.4

Short-term contracts

(17.2)

(4.7)

12.5

Long-term contracts

(13.3)

(10.4)

2.9

Financial receivables and cash and cash equivalents 

(644.7)

(1,183.0)

(538.3)

Cash and cash equivalents 

(205.7)

(268.3)

(62.6)

Financial receivables

(439.0)

(914.7)

(475.7)

Net financial debt 

6,250.1

6,096.8

(153.3)

Lease liabilities - IFRS 16 

10.0

7.9

(2.1)

Net financial debt (excluding the effects pursuant to IFRS 16) 

6,240.1

6,088.9

(151.2)

(*) Includes the short-term portion of long-term financial debt and financial debt to subsidiaries.

Financial and bond debt as at 31 December 2024 totalled 7,294.9 million euros (6,925.3 million euros as at  31 December 2023) and referred to bonds (5,632.2 million euros), European Investment Bank (EIB) loan  agreements (802.7 million euros), payables to banks (376.6 million euros), IFRS 16 payables (7.9 million  euros) and financial debt to subsidiaries (475.5 million euros).

The breakdown of financial and bond debt by type of interest rate as at 31 December 2024 is as follows:

(€ millions) 

As of 31 December 2023 

% 

As of 31 December 2024 

% 

Fixed rate 

6,575.40

94.9

6,006.3

82.3

Floating rate 

349.9

5.1

1,288.6

17.7

Financial and bond debt 

6,925.3

100.0

7,294.9

100.0

Fixed-rate financial liabilities amounted to 6,006.3 million euros and consisted of bonds (5,632.2 million euros),  three EIB loans (362.8 million euros), liabilities to subsidiaries (3.4 million euros) and financial liabilities  pursuant to IFRS 16 (7.9 million euros).

Fixed-rate financial liabilities decreased by 569.1 million euros from 31 December 2023, mainly due to the  repayment of certain fixed-rate bank loans and the maturity, in December 2024, of a fixed-rate derivative on  an EIB loan.

Floating-rate financial liabilities increased by 938.7 million euros mainly due to a new bank loan and the  maturity of the derivative in December on an EIB loan.

As at 31 December 2024, there are no loan contracts in place containing financial covenants and/or backed  by real guarantees. Some of these contracts provide, inter alia, for the following: (i) negative pledge  commitments pursuant to which Italgas and its subsidiaries are subject to limitations on pledging real property  rights or other restrictions on all or part of the respective assets, shares or merchandise; (ii) pari passu and  change-of-control clauses; and (iii) limitations on certain extraordinary transactions that the Company and its  subsidiaries may carry out. As at 31 December 2024, these commitments were respected.

67

Reclassified Statement of Cash Flows

(€ millions)

As of 31 December  2023

As of 31 December  2024

Profit

301.4 

422.5

Correction:

\- Amortisation, depreciation and other non-monetary components

1.9 

0.6

\- Interest and income taxes

(306.8)

(426.7)

Change in working capital due to operating activities

13.8 

(106.2)

Dividends, interest and income taxes cashed in (paid)

320.8 

443.7

Cash flow from operating activities

331.1 

333.9

Technical investments 

(2.2)

(2.5)

Equity investments

(56.1)

(30.0)

Net financial investments instrumental to operations

(382.7)

(333.8)

Other changes related to investments activities

\- 

(0.2)

Divestments and other changes

1.0 

\- 

Free cash flow

(108.9)

(32.6)

Change in financial receivables not related to operations

(192.5)

24.3

Change in current and non-current financial debt

410.3 

358.8

Reimbursements of lease liabilities

(1.4)

(2.3)

Equity cash flow

(257.6)

(285.6)

Cash flow for the year

(150.1)

62.6

(€ millions)

As of 31 December  2023

As of 31 December  2024

Free cash flow

(108.9)

(32.6)

Equity cash flow

(257.6)

(285.6)

Other changes (Difference between interest accounted for, and paid fair  value of derivatives)

(39.0)

(28.3)

Increase in lease liabilities

(3.2)

(0.2)

Change in net financial debt 

(408.7)

(346.7)

4.3 Non – GAAP Measures

Alternative performance indicators

On 5 October 2015, the ESMA (European Security and Markets Authority) published its guidance  (ESMA/2015/1415) on the presentation criteria for alternative performance indicators (API or APM), which  replaces the CESR/05-178b recommendations from 3 July 2016. The NON-GAAP financial report must be  considered complementary to and not replacing the reports prepared according to IAS – IFRS.

68

The alternative performance indicator adopted in this report are illustrated below. 

Alternative economic performance indicators

Description

Gas Distribution regulated revenues

Operating performance indicator representing revenues from regulated gas distribution  activities, calculated by subtracting Other revenues from Revenues and other income.  Other revenues is revenue from unregulated activities, revenue for construction and  enhancement of infrastructures recognised pursuant to IFRIC 12, the release of  connection contributions relating to the financial year and any other components entered  in the statement of reconciliation of the income statement of the subsequent chapter  “Reconciliation of the reclassified income statement, statement of financial position and  statement of cash flows”.

Total revenues and other income

Total revenues and other income excludes (i) the effects of applying IFRIC 12 “Service  Concession Arrangements”, (ii) connection fees, (iii) reimbursements from third parties  and other residual items.

Total revenues and other income adjusted

Total revenues and other income excludes (i) the effects of applying IFRIC 12 “Service  Concession Arrangements”, (ii) connection fees, (iii) reimbursements from third parties  and other residual items, (iv) items classified as “special items”, i.e., deriving from: (a)  non-recurring events or transactions or from transactions or events which do not occur  frequently in the ordinary course of business; or (b) events or transactions which are not  representative of the normal course of business.

Operating costs

Operating performance indicator representing the legally-required operating costs minus  costs for construction and enhancement of the infrastructure recognised pursuant to  IFRIC 12 and any other components entered in the statement of reconciliation of the  income statement of the subsequent chapter “Reconciliation of the reclassified income  statement, statement of financial position and statement of cash flows”.

EBITDA

Operating performance indicator, calculated as net profit excluding income taxes, net  income from equity investments, net financial expense, amortisation, depreciation and  impairment.

Adjusted EBITDA

Adjusted EBITDA is calculated as the net profit for the year excluding income taxes, net  income from equity investments, net financial expenses, amortisation, depreciation and  impairment, connection fees and items classified as “special items”, i.e. from: (a) non- recurring events or transactions or from transactions or events which do not occur  frequently in the ordinary course of business; or (b) events or transactions which are not  representative of the normal course of business.

EBIT

Operating performance indicator, calculated as net profit for the year excluding income  taxes, net income from equity investments and net financial expense.

Adjusted EBIT

Adjusted EBIT is calculated as net profit for the year excluding income taxes, net income  from equity investments, net financial expenses and items classified as “special items”,  i.e. from: (a) non-recurring events or transactions or from transactions or events which do  not occur frequently in the ordinary course of business; or (b) events or transactions which  are not representative of the normal course of business.

Adjusted profit before Tax

Net profit for the year excluding income taxes and items classified as “special items”, i.e.  from: (a) non-recurring events or transactions or from transactions or events which do not  occur frequently in the ordinary course of business; or (b) events or transactions which  are not representative of the normal course of business.

Adjusted income taxes

Income taxes excluding items classified as “special items”, i.e. from: (a) non-recurring  events or transactions or from transactions or events which do not occur frequently in the  ordinary course of business; or (b) events or transactions which are not representative of  the normal course of business.

Adjusted net profit

Net profit for the year excluding items classified as “special items”, i.e. from: (a) non- recurring events or transactions or from transactions or events which do not occur  frequently in the ordinary course of business; or (b) events or transactions which are not  representative of the normal course of business.

Adjusted net profit attributable to the Group

Net profit for the year attributable to Owners of the parent company excluding items  classified as “special items” attributable to Owners of the parent company, i.e. from: (a)  non-recurring events or transactions or from transactions or events which do not occur  frequently in the ordinary course of business; or (b) events or transactions which are not  representative of the normal course of business.

Adjusted net profit attributable to non-controlling interests

Non-controlling interests excluding items classified as “special items” attributable to  Owners of the parent company, i.e. from: (a) non-recurring events or transactions or from  transactions or events which do not occur frequently in the ordinary course of business;  or (b) events or transactions which are not representative of the normal course of  business.

69

Adjusted Earnings per Share

Indicator of the profitability of the company’s shares, calculated as the ratio between the  net profit attributable to the Group and the total number of shares.

Alternative capital performance indicators

Description

Net working capital

A capital indicator that expresses the capital employed in current and non-financial assets  and liabilities. This is defined as the sum of the values relating to Trade receivables and  payables, Inventories, Tax receivables and payables, Provisions for risks and charges,  Deferred tax assets, Deferred tax liabilities and Other assets and liabilities.

Fixed capital

A capital indicator that expresses the total fixed assets. It is defined as the sum of the  values relating to items of Property, plant and equipment, Intangible assets net of Other  liabilities relating to connection contributions, Equity investments and Net payables  relating to investment activities.

Net invested capital

A capital indicator that expresses the investments made by the company in operations.  This is defined as the sum of the values related to fixed capital, net working capital,  provisions for employee benefits and assets held for sale and directly related liabilities.

Additions

They are calculated as the sum of investments in property, plant and equipment and  investments in intangible assets.

Alternative financial performance indicators

Description

Cash flow from operating activities

It represents the net cash flow from the operating activity of the mandatory schemes,  excluding the effects deriving from the application of the IFRS 15 accounting standard  (Other liabilities relating to connection contributions). 

Free cash flow before Merger

and Acquisition transactions

It represents the cash surplus or deficit remaining after the financing of investments,  excluding the flow deriving from Merger and Acquisition transactions.

Free cash flow

It represents the cash surplus or deficit remaining after financing of the investments.

Net financial debt 

Determined as the sum of current and non-current financial liabilities, net of cash and cash  equivalents, current financial assets, for instance securities held for trading, and other  current and non-current financial assets.

Reconciliation of the reclassified Income Statement, Statement of Financial Position and Statement  of Cash Flows

In line with ESM/2015/1415 guidance, the reconciliation of the Income Statements, Statements of Financial  Position and Statements of Cash Flows of the Italgas Group and Italgas S.p.A., commented in the Directors’  Report is provided below with the related legally required statements.

In compliance with the ESMA provisions for the taxonomy of ESEF (European Single Electronic Format)  annual financial statements, a number of items in the balance sheet and income statement were reclassified,  also readjusting the values as at 31 December 2024.

For more details, see the “Financial Statements” section of the notes to the consolidated financial statements  and separate financial statements.

Reconciliation between reclassified consolidated financial statements and the legally required  financial statements

RECLASSIFIED INCOME STATEMENT

For the year ended 31 December 2023

For the year ended 31 December 2024

(€ millions)

Reference  to the  explanatory  notes of the  consolidated  financial  statements 

Figures from  mandatory  statements 

Partial figures  from  mandatory  statements 

Figures  from  reclassified  statements 

Figures from  mandatory  statements 

Partial figures  from mandatory  statements 

Figures from  reclassified  statements 

70

Revenues (from mandatory  statements)

2,638.8 

2,539.4 

\- Revenues for construction and  upgrading of distribution  infrastructures IFRIC 12

(note 27)

(787.1)

(746.5)

\- Connection contribution uses

(note 27)

(19.2)

(19.0)

\- Reimbursement of faulty meters

(note 27)

(5.8)

(16.6)

\- Repayments from third parties

(note 27)

(8.8)

(14.3)

\- Operational performance vs.  Campania Region

(note 27)

\- 

(2.6)

\- Other reimbursement

(note 27)

(0.4)

(0.1)

Total revenues and other  income (from reclassified  statements)

1,817.5

1,740.3

Operating costs (from  mandatory statements)

(1,412.0)

(1,220.7)

\- Revenues for construction and  upgrading of distribution  infrastructures IFRIC 12

(note 27)

787.1

746.5

\- Reimbursement of faulty meters

(note 27)

5.8

16.6

\- Repayments from third parties

(note 27)

8.8

14.3

\- Operational performance vs.  Campania Region

(note 27)

\- 

2.6

\- Other reimbursement

(note 27)

0.4

0.1

\- Use of metering provision

(note 29)

\- 

12.6

Operating costs (from  reclassified statements)

(609.9)

(427.9)

EBITDA

1,207.6

1,312.4

Amortisation, depreciation and  impairment (from mandatory  statements)

(545.6)

(536.6)

\- Connection contribution uses

(note 27)

19.2

19.0

\- Use of metering provision

(note 29)

\- 

(12.6)

Amortisation, depreciation and  impairment (from reclassified  statements)

(526.4)

(530.2)

EBIT

681.2

681.2

782.1

782.2

Net financial expense

(98.2)

(98.2)

(120.6)

(120.6)

Net income from equity  investments

3.1

3.1

11.2

11.2

Profit before Tax

586.1

586.1

672.8

672.8

Income taxes

(118.6)

(118.6)

(165.3)

(165.3)

Net profit (loss)

467.5

467.5

507.5

507.5

RECLASSIFIED STATEMENT OF FINANCIAL POSITION

(€ millions) 

As of 31 December 2023

As of 31 December 2024

(Where not expressly indicated, the item is obtained directly from the legally-required  statement)

Reference to  the  explanatory  notes of the  consolidated  financial  statements

Partial  figures  from  mandatory  statements

Figures  from  reclassified  statements

Partial  figures from  mandatory  statements

Figures  from  reclassified  statements

71

Fixed capital

Property, plant and equipment 

386.0

383.3

Intangible assets, of which:

8,250.3

8,305.6

\- Intangible assets

(note 14)

8,772.6

8,833.3

from which to deduct Connection contributions

(note 21)

(522.3)

(527.7)

Equity investments

153.0

176.1

Financial receivables and securities instrumental to operations 

2.6

319.5

Net payables relating to investment activities, composed of:

(370.5)

(407.4)

\- Trade and other payables (Payables for investing activities)

(note 19)

(375.8)

(412.7)

\- Trade and other receivables (Receivables from disposal of property, plant and equipment and  intangible assets)

(note 9)

5.3

5.3

Total fixed capital (from reclassified statements)

8,421.40

8,777.1

Net working capital

Trade receivables

694.3

740.5

Inventories

79.1

57.2

Tax assets, composed of: 

319.6

420.8

\- Current and non-current tax receivables/liabilities (non-current tax receivables)

(note 11)

30.4

17.7

\- Other current and non-current non-financial assets (Other current taxes)

(note 12)

20.0

37.9

\- Trade and other receivables (IRES receivables for national tax Consolidation scheme)

(note 9)

5.2

5.2

\- Reclassification to Tax Receivables for Super/Ecobonus Receivables

(note 12)

264.0

360.0

Other assets, composed of:

434.5

608.0

\- Trade and other receivables (Other receivables)

(note 9)

148.6

142.0

\- Other current and non-current non-financial assets

(note 12)

278.1

379.7

\- Reclassification to Tax Receivables for Super/Ecobonus Receivables

(note 12)

(264.0)

(360.0)

\- Other current and non-current non-financial assets (Other regulated activities)

(note 12)

271.8

446.3

Trade payables

(278.3)

(249.7)

Provisions for risks and charges

(109.9)

(92.1)

Deferred tax liabilities 

(47.8)

(48.3)

Tax payables, composed of:

(30.2)

(39.3)

\- Current and non-current tax receivables/liabilities (Current tax liabilities)

(note 11)

(20.4)

(25.6)

\- Other current and non-current non-financial liabilities (Other indirect tax liabilities)

(note 21)

(9.8)

(13.7)

Other liabilities, composed of:

-189.0

(562.0)

\- Trade and other payables (Other payables)

(note 19)

(175.8)

(522.2)

\- Other current and non-current non-financial liabilities

(note 21)

(13.2)

(39.8)

Total net working capital (from reclassified statements)

872.3

835.1

Provisions for employee benefits

(65.3)

(61.3)

Assets held for sale:

6.60 

5.4

NET INVESTED CAPITAL 

9,235.0

9,556.3

Equity including non-controlling interests 

(2,600.7)

(2,793.5)

Net financial debt

Financial and bond debt, composed of: 

(6,920.3)

(7,185.8)

\- Non-current financial liabilities

(note 17)

(5,840.9)

(6,161.1)

Net non-current financial liabilities, composed of:

\- Short-term portions of long-term financial debt

(note 17)

(501.6)

(637.6)

\- Short-term financial liabilities

(note 17)

(498.7)

(296.6)

Other financial debt 

(note 17)

\- 

72

\- Financial debt pursuant to IFRS 16

(note 17)

(79.1)

(90.5)

Other current and non-current financial assets/liabilities, composed of:

31.8

16.9

Current Cash flow hedge derivative financial instruments 

(note 20)

18.1

5.9

Non-current Cash flow hedge derivative financial instruments 

(note 20)

13.7

11.0

Financial receivables and cash and cash equivalents, composed of:

254.2

406.1

Cash and cash equivalents 

250.0

402.7

Current financial assets, composed of:

4.2

3.4

Financial receivables non-instrumental to operations

(note 8)

4.2

3.4

Total net financial debt (from reclassified statements)

(6,634.3)

(6,762.8)

FUNDING 

(9,235.0)

(9,556.3)

RECLASSIFIED STATEMENT OF CASH FLOWS

(€ millions)

Reclassified Statement of Cash Flows items and intersection of legally- required statement items

Partial figures from  mandatory  statements

Figures from  reclassified  statements

Partial figures from  mandatory  statements

Figures from  reclassified  statements

Profit 

467.5

507.5 

Correction:

Amortisation, depreciation and other non-monetary components:

525.5

518.0 

\- Amortisation and depreciation

522.5

549.1 

\- Net impairment of property, plant and equipment and intangible assets

21.8

\- 

\- Contributions for connections - uses

(19.2)

(19.0)

\- Results from investments accounted for using the equity method 

(1.8)

(11.2)

\- Non-monetary items (stock grants)

2.2

(0.9)

Net capital losses (capital gains) on asset sales and eliminations

19.1

5.6 

Interest, income taxes and other changes:

216.5

285.9 

\- Interest income 

(5.4)

(28.9)

\- Interest expense

103.3

149.5 

\- Income taxes

118.6

165.3 

Change in working capital due to operating activities:

(470.7)

(97.7)

\- Inventories

33.2

29.0 

\- Trade and other receivables

(366.4)

(174.7)

\- Trade and other payables

(462.9)

(172.0)

\- Change to provisions for risks and charges

(7.1)

(20.0)

\- Other assets and liabilities 

339.2

247.1 

from which to deduct Deferrals for connection contributions - increases

17.6

\- 

from which to deduct Deferrals for connection contributions - uses

(19.2)

(19.0)

\- Change in provisions for employee benefits

(6.7)

(7.1)

Dividends, interest and income taxes cashed in (paid):

(202.7)

(120.6)

\- Dividends cashed in

0.7

1.0 

\- Interest income

4.4

13.6 

\- Interest paid

(88.7)

(107.4)

\- Income taxes (paid) refunded

(119.1)

(27.8)

Cash flow from operating activities

555.2

1,098.7 

Technical investments: 

(844.3)

(845.4)

\- Property, plant and equipment 

(24.5)

(33.5)

73

\- Intangible assets 

(837.4)

(811.9)

\- Contributions for connections - increases

17.6

\- 

\- Change in payables for investing activity

60.7

37.0 

\- Other changes

0.8

(1.9)

Disinvestments:

20.6

27.6 

\- Property, plant and equipment

0.2

3.3 

\- Intangible assets 

21.3

11.2 

\- Sale of non-controlling interests

(0.9)

\- 

\- Securities

-

11.0 

\- Companies outside the scope of consolidation and units

-

2.1 

Free cash flow before M&A transactions

(207.0)

316.0 

Change in scope of consolidation

(76.9)

19.8 

\- Price paid for equity

(76.5)

(14.5)

\- Cash and cash equivalents from companies in the scope of consolidation

(0.4)

65.7 

Takeover of financial debt from companies that joined the scope of consolidation

-

(31.4)

Acquisition of companies, plant and other financial assets

(1.4)

(77.9)

Free cash flow 

(285.3)

258.0 

Change in financial debt:

384.9

228.6 

\- Change in short- and long-term financial debt

382.4

227.9 

\- Cash and cash equivalents from companies in the scope of consolidation

0.4

\- 

\- Medium- to long-term financial receivables

2.1

0.7 

Reimbursements of lease liabilities

(31.0)

(34.1)

Equity cash flow

(270.5)

(299.8)

Cash flow for the year

(201.9)

152.7 

Reconciliation between reclassified financial statements of Italgas S.p.A. and the legally required  financial statements

RECLASSIFIED INCOME STATEMENT

For the year ended 31 December 2023

For the year ended 31 December 2024

(€ millions)

Reference to  the  explanatory  notes of the  financial  statements 

Figures from  mandatory  statements 

Partial figures  from  mandatory  statements 

Figures from  reclassified  statements 

Figures from  mandatory  statements 

Partial figures  from  mandatory  statements 

Figures from  reclassified  statements

Revenues (from mandatory statements)

82.7

85.3 

\- Income for seconded personnel

(note 24)

(5.0)

(5.7)

Total revenues and other income (from  reclassified statements)

77.7

79.6

Operating costs (from mandatory statements)

(86.2)

(86.8)

\- Income for seconded personnel

(note 24)

5.0

5.7

Operating costs (from reclassified statements)

(81.2)

(81.1)

EBITDA

(3.5)

(1.5)

Amortisation, depreciation and impairment of  assets

(2.7)

(2.7)

(2.7)

(2.7)

Operating profit

(6.1)

(6.1)

(4.3)

(4.3)

Net financial expense

19.5

19.5

3.6

3.6

74

Net income from equity investments

296.1

296.1

428.2

428.2

Profit before Tax

309.4

309.4

427.6

427.6

Income taxes

(8.0)

(8.0)

(5.1)

(5.1)

Net profit (loss)

301.4

301.4

422.5

422.5

RECLASSIFIED STATEMENT OF FINANCIAL POSITION

(€ millions)

As of 31 December 2023

As of 31 December 2024

(Where not expressly indicated, the item is obtained directly from  the legally-required statement)

Reference to  the  explanatory  notes of the  financial  statements

Partial figures from  mandatory  statements

Figures from  reclassified  statements

Partial figures from  mandatory  statements

Figures from  reclassified  statements

Fixed capital

Property, plant and equipment 

13.0

12.3

Intangible assets

1.5

1.9

Equity investments, composed of:

3,386.3

3,441.4

Equity investments

(note 13)

3,372.7

3,427.4

Other equity investments

(note 7)

13.6

14.0

Net payables for investing activity

(0.2)

(0.1)

Financial receivables and securities instrumental to operations

4,704.9

4,514.4

Total fixed capital (from reclassified statements)

8,105.5

7,969.9

Net working capital

Trade receivables 

37.5

76.2

Tax assets, composed of: 

19.0

86.7

\- Current and non-current tax receivables

(note 9)

4.9

4.6

\- Other current and non-current non-financial assets

(note 10)

9.5

79.7

\- Group VAT receivables

(note 8)

4.6

2.4

Other assets

4.0

5.4

Trade payables 

(15.8)

(19.9)

Provisions for risks and charges 

(5.7)

(4.8)

Deferred tax liabilities

(4.6)

(1.1)

Tax payables, composed of:

(29.2)

(32.6)

\- Current and non-current tax liabilities

(note 9)

(6.5)

(7.6)

\- Other current and non-current non-financial liabilities

(note 17)

(1.6)

(2.1)

\- Payables for tax consolidation

(note 16)

\- 

(14.9)

\- Group VAT payables

(note 16)

(21.1)

(8.0)

Other liabilities

(13.0)

(12.7)

Total net working capital (from reclassified statements)

(7.8)

97.2

Provisions for employee benefits

(8.8)

(8.4)

NET INVESTED CAPITAL 

8,088.9

8,058.7

Equity including non-controlling interests 

(1,838.8)

(1,961.9)

Net financial debt

Financial and bond debt, composed of: 

(6,925.4)

(7,294.9)

\- Long-term financial liabilities

(note 15)

(5,580.7)

(5,930.2)

\- Short-term portions of long-term financial debt

(note 15)

(489.1)

(631.3)

75

\- Short-term financial liabilities

(note 15)

(845.5)

(725.5)

\- Financial debt pursuant to IFRS 16

(note 15)

(10.0)

(7.9)

Hedging derivative contracts Cash flow Hedge, consisting of:

30.5

15.1

Short-term contracts

(note 18)

17.2

4.7

Long-term contracts

(note 18)

13.3

10.4

Financial receivables and cash and cash equivalents, composed of:

644.7

1,183.0

\- Financial receivables non-instrumental to operations

(note 7)

439.0

914.7

\- Cash and cash equivalents 

(note 6)

205.7

268.3

Total net financial debt (from reclassified statements)

(6,250.2)

(6,096.8)

FUNDING 

(8,088.9)

(8,058.7)

RECLASSIFIED STATEMENT OF CASH FLOWS

(€ millions)

As of 31 December 2023

As of 31 December 2024

Reclassified Statement of Cash Flows items and intersection of legally- required statement items

Partial figures from  mandatory  statements

Figures from  reclassified  statements

Partial figures from  mandatory  statements

Figures from  reclassified  statements

Profit 

301.4 

422.5 

Correction:

Amortisation, depreciation and other non-monetary components:

1.9 

0.6

\- Amortisation and depreciation

2.7 

2.7 

\- Impairment of equity investments

(2.3)

\- 

\- Non-monetary items (stock grants)

1.5 

(2.1)

Interest, income taxes and other changes:

(306.8)

(426.7) 

\- Interest income and dividends

(399.3)

(562.1)

\- Interest expense

84.5 

130.3 

\- Income taxes

8.0 

5.1 

Change in working capital due to operating activities:

13.8 

(106.2)

\- Trade and other receivables

103.2 

(107.6)

\- Trade and other payables

(111.5)

2.8 

\- Change to provisions for risks and charges

(1.1)

(0.9)

\- Other assets and liabilities 

23.6 

\- 

Change in provisions for employee benefits

(0.4)

(0.5)

Dividends, interest and income taxes cashed in (paid):

320.8 

443.7 

\- Dividends and other income cashed in from equity investments

295.2 

428.2 

\- Interest income

103.5 

106.0 

\- Interest paid

(65.9)

(89.4)

\- Income taxes (paid) refunded

(12.0)

(1.1)

Cash flow from operating activities

331.1 

333.9 

Technical investments: 

(2.2)

(2.5)

\- Property, plant and equipment 

(2.2)

(2.4)

\- Intangible assets

\- 

(0.1)

Equity investments

(56.1)

(30.0)

Financial receivables instrumental to operations

(382.7)

(333.8)

Other changes related to divestment activities

1.0 

(0.2)

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Free cash flow

(108.9)

(32.6)

Change in financial receivables not related to operations

(192.5)

24.3 

Change in short- and long-term financial debt

410.3 

358.8 

Change in lease liabilities

(1.4)

(2.3)

Equity cash flow

(257.6)

(285.6)

Cash flow for the year

(150.1)

62.6 

4.4 Other information 

Treasury shares

The company did not own any treasury shares as at 31 December 2024.

Related party transactions

Based on Italgas’ current ownership structure, Italgas related parties include, in addition to directors, statutory  auditors, executives with strategic responsibilities, companies associated with the Group or under its joint  control, also the subsidiaries directly or indirectly controlled by CDP, therefore including the shareholder Snam,  and the Ministry of Economy and Finance (MEF). Transactions with these entities relate to the exchange of  assets, the provision of services and, in the case of CDP, the provision of financial resources.

These transactions are part of ordinary business operations and are generally settled at arm’s length, i.e. the  conditions which would be applied between two independent parties. All the transactions carried out were in  the interest of the companies of the Italgas Group. 

Pursuant to the provisions of the applicable legislation, the Company has adopted internal procedures to  ensure that transactions carried out by the Company or its subsidiaries with related parties are transparent  and correct in their substance and procedure.

The Directors and Statutory Auditors declare potential interests that they have in relation to the Company and  the Group every six months, and/or when changes in said interests occur; in any case, they promptly inform  the Chief Executive Officer (or the Chairperson, in the case of the Chief Executive Officer’s interests), who in  turn informs the other directors and the Board of Statutory Auditors, of the individual transactions that the  Company intends to carry out and in which they have an interest.

CDP and CDP Reti consolidate Italgas pursuant to IFRS 10. In addition, through the Board of Directors’  decision of 1 August 2019, CDP reclassified its investment in Italgas S.p.A. as a controlling interest pursuant  to Article 2359, paragraph 1.2) of the Italian Civil Code and Article 93 of the TUF. Italgas is not subject to  management and coordination activities by CDP. 

As at 31 December 2024, Italgas manages and coordinates its subsidiaries, pursuant to Article 2497 et seq.  of the Italian Civil Code.

The amount involved in commercial, miscellaneous and financial relations with related parties, descriptions of  the key transactions and the impact of these on the balance sheet, income statement and cash flows, are  provided in the section “Related-party transactions” of the Notes to the consolidated and annual financial  statements.

77

Relations with Key Managers are shown in the section “Operating costs” of the Notes to the consolidated  financial statements.

Operating performance of subsidiaries

For information on the outlook of areas where Italgas operates in whole or in part through subsidiaries, please  refer to “Operating performance” and “Comment on the economic and financial results” of this Report.

Branch offices

In compliance with Art. 2428, fourth paragraph of the Italian Civil Code, note that the Italgas does not have  secondary offices.

Research and development

Research and development activities carried out by Italgas are not of a considerable amount. For more details,  see the notes to the Consolidated Financial Statements.

Significant events after year end

The significant transactions carried out after 31 December 2024 are summarised below. The Integrated Annual  Report has been submitted to the examination of the Company’s Board of Directors and its publication was  authorised within the terms and in accordance with the procedure prescribed by law. Therefore, this document  does not note any events that occurred subsequent to that date.

Extraordinary transactions and area tenders

• On 27 December 2022 Italgas, Toscana Energia and Alia Servizi Ambientali signed an agreement that  granted Italgas an option to purchase 30,134,618 shares in Toscana Energia held by Alia Servizi  Ambientali following their transfer by the Municipality of Florence.

Italgas exercised the option on 14 January 2025. The envisaged contractual price to purchase the  shares of Toscana Energia is to be determined as the “fair market value” at the date of execution of  the option, calculated by an international financial institution named jointly by the parties. 

Legal and Regulatory Framework

• Italgas Reti challenged on additional grounds Resolution no. 513/2024/R/com through which the  Authority, following an update for the 2025-2027 sub-period of the parameters common to all regulated  services and following a review of the criteria for updating the β-asset (beta asset) parameter for all  regulated infrastructural services of the electricity and gas sectors, updated the WACC for the year  2025\. The setting of a date for the hearing is currently pending.

Capital Transactions

• On 12 February 2025, in execution of the 2021-2023 Co-Investment Plan approved by the Ordinary  and Extraordinary Shareholders' Meeting of 20 April 2021, the Board of Directors resolved on the free  allocation of a total of 511,604 new ordinary shares of the Company to the beneficiaries of said Plan 

78

(second cycle of the Plan) and executed the second tranche of the share capital increase resolved on  by the aforesaid Shareholders' Meeting, for a nominal amount of 634,388.96 euros, taken from  retained earnings reserves.

Other events

• On 7 February 2025, Italgas was confirmed for the third consecutive year by CDP (Carbon Disclosure  Project) in the “Climate A list” which groups together the best players globally in terms of transparency  and performance in combating climate change.

• On 11 February 2025, Italgas was included for the sixth consecutive year in the S&P Global  Sustainability Yearbook, S&P Global's annual publication that collects best practices, experiences and  success stories of the world's leading companies on sustainability issues. Italgas also confirmed its  leadership with inclusion in the “Top 1% S&P Global CSA Score”, category, based on the results of  the Corporate Sustainability Assessment (CSA) 2024.

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5\. Operating segment operating performance 

Consistent with the manner in which Management reviews the Group's operating results and in compliance  with the provisions of the international accounting standard IFRS 8 "Operating segments", the Italgas Group  has identified the following operating segments: “Gas distribution”, “Water service”, “Energy efficiency” and  “Corporate” 39 . 

More precisely, the "Gas Distribution" sector is associated with gas distribution and metering activities carried  out by Group companies both in Italy and in Greece.

The “Water service” sector consists of all public services of the collection, adduction and distribution of water  for civil use, drains and the purification of waste water.

The "Energy Efficiency" sector refers to activities carried out in the energy sector. Italgas offers and implements  energy efficiency measures for its customers in the residential and industrial sectors. 

"Corporate" includes the services performed for third parties by the Parent Company Italgas.

Below is a breakdown of the main economic performance indicators by sector:

(€ millions)

For the year ended 31  December 2023

For the year ended 31  December 2024

For the year ended 31 December  2024* pro rata

Gas Distribution Sector (regulated  and unregulated)

1,484.2

1,652.7 

1,652.7 

Water Sector

8.8

94.7 

203.9 

Energy efficiency sector

299.0

48.2 

48.2 

Corporate

82.7

85.3 

85.3 

Intra-sector eliminations

(99.9)

(102.1)

(102.1)

Total revenues and other income  adjusted

1,774.8

1,778.8 

1,888.0 

Gas distribution sector

1,132.5

1,308.5 

1,308.5 

Water Sector

0.2

39.7 

68.6 

Energy efficiency sector

54.6

4.2 

4.2 

Corporate

(3.6)

(1.5)

(1.5)

Adjusted EBITDA

1,183.7

1,350.9 

1,379.8 

Gas distribution sector

636.9

812.3 

812.3 

Water Sector

(0.7)

12.3 

27.5 

Energy efficiency sector

51.2

0.4 

0.4

Corporate

(6.2)

(4.3)

(4.3)

Adjusted EBIT

681.2

820.7 

835.9 

* Unaudited values

5.1 Gas distribution sector

39 With regard to the services provided to third parties by the Parent Company Italgas, taking into account the residual nature of the values and deletions, no  evidence is provided in this document.

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Main economic and financial indicators

The following table summarises the main items of the adjusted financial statements:

(€ millions)

For the year ended 31  December 2023

For the year ended 31  December 2024

Total revenues and other income adjusted (regulated and unregulated)

1,484.2

1,652.7

Adjusted EBITDA

1,132.5

1,308.5

Adjusted EBIT

636.9

812.3 

Adjusted EBITDA margin (%)

76%

79%

Adjusted EBIT margin (%)

43%

49%

Total revenues and other income adjusted for the Gas Distribution segment as at 31 December 2024 amounted  to 1,652.7 million euros (1,484.2 million euros in 2023), an increase of 168.5 million euros, mainly due to the  combined effect of (i) the increase in distribution revenues (+172.9 million euros) and (ii) the decrease in  revenues from services and other (-4.4 million euros). Adjusted operating profit increased by 175.4 million  euros (+27.5% compared to the previous year), from 636.9 million euros as at 31 December 2023 to 812.3  million euros as at 31 December 2024. 

Operating performance

Additions

In 2024, technical investments amounting to 850.4 million euros were made (895.0 million euros in 2023), of  which 21.5 million euros were related to investments accounted for in accordance with IFRS 16, and resulted  in the laying of an additional 755 km of pipeline.

(€ millions)

For the year  ended 31  December 2023

For the year  ended 31  December 2024

Abs. change

% Change

Gas distribution

538.9

538.7

(0.2)

-

Network maintenance and development 

420.7

438.8

18.1

4.3

New networks 

118.2

99.9

(18.3)

(15.5)

Gas digitisation

282.5

242.9

(39.6)

(14.0)

Other assets

151.6

99.7

(51.9)

(34.2)

Metering

110.0

115.9

5.9

5.4

Processes

21.0

27.3

6.3

30.0

Other investments

73.6

68.8

(4.8)

(6.5)

\- of which Real Estate 

11.7

20.8

9.1

77.8

\- of which ICT 

26.0

22.8

(3.2)

(12.3)

\- of which the effect of IFRS 16 

32.8

21.5

(11.3)

(34.5)

895.0

850.4

(44.6)

(5.0)

Investments in gas distribution remained virtually unchanged compared with 2023 at 538.7 million euros. 

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Investments in digitisation (242.9 million euros) decreased by 14.0% compared with 2023 due to the gradual  completion of the digitisation process of the gas network in Italy.

Operating figures

Key operating figures for gas distribution 

Italgas Group and affiliates (Italy and Greece)

For the year  ended 31  December 2023

For the year  ended 31  December 2024

Abs.  change

% Change

Active meters (millions)

7.974

8.020

0.046

0.6

Municipalities with gas distribution concessions (no.)

2,050

2,099

49

2.4

Municipalities with gas distribution concessions in operation (no.)

1,967

2,024

57

2.9

Distribution network (kilometres)

82,034

83,811

1,777

2.2

Gas distributed (million cubic metres)

8,145

8,188

43

0.5

Key operating figures for gas distribution 

Italgas Group (Italy and Greece)

For the year  ended 31  December 2023

For the year  ended 31  December 2024

Abs.  change

% Change

Active meters (millions)

7.821

7.867

0.046

0.6

Municipalities with gas distribution concessions (no.)

1,989

2,038

49

2.5

Municipalities with gas distribution concessions in operation (no.)

1,906

1,963

57

3.0

Distribution network (kilometres)

80,136

81,907

1,771

2.2

Gas distributed (million cubic metres)

7,895

7,929

34

0.4

Legislative and regulatory framework

Gas distribution tariff regulation - Italy

The distribution and metering of natural gas is regulated by the Regulatory Authority for Energy, Networks and  Environment (ARERA). Among its functions are the calculation and updating of the tariffs, and the provision of  rules for access to infrastructure and for the delivery of the related services.

The rate system establishes in particular that the reference revenues for the formulation of rates is determined  so as to cover the costs incurred by the operator and allow for a fair return on invested capital. Three cost  categories are recognised:

- the cost of net invested capital for RAB (Regulatory Asset Base) purposes through the application of  a rate of return of the same;

- economic-technical amortisation/depreciation, hedging investment costs;

- operating costs, hedging operational costs.

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The main rate elements are reported below on the basis of the regulatory framework (Resolution no.  570/2019/R/gas as amended):

The RAB of the companies currently included in the scope of consolidation, calculated by applying the criteria adopted by the Authority, with reference to  investments made up to 31 December 2024, in the definition of the reference tariffs, is equal to approximately 9.1 billion euros.

• Resolution no. 570/2019/R/gas approved the tariff regulation of gas distribution and metering services for  the fifth regulatory period 2020-2025 and Resolution no. 737/2022/R/gas approved the infra-period update  of the tariff regulation of gas distribution and metering services, for the second half-period 2023-2025 of  the current regulatory period.

• Resolution no. 614/2021/R/com approved the criteria for determining and updating the rate of return on  invested capital for the infrastructural services of the electricity and gas sectors for the 2022-2027 period  (TIWACC 2022-2027). The 2PWACC is split into two sub-periods, each lasting three years. Albeit  maintaining a three-year update frequency of the parameters relating to the macroeconomic and fiscal  context, the Authority introduced an annual update mechanism (at least for the first three-year period) for  the macroeconomic variables, if the cumulative effect of the update of the parameters leads to a change  in the WACC above a threshold of 50 bps (basis point spread).

• Resolution no. 556/2023/R/com updated, for the year 2024, the parameters provided for the verification  of the activation of the trigger mechanism, based on which the conditions are verified for the annual update 

83

of the WACC, as per Article 8 of the TIWACC 2022-2027 (variation of 90 bps compared to the previous  year). The Resolution therefore set the WACC for the natural gas distribution and metering service at  6.5% for the year 2024.

• Resolution no. 631/2023/R/gas approved, for the year 2024, the mandatory tariffs for the natural gas  distribution, metering and marketing services.

• On 9 April 2024, with Resolution no. 134/2024/R/gas, the Authority redetermined the tariffs for the gas  distribution and metering services for the years running from 2017 to 2022, in order to take into account  the acceptance of the requests to redetermine tariffs and apply rectifications submitted by the distribution  companies. The measure also redetermines the reference tariffs for the years running from 2020 to 2022,  limited to the part relating to the coverage of operating costs recognised for the distribution service, in  order to allow for the correction of the calculation error noted by the Regional Administrative Court when  examining the appeals lodged against resolution no. 570/2019/R/gas, implemented by resolution no.  409/2023/R/gas.

• With Resolution no. 146/2024/R/gas, the Authority determined the final reference tariffs for gas distribution  and metering services for 2023, calculated on the basis of the actual balance sheet figures for 2022. 

• By way of Resolution no. 173/2024/R/gas, as a result of the consultation process developed with  document no. 67/2024/R/gas, the Authority proceeded to recognise, on an extraordinary basis, the effects  deriving from the revision, by ISTAT, of the data used to determine the rate of change of the deflator of  gross fixed investments used for the purposes of updating the tariffs for gas distribution and metering  services, for the year 2024. The new deflator for the tariffs of the year 2024 was set at 5.3% instead of  the previous 3.8%.

• By way of Resolution no. 186/2024/R/gas, the Authority determined the provisional reference tariffs for  gas distribution and metering services for the year 2024, calculated on the basis of the preliminary balance  sheet data for the year 2023 and, following the redetermination of the rate of change of the deflator of  gross fixed investments pursuant to resolution no. 173/2024/R/gas, it redetermined the values of certain  tariff components for the same year 2024.

• With Resolution no. 283/2024/R/efr, the Authority approved the tariff contribution to be recognised to  distributors fulfilling their energy saving obligations under the EEC mechanism for the mandatory year 2023\.  Specifically, the Authority set a contribution equal to 248.99 euros/EEC as the weighted value between the  average GME stock market price (249.33 euros/MWh) and the average price of the relevant bilateral  contracts (248.22 euros/MWh).

• With Resolution no. 296/2024/R/gas of 16 July 2024, the Authority approved the new Integrated Text of the  provisions on natural gas distribution tenders in order to simplify and accelerate the ongoing proceedings,  make available more streamlined verification methods for those initiated after the adoption of the resolution,  and speed up the execution of tenders.

• By way of Resolution no. 376/2024/R/gas, the Authority redetermined the values of the reference tariffs for  natural gas distribution and metering services for the years 2015 to 2023 for the recognition of the residual  value of smart meters of class less than or equal to G6, installed by 31 December 2018, with a  manufacturing year of no later than 2016, decommissioned before the end of their useful life for tariff  purposes according to the operating methods indicated in Determination 1/2023 DINE.

84

• By way of Resolution no. 489/2024/R/gas, the Authority re-determined the tariffs for gas distribution and  metering services for the years 2013 to 2023, in order to take into account the requests for rectification of  physical and asset data submitted by distribution companies. The measure also corrects the material  error found in the calculation algorithm for the tariff recognition of the value of new investments in  electronic meters made in the year 2022. 

• By way of Resolution no. 513/2024/R/com, the Authority approved the updating of the relevant parameters  for the purposes of determining the rate of return on invested capital for the 2025-2027 sub-period, and the  beta asset parameter, with reference to the infrastructure services of the electricity and gas sectors. With  reference to the beta parameter, for the gas distribution sector only, the Authority deemed it appropriate to  reduce the value to 0.41 (compared to 0.439 for the three-year period 2022-2024). The trigger mechanism  was also confirmed for the 2025-2027 sub-period by reducing the trigger threshold, set by Resolution no.  614/2021/R/com from 50 bps to 30 bps. For the gas distribution sector, the Resolution set the value of the  WACC for the year 2025 at 5.9%.

• On 22 October 2024, the Authority published Consultation Document no. 427/2024/R/gas of 22 October  2024, outlining its guidelines for the revision of the regulation of gas distribution tariffs for the 2020-2025  period. The measures envisaged pursue the following main objectives: (i) to address the information gaps  found in the courts, by means of a more precise definition of the criteria for processing the data provided  by the operators in the separate statements and the determination of the actual cost for the year 2018; (ii)  to rectify the illegitimacy profiles found by the Council of State with reference to the level of the actual  operating costs for the year 2018 (COE 2018) and the determination of the annual rate of reduction of the  costs recognised to cover operating costs (X-factor).

• By way of Resolution no. 587/2024/R/gas, the Authority approved the mandatory tariffs for natural gas  distribution, metering and marketing services for the year 2025. This Resolution also provides that, for the  tariffs of the year 2025, the rate of change of the deflator of gross fixed investments, determined on the  basis of the criteria in force, shall be set at 0.30%, and that any redetermination of the rate for the revaluation  of capital costs as a result of the proceedings initiated with Resolution no. 339/2024/R/com may already  take effect when determining the definitive reference tariffs for the year 2025, scheduled by 31 March 2026.

Legal and regulatory events

• For technical reasons, Italgas Reti contested Resolution no. 134/2024/R/gas published on 9 April 2024  with which the Authority redetermined the tariffs for the gas distribution and metering services for the  years running from 2017 to 2022, in order to take into account the acceptance of the requests to  redetermine tariffs and apply rectifications submitted by the distribution companies. The measure also  redetermines the reference tariffs for the years running from 2020 to 2022, limited to the part relating to  the coverage of operating costs recognised for the distribution service, in order to allow for the correction  of the calculation error noted by the Regional Administrative Court when examining the appeals lodged  against Resolution no. 570/2019/R/gas, implemented by Resolution no. 409/2023/R/gas.

• For technical reasons, Italgas Reti contested Resolution no. 146/2024/R/gas, with which the Authority  determined the final reference tariffs for gas distribution and metering services for 2023, calculated on the  basis of the actual balance sheet figures for 2022. 

85

• Concerning the dispute with the Municipality of Cavallino Treporti, the Municipality of Cavallino Treporti  notified the appeal with the Court of Cassation against the judgement of 22 April 2024, with which the Court  of Appeal of Venice, although declaring that it was not competent to rule, confirmed the judgement of the  Court in the part where it declared that the Municipality only owned the assets of block A starting 1 January  2013, and rejected the petition made by the Municipality of Cavallino Treporti to have the amounts paid by  way of fees for occupying public areas and spaces returned. At present, the determination of the hearing  before the Court of Cassation is pending.

• With Resolution no. 207/2024/R/gas, the Authority concluded the proceedings initiated with Resolution no.  114/2022/R/gas, then extended with Resolution no. 162/2023/R/gas, for the verification of the operating  costs declared by Italgas Reti for the development of the smart reading/remote management centralised  system relating to the years running from 2011 to 2016, recalculating them and applying, as a result, an  overall reduction of 9.9 million euros. The Company does not agree with the contents of Resolution no.  207/2024/R/gas and, on additional grounds, has appealed against this provision before the Regional  Administrative Court of Lombardy, disputing its illegitimacy.

• Italgas Reti challenged Resolution no. 490/2024/R/gas with which the Authority approved the second  determination of the premiums and penalties related to the safety recoveries of the natural gas distribution  service for the year 2020, not granting approximately 24 million euros to the company. Italgas Reti does not  agree with the contents of the Resolution, disputing in particular the non-compliance with the principle of  proportionality related to the criterion used to determine to the aforesaid premiums, and appealed against  the related provision before the Regional Administrative Court of Lombardy. At present, the next hearing  has been set for 14 May 2025.

Tariff regulation – Greece

The licences held by the distributor of the Enaon Group extend over the entire Greek territory.

The expiry and renewal of the gas distribution licences in Greece are governed by the Greek Energy Law,  partially amended (i.e. Articles 2, 80Γ and 88) by Law no. 4812/2021, enacted on 30 June 2021. According to  this amendment, the duration of the licence is set at a minimum of 20 years and may be extended to a further  30 years upon expiry of the original licence, following an application by the licence holder. In this case, the  licence holder must apply for an extension one year before the expiry date (31 December 2043). The renewal  takes place through an “act with declaratory effect” issued by the Regulatory Authority for Energy (RAE), the  Greek Regulator, in accordance with Articles 5-9-13-16 of the Regulation of Natural Gas Permits (Decision of  the Minister no. 178065/2018, published in Journal 3430/2018). Law no. 4951-2022 (Article 134) also  introduced a possible repayment, for the outgoing operator, for the residual value of their assets, equal to the  value of the RAB 40 at the end of the licence, plus a premium of at least 15%. 

The activity of natural gas distribution and metering in Greece is regulated by the RAE: its responsibilities  include the setting and updating of tariffs, as well as the establishment of rules for access to infrastructure and  the provision of related services (e.g. Distribution Code - RAE Decision 589/2016).

40 Net fixed asset value of assets net of contributions, capitalised interest, revenues from connection contributions and/or user fees and all costs related to  planning. To increase the RAB, a percentage of Working Capital calculated parametrically.

86

Law 5037 ΦEK A 78 of 29 March 2023 renamed the Energy Regulatory Authority into the Regulatory Authority  for Energy, Waste and Water (RAEWW) and expanded its scope with responsibilities for water services and  municipal waste management.

With Decision E-14/2024, the RAEWW announced the WACC to be applied on the RAB for the Enaon Group  DSOs, setting it at 8.38% for 2024, 2025 and 2026 (compared to 8.57% in 2023). The decision was made in  accordance with the provisions of Article 260 of Law 5037/2023.

The duration of a tariff adjustment period is set at four years: the current adjustment period at the end of the  financial year is the period from 2023 to 2026. In particular, the Greek regulation provides that, prior to the  beginning of each regulatory period, the operator shall submit to the Authority, for approval, the Development  Plan and the Business Plan for the following regulatory period on the basis of which the operator's distribution  tariffs and regulated revenues for the relevant period are determined. 

In the event that there are differences between the assumptions made in the Development Plan and the Business  Plan and the actual data for the reference period, a deviation of the actual revenues from the regulated revenues  will be generated: this deviation (defined as a "recoverable difference"), whether positive or negative, is  considered in the definition of the regulated revenues of the following regulatory period and will therefore be  recovered or returned as part of the tariffs for the following four years. To satisfy the need not to assign (only) to  end customers in disadvantaged areas with limited infrastructural developments the costs of the distribution and  metering service, the Authority, with Decision no. 485/22 Article 20 envisaged the possibility of socialising any  potential recoverable difference between all distribution companies of a single corporate Group. 

By way of Decision E-257/2024, RAEWW revised the structure of the tariffs applied by Enaon EDA for its natural  gas distribution activity, providing for the progressive application of a single tariff for the same categories of users  served throughout the managed territory as of 1 December 2024. The tariffs for the years 2025 and 2026 of the  2023-2026 regulatory period will be determined using the latest available percentage change in the annual  average consumer price index (CPI) published by the Hellenic Statistical Authority.

The rate system establishes in particular that the reference revenues for the formulation of rates is determined  so as to cover the costs incurred by the operator and allow for a fair return on invested capital. In particular,  the following tariff components are identified:

- the cost of net invested capital for regulatory purposes RAB (Regulatory Asset Base) through the  application of a rate of return (WACC); the WACC is nominal pre-tax and is defined ex ante for the  regulatory period;

- economic-technical amortisation/depreciation, hedging investment costs;

- the operating costs, which are defined for the following regulatory period, are not re-estimated at the  end of the regulatory period; thus the operator can retain the efficiency achieved during the regulatory  period;

- the additional revenues obtained from activities other than gas distribution are separated;

- the recoverable difference defined by the difference between the regulated revenues (calculated  based on the final balance) and the revenues obtained from invoicing;

87

- connection fees may be borne by the distribution operator and, in that case, taken into account in  determining the RAB if the operator's penetration rate is low (letter K) point XIII Decision RAE 328/2016  \- Approval of the pricing regulation).

Below are the main elements of the tariff regulation and its relevant reference timetable: 

The RAB of the Greek distribution companies, calculated by applying the criteria adopted by the local regulatory Authority, with reference to investments  made up to 31 December 2024, is equal to approximately 0.8 billion euros.

The timings defined by the tariff regulation are shown below:

On 18 July 2024, RAEWW approved the Five-Year Investment Plan submitted by its subsidiary Enaon Eda. 

88

Municipalities in concession and local tender areas 41

The following figure shows the presence of the Italgas Group in Italy 42 . As at 31 December 2024, as a result  of the regulatory framework that provides for assigning the gas distribution service with tenders by territorial  area (and not by individual municipality), 43 calls for tenders have been published. 

Of the 43 tender notices published to date:

- TORINO 3 - South-West, MASSA  CARRARA, COMO 1 - Triangolo Lariano and  Brianza Comasca, BERGAMO 3 - Surroundings  West of Bergamo, BRESCIA 1 - North - West,  BERGAMO 2 - North - East, MILANO 4 - North- Eastern Province, MILANO 3 - Southern  Province, VICENZA 3 - Astico, Leogra and  Timonchio Valleys, BIELLA (partially already  annulled by the Piedmont Regional Administrative Court) and VARESE 3 - South are suspended by  the Contracting Authorities; 

- VENICE 1 – Laguna Veneta, ALESSANDRIA 2 – Centre and GENOVA 2 – Province were respectively  annulled by the State Council, the Regional Administrative Court (TAR) of Piedmont and the Regional  Administrative Court (TAR) of Liguria;

- MONZA and BRIANZA 2 - West, LUCCA,  TRIESTE, MONZA and BRIANZA 1 - East,  VERONA 2 - Veronese Plains, PRATO,  CREMONA 2 - Centre and CREMONA 3 - South  aggregates and VARESE 2 - Centre were  withdrawn by their respective contracting stations;

- TURIN 2 – Turin plant, VALLE D'AOSTA,  BELLUNO, TURIN 1 – City of Turin, LA SPEZIA  and CATANZARO - officially awarded to ITALGAS  RETI;

In Greece, as at 31 December 2024, Italgas holds  the natural gas distribution licences of Enaon EDA  (the only operating company following the merger  by incorporation of EDA Thess and EDA Attikis)  amounting to 145 Municipalities, of which 111 are  already in operation.

41 For more information on the regulation concerning the assignments of gas distribution service and the related call for tenders, please see the specific  paragraph in the chapter “Legislative and regulatory framework”.

42 The territorial presence where Italgas exercises control is shown in blue, the presence through affiliates over which it does not exercise control is shown in  orange.

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5.2 Water Service Sector

Main economic and financial indicators

The table below summarises the main items of the financial statements and, with a view to providing a more  general overview of the business, includes a column relating to 2024*, showing the data of the operative  companies Acqualatina and Siciliacque as  pro rata consolidation (2024*  pro rata ) 43 .

(€ millions)

For the year ended  31 December 2023

For the year  ended 31  December 2024

For the year ended 31  December 2024* pro  rata

Total revenues and other income adjusted 

8.8

94.7

203.9

EBITDA adjusted

0.2

39.7

68.6

EBIT adjusted

(0.7)

12.3

27.5

Adjusted net profit

0.6

15.2

15.2

Group’s adjusted net profit

0.6

14.9

14.9

EBITDA margin (%)

2%

42%

34%

EBIT margin (%)

(8%)

13%

13%

* Unaudited values

Operating performance

The following table summarises the main operating figures for the sector:

Key operating figures for the water segment

Italgas Group and affiliates

For the year  ended 31  December  2023

For the year  ended 31  December  2024*

Abs. change

% Change

Customers served directly and indirectly (millions)

2.3

6.3

4.0

-

Managed water distribution network (kilometres) 

8,643

8,982

339 

3.9 

* The figures for 2024 include, in addition to Nepta, Acqualatina and Siciliacque, the effect of the inclusion of Acqua Campania in the scope of consolidation.

Legislative and regulatory framework

The group of public services for the collection, adduction, and distribution of water for civil use, sewage, and  wastewater purification, including the collection adduction and purification services, which are part of the  Integrated Water Service (IWS), are regulated by ARERA pursuant to Article 21, subsections 13 and 19, of  Decree Law no. 201/11. Among the functions of regulation and control of water services are the determination 

43 In addition to Acqualatina and Siciliacque, the fully consolidated companies (Nepta, Acqua, Idrolatina, Idrosicilia and Acqua Campania from the date of  acquisition) are included. On the other hand, in the reclassified income statement table, the result of Acqualatina and Siciliacque is included in net income  from equity investments.

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and updating of tariffs, as well as the preparation of rules to guarantee the conditions of efficiency and quality  of the services provided and the protection of the interests of users and consumers.

The tariff system provides that the competence of submitting tariff proposals to the Authority lies with the area  governing body, Ente di Governo d'Ambito (EGA), which provides for the approval of the data and documents  prepared by the operator. 

For the fourth regulatory period (2024-2029), the Authority adopted the Water Tariff Method MTI-4, introduced  by Resolution no. 639/2023/R/idr of 28 December 2023.

The main elements of tariff regulation are as follows:

The RAB pro quota of the sector, resulting from the application of the criteria adopted by the Authority, with reference to the investments made up to 31  December 2024, within the scope of the definition of the reference tariffs, is equal to approximately 0.1 billion euros.

The following components contribute to the tied revenues recognised by the Guaranteed Revenue Constraint  (VRG) method to the operator:

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With Resolution no. 639/2023/R/IDR of 28 December 2023, the Authority approved the water tariff method for  the fourth regulatory period 2024-2029 (MTI-4), defining the rules for calculating the costs that are eligible for  recognition in the tariff.

On 30 January 2024, the Authority published Resolution no. 26/2024/R/idr with which it initiated a procedure  aimed at defining and introducing the incentive mechanism to favour water resilience, provided for in the  updating of the regulation of technical quality as per Resolution no. 637/2023/R/idr, with a view to mitigating,  also through the development of large strategic works, the effects of climate change.

On 6 February 2024, the Authority published Resolution no. 37/2024/R/idr and Resolution no. 39/2024/R/idr  concerning, respectively, the commencement of proceedings for the quantitative assessments, for the two- year period 2022-2023, provided for by the incentive mechanism for the contractual and technical quality of  the water service.

By way of Resolution no. 358/2024/R/idr of 10 September 2024, the Authority initiated proceedings for the ex  officio determination of the tariff multiplier for the integrated water service managements falling within the cases  specified in paragraph 5.8 of Resolution no. 639/2023/R/idr. This resolution also mandated the Tariffs and  Environmental Fees Department to issue a formal warning to the governing bodies of the relevant area or  other competent parties in case of non-compliance with their obligations to update the tariff structure following  a request from the operator, in accordance with paragraph 5.6 of Resolution no. 639/2023/R/idr. On 12  September 2024, the Authority warned both Ente Idrico Campano (EIC) and the Region of Sicily to comply  within the next 30 days, following the submission of tariff update applications by Nepta and Siciliacque to their  respective Governing Bodies and to the Authority. Once this deadline had expired, the two entities asked the  Authority for additional time to evaluate the regulatory schemes proposed by the companies for the 2024-2029  period, highlighting the elements that would not allow them to proceed with tariff approval. The operators are  waiting for a ruling from the Authority following the feedback formally transmitted by both the EIC and the  Sicilian Region to the warnings received. Instead, about Acqua Campania S.p.A. and Acqualatina S.p.A., the  tariffs for MTI-4 have already been approved.

With Resolution no. 570/2024/R/IDR of 17 December 2024, the Authority identified the theoretical purchase  mix for the definition of the reference cost of electricity for the purpose of calculating the adjustments related  to electricity for the year 2027, in accordance with MIT-4.

Concessions 

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At 31 December 2024 Nepta operates the water service for five Municipalities in the Province of Caserta:  Caserta, Baia and Latina, Casaluce, Galluccio and Roccaromana. The concessions naturally expired in 2020  and 2021, therefore, the management is extended, under the prorogatio system, until the management is  entrusted to the new Operator of the Integrated Water Service in the District of Caserta. 

Acqualatina is the operator of the Integrated Water Service in the territory of ATO4 Lazio Meridionale – Latina  with a managed territory of 38 Municipalities.

Siciliacque is the 40-year concession holder of the collection, storage, drinking water and adduction service in  the Sicily Region. 

Acqua Campania manages the Western Campania concession in Naples and Caserta for the capture,  purification, adduction and transport of drinking water destined for water distribution companies. For the  Company, the concession has come to its expiration and has been further extended to 31 December 2025.

5.3 Energy efficiency sector

Main economic and financial indicators

The following table summarises the main items of the adjusted financial statements:

(€ millions)

For the year ended 31 December 2023

For the year ended 31 December 2024

Total revenues and other income adjusted

299.0

48.2

Adjusted EBITDA

54.6

4.2

Adjusted EBIT

51.2

0.4

EBITDA margin (%)

18%

9%

EBIT margin (%)

17%

1%

The revenues of the Energy Efficiency segment, amounting to 48.2 million euros as at 31 December 2024,  decreased due to the decline in “Superbonus” activities. In this context, ESCo Geoside is now focused on  industrial efficiency projects and the integration of the offer for the residential sector. The company also deals  with “heat management” activities, whose contracts, stipulated with the Public Administration and residential  customers, provide for the construction, efficiency, operation, ordinary and extraordinary maintenance of plants  and the related services aimed at achieving the required efficiency standards.

Regulatory framework

The "Superbonus" business developed as a result of the tax incentives provided by the legislature, which,  through the mechanism of the "assignment of the tax credit" or the "invoice discount", facilitated access to  these tax incentives to end customers (mainly condominiums) for such efficiency-boosting interventions.

Decree-Law no. 11/2023 subsequently introduced a generalised prohibition on exercising the options of  discount on the invoice and assignment of the tax credit deriving from building bonuses, with exceptions  provided for IACPs (Autonomous Public Housing Institutes), non-profit organisations and condominiums in 

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which the CILA and the resolution of the shareholders' meeting are submitted and adopted before 17 February  2023. Moreover, on 31 December 2023 the 110% Superbonus came to an end and a mechanism came into  force, according to which services invoiced in 2024 will benefit from a 70/30 tax incentive mechanism (where  the tax credit corresponds to 70% of the expenditure and the condominium pays the remaining 30%), while  those invoiced in 2025 will benefit from a 65/35 tax incentive mechanism.

6. Business Outlook

With the acquisition of 2i Rete Gas, Italgas will go down in history as the European leader in gas distribution,  further strengthening its commitment to the digital transformation of infrastructure for the benefit of the entire  country.

The new dimension of the Group combined with innovation and digital transformation is the key factor in  ensuring the achievement of energy transition targets, security of supply and sustainability of energy costs for  people and businesses.

The investments envisaged in the

2024-2030 Strategic Plan

will give further strong impetus to the growth path: 

the largest share is once again earmarked for the development, digitisation and repurposing of the gas  distribution network in both Italy and Greece. Commitment to the widespread use of Artificial Intelligence will  usher in a new era of digital transformation.

The Group will also continue to work to strengthen its role as a key player in the water sector and to grow in  energy efficiency as an indispensable tool in achieving its energy transition goals.

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7. Consolidated Sustainability Statement

7.1 General Information

ESRS 2 – General disclosures

General basis for preparation of sustainability statements and disclosures in relation to specific  circumstances (BP-1, BP-2)

This Sustainability Statement (Statement) has been prepared on a consolidated basis. The scope of  consolidation is the same as that used for the financial statements, which can be found in Directors’ Report \-  Methodological Note.

With regard to the company Acqua Campania, values are reported as of the date of first consolidation (30  January 2024).

In accordance with the recent regulatory changes in sustainability reporting, introduced by Legislative Decree  no. 125/2024 to implement the Corporate Sustainability Reporting Directive 2022/2464/EU (CSRD), the  structure and content of this Statement differs from the sustainability reporting published in previous years  (Consolidated Non-Financial Statements), which was prepared under Legislative Decree no. 254/2016, which  implemented Non-Financial Reporting Directive 2014/95/EU 44 . Where relevant, the Statement includes also  information on the value chain. Specifically:

• the description of relevant impacts on the value chain is included in disclosures ESRS 2 IRO-1 and  ESRS 2 SBM-3. The value chain is also described in disclosure SBM-1;

• references to the value chain are included, where relevant, in all Minimum Disclosure Requirements  (MDR) relating to significant impacts. This category includes MDR disclosures specific to standards  S2 and S3 which, by definition, refer to actors in the value chain;

• the qualitative descriptions required by Disclosure Requirement (DR) E1-1 and E5-4, as well as the  description of procured materials in DR E5-5, show information related to the value chain.

The only quantitative data points that also include data related to value chain are those concerning GHG Scope  3 emissions, reported in DR E1-6. For this KPI, indirect sources of calculation were also used: 27% of Scope  3 emissions were calculated through direct access to consumption and emission data from suppliers, while  the remaining 73% were calculated through a spend-based approach using sectoral emission factors. In order  to be able to better monitor the effectiveness of engagement initiatives with suppliers in terms of reducing its  Scope 3 - Supply chain 45 emissions, the Group aims to increase as much as possible the share of these 

44 The Group has not made use of the option to omit specific information relating to intellectual property, know-how or innovation; nor did it make use of the  exemption from disclosing information regarding upcoming developments or matters in negotiation, in accordance with Article 19- bis , subsection 3, and Article  29- bis , subsection 3, of Directive 2013/34/EU. 

45 Please refer to items 1, 2, 4, 5, and 8 of the GHG Scope 3 categories. For 2024, the calculation perimeter for Scope 3 – Supply Chain emissions does not  include Acqua Campania in the tabular representation of DR E1-6. Please refer to that section and the related notes for the estimation used.

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emissions calculated using direct data, thus obtaining more refined calculations that are increasingly linked to  the actual energy and emission performance of suppliers.

Included in the Statement are forward-looking KPIs and economic data that by their nature present a degree  of uncertainty. In particular, future CapEx and OpEx figures for sustainability topics management are based  on assumptions incorporated in the Group's Strategic Plan, which has a time frame of 7 years. This includes  data on the transition plan, i.e. the contribution in quantitative terms to the reduction of CO 2 emissions of  individual levers, as well as the economic amounts supporting them. For these indicators, the sources of  measurement uncertainty are related to several factors, including dependence on the results of future events,  such as developments in the regulatory or technological environment, the adoption of new solutions and the  progress of national and international climate policies, and possible updates of measurement methodologies  and/or techniques used. The main assumptions and approximations used in the preparation of forecasts  therefore concern future trends in energy consumption, the performance of emission reduction technologies  and estimates of the costs associated with the various sustainability initiatives.

Finally, the billed volumes, used for the calculation of water losses, are partially subject to estimation as  required by ARERA 46 .

In preparing the Statement, the Group established the following time horizons: short term up to one year,  medium term up to 5 years and long term beyond 5 years. 

The role of the administrative, management and supervisory bodies and Information provided to and  sustainability matters addressed by the undertaking’s administrative, management and supervisory  bodies (GOV-1, GOV-2)

The Board of Directors of Italgas S.p.A. currently in office consists of 9 Directors, including 1 executive Director  (Mr Paolo Gallo, Chief Executive Officer) and 8 non-executive Directors, including the Chairperson without  management powers. Below is the composition of the Board of Directors and the Board of Statutory Auditors 47 .

Board of Directors

Criteria

Category

Number and % of Directors 

Female 

4 48 (45%)

Gender diversity

Male 

5 (55%)

46-52 years

3 (33%)

53-60 years

3 (33%)

Age diversity

61-68 years

3 (33%)

Seniority diversity

1st term

7 (77%)

46  For details, please refer to the chapter “Water Losses” related to the metrics (MDR-M)

47  Considering both governing bodies together, 7 out of 14 members (50%) are female.

48 Including the Chairperson of the Board of Directors.

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2nd term

1 (11%)

3rd term

1 (11%)

Independent 49

5 (55%)

Independence requirements

Non-independent

4 (45%)

Italy

8 (89%)

Geographical origin

China

1 (11%)

Board of Statutory Auditors, consisting of 3 Standing Auditors and 2 Alternate Auditors

Criteria

Category

Number and % of Statutory Auditors

Female 

3 50 (60%)

Gender diversity

Male 

2 (40%)

55-60 years

4 (80%)

Age diversity

61-65 years

1 (20%)

1st term

3 (60%)

Seniority diversity

2nd term

2 (40%)

The members of the Board of Directors and the Board of Statutory Auditors have a balanced combination of  managerial and professional profiles, with complementary skills that guarantee the correct and diligent  performance of the duties entrusted to them, including those within the sphere of ESG. The Directors and  Statutory Auditors have significant experience in the fields of finance, industry, ESG and Climate Change,  Audit, Enterprise Risk Management, People and HR, and Governance. These skills have also been developed  in international contexts.

No member of the Board of Directors or the Board of Statutory Auditors has held a comparable position in  public administration (including regulatory authorities) in the two years prior to their appointment in the current  reporting period.

Within the corporate bodies of Italgas, there are no appointments in representation of employees. 

Sustainability is the principle through which Italgas enhances its business strategies; consequently, the  Group's corporate governance system assigns a key role to corporate bodies in matters of sustainability. The  supervision of impacts, risks and opportunities is delegated to several corporate bodies, each according to  their respective responsibilities:

49 4 Directors qualified as independent on the basis of both the independence requirements of the TUF (Articles 147- ter , subsection 4, and 148, subsection  3, of the TUF) and the Corporate Governance Code (Article 2), including the Chairperson of the Board of Directors; 1 Director qualified as independent on  the basis of the independence requirements of the TUF (Articles 147- ter , subsection 4, and 148, subsection 3, of the TUF).

50 2 Standing Auditors, including the Chairperson of the Board of Auditors, and 1 Alternate Auditor belong to the female gender. 1 Standing Auditor and 1  Alternate Auditor belong to the male gender.

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1. Board of Directors: (i) it guides the Company by pursuing the objective of long-term value creation for the  benefit of shareholders, taking into account the interests of other stakeholders relevant to the Company; (ii) it  is responsible for the ordinary and extraordinary management of the Company and, on the recommendation  of the CEO, it defines the strategic guidelines and objectives for the Italgas Group, including the strategy  relating to sustainability objectives and climate change impacts, as well as sustainability policies, monitoring  their implementation; (iii) it is called upon annually to approve Italgas’ seven-year Strategic Plan and updates  to the Sustainable Value Creation Plan, ensuring the creation of value in the short and medium-long term for  shareholders and stakeholders; (iv) it examines and approves the Company's integrated annual report, the  half-yearly report and the interim and consolidated reports on operations, which include sustainability reporting;  (v) it defines and updates, on the recommendation of the CEO, after hearing the opinion of the Control, Risk  and Related Party Transactions Committee (“CRRPTC”), the Guidelines on the Group’s internal control and  risk management system; (vi) it defines the nature and level of risk compatible with the strategic objectives of  the Company and the Group, with a view to the pursuit of sustainable success, and assesses, subject to the  opinion of the CRRPTC, the adequacy of the internal control and risk management system, as well as its  effectiveness in relation to the strategic objectives of the Company and the Group, with a view to the pursuit  of sustainable success.

2. Chief Executive Officer: (i) is responsible for the administration of the Company and the elaboration of the  key strategic objectives and sustainability initiatives, which are then submitted to the Board for approval; (ii)  submits the Strategic Plan and the Sustainable Value Creation Plan to the Board of Directors on an annual  basis for approval, after review by the Sustainable Value Creation Committee (“SVCC”) for the parts  concerning non-financial objectives and indicators; (iii) chairs the Sustainability Business Review, an internal  managerial committee, in which a detailed assessment of the most important environmental sustainability KPIs  is carried out and the progress of related initiatives is discussed. This monthly meeting is attended by the Top  Management of each Group company and the process owners and managers of the activities with the main  sustainability impacts; (iv) chairs the Innovation Committee, an internal managerial committee which examines  and evaluates efficiency initiatives in Group operations, including those with a focus on reducing emissions  and/or increasing energy efficiency.

3. Sustainable Value Creation Committee: It provides proposals and advice to the Board regarding the  processes and activities which contribute to the company’s sustainable development along the value chain,  aimed at pursuing sustainable success and for periodic non-financial reports, coordinating with the CRRPTC  for evaluation by this committee of the suitability of the periodic, financial and non-financial reporting.

4. Control, Risk and Related Party Transactions Committee: It assesses the suitability of the periodic financial  and non-financial information, so that it correctly represents the company’s business model, strategies, impact  of its activities, and performance achieved, while coordinating with the SVCC.

These responsibilities are institutionalised within the operating regulations of the aforementioned bodies.  Italgas’ Board of Directors’ Operating and Organisational Rules 51 (art.3) provide that the Board of Directors  leads the company by pursuing the objective of long-term value creation for the benefit of shareholders, taking 

51 The Board of Directors' Regulations can be found at the following link https://www.italgas.it/wp-content/uploads/sites/2/2024/03/RULES-FOR-THE- FUNCTIONING-AND-ORGANISATION-OF-THE-BOARD-OF-DIRECTORS-OF-ITALGAS-S.P.A.pdf.

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into account the interests of other stakeholders relevant to the company (“Sustainable Success”). The SVCC  Regulation 52 governs the tasks and functions of the SVCC as summarised above.

As provided for in the Board Regulation, in compliance with the recommendations of the Corporate  Governance Code (CG Code) for "large companies other than those with concentrated ownership", the Board  carries out at least annually, in accordance with the procedures set out in the CG Code and with the support  of the Chairperson of the Board of Directors and the Appointments and Compensation Committee, which are  responsible for its adequacy and transparency, an assessment of the size and composition of the Board itself  and its Committees, as well as their operation, also taking into account the role played by the Board in defining  strategies and monitoring management performance and the adequacy of the internal control and risk  management system, including the management and monitoring of sustainability issues. For the purposes of  evaluating its own composition and that of the Committees set up within it, the Board also takes into account  elements such as diversity in terms of gender, age, nationality, and history, such as the professional  characteristics, experience, including managerial experience, and gender of its members, as well as their  seniority in office; all in accordance with the provisions of the “Diversity of Corporate Bodies Policy” 53 in force at the time. 

The Board of Directors and their respective Committees are constantly informed about the significant Impacts,  Risks and Opportunities, the implementation of the duty of care, and the results and effectiveness of the  policies, actions, metrics and targets adopted to address them. During the financial year 2024, the Sustainable  Value Creation Committee met 8 times. 

Furthermore, the SVCC reports to the Board of Directors (i) at the first possible Board meeting following each  of its own meetings, regarding the topics discussed and observations, recommendations, opinions provided  therein and (ii) on the activities carried out at least every six months and, as a rule, at (or prior to) the meetings  for approving the annual and half-yearly financial reports.

On 20 February 2024, the Directors and Statutory Auditors also participated in an induction session that  focused on sustainability issues, with the aim of illustrating the main global and European trends in the area  of ESG, and to examine the new provisions of the Corporate Sustainability Reporting Directive, transposed  into Italian law by Legislative Decree no. 125/2024, as well as examining in depth the new regulatory  requirements concerning the reporting of sustainability information.

On 11 June 2024, the Board of Directors reviewed the ESG targets that the Group aims to achieve over the  time frame of the 2024-2030 Strategic Plan. On 4 October 2024, the Board of Directors approved the 2024- 2030 Strategic Plan, which includes the 2024-2030 Sustainable Value Creation Plan. The sustainability targets  were therefore approved in conjunction with the Strategic Plan, in which they are included, with a view to fully  integrating business and sustainability. 

52 The Regulations of the SVCC can be found at the following link https://www.italgas.it/en/investors/governance/committees/.

53 The “ Diversity of Corporate Bodies Policy ” can be found at the following link https://www.italgas.it/en/investors/governance/board-directors/.

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All material Sustainability Impacts, Risks and Opportunities have been addressed by the relevant corporate  bodies, both through the monitoring activities described above, and through the approval of the sustainability  targets contained within the 2024-2030 Strategic Plan.

At the managerial level, the management of Sustainability Impacts, Risks and Opportunities is entrusted to the  Chief Executive Officer, who is responsible for the administration of the Group and the development of strategic  objectives and sustainability initiatives. The CEO annually proposes the Strategic Plan (which includes updates  to the Sustainable Value Creation Plan) for consideration by the SVCC and, subsequently, for approval by the  BoD. These plans include the definition of strategies, actions and related sustainability targets. The CEO also  chairs the Innovation Committee to evaluate initiatives to improve the efficiency of Group operations, including  those with a focus on various sustainability issues and, in particular, on reducing GHG emissions and/or  increasing energy efficiency.

In managing sustainability IROs, the CEO is supported by the executive team, which includes all the directors  (Chief Financial Officer, General Counsel, Director of Human Resources & Organisation, etc.), who as  members of the Executive Leadership Team, are responsible for sustainability initiatives in their respective  areas of expertise.

The Sustainability Unit, part of the External Relations and Sustainability Department, oversees the definition  of the Group's sustainability model and coordinates the input of the various company departments for the  planning and execution of all sustainability initiatives (strategy, planning, reporting, stakeholder engagement  and communication).

Integration of sustainability-related performance in incentive schemes (GOV-3)

The incentive schemes for top management (MBO, Co-investment Plan and LTI Plan) and the related  performance targets are defined by the Board of Directors, on the proposal of the Appointments and  Compensation Committee and after hearing the opinion of the Board of Statutory Auditors. In particular, the  performance targets are identified among the priorities for the business strategy, consistent with the provisions  of the Strategic Plan and the Sustainable Value Creation Plan. The finalisation of the performance at the end  of the vesting period is examined and approved by the Board of Directors, upon the proposal of the  Appointments and Compensation Committee and after hearing the opinion of the Board of Statutory Auditors.

At the request of the Appointments and Compensation Committee, the process of assigning, monitoring and  reporting on targets may involve other corporate bodies and departments, including the corporate management  of People, Innovation & Transformation Department, General Counsel, Chief Financial Officer and External  Relations and Sustainability Department, as well as the Sustainable Value Creation Committee on matters  concerning sustainability.

The Appointments and Compensation Committee also periodically assesses the adequacy, overall  consistency and practical application of the remuneration policy adopted, in particular with reference to the  definition of performance targets and the reporting of company results related to the implementation of  incentive plans and the definition of variable remuneration.

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Information on the characteristics of the incentive systems in place is provided in the first section of the Report  on the Remuneration Policy and Compensation Paid 54 (“Remuneration Policy”), while information on the  finalisation of performance targets at the end of the vesting period is provided in the second section. The  Report on the Remuneration Policy and Compensation Paid is submitted annually to the Shareholders'  Meeting for approval, which expresses its opinion, in accordance with current regulations, with a binding vote  on the first section and an advisory vote on the second section.

The Remuneration Policy is approved annually by the Board of Directors, on the proposal of the Appointments  and Compensation Committee, and by the Shareholders’ Meeting, and provides for the participation of top  management in both short-term and long-term incentive schemes, both based on the achievement of  predefined sustainability targets. 

In particular, the 2024 short-term incentive scheme (MBO) takes into account specific sustainability KPIs:

• Combined employee and contractor accident index (weight 5%) - measured as a combination of the  frequency index (number of accidents per million hours worked) and severity index (number of days  of absence per thousand hours worked) of accidents recorded at Group level during the year;

• Leakage on the distribution network (weight 7.5%) - expressed in terms of the percentage of network  km inspected at Group level during the year out of the total network km managed;

• Energy consumption (weight 7.5%) - reduction of net energy consumption at Group level, calculated  on the basis of the same amount of gas injected in 2023;

• Diversity and Inclusion (weight 5%) - gender equity pay gap for the Italian scope, calculated as the  change in the average ratio of women's and men's hourly basic pay for clusters of employees  comparable by organisational weight with respect to 2023.

In addition, the 2023-2025 long-term incentive scheme (LTI Plan) takes into account the following sustainability  KPIs:

• Reduction of CO 2 emissions - scope 1 and 2 compared with 2020 at constant scope (weight 10%);

• Energy efficiency (weight 10%) - reduction of net energy consumption compared with 2020 at constant  scope.

The evaluation of these KPIs refers to the relevant three-year period. Italgas is committed to ensuring that its  remuneration policy supports and encourages sustainable business development, in line with the provisions  of the Strategic Plan and Sustainable Value Creation Plan. 

Statement on due diligence (GOV-4)

54 https://www.italgas.it/en/investors/governance/remuneration/

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In 2024, Italgas conducted due diligence activities in accordance with the guidelines of the United Nations  Global Compact Network on business and human rights. The following table outlines the due diligence  processes and their corresponding sections within the Consolidated Sustainability Statement:

Core elements of due diligence

Sections in the Sustainability Statement

a) Embedding due diligence in governance, strategy  and business model 

ESRS 2 GOV-2, GOV-3, SBM-3

b) Engaging with affected stakeholders in all key steps  of the due diligence 

ESRS 2 GOV-2, SBM-2, IRO-1, S1-2, S2-2, S3-2

c) Identifying and assessing adverse impacts

ESRS 2 IRO-1, SBM-3

d) Taking action to address those adverse impacts

S1-3, S1-4, S2-3, S2-4, S3-3, S3-4 

e) Tracking the effectiveness of these efforts and  communicating 

S1-5, S2-5, S3-5

Risk management and internal controls over sustainability reporting (GOV-5)

The sustainability reporting process falls within the scope of the Group's Enterprise Risk Management (ERM)  system, which manages business risks for all consolidated Group companies. The ERM methodology is based  on international models such as the COSO Framework and ISO 31000, and is applied to all business risks,  including sustainability risks. This method is described in detail in Section 2.2 Risk Management. In addition,  in order to ensure the reliability, accuracy and timeliness of the information disclosed to shareholders and the  market, sustainability reporting is supported by a Corporate Reporting Internal Control System (SCIS), adopted  by Italgas and its subsidiaries in accordance with the provisions of Article 154- bis of the Consolidated Law on  Finance. The COSO Framework, on which SCIS bases its methodology, was updated in May 2013 and is the  latest version available. The SCIS provides for scoping, identification and assessment of risks and controls (at  corporate and process level, through risk assessment and monitoring activities) and related information flows  (reporting), and also applies to the process of collecting and consolidating sustainability information for  reporting purposes. In 2024, a review of all sustainability process controls was planned to assess their  adequacy in relation to the requirements of the CSRD. Additionally, in 2024, the scope of Acqua Campania  was set to be expanded with the definition of new controls for sustainability processes, specifically regarding  emissions and waste, which are subject to scoping. The integration of Enaon with existing SCIS controls for  all sustainability processes subject to scoping was also planned.

Within the scope of ERM, the main risk associated with the sustainability reporting process is the risk of  incomplete or ineffective reporting. This risk has a “high” rating and is monitored on a half-yearly basis.  Mitigation strategies include:

• organisational sustainability procedures and policies, and stakeholder engagement;

• the Sustainability Business Review process, which monitors energy consumption, emissions and  waste management on a monthly basis;

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• the Sustainable Value Creation Plan, which defines clear objectives aligned with the strategic plan,  and provides for periodic reporting that verifies the progress of sustainability KPIs.

In addition, SCIS provides for periodic checks to verify the correctness and completeness of the reporting  information.

The results of the risk assessment are integrated into the company's processes through its risk ownership  model, which assigns each risk to the organisational unit responsible for managing it, and the periodic mapping  (quarterly for “critical” risks, half-yearly for “high” risks, annual for all risks) of actions for dealing with it. The  results of ERM mapping are periodically shared with company management at various levels (Risk Owners,  2nd and 3rd level control units, Top Management) and with the Supervisory Board, the Control, Risk and  Related Party Transactions Committee, the Sustainable Value Creation Committee, the Board of Statutory  Auditors and the Board of Directors. The SCIS also provides for independent monitoring activities entrusted to  the Internal Audit Department, which operates according to an annual plan agreed upon with the Officer  responsible for the preparation of financial reports, in order to define the scope and objectives of its  intervention, also with reference to sustainability reporting.

Strategy, business model and value chain (SBM-1)

The Italgas Group, which had 4,339 employees as of 31 December, operates in 4 main sectors:

• gas distribution: Italgas is the European and national leader in Italy and Greece;

• management of the water system: Italgas directly and indirectly serves over 6 million people in Lazio,  Campania and Sicily;

• energy efficiency: through the subsidiary Geoside, ESCo, the Group offers innovative energy saving  solutions;

• information technology: through its subsidiary Bludigit, the Group implements innovative solutions and  digital business transformation.

The Group does not produce goods or provide services that are prohibited in the reference markets for the  sectors in which it operates.

The Group is active in the gas distribution sector with total revenues and other income as at 31 December  2024 equal to 2,408.4 million euros (total revenues and other income adjusted equal to 1,652.7 million euros).  Of these, 495.0 million euros, net of the impact of IFRIC 12, are in line with the Taxonomy of eco-sustainable  activities, as detailed in the paragraph “Disclosure pursuant to Article 8 of Regulation (EU) 2020/852”. 

The Group is not active in the fields of chemical production, unconventional weapons production, tobacco  cultivation or production.

For an understanding of the Group's business model, refer to Note 34 “Information by operating segment” in  the Consolidated Financial Statements. Through an analysis of the Group's value chain, it was possible to  define the most relevant value chain, i.e., the one considered most representative of the Group's activities, to 

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be considered for sustainability reporting purposes. This includes gas distribution and integrated water service  activities. The upstream section of the value chain refers to the production activities of the network components  and the related raw material extraction phase. The downstream phases refer to the sale of gas to the end user  (through sales companies outside the Group) and the use by citizens of the service guaranteed by network  operation and network disposal activities.

Italgas is committed to maintaining adequate planning and management of procurement flows of the materials  required to implement industrial plans, as well as the management of logistics activities, including warehouse  operations. The Group supports its partners at every stage of the process, ensuring that procurement is  guaranteed to optimise efficiency and reduce risks in the supply chain, adopting continuous and periodic  monitoring of contractual agreements, verifying the quality of execution, compliance with technical  specifications, timelines, regulations and ESG commitments across the entire supply chain.

The activities are aimed at generating long-term value for customers, investors and all other stakeholders. The  Group's commitment, as a player in the path towards energy and ecological transition, aims at continuous  improvement of the quality of service and promoting sustainable development from an economic, social and  environmental perspective, offering development opportunities for employees and communities impacted by  the service.

The strategy is intrinsically linked to the sustainability issues relevant to the Group:

• Gas distribution in Italy and Greece

A digitisation programme has been operating for years, involving both infrastructure and business processes.  This programme aims to make the gas distribution network smarter, more flexible and capable of handling  renewable gases such as biomethane and hydrogen. By 2025, the network in Italy will be fully digitised and  remotely manageable through the DANA (Digital Advanced Network Automation) system, and by 2027 DANA  is expected to be applied to the 2i Rete Gas network, which is the subject of the acquisition. The same process 

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has also been started in Greece, where ENAON's new networks will be digital native and subsequently entirely  digitised. By the end of 2026, installations in Greece may also be managed on DANA. The digitisation of the  network allows 24/7 remote monitoring and control, improving operational efficiency and allowing data-driven  decision-making in real time. To manage the network even more efficiently, a new smart meter, “Nimbus”, has  been developed in-house, designed to improve reading performance and ensure security. The new smart  meter is manufactured from recyclable materials, it is compatible with different gas mixtures, including  hydrogen, and is equipped with special tamper, seismic and fire sensors. The prototype was field-tested in  2024 and large-scale installation will begin in 2025.

With a view to promoting sustainability and the energy transition, Italgas' strategy also focuses on supporting  the development of biomethane and green hydrogen, with the aim of increasing the number of biomethane  production plants connected to the Italian and Greek distribution networks by 2030. Furthermore, Italgas is  working in Italy and Greece with the authorities to define the regulatory framework required for reverse flow  projects, to allow excess biomethane to be injected back into the transmission network. Two pilot projects are  currently underway to test reverse flow solutions.

With regard to green hydrogen, Italgas' strategy includes a testing phase (focused on “Power to Gas” with a  pilot project in Sardinia that aims to test the entire green hydrogen value chain), thus contributing to the  decarbonisation of the country.

• Energy efficiency

Through the ESCo Geoside, the Group offers a wide range of services to improve the energy efficiency of  buildings, industries and public administrations, using proprietary technologies and advanced digital solutions  based on big data analysis and artificial intelligence, thus contributing to the achievement of EU climate  objectives. 

• Water resource management

Italgas' strategy in the water sector focuses on modernising infrastructure, many of which are currently leaking  significantly, with peaks of over 70%. The implementation of advanced digital technologies for the monitoring  and management of water networks, including smart meters and predictive maintenance systems (leveraging  experience gained in gas distribution) will contribute to the early detection of leaks, significantly reducing them  and thus contributing to the sustainable development of the communities served.

Many of the Italgas Group's sustainability objectives, contained in the Sustainable Value Creation Plan  (approved by the Board of Directors on 4 October 2024), have a direct impact on the type of products/services  offered, markets and/or end customers served 55 . They mainly refer to the Group's activities to promote energy  transition by enabling the network to distribute green gases (biomethane, hydrogen), to ESCo activities with a  focus on energy efficiency services, and the activities related to utility activation and emergency response.

With regard to energy transition, the Group has established the following objectives:

55 The targets, included in the 2024-2030 Sustainable Value Creation Plan, refer to the scope of consolidation of the financial data, with the inclusion of the  2i Rete Gas perimeter, unless otherwise indicated.

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• 100% of the gas distribution network ready for hydrogen by 2028; 

• 400 biomethane production plants, built by third parties, connected to the distribution network by 2030;

• 200 tonnes of green hydrogen produced and distributed in the Group's P2G pilot plant in Sardinia by  2028.

With regard to ESCo activities, the Group has defined the following objectives:

• 115,000 tonnes of CO ₂ saved through investments in energy performance contracts (including  photovoltaic) for industrial, residential and public administration customers;

• 107,000 tonnes of CO ₂ saved from 2024 to 2030 through energy efficiency solutions for industrial and  residential customers.

The Group has defined the following objectives with regard to utility activation and emergency response  activities for gas distribution:

• 90% compliance within 10-day and 100% compliance within 20-day time limit to complete procedures  within Italgas’ remit, from request for a quotation to activation of the gas supply to the end-customer  by 2028 56

• 98% of interventions with Emergency Response arrival at site within 60 minutes (target value for each  year 57 ).

Interests and views of stakeholders (SBM-2)

Continuous dialogue with stakeholders is a priority for the Group so that it can monitor the level of satisfaction  with its operations, gather useful ideas on how to improve the quality of its services and operational and  management models, promote more sustainable business practices, also in the long term, and create and  maintain an ongoing relationship with the territories and communities in which the Group operates, in Italy and  Greece. 

The categories of stakeholders and their specific methods of engagement are listed below. 

• Investors and lenders: Regular financial reports, conference calls, business plan presentations,  shareholder meetings, physical and virtual meetings, corporate website, social networks;

• Suppliers: Dedicated meetings, conventions, information and training initiatives, thematic engagement  activities;

• Customers and sales companies: Direct and ongoing relations, conventions, regular workshops,  contact centres and customer portals, customer satisfaction surveys;

56 Target applies solely to interventions to be performed by the distributor that do not call for network extensions; target currently based only on the Italian  scope.

57 ARERA Target: the distributor is required to comply with service obligations relating to the frequency of network inspection, equal respectively to 100% in  the 3 mobile years for high and medium pressure networks and 100% in the 4 mobile years for low pressure networks, and Greek (RAE target: 2-4 times a  year for ductile networks in densely populated areas, while targets for other types of networks vary from once a year to once every 4 years, depending on the  characteristics of the network).This target refers to an entity-specific KPI, which is extensively disclosed within ESRS S3.

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• Authorities and associations: Periodic meetings, workshops for debate and discussion of sustainability  topics;

• Employees: Theme-based events and training, regular meetings, annual meetings, engagement  projects, company climate analysis, company intranet;

• Communities and local areas: Meetings with representatives of local communities, associations and  organisations, social and cultural initiatives.

The outcomes of stakeholder engagement events are taken into consideration by Italgas in order to make  continuous improvements to its services and operational processes, responding in a flexible and diversified  manner to the needs and expectations of its stakeholders.

The perspective of its stakeholders contributes to determining relevant issues. During the year, in addition to  stakeholder engagement events, meetings and discussions were held with the various company departments  in order to thoroughly assess the existence, extent and likelihood of Sustainability Impacts, Risks and  Opportunities. 

Material impacts, risks and opportunities and their interaction with strategy and business model (SBM- 3)

For the description of Impacts, Risks, and Opportunities resulting from the materiality analysis, please refer to  the tables at the end of this chapter 58 . 

Description of processes to identify and assess material impacts, risks and opportunities (IRO-1)

In compliance with the requirements of the CSRD, the Italgas Group has conducted the double materiality  exercise in accordance with the European Sustainability Reporting Standards (ESRS). The analysis is the  starting point for the identification of the most relevant issues for the Group and its main stakeholders, as well  as for the definition of the topics to be addressed and deepened within the Sustainability Statement. 

The main Impacts, Risks and Opportunities (IROs) linked to environmental, social and governance issues for  the Group's direct operations, as well as along the value chain, have been identified in a structured and  systematic way, considering three different time horizons in which they are expected to be implemented: short  term (< 1 year); medium term (1 to 5 years); long term (over 5 years). 

These two parallel processes are closely interconnected : the ERM assessment of Risks and Opportunities  serves as input for the assessment of possible Impacts; at the same time, the updated list of impacts is again  critically analysed by ERM in identifying possible Dependencies and Impacts as sources of potential Risks 

58 During 2024, the materiality analysis was carried out using the new methodology provided by the ESRS, with particular reference to topics and sub-topics.  Compared to 2023, a new entity-specific impact on water loss has been included in the analysis, and the topics “Management of ecosystems and biodiversity”,  “Network development”, “Corporate identity” and “Economic value generation and ESG finance” have been excluded. From the detailed assessment carried  out during the year, the topic of biodiversity was not relevant, either from the point of view of impact or financial significance, as Italgas operates mainly in  urban and street environments, from city gates to meters. The other threetopics were excluded because they did not appear in the ESRS list of topics and  sub-topics, but they were included in the general qualitative disclosures of the company profile.

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and/or Opportunities with financial effects, identifying possible alignments, synergies, contributions and  possible trade-offs between Risks and Opportunities, and Impacts.

This process is closely integrated into the Group's ERM system, in line with international best practices and  standards, such as the COSO Framework and ISO 31000; it has also been shared with company departments  competent in the subject matter, and with the Group's Top Management, ensuring that the data collected is  validated and a complete view of the impacts and risks is obtained.

The decision-making process involves the SVCC and the CRRPTC, which evaluate the results of the analysis  before their final approval by the Board of Directors. 

Impact materiality

Regarding the impact materiality analysis, Italgas has identified and assessed the impacts generated by its  activities, considering both direct operations and indirect activities along the entire value chain, adopting an  inside-out perspective, with the aim of identifying the current and potential positive and negative effects that  the Group and the stakeholders operating along its value chain generate or could generate on the environment  and people. 

Benchmark analysis and specific analysis of the context in which Italgas operates were conducted, taking into  account international peers, established and emerging sustainability standards and reference regulations, as  well as media reports, in order to acquire a complete and contextualised view of the landscape in which the  Group operates. This activity made it possible to draw up a preliminary list of the impacts generated, which  was then subjected to a validation process conducted by Italgas' sustainability team in collaboration with the  ERM Department and the Departments responsible for each impact area.

The significance of actual impacts was assessed on the basis of the severity of each impact, measured through  the three parameters of scale, scope and irremediability assigned according to a “gross” approach, i.e. without  considering any existing mitigation measures:

• scale measures the strength of the impact, i.e. the intensity of the effects generated on the environment  and people;

• scope, which assesses the extent of the impact generated, was determined according to specific  parameters, such as the presence of the impact along the stages of the value chain involved;

• irremediability , which represents the level of difficulty in remedying the impact generated, considers  both the financial and time resources required to remedy the impact.

Each of the three parameters is defined according to scales of five levels, which allow for a total severity  assessment (also divided into five levels). In the case of positive impacts, irremediability is not a parameter  considered in the assessment.

In the case of potential impacts, materiality is determined on the basis of a further parameter, namely the  likelihood of an impact to occur (also determined on a five-level scale).

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In the Impacts assessment phase, both internal sources including the Group's strategic objectives and input  from the due diligence analysis carried out during 2024, as well as nationally and internationally recognised  external sources, such as the sectoral materiality assessments prepared by SASB 59 were analysed.

Specifically, the due diligence activity was carried out in accordance with the guidelines of the United Nations  Global Compact Network on business and human rights and included the following phases: mapping and  assessment of key risks through interviews with responsible functions, positioning of these risks within the  Heat Map, and the identification of an action plan to prevent and mitigate the most significant human rights  risks. For each significant impact, the type of impact, the involved stakeholders, the existing mitigation actions,  the actions to be implemented, the KPIs, and the responsible functions were thoroughly analyzed.

The Impacts of material relevance that have been assigned a severity and likelihood rating above the  predetermined materiality threshold determine the sustainability issues to be reported in accordance with the  ESRS 60 .

Financial materiality

In the second stage of the process, the financial materiality analysis, an outside-in perspective was adopted,  aimed at identifying risks and opportunities that affect or could affect the Group's financial position, economic  results and cash flow, as well as access to the financial market and cost of capital, in the short, medium and  long term.

The significant risks/opportunities have been outlined for each applicable ESRS Topic/Sub-Topic. Each event  was assessed using thresholds of probability of occurrence and impact on the economic-financial dimension,  taking into account the persistence of the impact in the short, medium or long term. The combination of the  level of probability and maximum impact on the economic-financial impact scale constitutes a rating (critical,  high, medium and low) associated with each risk/opportunity, and represents its prioritisation. The  methodology followed by the Group for the prioritisation of risks and opportunities does not depend on the type  of risk; in fact, sustainability risks are prioritised using the same criteria as those used for other types of risk.  Risks/opportunities rated "relevant" or "highly relevant" are considered significant; the presence of at least one  significant risk/opportunity determines the financial materiality of the ESRS Topic/Sub-Topic to which the event  is connected.

Significant risks are linked to those present in the mapping of ERM risks; if there is no link, the ERM Department  assesses the integration of the significant risk into the Group's risk mapping. Relevant opportunities are  incorporated into the strategic agenda of the Italgas Group.

The main inputs taken into consideration for the analysis of the significant risk relating to the topic of Climate  Change refer to energy scenarios developed by external sources (ENTSOG-ENTSOE Distributed Energy and 

59 Sustainability Accounting Standards Board.

60 The impacts considered relevant are those identified as "relevant" or "critical".

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Global Ambition). For the analysis of relevant opportunities relative to the topic of Climate Change, the  investments and assumptions set forth in the Group's Strategic Plan were taken into consideration. 

Disclosure requirements in ESRS covered by the company’s sustainability statement (IRO-2)

The Group outlined the relevant information to be disclosed, following a process that firstly considered all  datapoints related to the issues identified as relevant from the perspective of Impacts, Risks and Opportunities.  Subsequently, datapoints were selected that were not deemed relevant for the Group, as they related to  aspects that were not applicable or not significant for a correct representation of the Group's strategy with  respect to significant impacts and risks.

Financial materiality: Sustainability Risks and Opportunities 

Standard

Risk /  Opportunity

Time  Frame

Description of the  effects

Current  financial  effects

Expected  financial  effects

Positioning in  the Value  Chain

Management 

actions

E1

Risk of  negative  development s in the  technologica l and market  environment : Weakening  of the weight  of gas as an  energy  carrier for  the  residential  segment

Long

The risk reflects the  potential occurrence of  an energy scenario  involving a greater  transition towards  electrification of  consumption, which, in  the long term, would  lead to a decline in the  use of gas  (natural+biomethane+hy drogen) in the residential  segment (e.g. ENTSOG- ENTSOE Distributed  Energy and Global  Ambition). The  occurrence of these  scenarios is sensitive to  the uncertainty related to  multiple demand and  supply factors in the  energy market,  including: the timeline  for achieving grid parity  between conventional  sources and renewable  energy; the development  pathway of renewable  gas production,  particularly concerning  the potential volumes of  biomethane and  hydrogen, as well as  their final uses; incentive  schemes for renewable  fuels; the timeline for  infrastructure adaptation  to scenarios of  renewable penetration  and electrification of  consumption; and the  development and  adoption of available  technological solutions  for civil use. The effect  of energy efficiency  actions and the adoption  of good consumption  practices may not be 

With  regard to  current  effects, no  current  impacts of  the risk  have  emerged  in the  financial  materiality  assessme nt.

As part of  the financial  materiality  assessment,  a qualitative  economic  estimate  was made  that  considers  the potential  long-term  effects of an  increase in  the number  of  deactivation s and/or a  decrease in  the  activations  of new re- delivery  points in the  residential  segment,  with a  consequent  negative  impact on  Group  revenues  (given the  current  regulatory  mechanism  that, in Italy,  provides for  a parametric  revenue  component  dependent  on the  number of  re-delivery  points  managed by  the Group).

End-user use

\- Promotion of  responsible  business  practices, by  joining the UN  Global Compact  and the OGMP 2.0  of the UNEP. \- Guidance to  define unitary  business positions  in Italy and  abroad. \- Active  participation in  consultations  called by the  Italian government  or by European  community  organisations on  relevant topics. \- Active  participation in the  activities of  European sector  associations to  oversee  technological  changes. \- Process of  converting the  network into digital  infrastructure to  enable the  distribution of gas  other than  methane, such as  hydrogen,  biomethane and e- gas. \- Development  and adoption of  Nimbus, the next- generation smart  meter, a state-of- the-art device  equipped with  remote control 

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sufficient to "respect" the  drop in gas volumes  forecast by these  scenarios, and  electrification would  lead, in the long term, to  an increase in the use of  systems powered by  electricity, rather than by  natural gas / renewable  gas.  In this scenario, the  impact for the Group  would be a long-term  increase in the number  of deactivations and/or a  decrease in the  activations of new  redelivery points in the  residential sector, with  the resulting negative  impact on the Group's  revenues (given the  current regulatory  mechanism which, in  Italy, provides for a  revenue component that  is parametric and  dependent on the  number of re-delivery  points managed by the  Group).

features and  safety sensors,  compatible with  methane,  biomethane,  hydrogen, and  synthetic gas  blends. \- Development of  power-to-gas  technology  powered by  renewable energy  in order to  produce  renewable gas  that can be used  in the existing  networks. \- The Group's  presence in the  energy efficiency  sector through its  subsidiary  Geoside, with  prospects for  growth. \- Group presence  in the water  business through  its subsidiary  Nepta, with  prospects for  growth.

E1

Opportunitie s to enable  the use of  renewable  gas in order  to meet  residential  demand

Mediu m

The opportunity related  to Climate Change is in  reference to the  opportunity to enable the  use of renewable gas to  meet residential  demand. Gas  distribution  infrastructures, due to  their extension and  coverage over the  territory and the  flexibility they provide to  the system, play a key  role in decarbonisation.  In this context, Italgas'  commitment to  digitisation represents a  fundamental step to: i)  Accelerating the  distribution of renewable  gases; ii) Reducing our  carbon footprint; iii)  Making the network  more reliable and able to  adapt to the impacts of  climate change. The digitisation of the  gas distribution networks  in Italy and Greece is an  important part of Italgas'  Strategic Plan, in line  with European  decarbonisation and  renewable gas  development targets. In  particular, the Strategic  Plan includes  investments in network  metering and  repurposing in order to  increase its flexibility  and ensure the 

With  reference  to the  current  effects, no  current  impacts  emerged  as part of  the  financial  materiality  assessme nt of the  opportunit y (the  effects are  medium- long term  impacts  that will  contribute  to climate  change  mitigation  and  adaptation  in the  Group's  areas of  operation).

As part of  the financial  materiality  assessment,  a qualitative  economic  estimate  was made  that  considers  the potential  long-term  effects of the  digitisation  of the gas  distribution  networks in  Italy and  Greece. In  particular,  the Strategic  Plan  provides for  investments  in the  metering  and  repurposing  of the  network to  increase its  flexibility and  guarantee  the  connections  necessary  for the  distribution  of  biomethane  and  hydrogen.  Given the 

Direct Group  Operations –  End-user use

\- Development of  power-to-gas  technology  powered by  renewable energy,  which involves the  production of  renewable gas  and can be used  in existing  networks: the  Power-to-Gas pilot  project in Sardinia,  near Cagliari, is its  first application in  the EU. The initiative  includes the  testing phases of  the entire green  hydrogen supply  chain, from the  production of  hydrogen from  electricity  produced by  photovoltaic  panels, to  distribution in  networks and end- use. Italgas sees  Power-to-Gas  technology as  demonstrating that  the gas and  electricity sectors  are merging. P2G  can offer a reliable  solution to the  problem of  reduced  programmability of 

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necessary connections  for the distribution of  biomethane and  hydrogen. Given the  current regulatory  mechanism, these  investments are subject  to remuneration, and  therefore contribute to  generating value for the  Group.

current  regulatory  mechanism,  these  investments  are subject  to  remuneratio n, and  therefore  contribute to  generating  value for the  Group.

renewable  sources.  \- Network and  facility analysis  initiatives for the  evaluation of their  adequacy and of  interventions  intended to enable  the distribution of  gas other than  methane, such as  hydrogen,  biomethane and e- gas. \- Process of  converting the  network into digital  infrastructure to  enable the  distribution of gas  other than  methane, such as  hydrogen,  biomethane and e- gas.  Development and  adoption of  Nimbus, the next- generation smart  meter, a state-of- the-art device  equipped with  remote features  and safety  sensors,  compatible with  methane,  biomethane,  hydrogen, and  synthetic gas  blends.

G1

Risk of  commission  of offences  to the  advantage  of the body /  related to  the  organisation al model  referred to in  Legislative  Decree no.  231/2001

Short

According to Italian law,  in particular, Legislative  Decree no. 231 of 2001  (“Decree 231”), the  Group is subject to  liability in the event of  alleged offences  committed, including  abroad, in its interest or  to its advantage, by  individuals holding  representative,  administrative, or  managerial functions, as  well as by individuals  under the direction or  supervision of any such  persons.  Although the Italgas  Group has  countermeasures in  place to prevent and  counteract possible risks  of non-compliance, in  the event of conviction,  the Italgas Group would  face fines and,  depending on the case,  disqualifying sanctions,  as well as confiscation  of the profit gained from  the offence, and  publication of the  judgement of conviction 

With  regard to  current  effects, no  current  impacts of  the risk  have  emerged  in the  financial  materiality  assessme nt

As part of  the financial  materiality  assessment,  a qualitative  economic  estimate  was made  that  considers  the potential  short-term  effects, if  any, of  possible  fines to  which the  Italgas  Group would  be subject,  of  disqualifying  sanctions,  as well as of  the  confiscation  of the profit  gained from  the offence  and the  publication  of the  conviction in  the event of  the 

Direct Group  Operations

\- Internal control  and risk  management  system and areas  of responsibility  defined in terms of  compliance \- Code of Ethics,  Model 231, Policy  for the prevention  of and fight  against corruption,  ISO 37001 anti- bribery certification \- Monitoring,  analysis,  distribution and  implementation of  legislative  measures on  topics of interest  for the Italgas  Group and  verification of  correct  implementation \- Training for  personnel on  compliance  issues; \- Analysis and  monitoring of the  reputational  requirements of  the Group’s 

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in the event of applying  the disqualifying  sanction

application  of the  disqualifying  sanction.

counterparties \- “Supplier Code of  Ethics”

Impact materiality: Sustainability impacts

Value chain

Standard

Impact name

Positive /  negative

Description of impact and  connections with the business  model, strategy and/or value chain

Time  frame

Raw material extraction

Raw material  processing

Direct Group  Operations

End-user use

Asset disposal  (network and smart  meter)

E1

Benefits from the  ESCo's network  digitisation and  energy efficiency  works

Positive

The Group is committed to repurposing  and digitising its distribution networks  in order to enable the transmission of  green gases such as biomethane and  hydrogen in the future. Through the  ESCo Geoside, the Group offers  energy efficiency services to reduce  energy consumption and related third- party emissions, actively contributing  to the fight against climate change.

Short- medium- long

x

x

E1

Contribution to  climate change

Negative

The extraction phases of the main raw  materials used in the Group's assets  (steel, polyethylene) generate  greenhouse gas emissions that are  related to the use of vehicles and  machinery powered by fossil fuels for  site development.  The processing of raw materials  results in additional greenhouse gas  emissions: in the case of steel, blast  furnaces and steel mills use energy- intensive processes that burn fossil  fuels, emitting large quantities of CO ₂ and other greenhouse gases. With  regard to polyethylene production,  processes such as cracking naphtha or  methane gas, pipe extrusion and  cooling consume large amounts of  energy and release additional  emissions into the environment. Italgas Group's core operations also  generate significant emissions,  contributing negatively to climate  change. Direct energy consumption in  the company's operations stems  mainly from the use of natural gas for  industrial purposes (e.g. for pre- heating at city gates of gas distributed  in the distribution network) and from  the use of automotive fuels, used in  company vehicles used for transport  and maintenance. Property  management contributes further, with  energy consumption related to heating,  to the management of buildings. If this  consumption is not based on energy  from renewable source, it generates  CO ₂ emissions and other greenhouse  gases.

In addition, fugitive emissions may  occur during network maintenance  activities, caused by accidents or leaks  along the distribution network,  releasing methane.

Medium- long

x

x

x

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Entity- specific

Water losses along  the distribution  network of the  Group's water  business

Negative

As far as Italgas' water business is  concerned, potential impacts are  related to leaks along the distribution  network, causing a potential waste of  the resource, as well as increased  energy consumption due to pumping  activities. Through targeted  interventions and advanced  technologies such as digitisation,  districtisation and innovation, Italgas  works to optimise distribution efficiency  and ensure that water resources are  used sustainably. As far as gas  distribution activities are concerned,  the impact of water consumption is not  significant, as water is mainly used for  civil purposes and not in industrial  processes.

Medium- long

x 61

E5 

Damage caused  by waste  production 

Negative

Waste management is a relevant issue  along the Group's value chain. The  extraction and processing of steel and  polyethylene pipe materials can  generate hazardous waste and scrap,  requiring proper management to avoid  environmental and health risks. Pipe  maintenance activities carried out by  contractors produce waste, including  excavated soil and solvents which, if  not properly managed, could become a  source of contamination. 

Short- medium- long

x

x

x

x

E5

Benefits of  implementing  circular economy  principles

Positive

By introducing circular economy  principles into business processes,  pressure on natural resources can be  reduced. The implementation of these  principles consists mainly in the use of  renewable materials for the  procurement of materials and products  (e.g. bio-ethylene pipes). 

Short- medium- long

x

x

x

S1-S2

Failure to respect  human rights

Negative

Activities in the upstream phase of the  Group's value chain are subject to  potential human rights violations due to  the employment conditions of heavy  industry sectors and/or suppliers  operating in non-European countries. Activities carried out directly by the  Group on construction sites may cause  harm to its employees in the event of  inadequate working conditions.

Short- medium- long

x

x

x

S1-S2

Failure to respect  diversity and equal  opportunities of  workers

Negative

The upstream stages of the value  chain may be characterised by working  conditions, locations and required skills  that may lead to discrimination and  inequalities based on gender, age,  ethnicity or religion. In particular, the  metal industry may require skills and  jobs that may generate barriers to  entry for female applicants.  In the direct operations of Italgas,  incidents of discrimination and gender  inequality may occur in all professional  categories. 

Short- medium

x

x

x

S1-S2

Failure to protect  the health and  safety of workers

Negative

The activities carried out in the  upstream stages of the value chain in  which Italgas operates, including the  extraction of raw materials and the  processing of polyethylene and steel,  can pose risks to the health and safety  of workers as they are in close contact  with hazardous machinery and harmful  substances, which, in the absence of  appropriate training and protective  equipment, can put the health of those  in contact with them at risk. Similarly, the Group's direct activities, 

Short

x

x

x

61 Applies to the Group's consolidated water companies.

114

in particular the installation and  maintenance of gas and water meters,  expose employees to risks of  accidents.

S1-S2

Increasing the  professionalism  and preparedness  of employees  through upskilling  and reskilling

Positive

The Group has a positive impact in  developing the knowledge and skills of  its employees due to the attention and  importance given to training, including  upskilling and reskilling. Proper training  increases staff retention and the ability  to attract new talent. In addition, proper  training also has positive  consequences for the health and  safety of workers.

Short- medium

x

S1

Contribution to  employee welfare  through the  implementation of  welfare initiatives  and measures

Positive

The good work-life balance is reflected  in the performance of the Group's  employees. In order to guarantee  optimal results and ensure the well- being of its employees, the Group  adopts appropriate welfare measures  that take into account the distinction  between the two dimensions of the  employee and an inclusive and open  culture. 

Short- medium

x

S3

Damage to the  health and safety  of local  communities  resulting from the  lack of asset  integrity

Negative

The activities carried out along the  Group's value chain and in its direct  operations could have consequences  in terms of citizens' safety, who may  have to be evacuated from their homes  or have their safety compromised.  Some of the consequences generated  by problems with the integrity of assets  managed by the Group could involve  gas leaks that could ultimately lead to  explosions or fires. Incidents involving a failure of asset  integrity along the Group's value chain  can have significant impacts on  communities located near gas  extraction and processing sites, as well  as raw material processing/production  facilities, as incidents in these  locations can lead to serious  explosions and fires, with irreversible  consequences on land and people.

Short

x

x

x

G1

Promoting a  healthy and  transparent  corporate culture

Positive

An ethical corporate culture generates  a positive impact on the conduct of its  people and society, as it stimulates the  adoption of ethical behaviour that  promotes positive and socially  beneficial values such as loyalty,  fairness, transparency, honesty and  integrity

Short

x

G1

Supply chain  resilience through  transparent and  clear relationships  with their suppliers

Positive

Fair and timely payment practices can  help suppliers maintain sustainable  operations, avoiding the use of labour  practices that violate human rights or  create unsafe working conditions. In  addition, positive relationships with  local suppliers can stimulate the local  economy, creating jobs and improving  the well-being of communities. The  Group's commitment to take measures  to ensure transparent relationships  with its suppliers generates a positive  impact in terms of expanding the 

Medium- long

x

115

culture of environmental and social  responsibility along the supply chain.

G1

Damage caused  by incidents of  corruption

Negative

Corruption causes significant negative  impacts, such as the general  weakening of institutions, with the  further possibility of perpetuating and  exacerbating social inequalities, as  resources are diverted from those  actually in need to those who have the  economic opportunity to engage in  corrupt behaviour.

Short- medium- long

x

x

G1

Contributions from  the activities of  trade associations

Positive

Trade associations play a strategic role  in representing the collective interests  of companies and in contributing to  public policy making, acting as a  bridge between the private sector and  institutions. In fact, trade associations  can exert a significant influence on  defining legislation, regulations and  economic, social and environmental  policy initiatives, helping to create a  favourable environment for the  development of the sector and its  member companies. Italgas  recognises the importance of a  constructive and transparent dialogue  with trade associations, ensuring  continuous alignment with the  guidelines of these organisations. This  commitment translates into the  constant updating and adjustment of  its advocacy strategies, with the aim of  promoting effective communication  and synergy with shared objectives.

Medium- long

x

Disclosure  Requirement

Page

Information derived from other EU legislative acts

ESRS 2

BP-1

76-77

BP-2

76-77

77 to 80

Gender diversity in the board, paragraph 21, letter d) SFDR Annex I, Table 1, Indicator No. 13 Regulation on Benchmarks \- Commission Delegated Regulation (EU)  2020/1816, Annex II

GOV-1

Percentage of independent members of the board of directors, paragraph  21, letter e) Regulation on Benchmarks \- Commission Delegated Regulation (EU)  2020/1816, Annex II

GOV-2

77 to 80

GOV-3

80 to 82 

GOV-4

82

Due diligence statement, paragraph 30 SFDR \- Annex I, Table 3, Indicator No. 10

GOV-5

82 to 83

SBM-1

83 to 86

Involvement in activities related to fossil fuels, paragraph 40, letter d),  point i) SFDR \- Annex I, Table 1, Indicator No. 4 Third pillar \- Article 449-bis of Regulation (EU) No. 575/2013;  Commission Implementing Regulation (EU) 2022/2453, Table 1 –  Qualitative information on environmental risk and Table 2 – Qualitative  information on social risk Regulation on Benchmarks \- Commission Delegated Regulation (EU)  2020/1816, Annex II

116

Involvement in activities related to the production of chemicals,  paragraph 40, letter d), point ii) SFDR \- Annex I, Table 2, Indicator No. 9 Regulation on Benchmarks \- Commission Delegated Regulation (EU)  2020/1816, Annex II

Participation in activities connected to controversial weapons, paragraph  40, letter d), point iii) SFDR \- Annex I, Table 1, Indicator No. 14 Regulation on Benchmarks \- Article 12, paragraph 1, of Delegated  Regulation (EU) 2020/1818 and Annex II of Delegated Regulation (EU)  2020/1816

Involvement in activities related to tobacco cultivation and production,  paragraph 40, letter d), point iv) Regulation on Benchmarks - Article 12, paragraph 1, of Delegated  Regulation (EU) 2020/1818 and Annex II of Delegated Regulation (EU)  2020/1816

SBM-2

86

SBM-3

87, 89 to 98

IRO-1

87 

IRO-2

89

E1

Transition plan to achieve climate neutrality by 2050, paragraph 14 EU Climate Regulation \- Article 2, paragraph 1, of Regulation (EU)  2021/1119

E1-1

120 to 123

Companies excluded from benchmarks aligned with the Paris  Agreement, paragraph 16, letter g) Third pillar \- Article 449-bis of Regulation (EU) No. 575/2013;  Commission Implementing Regulation (EU) 2022/2453, Model 1: Banking  portfolio – Indicators of potential transition risk related to climate change:  Credit quality of exposures by sector, emissions, and remaining maturity Regulation on Benchmarks \- Article 12, paragraph 1, letters to to g, and  paragraph 2, of Delegated Regulation (EU) 2020/1818

ESRS 2- GOV- 3

120 to 123

ESRS 2 SBM-3

123 to 127

ESRS 2 IRO-1

123 to 127

E1-2

127

MDR-P 

127

MDR-A

127 to 129

E1-3

127 to 129

MDR-T

130-131

E1-4

130-131

GHG reduction targets, paragraph 34 SFDR \- Annex I, Table 2, Indicator No. 4 Third pillar \- Article 449-bis of Regulation (EU) No. 575/2013;  Commission Implementing Regulation (EU) 2022/2453, Model 3: Banking  portfolio – Indicators of potential transition risk related to climate change:  Alignment metrics Regulation on Benchmarks \- Article 6 of Delegated Regulation (EU)  2020/1818

Energy consumption from fossil fuels disaggregated by source (only high  climate impact sectors), paragraph 38 SFDR \- Annex I, Table 1, Indicator No. 5 and Annex I, Table 2, Indicator  No. 5

E1-5

131-132

Energy consumption and energy mix, paragraph 37 SFDR \- Annex I, Table 1, Indicator No. 5

117

Energy intensity associated with activities in high climate impact sectors,  paragraphs 40 to 43 SFDR  \- Annex I, Table 1, Indicator No. 6

Gross emissions Scope 1, 2, 3 and total GHG emissions, paragraph 44 SFDR \- Annex I, Table 1, Indicators No. 1 and 2 Third pillar \- Article 449-bis of Regulation (EU) No. 575/2013;  Commission Implementing Regulation (EU) 2022/2453, Model 1: Banking  portfolio – Indicators of potential transition risk related to climate change:  Credit quality of exposures by sector, emissions, and remaining maturity Regulation on Benchmarks \- Article 5, paragraph 1, Article 6, and  Article 8, paragraph 1, of Delegated Regulation (EU) 2020/1818

E1-6

133-134

Gross GHG emission intensity, paragraphs 53 to 55 SFDR \- Annex I, Table 1, Indicator No. 3 Third pillar \- Article 449-bis of Regulation (EU) No. 575/2013;  Commission Implementing Regulation (EU) 2022/2453, Model 3: Banking  portfolio – Indicators of potential transition risk related to climate change:  Alignment metrics Regulation on Benchmarks \- Article 8, paragraph 1, of Delegated  Regulation (EU) 2020/1818

E1-7

134

GHG absorptions and carbon credits, paragraph 56 EU Climate Regulation \- Article 2, paragraph 1, of Regulation (EU)  2021/1119

E1-8

134-135

E1-9

Phase-in

E2

Non material

E3

Non material

E4

Non material

E5

IRO-1

135

MDR-P

135-136

E5-1

135-136

MDR-A

135 to 137

MDR-M

135 to 137

MDR-T

136 to 138

E5-2

135 to 137

E5-3

136 to 138

E5-4

138

Non-recycled waste, paragraph 37, letter d) SFDR  \- Annex I, Table 2, Indicator No. 13

E5-5

138-139

Hazardous and radioactive waste, paragraph 39 SFDR \- Annex I, Table 1, Indicator No. 9

E5-6

Non material

Water losses

MDR-P

139-140

MDR-A

140 to 142

MDR-M

140 to 142

MDR-T

140 to 142

S1

ESRS 2 SBM-2

143

Risk of forced labor, paragraph 14, letter f) SFDR \- Annex I, Table 3, Indicator No. 13

ESRS 2 SBM-3 

143 to 145

Risk of child labor, paragraph 14, letter g) SFDR  \- Annex I, Table 3, Indicator No. 12

118

Political commitments on human rights, paragraph 20 SFDR \- Annex I, Table 3, Indicator No. 9 and Annex I, Table 1, Indicator  No. 11

Policies regarding due diligence on issues covered by the fundamental  conventions 1 to 8 of the International Labour Organization, paragraph  21 Regulation on Benchmarks \- Commission Delegated Regulation (EU)  2020/1816, Annex II

Procedures and measures to prevent human trafficking, paragraph 22 SFDR \- Annex I, Table 3, Indicator No. 11

S1-1

145 to 147

Policy for the prevention or management of workplace accidents,  paragraph 23 SFDR \- Annex I, Table 3, Indicator No. 1

MDR-P

145 to 147

S1-2

147-148

S1-3

148-149

Complaint/grievance mechanisms, paragraph 32, letter c) SFDR \- Annex I, Table 3, Indicator No. 5

S1-4

149 to 153

S1-5

153

MDR-T

153

MDR-M

153

S1-6

153 to 155

S1-7

155

S1-8

155 to 157

S1-9

157-158

S1-10

158

S1-11

158

S1-12

158

S1-13

159

Number of deaths and number and rate of work-related injuries,  paragraph 88, letters b) and c) SFDR  \- Annex I, Table 3, Indicator No. 2 Regulation on Benchmarks \- Commission Delegated Regulation (EU)  2020/1816, Annex II

S1-14

159-160

Number of lost days due to injuries, fatal accidents, or illnesses,  paragraph 88, letter e) SFDR \- Annex I, Table 3, Indicator No. 3

S1-15

160

Unadjusted gender pay gap, paragraph 97, letter a) SFDR \- Annex I, Table 1, Indicator No. 12 Regulation on Benchmarks \- Commission Delegated Regulation (EU)  2020/1816, Annex II

S1-16

160-161

Excessive gender pay gap in favor of the CEO, paragraph 97, letter b) SFDR \- Annex I, Table 3, Indicator No. 8

Discrimination-related incidents, paragraph 103, letter a) SFDR \- Annex I, Table 3, Indicator No. 7

S1-17

161

Failure to comply with the UN Guiding Principles on Business and  Human Rights and OECD guidelines, paragraph 104, letter a) SFDR \- Annex I, Table 1, Indicator No. 10 and Annex I, Table 3, Indicator  No. 14 Regulation on Benchmarks \- Annex II of Commission Delegated  Regulation (EU) 2020/1816 and Article 12, paragraph 1, of Commission  Delegated Regulation (EU) 2020/1818

S2

119

ESRS 2 - SBM- 2

161-162

ESRS 2 - SBM- 3

162-163

Severe risk of child or forced labor in the labor chain, paragraph 11, letter  b) SFDR \- Annex I, Table 3, Indicators No. 12 and 13

Political commitments on human rights, paragraph 17 SFDR  \- Annex I, Table 3, Indicator No. 9 and Annex I, Table 1, Indicator  No. 11

Policies related to workers in the value chain, paragraph 18 SFDR  \- Annex I, Table 3, Indicators No. 11 and 4

Failure to comply with the UN Guiding Principles on Business and  Human Rights and OECD guidelines, paragraph 19 SFDR \- Annex I, Table 1, Indicator No. 10 Regulation on Benchmarks \- Annex II of Commission Delegated  Regulation (EU) 2020/1816 and Article 12, paragraph 1, of Commission  Delegated Regulation (EU) 2020/1818

S2-1

164-165

Policies regarding due diligence on issues covered by the fundamental  conventions 1 to 8 of the International Labour Organization, paragraph  19 Regulation on Benchmarks \- Commission Delegated Regulation (EU)  2020/1816, Annex II

MDR-P

164-165

S2-2

165-166

S2-3

166-167

S2-4

167-168

Issues and incidents related to human rights in its upstream and  downstream value chain, paragraph 36 SFDR \- Annex I, Table 3, Indicator No.

S2-5

168-169

MDR-T

168-169

MDR-M

168-169

S3

ESRS 2 SBM-2 

169

ESRS 2 SBM-3

169

Political commitments regarding human rights, paragraph 16 SFDR \- Annex I, Table 3, Indicator No. 9 and Annex I, Table 1, Indicator  No. 11

S3-1

169-170

Non-compliance with the UN Guiding Principles on Business and Human  Rights, the ILO principles, or the OECD Guidelines, paragraph 17 SFDR \- Annex I, Table 1, Indicator No. 10 Regulation on Benchmarking \- Annex II of Commission Delegated  Regulation (EU) 2020/1816 and Article 12, Paragraph 1, of Commission  Delegated Regulation (EU) 2020/1818

MDR-P

169-170

S3-2

170

S3-3

171

S3-4

171-172

Human rights issues and incidents, paragraph 36 SFDR \- Annex I, Table 3, Indicator No. 14

MDR-A

171-172

S3-5

172-173

MDR-M

172-173

MDR-T

172-173

S4

Non material

G1

120

ESRS 2 GOV-1

174

ESRS 2 IRO-1

174

UN Convention Against Corruption, paragraph 10, letter b) SFDR \- Annex I, Table 3, Indicator No. 15

G1-1

174 to 176

Whistleblower protection, paragraph 10, letter d) SFDR \- Annex I, Table 3, Indicator No. 6

MDR-P

174 to 176

G1-2

176

G1-3

176-178

Fines imposed for violations of active and passive corruption laws,  paragraph 24, letter a) SFDR \- Annex I, Table 3, Indicator No. 17 Regulation on Benchmarking \- Annex II of Commission Delegated  Regulation (EU) 2020/1816

G1-4

178

Rules on fighting active and passive corruption, paragraph 24, letter b) SFDR \- Annex I, Table 3, Indicator No. 16

G1-5

178-179

G1-6

179

MDR-A

179-180

MDR-M

179-180

MDR-T

179-180

121

7.2 Environmental information

Disclosure pursuant to Article 8 of Regulation (EU) 2020/852 (Taxonomy Regulation)

EUROPEAN TAXONOMY

The European taxonomy for sustainable activities was instituted with EU Regulation 2020/852 in order to define  a unique criterion for the classification of sustainable economic activities from an environmental viewpoint. The  European Union aims to provide companies, investors and policy managers with appropriate definitions for  environmentally-sustainable activities, useful on the one hand to achieve the medium- and long-term European  objectives, directing their investments, and on the other to offer greater security to investors and companies in  their green investment choices. With its investments in the gas networks aimed at making them carriers of  renewable gases, in electronic meters, in energy efficiency and the ever greater reduction of potential grid  losses (gas and water), Italgas helps pursue that energy transition process necessary to achieve the European  Green Deal objectives, while at the same time ensuring the stability of energy systems.

EU Regulation 2020/852 defines an activity as environmentally-sustainable if it makes a substantial  contribution to achieving one of the following six environmental objectives: 

• climate change mitigation, 

• climate change adaptation, 

• the sustainable use and protection of water and marine resources, 

• the transition to a circular economy, 

• pollution prevention and control, 

• the protection and restoration of biodiversity and ecosystems. 

In particular, the Taxonomy, as it is defined today, establishes that an activity shall be:

• eligible , when included in the list of environmentally sustainable economic activities contained in  delegated acts EU 2021/2139, EU 2023/2485 and EU 2023/2486, regardless of whether they meet  the relevant technical screening criteria and/or DNSH ( Do No Significant Harm) . 

• aligned , eligible activity that makes a substantial contribution to the achievement of one or more of  the environmental objectives described in Regulation (EU) 2020/852, in accordance with the technical  screening criteria defined by the Commission itself and that does not harm the remaining objectives  (Do No Significant Harm – DNSH), in compliance with the minimum safeguards regarding the  protection of labour and human rights.

Starting 2022, and therefore applicable already from the 2021 financial statements, non-financial companies  required to publish non-financial information in accordance with Article 19 bis or Article 29 bis of Directive  2013/34/EU reported the share of revenues, capital expenditure and operating expenses considered  Taxonomy-eligible and non-eligible. As of the year 2023 and therefore applicable from the 2022 financial  statements, the reporting obligation covers the share of turnover, capital expenditure and operating  expenditure considered aligned, eligible and not eligible to the Taxonomy broken down by activity, with respect  to climate change mitigation and adaptation objectives. Under the 2023 financial statements, the reporting  obligation with respect to the eligibility criterion also covered the last four objectives. In 2025, based on the 

122

2024 financial statements, the reporting obligation concerns the share of turnover, capital expenditure and  operating expenses considered aligned, eligible and not eligible for the Taxonomy, with respect to all the  environmental objectives described in Regulation (EU) 2020/852. Italgas is subject to this obligation. 

The data reported in this section therefore satisfies the reporting obligation. 

Main assumptions

To define the share of revenues, operating expenses and capital expenditure deriving from activities that are  eligible or aligned with the taxonomy, for lack of a consolidated, shared practice on a sector level and in light  of possible different technical interpretations of the EU Delegated Regulations 2021/2139, 2021/2178,  2023/2485 and 2023/2486 that supplemented Regulation 2020/852, Italgas has defined its own reporting  criteria. As a result, the resulting values, expressing the best assumptions presently available for the Group,  could be subject to future updates in view of changes or updates of the internal assessment, the reference  regulations or the emergence of new shared standards or changes in the scope of some of the activities carried  out. Compared to the interpretation given last year, the Draft Commission Notice approved by the European  Union and published on 29 November 2024 62 , has been taken into account; this explains some changes in the  reporting of eligible and aligned activities compared to what was done in 2023.

The portion of non-eligible activities includes all those activities that are not described in the Delegated  Regulation EU 2021/2139, 2023/2485 and 2023/2486 irrespective of whether or not these activities can  significantly contribute to one of the six environmental objectives defined in the Regulation EU 2020/852. 

Methodology 

The mapping of activities looked in detail at the individual activities carried out by Italgas S.p.A. and its  subsidiaries. The NACE code associated with the operating company has not been considered as a restriction  for inclusion or exclusion, given that, in the case of Italgas and its subsidiaries, the NACE code in most cases  reflects the core business and does not necessarily reflect the details required by the Taxonomy. For the  definition of "eligible activity" or "aligned activity", consistency with the definition of activities included in  delegated acts was therefore considered.

In 2024, the contribution of Acqua Campania, which was consolidated during the reporting period, was also  included in the data, as well as the investment related to the consolidation of the Belluno ATEM.

Where an activity can be considered both in light of climate mitigation and climate adaptation, the main aim  for which this activity was implemented and the prevailing impacts were assessed, thereby guaranteeing no  duplication of data. In general, it was found that the Italgas activities considered meet the climate mitigation  objective, with the exception of the activities included under (2.1) Water supply which fall under the  environmental objective of “ sustainable use and protection of water and marine resources ” 63 . Compliance with  technical screening criteria, DNSH (Do No Significant Harm to environmental criteria) criteria (Do No  Significant Harm to the environment criteria) and compliance with the minimum safeguard thresholds were  assessed to determine which eligible assets were also aligned according to the Taxonomy.

62 https://finance.ec.europa.eu/document/download/b799db63-a034-4023-9f77-3e9a69be4de9_en?filename=241129-draft-commission-notice-eu- taxonomy-delegated-acts_en.pdf

63 Acqua Campania engages in transportation activities with water loss levels of 2.6%, improving year-on-year. The nature of the transportation activity makes  the application of the Infrastructure Leakage Index (ILI) described in the technical screening notes not feasible, as it is related to water distribution.

123

No minimum materiality thresholds were defined for the inclusion/exclusion of individual activities of the scope  described above in line with the analysis conducted last year. 

It should be noted that Italgas mainly carries out the gas distribution activity and therefore acts to create the  best possible conditions to ensure that its network is "enabled" for the distribution of hydrogen and/or other  renewable gases. It is not, however, responsible for the production of such gases nor for the definition of the  blending thresholds, which are the responsibility of other parties. In considering the activities, it was assessed  how far the Group can act to facilitate and make possible, within the plan horizon, the distribution of green  gases in addition to methane.

Eligible activities

In accordance with Delegated Regulations no. 2021/2139, 2023/2485 and 2023/2486, which supplement  Regulation no. 2020/852, the analysis carried out by Italgas starting from 2021 led to the identification of the  following eligible activities set forth below in order of significance:

• (4.14) Renewable gas and low carbon emission gas distribution and transmission networks in respect  of the gas distribution business

• (7.5) Installation, maintenance and repair of devices related to metering, regulation and energy  performance control of buildings in respect of metering

• (7.3) Installation, maintenance and repair of energy efficiency devices for all energy efficiency activities 

• (3.10) Manufacture of hydrogen 

• (4.11) Storage of thermal energy

• (2.1) Water supply

• (5.1) Construction, expansion and management of water collection, treatment and supply systems 

• (5.2) Renewal of water collection, treatment and supply systems 

• (4.1) Production of electricity by means of solar-photovoltaic technology, 

• (4.15) Distribution of district heating/district cooling, 

• (7.1) Construction of new buildings 

• (7.2) Renovation of existing buildings

• (7.4) Installation, maintenance and repair of electric vehicle charging stations in buildings

• (7.6) Installation, maintenance and repair of renewable energy technologies

• (8.1) Data processing, hosting and connected activities

• (9.3) Professional services related to energy performance of buildings 

Compared to 31 December 2023, due to the consolidation of Acqua Campania as of 30 January 2024, the list  of environmental objectives pursued has been expanded to include (2.1) Water supply under the environmental  objective “ sustainable use and protection of water and marine resources ”.

Revenues aligned or eligible for taxonomy 

The share of revenues aligned with or eligible for the taxonomy for the year 2024, in compliance with  subsection 1.1.1 of Annex 1 to Delegated Regulation 2021/2178, is calculated as the sum of revenues derived  from products or services associated with activities respectively aligned with or eligible for the taxonomy, 

124

proportionally to the total net revenues of the Group (of the scope described above) recorded in compliance  with International Accounting Standard (IAS) no. 1, subsection (82: (a)), illustrated in the Notes to the  consolidated financial statements in subsection 27.

Aligned revenues include activities for which technical screening, DNSH criteria and minimum guarantees of  safeguards are met. More specifically, revenues from the construction and upgrading of gas distribution and  metering infrastructure related to services under concession arrangements are considered aligned, in  accordance with IFRIC 12, for (i) the share referring to activities aimed at making the network suitable for the  distribution of renewable and low-carbon gases including all requalification of the distribution network and its  extensions, carried out with materials suitable for the new renewable gases (activity 4. 14); (ii) the share  referring to activities involving the detection of leaks, the repair of existing gas pipelines and other elements of  the network, aimed at reducing methane leaks (activity 4. 14); and (iii) the share referring to the activities of  installation, maintenance and repair of smart gas meters (activity 7.5). Also included is the share of gas  metering service remuneration related to the costs recognized for the installation and maintenance of smart  meters (activity 7.5). Revenues deriving from activities relating to energy efficiency, water service and ICT  have also been included, consistently with the taxonomy criteria. 

All those activities that, although included in the list of Delegated Regulation EU 2021/2139, do not meet all  the technical screening and/or DNSH criteria, are considered eligible but not aligned. 

The share of revenues considered ineligible includes all activities not covered by the previous points.

Operating expenses aligned with or eligible for taxonomy 

The portion of aligned or eligible operating expenses (OpEx) is calculated as the ratio between operating costs  related to activities or processes respectively aligned or eligible for the taxonomy, in proportion to the operating  expenses incurred, in compliance with the provisions of subsection 1.1.2 of Annex 1 to Delegated Regulation  2021/2178. Operating expenses include by Delegated Regulations, direct non-capitalized costs related to  research and development, building renovation measures, short-term leases, maintenance and repair and any  other direct expenditures relating to the day-to-day servicing of assets of property, plant and equipment  necessary to ensure the continued and effective functioning of such assets

The operating expenses referred to in subsection 1.1.2 of Annex 1 to Delegated Regulation 2021/2178 are a  part of those shown in subsection 28 of the Notes to the Consolidated Financial Statements.

The activities to which these expenses refer are those described in the previous sections, in addition to the  operating expenses related to real estate services. 

Capital expenditures aligned with or eligible for taxonomy 

The portion of capital expenses (CapEx), in compliance with paragraph 1.1.2 of Annex 1 to Delegated  Regulation 2021/2178, is calculated as the ratio between investments in activities or processes eligible to the  taxonomy with respect to the increases in tangible and intangible assets in 2024, considered before  amortisation/depreciation, impairment and any value adjustment, including those resulting from the  recalculation and reduction in value and excluding changes in fair value. As indicated in Delegated Regulation  2021/2178, the increase in assets also includes the increases in tangible and intangible assets deriving from  business combinations. Capital expenditure are recognized in accordance with IAS 16 (73: (e) (i) and (iii)), IAS 

125

38 (118: (e) (i)), and IFRS 16 (53: (h)) and are shown in the Notes to the Consolidated Financial Statements  in sections 13 and 14 as well as in the Directors’ Report in section “3. Operating performance” . Capital  expenditure is considered gross of grants.

As a result, the CapEx aligned with the taxonomy includes all investments related to the installation,  maintenance and repair of digital meters. For the gas distribution activity, the following has been included: the  investments made in the network for the distribution of renewable and low-carbon gases, including all  requalification of the distribution network and its extensions, carried out with materials suitable for the new  renewable gases and the portion of investments relating to activities involving the detection of leaks, the repair  of existing gas pipelines and other elements of the network, aimed at reducing methane leaks. The CapEx  related to energy efficiency, the water service, real estate and ICT were also included in line with the taxonomy  criteria. 

All those activities that, although included in the list of EU Delegated Regulation 2021/2139, 2023/2485 and  2023/2486, do not comply with all the technical screening criteria are considered eligible, but not aligned . In  particular, the CapEx eligible but not aligned with the taxonomy includes expenses related to Power-to-Gas  project since, for that project, which qualifies for the production of green hydrogen from renewable sources  (hence without carbon production), when this analysis was closed, the third-party assessment of the emission  level was not available. Once this certification has been obtained and in view of the nature of the activities, it  is considered that the project is meeting the technical and DNSH screening criteria. The investments relating  from the business combination of Acqua Campania are considered eligible, but not aligned, in line with the  provisions of Delegated Regulation  no. 2021/2178.

The CapEx considered as not eligible, in continuity with last year, includes all activities not described in EU  Delegated Regulations 2021/2139, 2023/2485 and 2023/2486..

Do Not Significant Harm to environmental goals (DNSH)

Climate change mitigation: the activities considered meet the climate change mitigation objective. In the  case of the activity (2.1) Water supply a significant damage assessment with respect to this objective is not  required.

Climate change adaptation: the analysis of the physical climate risks affecting Italgas' activities is integrated  into the Group's strategic planning process and ERM model. It takes into account the vulnerability of specific  activities, the mitigation actions implemented and the adaptation solutions integrated where appropriate. To  facilitate the identification of risks related to climate change, the ERM Department carries out a specific analysis  based on physical scenarios to identify the main drivers of climate change that could impact Italgas' activities  in the short (1 year), medium (2 to 5 years) and long term (more than 5 years), and, for each of these drivers,  a predefined list of risk/opportunity events applicable to Italgas is provided. The physical risks are assessed  as low in consideration of the mitigation actions implemented. The list of risks considered was compared with  the list in Appendix A, Annex I of Delegated Regulation EU 2021/2139. From the comparison made, it emerged  that the activities do not pose significant harm to the ability to adapt to climate change, i.e. do not lead to a  worsening of the negative effects of the current or future climate on humans, nature or assets. 

Furthermore, in the case of newly constructed physical assets, adaptation solutions that reduce the main  climate risks affecting them are incorporated into the design and construction phases. Other activities 

126

considered to be aligned were assessed as not posing significant harm to the ability to adapt to climate change,  i.e. not leading to a worsening of the negative effects of the current or future climate on humans, nature or  assets.

Sustainable use and protection of water and marine resources: Italgas is not required, for its gas and  water distribution activities, to carry out an environmental impact assessment pursuant to Directive  2011/92/EU. This absence of such requirement is inherent in the nature of the distribution business. It should  be noted, however, that the laying of gas distribution pipes and related items is carried out in compliance with  regulations, including those of an environmental and water protection nature, both national and local, and is  subject to authorisation by the competent authorities. By way of example, in Italy it is required that the laying  of pipes is carried out with a minimum coverage of 1.00 m (save for derogations) resulting, in case of diameters  at the upper limit of the range permitted for use, a maximum excavation depth of approximately 1.70 m, which  limits interference with the water system. The laying of cathodic protection, which can have impacts at greater  depths, is also carried out with prior authorisation and with consideration of the risks associated with  groundwater interference. Since the networks distribute gas, there is no risk of pollutants leaching into the  groundwater. 

In the case of Nepta, the actions put in place are aimed at the efficient use of water resources. Nepta distributes  only drinking water and is not involved in wastewater treatment activities. 

Finally, Italgas' HSEQE Policy commits the Group to the efficient use of water in the conduct of business  activities. On the basis of the analyses carried out, the activities are not considered to be detrimental to the  good potential status of water bodies or sea waters

Transition towards a circular economy: in its activities, Italgas pursues the reduction and prevention of  pollution. Italgas' HSEQE Policy commits the Group to the reduction of waste produced and promotion, where  possible, of its recovery. For the aligned activities, the principle of absence of significant damage is respected,  in line with the provisions of Delegated Regulation (EU) 2021/2139. Considering the components and  construction materials used, waste management and construction techniques and projects in the activities  relating to point 7.1 and 7.2 respect the criteria of Delegated Regulation (EU) 2021/2139.

Pollution prevention and reduction: in its activities, Italgas pursues the reduction and prevention of pollution.  Italgas' HSEQE Policy commits the Group to the reduction of waste produced and the promotion, where  possible, of its recovery. As regards distribution, the equipment considered as aligned in terms of the  taxonomy, falls within the scope of Directive 2009/125/EC, is compliant therewith and represents the best  available technology. With regard to building components and materials used in activities related to Section  7.1, 7.2 and 7.3, the criteria in Appendix C, including the related regulations on the treatment and disposal of  asbestos, are met.

127

Protection and restoration of biodiversity and ecosystems: the Italgas' HSEQE Policy commits the Group  to the protection of the environment and the responsible management of the significant environmental impacts  associated with its activities, pursuing the protection and care of the natural environment and combating  climate change, avoiding deforestation, ensuring restoration and maintaining the balance of the ecosystem  and biodiversity. 

Italgas is not required, for its gas and water distribution activities, to carry out an environmental impact  assessment pursuant to Directive 2011/92/EU. For both networks, the laying of the pipelines, related structures  and excavation works are carried out in compliance with environmental regulations, limiting impacts on  biodiversity and ecosystems. For large-scale water supply activities, Acqua Campania is subject to an  environmental impact assessment in accordance with Directive 2011/92/EU. The laying of the pipelines,  related structures and excavation works are carried out in compliance with environmental regulations also for  this company, limiting impacts on biodiversity and ecosystems.

Minimum safeguards guarantees

The Italgas Code of Ethics, the Supplier Code of Ethics and the Human Rights Policy outline the reference  principles and actions taken to protect human rights, compliance with laws and the principle of competition,  and the fight against corruption in the performance of the Group's activities and, in general, in any context in  which Italgas people and business partners operate. These principles are in line with the OECD Guidelines for  Multinational Enterprises, the UN Guiding Principles on Business and Human Rights and the International  Labour Organisation (ILO) Fundamental Conventions. The Policy for the Prevention of Discrimination and  Protection of the Dignity of Group Personnel and the Diversity and Inclusion Policy reinforce the Group's  commitments to the protection of Human Rights.

Italgas and its subsidiaries have adopted Organisation, Management and Control Models (Models 231), aimed  at preventing the perpetration of offences that could result in administrative liability to the Company, as well as  Internal Control and Risk Management systems that guarantee compliance with minimum safeguards. 

All suppliers are also required to meet important criteria in terms of human rights and work by accepting the  Italgas Policy on Human Rights, health and safety, environmental protection and the ethical and responsible  management of the business. The Group conducts human rights due diligence involving both Group  Companies and suppliers. Please refer to sections S1 and S2 for a description of the actions taken to 1)  guarantee the protection of human rights through policies, actions, targets, whistleblowing channels and  remedial measures; 2) promote and verify respect for human rights by suppliers, including reputational  verification, qualification process, supplier engagement and training initiatives, ESG and health and safety  audits, availability of whistleblowing channels and mechanisms for remedial action.

For taxation-related issues, the Italgas Group has adopted a Tax Strategy, intended as a set of principles and  guidelines inspired by the values of the Italgas Code of Ethics, transparency and legality, which guide not only  fiscal choices, but also those related to the core business of the Group as a whole. In order to ensure adequate  control of the tax variable, it has also adopted an integrated internal control system on tax-related risks (the  Tax Control Framework - TCF). The TCF is part of the Italgas Group's broader Internal Control and Risk 

128

Management System and ensures oversight of the tax variable. In addition, in 2019, a process was launched  aimed at the gradual admission of the Group's Italian companies to the Cooperative Compliance regime  referred to in Legislative Decree no. 128/2015 as amended, aimed at reducing the level of uncertainty on tax  issues and preventing the emergence of tax disputes through continuous and preventive forms of dialogue on  situations likely to generate tax risks. Currently, the companies under the Cooperative Compliance regime are:  Italgas S.p.A., Italgas Reti S.p.A., Toscana Energia S.p.A., Medea S.p.A., BluDigit S.p.A., Geoside S.p.A. and  Newco S.p.A.. Remaining in the regime allows for continuous and preventive dialogue with the Revenue  Agency and is an indicator of the constant application of those principles of fairness, transparency and  awareness of the fulfilment of tax obligations that characterise the Company's behavioural policy in relation to  tax variable. Also, with regard to suppliers, reputational checks are carried out and about the possession of  general requirements, including those inherent in tax and contribution regularity. Please refer to section S2 for  more details.

Revenues are reported, along with CapEex and OpEx associated with the eligible activities. No information is  supplied in respect of other KPIs, apart from that required by the Delegated Regulation (EU) 2021/2178. 

2024

Eligible activities 

environmentally sustainable  activities

(aligned with the taxonomy)

activities eligible for the taxonomy  but not environmentally sustainable 

(not aligned with the taxonomy)

Not eligible Activities 

Revenues 

34.1%

0.0%

65.9%

OpEx

69.6%

7.5%

22.8%

CapEx

78.8%

4.6%

16.6%

129

2024  Share of revenues from products or services associated with economic activities aligned with the taxonomy

Criteria for the substantial  contribution

Criteria for “Do No Significant  Harm” DNSH

Code 

Absolute revenues

Revenue Share 

Climate change mitigation 

Climate change adaptation 

Water

Pollution

Circular Economy

Biodiversity

Climate change mitigation 

Climate change adaptation 

Water

Pollution

Circular Economy

Biodiversity

Minimum safeguards guarantees

Share of eligible revenue aligned  to Taxonomy (N-1)

Category (enabling activity)

Category (transition activity)

€M

%

Yes;  No;  N/EL;

Yes;  No;  N/EL;

Yes; 

No; 

N/EL;

Yes;  No;  N/EL;

Yes;  No;  N/EL;

Yes;  No;  N/EL;

Yes;  No;  N/EL;

Yes;  No;  N/EL;

Yes;  No;  N/EL;

Yes;  No;  N/EL;

Yes;  No;  N/EL;

Yes;  No;  N/EL;

Yes;  No;  N/EL;

%

E

T

A. ACTIVITIES ELIGIBLE FOR THE TAXONOMY

A.1 environmentally sustainable activities  (aligned with the taxonomy)

2.1 Water supply

WTR  2.1

74.8

2.9%

N/EL

N/EL

Yes

N/EL

N/EL

N/EL

Yes

Yes

Yes

Yes

Yes

Yes

Yes

0.0%

4.1 Production of electricity by means of solar- photovoltaic technology;

CCM  4.1

3.9

0.2%

Yes

N/EL

N/EL

N/EL

N/EL

N/EL

Yes

Yes

Yes

Yes

Yes

Yes

Yes

0.2%

4.14 Renewable gas and low carbon emission gas  distribution and transmission networks in respect of  the gas distribution business;

CCM  4.14

601.3

23.7%

Yes

N/EL

N/EL

N/EL

N/EL

N/EL

Yes

Yes

Yes

Yes

Yes

Yes

Yes

14.6%

5.1 Construction, expansion and management of  water collection, treatment and supply systems;

CCM  5.1

7.6

0.3%

Yes

N/EL

N/EL

N/EL

N/EL

N/EL

Yes

Yes

Yes

Yes

Yes

Yes

Yes

0.5%

7.3 Installation, maintenance and repair of energy  efficiency devices for all energy efficiency activities;

CCM  7.3

38.9

1.5%

Yes

N/EL

N/EL

N/EL

N/EL

N/EL

Yes

Yes

Yes

Yes

Yes

Yes

Yes

16.0%

E

7.5 Installation, maintenance and repair of metering,  regulation and energy performance control devices  and instruments of buildings in respect of metering;

CCM  7.5

138.1

5.4%

Yes

N/EL

N/EL

N/EL

N/EL

N/EL

Yes

Yes

Yes

Yes

Yes

Yes

Yes

8.3%

E

7.6 Installation, maintenance and repair of renewable  energy technologies;

CCM  7.6

0.0%

E

9.3 Professional services related to energy  performance of buildings.

CCM  9.3

1.1

0.0%

Yes

N/EL

N/EL

N/EL

N/EL

N/EL

Yes

Yes

Yes

Yes

Yes

Yes

Yes

0.0%

E

Revenues from environmentally sustainable  activities (aligned with the taxonomy) (A.1)

865.7

34.1%

31.2%

0%

2,9%

0%

0%

0%

Yes

Yes

Yes

Yes

Yes

Yes

Yes

39.6%

Of which are enabling

178.1

7.0%

7.0%

0.0%

0.0%

0.0%

0.0%

0.0%

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Of which are transitional

0.0

0.0%

0.0%

0.0%

0.0%

0.0%

0.0%

0.0%

Yes

Yes

Yes

Yes

Yes

Yes

Yes

A.2 activities eligible for the taxonomy but not  environmentally sustainable (not aligned with the  taxonomy)

130

€M

%

EL; N/EL;

EL;  N/EL;

EL;  N/EL;

EL;  N/EL;

EL;  N/EL;

EL;  N/EL;

%

4.15 Distribution of district heating/district cooling;

CCM  4.5

0.1

0.0%

EL

N/EL

N/EL

N/EL

N/EL

N/EL

0.0%

Revenues from activities eligible for the  taxonomy but not environmentally sustainable  (activities not aligned with the taxonomy) (A.2)

0.1

0.0%

0.0%

0%

0%

0%

0%

0%

0.0%

Total A.1 + A.2

865.8

34.1%

31.2%

0%

2.9%

0%

0%

0%

39.6%

B. ACTIVITIES NOT ELIGIBLE FOR THE  TAXONOMY

Income from activities not eligible for the taxonomy  (B)

1.673.7

65.9%

TOTAL A+B

2,539.4

Values for 2023 are aligned with what is reported in the 2023 Integrated Annual Report. 

The code contains the abbreviation of the goal to which the economic activity can make a substantial contribution, and the section number of the activity in the corresponding goal annex, i.e., CCM climate change mitigation; CCA  climate change adaptation; WTR water and marine resources; CE circular economy; PPC pollution prevention and control; BIO biodiversity and ecosystems.

Please refer to the following definitions for abbreviations included in the criteria for substantial contribution: Yes - Activity is eligible for taxonomy and aligned with taxonomy with respect to the relevant environmental objective; No \-  Activity is eligible for taxonomy but not aligned with taxonomy with respect to the relevant objective; EL - Activity eligible for taxonomy for the relevant objective; N/EL - Not eligible; activity is not eligible for taxonomy for the relevant  objective

2024 revenue share

Aligned

Eligible

Climate change mitigation CCM

31.2%

31.2%

Climate change adaptation CCA

0.0%

0.0%

Sustainable use and protection of water and marine resources WTR

2.9%

2.9%

Transition to a circular economy EC

0.0%

0.0%

Pollution prevention and reduction PPC

0.0%

0.0%

Protection and restoration of biodiversity and BIO ecosystems

0.0%

0.0%

131

2024 Share of operating expenses from products or services associated with economic activities aligned with the taxonomy

Criteria for the substantial contribution

Criteria for “Do No Significant Harm” DNSH

Code 

Absolute revenues

Revenue Share 

Climate change mitigation 

Climate change adaptation 

Water

Pollution

Circular Economy

Biodiversity

Climate change mitigation 

Climate change adaptation 

Water

Pollution

Circular Economy

Biodiversity

Minimum safeguards guarantees

Share of eligible revenue aligned to  Taxonomy (N-1)

Category (enabling activity)

Category (transition activity)

€M

%

Yes;  No;  N/EL;

Yes;  No;  N/EL;

Yes; 

No; 

N/EL;

Yes;  No;  N/EL;

Yes;  No;  N/EL;

Yes;  No;  N/EL;

Yes;  No;  N/EL;

Yes;  No;  N/EL;

Yes;  No;  N/EL;

Yes;  No;  N/EL;

Yes;  No;  N/EL;

Yes;  No;  N/EL;

Yes;  No;  N/EL;

%

E

T

A. ACTIVITIES ELIGIBLE  FOR THE TAXONOMY

A.1 environmentally  sustainable activities  (aligned with the  taxonomy)

2.1 Water supply

WTR  2.1

9.9

10.3%

N/EL

N/EL

Yes

N/EL

N/EL

N/EL

Yes

Yes

Yes

Yes

Yes

Yes

Yes

4.1 Production of electricity  by means of solar- photovoltaic technology;

CCM  4.1

0.6

0.6%

Yes

N/EL

N/EL

N/EL

N/EL

N/EL

Yes

Yes

Yes

Yes

Yes

Yes

Yes

0.2%

4.14 Renewable gas and low  carbon emission gas  distribution and transmission  networks in respect of the  gas distribution business;

CCM  4.14

21.8

22.9%

Yes

N/EL

N/EL

N/EL

N/EL

N/EL

Yes

Yes

Yes

Yes

Yes

Yes

Yes

9.4%

5.1 Construction, expansion  and management of water  collection, treatment and  supply systems;

CCM  5.1

0.1

0.1%

Yes

N/EL

N/EL

N/EL

N/EL

N/EL

Yes

Yes

Yes

Yes

Yes

Yes

Yes

0.1%

7.3 Installation, maintenance  and repair of energy  efficiency devices for all  energy efficiency activities;

CCM  7.3

30.8

32.3%

Yes

N/EL

N/EL

N/EL

N/EL

N/EL

Yes

Yes

Yes

Yes

Yes

Yes

Yes

76.2%

E

7.5 Installation, maintenance  and repair of metering,  regulation and energy  performance control devices  and instruments of buildings  in respect of metering;

CCM  7.5

1.8

1.9%

Yes

N/EL

N/EL

N/EL

N/EL

N/EL

Yes

Yes

Yes

Yes

Yes

Yes

Yes

3.4%

E

132

7.6 Installation, maintenance  and repair of renewable  energy technologies;

CCM  7.6

0.1%

E

9.3 Professional services  related to energy  performance of buildings.

CCM  9.3

1.3

1.4%

Yes

N/EL

N/EL

N/EL

N/EL

N/EL

Yes

Yes

Yes

Yes

Yes

Yes

Yes

0.3%

E

Revenues from  environmentally  sustainable activities  (aligned with the  taxonomy) (A.1)

66.4

69.6%

59.3%

0%

10.3%

0%

0%

0%

Yes

Yes

Yes

Yes

Yes

Yes

Yes

89.7%

Of which are enabling

34.0

35.6%

35.6%

0.0%

0.0%

0.0%

0.0%

0.0%

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Of which are transitional

0

0.0%

0.0%

0.0%

0.0%

0.0%

0.0%

0.0%

Yes

Yes

Yes

Yes

Yes

Yes

Yes

A.2 activities eligible for  the taxonomy but not  environmentally  sustainable (not aligned  with the taxonomy)

€M

%

E;  N/EL;

E;  N/EL;

E;  N/EL;

E;  N/EL;

E;  N/EL;

E;  N/EL;

%

4.15 Distribution of district  heating/district cooling;

CCM  4.15

0.0

0.0%

EL

N/EL

N/EL

N/EL

N/EL

N/EL

0.0%

8.1 Data processing,  hosting, and related  activities.

CCM  8.1

7.2

7.5%

EL

N/EL

N/EL

N/EL

N/EL

N/EL

2.4%

Operating expenses from  activities eligible for the  taxonomy but not  environmentally  sustainable (activities not  aligned with the taxonomy)  (A.2)

7,2

7.5%

7.5%

0%

0%

0%

0%

0%

2.4%

Total A.1 + A.2

73.6

77.1%

66.8%

0%

10.3%

0%

0%

0%

92.1%

B. ACTIVITIES NOT  ELIGIBLE FOR THE  TAXONOMY

Capital expenditures from  activities not eligible for the  taxonomy (B)

21.8

22.8%

TOTAL A+B

95.3

100%

Values for 2023 are aligned with what is reported in the 2023 Annual Consolidated Report. 

The code contains the abbreviation of the goal to which the economic activity can make a substantial contribution, and the section number of the activity in the corresponding goal annex, i.e., CCM climate change mitigation; CCA  climate change adaptation; WTR water and marine resources; CE circular economy; PPC pollution prevention and control; BIO biodiversity and ecosystems.

133

Please refer to the following definitions for abbreviations included in the criteria for substantial contribution: Yes - Activity is eligible for taxonomy and aligned with taxonomy with respect to the relevant environmental objective; No \-  Activity is eligible for taxonomy but not aligned with taxonomy with respect to the relevant objective; EL - Activity eligible for taxonomy for the relevant objective; N/EL - Not eligible; activity is not eligible for taxonomy for the relevant  objective

2024 share of operating expenses

Aligned

Eligible

Climate change mitigation CCM

59.3%

66.8%

Climate change adaptation CCA

0.0%

0.0%

Sustainable use and protection of water and marine resources WTR

10.3%

10.3%

Transition to a circular economy EC

0.0%

0.0%

Pollution prevention and reduction PPC

0.0%

0.0%

Protection and restoration of biodiversity and BIO ecosystems

0.0%

0.0%

134

2024 Share of capital expenditures from products or services associated with economic activities aligned with the taxonomy

Criteria for the substantial contribution

Criteria for “Do No Significant Harm” DNSH

Code 

Absolute capital expenditures

Capital expenditures share 

Climate change mitigation 

Climate change adaptation 

Water

Pollution

Circular Economy

Biodiversity

Climate change mitigation 

Climate change adaptation 

Water

Pollution

Circular Economy

Biodiversity

Minimum safeguards guarantees

Share of eligible revenue aligned to  Taxonomy (N-1)

Category (enabling activity)

Category (transition activity)

€M

%

Yes; No;  N/EL;

Yes;  No;  N/EL;

Yes; 

No;

N/EL;

Yes;  No;  N/EL;

Yes;  No;  N/EL;

Yes;  No;  N/EL;

Yes;  No

Yes;  No

Yes;  No

Yes;  No

Yes;  No; 

Yes;  No

Yes;

No;

%

E

T

A. ACTIVITIES ELIGIBLE FOR THE  TAXONOMY

A.1 environmentally sustainable  activities (aligned with the taxonomy)

2.1 Water supply

WTR  2.1

3.0

0.3%

N/EL

N/EL

Yes

N/EL

N/EL

N/EL

Yes

Yes

Yes

Yes

Yes

Yes

Yes

0.0%

4.1 Production of electricity by means of  solar-photovoltaic technology;

CCM  4.1

2.0

0.2%

Yes

N/EL

N/EL

N/EL

N/EL

N/EL

Yes

Yes

Yes

Yes

Yes

Yes

Yes

0.1%

4.11 Heat energy storage;

CCM  4.11

0.2

0.0%

Yes

N/EL

N/EL

N/EL

N/EL

N/EL

Yes

Yes

Yes

Yes

Yes

Yes

Yes

0.2%

E

4.14 Renewable gas and low carbon  emission gas distribution and  transmission networks in respect of the  gas distribution business;

CCM  4.14

622.0

64.0%

Yes

N/EL

N/EL

N/EL

N/EL

N/EL

Yes

Yes

Yes

Yes

Yes

Yes

Yes

67.9%

5.1 Construction, expansion and  management of water collection,  treatment and supply systems;

CCM  5.1

0.5

0.0%

Yes

N/EL

N/EL

N/EL

N/EL

N/EL

Yes

Yes

Yes

Yes

Yes

Yes

Yes

0.0%

5.2 Renewal of water collection,  treatment and supply systems;

CCM  5.2

1.7

0.2%

Yes

N/EL

N/EL

N/EL

N/EL

N/EL

Yes

Yes

Yes

Yes

Yes

Yes

Yes

0.2%

7.3 Installation, maintenance and repair  of energy efficiency devices for all energy  efficiency activities;

CCM  7.1

3.0

0.3%

Yes

N/EL

N/EL

N/EL

N/EL

N/EL

Yes

Yes

Yes

Yes

Yes

Yes

Yes

0.2%

7.5 Installation, maintenance and repair  of metering, regulation and energy  performance control devices and  instruments of buildings in respect of  metering;

CCM  7.2

7.2

0.7%

Yes

N/EL

N/EL

N/EL

N/EL

N/EL

Yes

Yes

Yes

Yes

Yes

Yes

Yes

0.1%

T

7.6 Installation, maintenance and repair  of renewable energy technologies;

CCM  7.3

7.4

0.8%

Yes

N/EL

N/EL

N/EL

N/EL

N/EL

Yes

Yes

Yes

Yes

Yes

Yes

Yes

0.7%

E

135

7.3 Installation, maintenance and repair  of energy efficiency devices for all energy  efficiency activities;

CCM  7.4

0.0%

E

7.5 Installation, maintenance and repair  of metering, regulation and energy  performance control devices and  instruments of buildings in respect of  metering;

CCM  7.5

117.3

12.1%

Yes

N/EL

N/EL

N/EL

N/EL

N/EL

Yes

Yes

Yes

Yes

Yes

Yes

Yes

11.3%

E

7.6 Installation, maintenance and repair  of renewable energy technologies;

CCM  7.6

1.1

0.1%

Yes

N/EL

N/EL

N/EL

N/EL

N/EL

Yes

Yes

Yes

Yes

Yes

Yes

Yes

0.1%

E

Revenues from environmentally  sustainable activities (aligned with the  taxonomy) (A.1)

765.3

78.8%

78.5%

0%

0.3%

0%

0%

0%

Yes

Yes

Yes

Yes

Yes

Yes

80.9%

Of which are enabling

126.0

13.0%

13.0%

0.0%

0.0%

0.0%

0.0%

0.0%

Yes

Yes

Yes

Yes

Yes

Yes

Of which are transitional

7.2

0.7%

0.7%

0.0%

0.0%

0.0%

0.0%

0.0%

Yes

Yes

Yes

Yes

Yes

Yes

A.2 activities eligible for the taxonomy  but not environmentally sustainable  (not aligned with the taxonomy)

€M

%

EL;  N/EL;

EL;  N/EL;

EL;

N/EL;

EL;  N/EL;

EL;  N/EL;

EL;  N/EL;

%

2.1 Water supply;

WTR  2.1

37.1

3.8%

N/EL

N/EL

EL

N/EL

N/EL

N/EL

0.0%

3.10 Hydrogen production;

CCM  3.10

8.0

0.8%

EL

N/EL

N/EL

N/EL

N/EL

N/EL

0.1%

5.1 Construction, expansion and  operation of water collection, treatment  and supply systems.

CCM  5.1

7.8%

8.1 Data processing, hosting, and related  activities.

CCM  8.1

0.2

0.0%

EL

N/EL

N/EL

N/EL

N/EL

N/EL

0.0%

Operating expenses from activities  eligible for the taxonomy but not  environmentally sustainable (activities  not aligned with the taxonomy) (A.2)

45.3

4.6%

0.8%

0%

3.8%

0%

0%

0%

7.8%

Total A.1 + A.2

810.6

83.4%

79.3%

0%

4.1%

0%

0%

0%

88.8%

B. ACTIVITIES NOT ELIGIBLE FOR  THE TAXONOMY

Capital expenditures from activities not  eligible for the taxonomy (B)

160.8

16.6%

TOTAL A+B

971.4

100%

Values for 2023 are aligned with what is reported in the 2023 Annual Consolidated Report. 

The code contains the abbreviation of the goal to which the economic activity can make a substantial contribution, and the section number of the activity in the corresponding goal annex, i.e., CCM climate change mitigation; CCA  climate change adaptation; WTR water and marine resources; CE circular economy; PPC pollution prevention and control; BIO biodiversity and ecosystems.

Please refer to the following definitions for abbreviations included in the criteria for substantial contribution: Yes - Activity is eligible for taxonomy and aligned with taxonomy with respect to the relevant environmental objective; No \-  Activity is eligible for taxonomy but not aligned with taxonomy with respect to the relevant objective; E - Activity eligible for taxonomy for the relevant objective; N/E - Not eligible; activity is not eligible for taxonomy for the relevant  objective

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2024 share of capital expenditures

Aligned

Eligible

Climate change mitigation CCM

78.5%

79.3%

Climate change adaptation CCA

0.0%

0.0%

Sustainable use and protection of water and marine resources  WTR

0.3%

4.1%

Transition to a circular economy EC

0.0%

0.0%

Pollution prevention and reduction PPC

0.0%

0.0%

Protection and restoration of biodiversity and BIO ecosystems

0.0%

0.0%

Annex XII – Revenues, Operating expenses and Capital expenditures

Template 1 Nuclear and fossil gas related activities

Nuclear energy related activities

The undertaking carries out, funds or has exposures to research, development, demonstration and deployment of innovative electricity generation facilities that produce energy from nuclear  processes with minimal waste from the fuel cycle.

NO

The undertaking carries out, funds or has exposures to construction and safe operation of new nuclear installations to produce electricity or process heat, including for the purposes of district  heating or industrial processes such as hydrogen production, as well as their safety upgrades, using best available technologies.

NO

The undertaking carries out, funds or has exposures to safe operation of existing nuclear installations that produce electricity or process heat, including for the purposes of district heating or  industrial processes such as hydrogen production from nuclear energy, as well as their safety upgrades.

NO

Fossil gas related activities

The undertaking carries out, funds or has exposures to construction or operation of electricity generation facilities that produce electricity using fossil gaseous fuels.

NO

The undertaking carries out, funds or has exposures to construction, refurbishment, and operation of combined heat/cool and power generation facilities using fossil gaseous fuels.

NO

The undertaking carries out, funds or has exposures to construction, refurbishment and operation of heat generation facilities that produce heat/cool using fossil gaseous fuels.

NO

137

138

ESRS E1 – Climate Change

Transition plan for climate change mitigation and Integration of sustainability-related performance in  incentive schemes (E1-1, ESRS 2 GOV-3)

Italgas has adopted a transition plan that aligns the Group's business model and operations with the pathway  to limiting global warming to 1.5°C, as outlined in the Paris Agreement and the European Union's climate goals.

The plan aims to achieve net zero carbon emissions for Scope 1 and 2 market-based emissions and Scope 3  supply chain emissions by 2050 64 , setting specific interim targets: 

Gas distribution 65 :

• \- 42% Scope 1 and Scope 2 market-based emissions by 2030 compared to 2020 levels;

• \- 33% Scope 3 - supply chain emissions by 2030 compared to 2020 levels;

• \- 33% of net energy consumption by 2030 compared to 2020 levels. 

Water Sector 66 :

• \- 33% Scope 1 and 2 market-based emissions by 2030 compared to 2023 levels;

• \- 33% of net energy consumption by 2030 compared to 2020 levels.

Italgas' 67 transition plan, built on the pillars of sustainability, growth and innovation, is fully integrated into the  Group's 2024–2030 Strategic Plan. The latter, approved by the Board of Directors 68 , ensures alignment with  the company's strategic direction. The integration ensures that climate-related risks and opportunities, as well  as the key elements of the transition plan – decarbonisation efforts, operational improvements, efficiency gains  and infrastructure modernisation – are aligned with the strategy and financial planning. Together, they provide  a structured framework for addressing the challenges of the energy transition.

The Strategic Plan incorporates these considerations into financial planning, including the strategic planning  of CapEx and OpEx, ensuring that sustainability goals influence decisions at all levels – from revenue  generation to asset management.

The Group's Remuneration Policy is aligned with the objectives of the transition plan. The document, drafted  by the Appointments and Compensation Committee and submitted to the Board of Directors for review and  approval, provides for short-term and long-term compensation for Group Management, including the CEO,  linked to the achievement of climate targets (please refer to datapoint GOV-3). 

The transition plan includes the Group's strategy to proactively address both physical climate risks – related  to the impact of natural disasters on the integrity of networks, ensuring their resilience to increasing climate 

64 Excluding the water sector.

65 The targets apply to gas distribution companies consolidated within the financial data consolidation perimeter as of December 31, 2024. Upon approval of  the 2024-2030 Sustainable Value Creation Plan, these targets were also extended to the financial data consolidation perimeter as of June 30, 2024, with the  addition of the 2i Rete Gas perimeter, while excluding the water sector, which has specific energy and greenhouse gas emission targets.

66 These targets, included in the 2024-2030 Sustainable Value Creation Plan, exclude Acqua Campania S.p.A., while they include Nepta S.p.A. and the non- consolidated companies Acqualatina S.p.A. and Siciliacque S.p.A.

67 It includes elements with a time horizon extending up to 2050.

68 Approved on Monday, October 7, 2024 https://www.italgas.it/wp-content/uploads/sites/2/2024/10/PR_Italgas_Strategic_Plan_2024_2030.pdf

139

variability – and transition risks, primarily related to the potential negative evolution of the technological and  market landscape due to a declining role of gas as an energy carrier for the residential sector.

A central element of the plan is the crucial role of gas distribution networks as a key infrastructure for achieving  European climate targets. The complete digitisation of the networks planned and implemented by the Group  will allow the safe transport of renewable gas mixtures, such as biomethane, synthetic methane and hydrogen,  which will progressively replace fossil natural gas. This technological upgrade therefore contributes directly to  reducing emissions, while confirming the relevance of the existing gas infrastructure beyond 2050. By  integrating renewable gases, the Italgas Group supports an inclusive, economically sustainable and resilient  energy transition in all the territories in which it operates.

Despite the absence of a methodology specific to the Science-Based Targets initiative (SBTi) for the oil & gas  sector, in particular for gas distribution, Italgas' targets are in any case aligned with the trajectory provided by  the SBTi's cross-sector approach for a 1.5°C scenario, in line with the objective of “limiting global warming to  well below 2°C, preferably to 1.5°C, compared to pre-industrial levels”, as set out in the Paris Agreement. This  is currently the most effective option available for alignment with the SBTi criteria. Italgas also remains  committed to obtaining formal SBTi validation as soon as the methodology is available.

Furthermore, in this regard, Italgas obtained confirmation of this alignment from an independent consultant  (Carbonsink, a Southpole company), specialised in the analysis of climate scenarios. 

The analysis of the Group's 69 alignment with a 1.5° scenario of Scope 1 and Scope 2 market-based  greenhouse gas emission targets and trajectories is based on the following activities:

- an assessment of the emissions profile and targets, against a set of 157 publicly available global  pathways for CO 2 and CH 4 emissions in Eastern and Western Europe, collected by the IPCC in its 6th  Assessment Report. These pathways are designed to limit the global temperature increase to 1.5 °C  with a probability of more than 50%, with or without exceeding this limit before reaching net zero  emissions by 2050 at the latest. Italgas' 2030 target was more ambitious than 151 of these scenarios  (96%, top quintile), indicating that the Group's Scope 1 and Scope 2 market-based target for 2030 falls  well within the range of those included in the IPCC 1.5°C global pathways; 

- a comparison performed using the absolute contraction approach of the Science Based Targets  initiative (SBTi) indicated that Italgas' targets exactly match the SBTi 1.5°C curve in terms of trajectory  from 2020 to 2030. The target envisages an annual reduction of 4.2% over the 10-year period under  analysis and is, therefore, aligned with the global annual emission reduction rate needed to meet 1.5  °C assuming a general industry pathway;

- an application of the Temperature Scoring Methodology to the Group's 2030 target, a temperature  scoring methodology developed by the Carbon Disclosure Project (CDP) and the World Wide Fund  For Nature (WWF) to translate the ambition of corporate greenhouse gas emission reductions into  temperature assessments for companies. This methodology has shown that the Group's targets are  in line with a temperature increase scenario within 1.5 °C. Leveraging SBTi's work, the temperature 

69 Reference perimeter: Group gas distribution companies (-42% Scope 1 and Scope 2 market-based emissions by 2030 compared to 2020 levels; net zero  carbon by 2050).

140

assessment methodology expands the temperature assessment of corporate ambitions in the short- to-medium term from a wide range of possible end-of-century (2100) temperatures between 1.5 and  5 °C, and aims to translate reported corporate targets into long-term temperature trajectories; 

- a comparison with emission reduction pathways in line with the 1.5°C Net Zero Emission (NZE)  scenario of the International Energy Agency (IEA) showed that they are compatible with Italgas'  medium-term (2030) targets within that specific time frame, when referencing absolute emissions for  “Other Industries” within advanced economies (the pathway would require a 29% reduction in  emissions by 2030 compared to a 2020 baseline, while Italgas’ target is for a 42% reduction over the  same period).

The alignment of Scope 3 – supply chain 70 targets for reducing greenhouse gas emissions with the  1.5°C and well below 2°C scenario pathways has been assessed through:

- an assessment of the emissions profile and targets against a set of 157 publicly available global  pathways in Eastern and Western Europe, collected by the IPCC in its 6th Assessment report. Italgas'  2030 targets were found to be more ambitious than 72 of these scenarios (46%). These results indicate  that Italgas' Scope 3 supply chain targets are in the lower half of those in the IPCC's 1.5°C global  pathways. The same exercise was carried out with respect to a set of 221 publicly available global  pathways in Eastern and Western Europe, collected by the IPCC in its 6th Assessment report,  designed to limit the global temperature increase to 2.0°C with a probability of more than 67% (“well  below 2°C”). Compared to these scenarios, Italgas' targets were found to be more ambitious than 165  of those considered (75%). These results indicate that Italgas' Scope 3 supply chain targets are within  the range of those in the IPCC well below 2°C global pathways;

- A comparison with the SBTi Absolute Contraction Approach indicated that Italgas' target exceeds the  minimum ambition required by the SBTi for a Scope 3 supply chain target aligned with a “well below  2°C” scenario, in terms of a trajectory from 2020 to 2030. The target provides for an annual reduction  of 3.3% over the 10-year period under analysis, and thus aligns with the overall annual rate of  emissions reduction required to meet the well below 2°C scenario, considering a “General Sector”  SBTi pathway;

- an application of the Temperature Scoring Methodology for the Group's Scope 3 GHG emissions  targets from the supply chain by 2030. The application for Scope 3 GHG emissions from the Group's  supply chain demonstrated the alignment of the targets' ambition with a long-term temperature  outcome of 1.68°C, corresponding to a scenario well below 2°C, in line with the Paris Agreement's;

- A comparison with emission reduction pathways in line with the International Energy Agency's 1.5°C  Net Zero Emission scenario showed that Italgas' medium-term (2030) targets are compatible with a  1.5°C NZE pathway over that specific time frame, when referencing absolute emissions for “Other  Sectors” in advanced economies. This trajectory would require a 29% reduction in Scope 3 GHG 

70 Reference perimeter: Group gas distribution companies (-33% Scope 3 emissions – Supply chain by 2030 compared to 2020 levels; net zero carbon by  2050).

141

emissions from the supply chain by 2030 compared to the 2020 baseline, while Italgas' target is for a  33% reduction over the same period.

The Group has defined specific decarbonisation levers with which to implement the transition plan to support  its targets for reducing greenhouse gas emissions, presented in detail in DR E1-3 / MDR-A. The Italgas Group  has also carried out an assessment of the “locked-in” 71 GHG emissions from the company’s main assets and products, identifying residual fugitive emissions that remain after all leakage minimisation measures as  potential “locked-in” emissions, since they are intrinsically linked to the reference assets and the sector in  which the company operates.

These investments aim to ensure the gradual integration and supply of renewable gas blends (hydrogen or  other low-carbon gases), in line with the Group's commitment to support a sustainable energy transition and  assist in the implementation of the climate transition plan. The activity includes leak detection and repair of  existing gas pipelines and other elements of the network to reduce methane leaks. This explains the high level  of alignment of the capital investments implemented in gas distribution networks in 2024 according to the  criteria of Commission Delegated Regulations (EU) 2020/852, 2021/2139, 2023/2485 and 2023/2486  (Delegated Regulations on Taxonomy) relating to the European Taxonomy. In defining its Strategic Plan,  Italgas takes into account the environmental objectives as described in the Delegated Regulations on  Taxonomy with the aim of increasing the Group's share of revenues, operating expenses (OpEx) and capital  expenditures (CapEx) over time, as well as the improvement of the reported KPIs. 

According to the exclusion criteria defined in the Commission Delegated Regulation (EU) 2020/1818, which  sets minimum standards for indices used as benchmarks for financial instruments and contracts or for  measuring the performance of investment funds aligned with the Paris Agreement, the Group is excluded as  it falls within the subset of companies deriving more than 50% of their revenue from the exploration, extraction,  production, or distribution of combustible gases.

Material impacts, risks and opportunities and their interaction with strategy and business model and  Description of the processes to identify and assess material climate-related impacts, risks and  opportunities (ESRS 2 SBM-3, ESRS 2 IRO-1)

Italgas' strategy is profoundly influenced by climate change: the analysis of climate scenarios and related  Impacts, Risks and Opportunities (IRO) are constantly considered during the drafting of the Strategic Plan.  The identification and assessment of climate-related IROs is part of the double materiality analysis, which  considered significant impacts from an inside-out perspective and significant risks/opportunities from a  financial perspective.

As part of the financial materiality assessment, the following climate-related risks/opportunities were identified  as significant:

71 This refers to the estimated Scope 1 and 2 GHG emissions over the operational life of key assets and those planned with certainty. Key assets are those  owned or controlled by the company and consist of existing or planned assets (such as fixed or mobile installations, plants and equipment) that are a source  of significant GHG emissions, caused directly or indirectly by energy generation. Key assets planned with certainty are those that the company will most likely  start using within the next five years.

142

• Risk of negative developments in the technological and market environment: Declining significance of  gas as an energy carrier for the residential sector

• Opportunities to enable the use of renewable gas in order to meet residential demand

Both of these events are considered Climate-related Transition Risks.

The assessment of the resilience of the Group's strategy to mitigate and adapt to climate change was  developed following an analysis based on climate scenarios that best represent the context in which Italgas  operates, both transitional and physical, qualitative and quantitative, which are publicly available and do not  exclude any physical or transitional risks of climate scenarios. The analysis helps identify and assess potential  business impacts, and define the responses and actions needed to manage these risks and opportunities. 

Details of the scenarios used in the resilience analysis are provided below.

Transition scenarios

The transition scenarios on decarbonisation and energy transition highlight the relevance of the future role of  gas in the energy mix, ensuring consistency with international and European objectives. The scenarios  considered for the development of the 2024-2030 Strategic Plan are based on forecasts from the European  Commission, the International Energy Agency’s (IEA) World Energy Outlook, ENTSOG, ENTSO-E, IRENA,  and national contributions (National Energy and Climate Plan for Italy and Greece, Snam-Terna scenarios). 

In particular, the IEA STEPS, APS and NZE scenarios were analysed with a focus on emission reduction and  mitigation actions necessary to achieve the Net-Zero target by 2050. 

ENTSO scenarios (e.g. ENTSOG-ENTSOE Distributed Energy and Global Ambition) were analysed to focus  on European CO 2 trends, gas supply and demand within the Group's reference perimeter (Europe, Italy,  Greece), the projected evolution of the gas mix (fossil fuels, biomethane, hydrogen and other renewables) and  energy efficiency. The Snam-Terna scenarios focus on the Italian perimeter and are developed with an  integrated approach by the main gas and electricity TSOs in Italy. They show an evolution of the energy mix  towards 2030 and 2040, with overall gas demand remaining almost stable in the coming decades, thanks to a  progressive shift to green gas, with an increasing role of biomethane in the decarbonisation of the residential  sector. With reference to the Greek perimeter, the DESFA 2022-2030 demand forecast study is also  considered. This scenario up to 2030 forecasts an increase in gas demand, due to the gasification of new  areas planned by the Greek TSO (Western Macedonia, Western Greece, Peloponnese, Epirus). All scenarios  are in line with the Paris Agreement and the European Union's ambition to reach the Net-Zero target in 2050\.  The potential occurrence of an energy scenario of a greater transition towards electrification of consumption,  which would result in a long-term decline in the use of gas (natural gas, biomethane and hydrogen) in the  residential segment, is sensitive to uncertainty related to multiple demand and supply factors in the energy  market, including: the timing of reaching grid parity between conventional sources and renewable energy; the  development pathway of renewable gas production, particularly with reference to the potential volumes of  biomethane and hydrogen, as well as their end uses; the incentive schemes for renewable fuels; the timing of  infrastructure adaptation to renewable penetration scenarios and electrification of consumption, and the  development and dissemination of technological solutions available for civil use. The effect of energy efficiency  actions and the adoption of good consumption practices may not be sufficient to “meet” the drop in gas volumes 

143

forecasted by these scenarios, and electrification would lead, in the long term, to an increase in the use of  systems powered by electricity, rather than by natural gas / renewable gas. In this scenario, the impact for the  Group would be that of a long-term increase in the number of deactivations and/or a decrease in the activations  of new redelivery points in the residential sector, with the resulting negative impact on the Group's revenues  (given the current regulatory mechanism which, in Italy, provides for a revenue component that is parametric  and dependent on the number of re-delivery points managed by the Group).

Physical scenarios

Although the physical risks of climate change have not been assessed as material, some details of the Physical  Scenarios considered in the risk assessment are provided: the physical scenarios considered are the  Representative Concentration Pathways (RCP) 8.5 and 4.5 of the Intergovernmental Panel on Climate  Change, both quantitative, based on climate physics, and defined by greenhouse gas concentrations in the  atmosphere. The first one selected by Italgas is RCP 8.5, which represents the IPCC worst-case scenario in  which there would be extreme and potentially irreversible consequences on weather and climate variables if  no action is taken to reduce emissions. In this scenario, emissions growth at current rates will lead to high  levels of greenhouse gas concentrations, resulting in the failure to combat global warming. With the  assumption that, by 2100, atmospheric CO 2 concentrations will triple or quadruple (840-1120 ppm) compared  to pre-industrial levels (280 ppm). This is an energy-intensive scenario with total consumption continuing to  grow over the century, reaching well over three times current levels. Secondly, Italgas has factored in the RCP  4.5 scenario, which does not take into account further mitigation commitments by states than those already  adopted, apart from the implementation of some initiatives, such as the use of new technologies and strategies  to reduce GHG emissions. For this reason, moderate transitional measures and a considerable worsening of  the planet's physical parameters are expected. It is considered a stabilisation scenario because it predicts that  CO 2 emissions will peak around mid-century and fall below current levels by 2070. By the end of the century,  atmospheric concentrations will stabilise at around twice (520 ppm) pre-industrial levels. These scenarios  project an increase in average temperatures of between 1.25° and 2.5°C in the 30-year period between 2030  and 2050. This increase varies depending on the climatic zone and involves a change in physical parameters,  including in Italgas' areas of operation (Italy and Greece). The main parameters and risks considered by Italgas  in the assessment are:

i. the increase in temperatures (KPIs used for the scenario analysis: average temperature and heating  degree days) and the consequent decrease in heating degree days in Italgas' areas of operation, and  therefore an increase in the number of municipalities in mild climate zones (resulting in fewer  activations/increased deactivations of re-delivery points). The scenarios analysed in the literature,  IPCC RCP 8.5 and 4.5, do not involve, in the short, medium or long term, a significant increase in  municipalities in mild climate zones that could have potentially significant negative effects on the  Group. 

ii. Increase in the frequency/intensity of extreme natural events (KPI: days with extreme rainfall): one of  the effects of the IPCC 8.5 and 4.5 scenarios is an increase in the frequency of extreme natural events.  For the Italgas areas of operation and for the type of business, the natural events observed in the past 

144

that resulted in damage to assets and/or extra costs, which were not negligible but in any case had a  minor impact, were attributable to landslides/floods/tsunamis.

The results obtained from the scenario and resilience analyses constituted key elements for the preparation  of the Group's Strategic Plan. In fact, the analyses supported the forecasting of investments in infrastructure  upgrades and innovation, including the repurposing and digitisation of gas networks, to facilitate the transition  to green gases and reduce greenhouse gas emissions. Also with the aim of enhancing the resilience and  security of the Group's infrastructure and ensuring a continuous and reliable service, strategic objectives,  including targets for the reduction of greenhouse gas emissions, defining specific KPIs, investments in the  distribution network and in the energy and water efficiency sectors, are included in the Strategic Plan (which  in turn contains and complements the Group's Transition Plan) and the Sustainable Value Creation Plan. This  approach, developed from the analysis of scenarios, ensures the optimal positioning of the Group in the  transition to a low-carbon economy, capitalising on new opportunities while managing the risks associated with  climate change and regulatory developments 72 . The impact significance analysis conducted by Italgas in 2024  identified the following positive and negative impacts related to climate change:

• Contribution to climate change : the extraction, processing and delivery phases of the raw materials  used by the Group generate greenhouse gas emissions due to the use of fossil fuels in the processes  involved. The main activities of the Italgas Group also generate greenhouse gas emissions, contributing  negatively to climate change: in particular, fugitive methane emissions can be produced during the  operation and maintenance of the network. 

• Benefits deriving from network digitisation and energy efficiency upgrades by ESCo : the Group  is committed to repurposing and digitising its distribution networks to enable the future transmission of  green gases such as biomethane, hydrogen and synthetic gases. In addition, through the ESCo  Geoside, the Group offers energy efficiency services to reduce energy consumption and related third- party emissions, actively contributing to the fight against climate change.

The identification of impacts is based on a detailed analysis by the Group of the climate impact of its assets  and business activities. Regarding the direct and indirect contribution to climate change, qualitative and  quantitative information from the Group's Scope 1, Scope 2, and Scope 3 emissions inventory was used, along  with a screening of positive contributions and activities undertaken to address climate change. For a more  detailed description of the impact assessment methodology, refer to DR ESRS 2 IRO-1. The process of  identifying and assessing climate risks, both physical and transitional, is conducted consistently with financial  materiality assessment requirements, taking into account the time frame necessary to promptly assess the  occurrence and/or impact of climate risks and opportunities. Therefore, both short-term (1 year), medium-term  (up to 5 years) and long-term (beyond 5 years) time frames were considered. Risk considerations include the  overall gas infrastructure, both upstream and downstream of the Group's activities. Regarding the physical  risks and opportunities related to climate change, the analysis was based on the RCP 1.9, 4.5, and 8.5 climate  scenarios. The main physical parameters considered by the model are heating degree days and days with  heavy precipitation.

72 It is specified that, regarding the economic-financial balance sheet data reported in the appropriate sections of the document, there are no considerations  related to climate scenarios.

145

Climate change transition risks and opportunities are analysed on the basis of various third-party climate and  energy scenarios, and with the involvement of the main process data owners in order to investigate the main  transition drivers, the assumptions of the Group's Strategic Plan and the related risks and opportunities.

The final assessment of the effects of climate risks and opportunities, both physical and transitional, is  conducted based on the parameters of risk/opportunity impact and probability of occurrence, consistent with  the assessment of financial materiality. Each event was assessed using the thresholds of probability of  occurrence and impact on the economic-financial dimension, considering the persistence of the impact in the  short (1 year), medium (up to 5 years) or long term (beyond 5 years). The combination of the level of probability  and maximum impact on the economic-financial impact scale of each risk/opportunity constitutes its “rating”  (“critical”, “high”, “medium” and “low”). Risks/opportunities rated “high” or “critical” are deemed “significant”.

Policies related to climate change mitigation and adaptation (E1-2, MDR-P)

For optimal management of the impacts, risks and opportunities related to climate change, the Group has  adopted a Climate Change Policy that outlines the Group's strategic response and is in line with the goal of  the Paris Agreement. The Policy is structured on two pillars: mitigation and adaptation. Regarding climate  change mitigation, it includes the Group's commitments to reducing fugitive emissions along the network and  digitising the same network to accommodate green gases such as biomethane, hydrogen, and synthetic gases,  improving energy efficiency, and sourcing energy from renewable sources. Adaptation initiatives relate to  infrastructure optimisation, the use of predictive analytics and collaboration with local authorities to improve  infrastructure resilience. Italgas' commitment to sustainable development and its role in driving the energy  transition is constantly reaffirmed, ensuring greater long-term operational resilience. The Policy applies to all  company activities, in every geographical area in which it operates, including relations with suppliers and  partners, upstream and downstream in the value chain, to ensure sustainable management throughout the  supply chain. Italgas actively involves its business partners, establishing specific guidelines and requirements  to ensure that their practices are in line with the company's emission reduction targets. The Group CEO is  responsible for overseeing the Group's implementation of the Policy, while the CEOs of Group companies are  responsible for overseeing and implementing the Policy for each company for which they are responsible. The  principles of the Policy are inspired by the guidelines of global initiatives such as the United Nations Global  Compact and the Oil and Gas Methane Partnership 2.0 (OGMP 2.0), of which the Group is a member. In  pursuing its corporate objectives, Italgas considers continuous and productive dialogue with all stakeholders  to be strategic: in the case of the Climate Change Policy, engagement activities with suppliers are particularly  relevant, having the aim of sharing sustainability best practices along the entire value chain. The Policy is  publicly available on the Italgas Group website and is accessible to all Group employees and stakeholders.

Actions and resources in relation to climate change policies (E1-3, MDR-A)

In detail, the actions implemented by the Group to actively contribute to climate change mitigation, reducing  Scope 1 and 2 emissions related to the gas distribution sector by 2030 and 2050, are divided into the following  decarbonisation levers.

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GHG reduction 73 :

-10 3 tCO 2 eq

\- % contribution of leverage reduction  compared to baseline (203.9 10 3  tCO 2 eq)

Decarbonisation  lever

Shares

Reference  scopes

2024

2030  (Expected)

2050  (Expected)

Reduction of  fugitive methane  emissions

• Leak detection and repair with innovative technologies:  implementation of advanced and innovative tools for  high-precision leak detection (such as Picarro's Cavity  Ring-Down Spectroscopy system) and rapid repairs,  significantly reducing fugitive emissions and improving  operational safety.

• Network digitisation: real-time monitoring systems that  enable renewable gas distribution and timely leak  detection and repair.

• AI-based predictive maintenance: algorithms that  enable interventions for digitised individual network  sections, minimising fugitive emissions and reducing  unscheduled operational interruptions.

Scope 1

-74.6

(-36.6%)

-95.9

(-47.1%)

-130.0

(-63.8%)

Energy efficiency  and reduction of  consumption

• Digitisation for remote monitoring: intelligent platforms  that optimise network pressure and flow, reducing  energy consumption.

• Innovative pre-heating systems: automated and  innovative systems that ensure the control of gas pre- heating parameters in IPRMs (withdrawal, reduction and  measurement sites), increasing efficiency. 

• Building energy renovations: complete energy  renovations of civil business assets integrating the use  of innovative monitoring and control systems.

Scope 1 & Scope 2  market- based

-10.1

(-5.0%)

-15.0

(-7.3%)

-22.8

(-11.2%)

Contextual  changes

• Green gas integration: injection of green gases into the  distribution network (e.g. biomethane and green  hydrogen), reducing the impact of climate-altering gas  losses from the network.

Scope 1

-

-

-28.1

(-13.8%)

Use of fuels from  renewable  sources

• Fleet decarbonisation: shifting the fleet to hydrogen  and biofuel powered vehicles, resulting in a  reduction/zeroing of operational emissions.

• Decarbonisation of civil and industrial consumption:  use of guarantees of origin linked to the adoption of  renewable gases (biomethane and hydrogen) as fuels.

Scope 1

-

-

-5.7

(-2.8%)

“Carbon removal” initiatives

Scope 1

-

-

-17.3

(-8.5%)

The Transition Plan is based on the Group's Strategic Plan, which provides for CapEx investments over the  2024-2030 time frame of approximately 14.9 billion euros in the gas distribution sector, with a focus on network  development, digital transformation and innovation 74 . In 2024, the Group made capital expenditures (CapEx)  totaling €757.9 million and operating expenses (OpEx) amounting to €56.4 million, focusing on the expansion,  enhancement, digitalization, and modernization of its gas distribution infrastructure in Italy and Greece 75 . The  contributions related to the decarbonization levers for 2030 and 2050 from the table above are presented  below.

73 The data in the table refer to the scope of consolidation of the financial data as at 31 December 2024, excluding the water sector.

74 The investments shown are gross of the share related to the purchase of 2i Rete Gas' assets.

75 These CapEx do not refer to any of the activities classified as "gas-related activities" mentioned in ESRS E1-1, paragraph 16 f., note 37. CapEx and OpEx  are extracted from the 2024 tables reported in the “Disclosure pursuant to Article 8 of Regulation (EU) 2020/852 (Taxonomy Regulation),” excluding activities  A.1: 2.1, 5.1, 5.2, 7.1, 7.2, and A.2: 2.1, 8.1.

147

Regarding the targets for reducing Scope 3 emissions – Supply Chain related to the gas distribution sector by  2030 and 2050, the relevant decarbonisation levers are presented below.

GHG reduction 76 :

-10 3 tCO 2 eq

\- % contribution of leverage reduction  compared to baseline (202.9 10 3  tCO 2 eq)

Decarbonisation  lever

Shares

Reference  scopes

2024

2030  (Expected)

2050  (Expected)

76 The data in the table refer to the scope of consolidation of the financial data as at 31 December 2024, excluding the water sector.

148

Involvement of  suppliers

• Awareness-raising, engagement and training  initiatives; inclusion of reward criteria in tenders for  suppliers

Scope 3 –  Supply  chain

-116.5

(-57.4%)

-67.0

(-33.0%)

Contextual  changes

• Evolution of the context in line with the  decarbonisation pathways of international and  national industries

Scope 3 –  Supply  chain

-

-

-182.6

(-90.0%)

Targets related to climate change mitigation and adaptation (E1-4, MDR-T)

As stated in DR E1-1, the Group's climate targets aim to reduce CO 2 emissions and energy consumption, with  a Net Zero Carbon target to 2050 for Scope1, Scope 2 market-based and Scope 3 – Supply chain emissions.

Progress (2024)

Category and  units

Target scope

Base year

Base  year  value

2030

2050

%

Absolut e value

Type of  target

Average  annual  percentage  reduction of  emissions

Scope 1 & 2  mkt-based [10 3 tCO 2 eq]

2020

203,9

-42%

-90%

-42%

119.2

Absolute

10%

Scope 3 \-  Supply chain  [10 3  tCO 2 eq]

2020

202.9

-33%

-90%

-57%

86.4

Absolute

14%

Net energy  consumption 78 [TJ]

Gas sector 77

2020

592.0

-33%

-

-36%

377.7

Absolute

9%

Scope 1 & 2  mkt-based [10 3  tCO2eq]

2023

94.0

-33%

-

+14%

107.1

Absolute

-14%

Net energy  consumption  [TJ]

Water sector (excluding  Acqua Campania, while  Nepta and the non- consolidated companies  Acqualatina and  Siciliacque are included)

2023

740.5

-33%

-

+7%

793.2

Absolute

-7%

By deploying a mix of actions – from energy efficiency, timely inspection, leak detection and repair, to smart  maintenance for the reduction of fugitive emissions - the Group has set itself the goal of reducing its Scope 1  and Scope 2 market-based climate-altering emissions of the gas distribution sector by 42% by 2030, and its  net energy consumption by 33% compared with 2020 levels. In addition, through intensified actions and  engagement of its suppliers, the Group has also set itself a Scope 3 - Supply chain emission reduction target  of 33% by 2030 compared to 2020 (with the same baseline and scope defined for the previous targets). Finally,  in line with the time frame set out in the Green Deal, the Group aims to achieve "Net Zero Carbon" at 2050 of  Scope 1, Scope 2 (market-based) and Scope 3 - Supply chain emissions, through the distribution of green gas  and carbon removal activities from 2030 onwards.

In the targets, 2020 was selected as the target year because it marked the first year of the full implementation  of CRDS Picarro technology, a state-of-the-art system for the high-precision detection and quantification of  fugitive emissions (the most significant source of emissions in the Italgas Group's carbon inventory). 

In the integrated water service, through a series of actions – from the digitalisation and automation of the  network and plants, to the massive replacement of piping and connections – the Group has set itself the goal  of reducing climate-altering emissions (Scope 1 and Scope 2 market-based) by 42% and net energy  consumption by 33% by 2030 compared to 2023 levels (excluding Acqua Campania, while Nepta and the non-

77 Performance and targets only apply to the scope of consolidation of the financial data. The same targets, which have also been included in the 2024-2030  Sustainable Value Creation Plan, refer to the scope of consolidation of the financial data at 30 June 2024, excluding the water sector, and including the 2ì  Rete Gas parameter.

78 This refers to total energy consumption, from which any self-produced and self-consumed electricity consumption is subtracted.

149

consolidated companies Acqualatina and Siciliacque are included). Due to the need to extract,  transport/distribute more water because of the drought that occurred, the consumption and emissions in 2024  have increased compared to 2023.

The targets were developed internally within the Italgas Group and no external stakeholders were directly  involved in the validation process. As indicated in DR E1-1, with regard to the targets related to gas distribution,  the Group obtained confirmation of the alignment of its targets to the 1.5°C scenarios (for Scope 1 and 2  market-based) and 1.5°C well-below 2°C scenarios (for Scope 3 – Supply chain) from an independent  consultancy firm (Carbonsink, a Southpole company), specialised in climate scenario analysis. These targets  are in line with the achievement of the overall objectives stated in the Climate Change Policy.

Energy consumption and mix (E1-5)

The energy source used the most in the Group's activities is natural gas, in both civil and industrial uses, and  for vehicles.

Group figures are presented below, which also take into account Acqua Campania's contribution from 30  January 2024.

2024

Acqua  Campania  2024

Total Group  2024

Total energy consumption (MWh)

110,111

109,096

219,206

Total energy consumption from fossil fuels

94,277

109,096

203,373

Consumption of fuel from coal and coal products

0

0

0

Fuel consumption from crude oil and petroleum products

11,750

611

12,361

Fuel consumption from natural gas

81,337

44

81,381

Fuel consumption from other fossil sources

0

0

0

Consumption of electricity, heat, steam and cooling purchased or acquired from fossil  sources

1,189

108,441

109,631

Percentage of fossil sources in total energy consumption

86%

100%

93%

Total energy consumption from nuclear sources

0

0

0

Share of consumption from nuclear sources in total energy consumption

0%

0%

0%

Total renewable energy consumption

15,834

0

15,834

Fuel consumption from renewable sources

0

0

0

Consumption of electricity, heat, steam and cooling purchased or acquired from  renewable sources

15,695

0

15,695

Consumption of self-generated non-combustible renewable energy

139

0

139

Percentage of renewables in total energy consumption

14%

0%

7%

150

Considering the same scope as in 2023, the 2024 figure shows a clear improvement over the previous year:  from 425.5 to 396.4 TJ 79 , corresponding to a decrease of 6.8%. In order to facilitate the analysis of the  performance trend, a breakdown of consumption in TJ is provided below, which also reflects the 2023 figure,  reported as part of the 2023 Consolidated Non-Financial Statement. 

Taking into account Acqua Campania, consolidated for the first time from 30 January 2024, the energy  consumption for 2024 was 789.2 TJ (of which 49.8% is attributable to Acqua Campania).

2023

2024

Acqua Campania  2024

Group Total  2024

Total energy consumption (TJ)

425.5

396.4

392.8

789.2

Total energy consumption from fossil fuels

365.0

339.4

392.8

732.2

Consumption of fuel from coal and coal products

0.0

0.0

0.0

0.0

Fuel consumption from crude oil and petroleum products

46.0

42.3

2.2

44.5

Fuel consumption from natural gas

314.7

292.8

0.2

293.0

Fuel consumption from other fossil sources

0.0

0.0

0.0

0.0

Consumption of electricity, heat, steam and cooling purchased or  acquired from fossil sources

4.3

4.3

390.4

394.7

Percentage of fossil sources in total energy consumption

86%

86%

100%

93%

Total energy consumption from nuclear sources

0.0

0.0

0.0

0.0

79 Respectively 425.0 TJ in 2023 and 395.9 TJ in 2024, if net energy consumption is considered. This indicator does not account for the non-combustible  renewable energy generated on-site, amounting to 0.5 TJ.

151

Share of consumption from nuclear sources in total energy  consumption

0%

0%

0%

0%

Total renewable energy consumption

60.5

57.0

0.0

57.0

Fuel consumption from renewable sources

0.0

0.0

0.0

0.0

Consumption of electricity, heat, steam and cooling purchased or  acquired from renewable sources

60.0

56.5

0.0

56.5

Consumption of self-generated non-combustible renewable energy

0.5

0.5

0.0

0.5

Percentage of renewables in total energy consumption

14%

14%

0%

7%

In terms of energy consumption from fuel, there has been a decrease in consumption for industrial use, thanks  to the continuation of efficiency measures implemented on the Group's plant assets, such as the replacement  of natural gas preheating boilers, the installation of systems to optimise gas preheating sections and the  digitisation of monitoring and regulation processes, which have allowed for more efficient operations. 

The Group's industrial electricity consumption decreased due to greater self-production (and self-utilisation) of  electricity in the citygates equipped with turbo-expanders coupled with the cogeneration plants and the action  taken to improve plant efficiency in managing water distribution, in respect of the increased electricity  consumption linked to the digitisation of the gas distribution network.

In terms of consumption for civil use, there is also a decrease in fuel and electricity consumption compared to  2023, as a result of the constant process of optimisation, innovation and “smart” management of real estate  assets.

Finally, the energy consumption from automotive fuel decreased mainly due to the optimisation of the car fleet  and the digitisation of company processes (online quotation service and the full adoption of Work-on-Site for  monitoring sites, as well as the use of DANA), which overall lead to a significant reduction in the number of  field trips by operational staff.

Below is the energy intensity value as the ratio between “Total energy consumption from activities in high  climate impact sectors” and “Net revenues from activities in high climate impact sectors” 80 .

2024

Energy intensity

Energy  consumption

Net revenues from  activities in high climate  impact sectors

Energy  intensity

Unit of measurement

MWh

€ millions

MWh/€ million  euros

Total energy consumption from activities in high climate impact  sectors (MWh) / Net revenues from activities in high climate impact  sectors (gas distribution and water service activities – million  euros)

219,206

2,492.9

87.9 

Gross Scopes 1, 2, 3 and Total GHG 81 emissions (E1-6)

The data and information reported in section E1-6 and related to the Group's GHG emissions refer to the  performance of the Italgas Group in the year ended 31 December 2024. Changes in the scope of consolidation  are illustrated under the paragraph “Italgas Group Structure as at 31 December 2024” of this document. Group  figures are presented below, including Acqua Campania from 30 January 2024.

80 The denominator “Net revenues from activities in high climate impact sectors” is calculated as Total Revenues and other income (note 27 of the Consolidated  Financial Statement) excluding the total value of Revenues and other income from third parties in the energy efficiency sector (note 34 "Segment Information"  of the Consolidated Financial Statement) as the company Geoside, due to the type of services provided, does not fall under the classification of high climate  impact sectors as defined by the ESRS standards.

81 Greenhouse Gas, hereinafter GES or GHG (Greenhouse Gas). All GHG emissions are reported in line with the GHG Protocol. For the calculation of Scope  1 and 2 emissions, the latest available factors from ISPRA, DEFRA, and AIB sources were used. The greenhouse gases considered are carbon dioxide  (CO2) and methane (CH4), while others have been excluded as they are not relevant. For Scope 3 emissions, GHG categories 1, 2, 4, 5, and 8, the application  of specific emission factors for Italy and Greece from the CEDA database for the spend-based methodology is planned.

152

2023

2024

Acqua Campania

2024

Total Group 

2024

Var. Ass.

Var. %

Gross GHG Scope 1  (tCO2eq) emissions

149,700

118,632

138

118,770

-30,930

-20.7

Percentage of GHG Scope  1 emissions covered by  regulated emissions  trading schemes – ETS  (%)

0%

0%

0%

0%

Gross GHG location- based Scope 2 (tCO2eq)  emissions

5,600

6,034

27,200

33,234

27,634

493.5

Gross GHG market-based  Scope 2 (tCO2eq)  emissions

600

567

54,282

54,850

54,250

9041.6

GHG market-based  Scope 1 + Scope 2  (tCO2eq) emissions

150,300

119,200

54,420

173,620

23,320

15.5

Total gross indirect GHG  emissions (Scope 3)  (tCO2eq) 82

184,400

92,293

11,633

103,926

-80,474

-43.6

1. Goods and services  purchased

45,400

39,394

-

39,394

2\. Capital goods

122,000

41,451

-

41,451

3. Fuel and energy-related  activities (not included in  Scope 1 or 2) 

4,200

3,949

11,597

15,546

4. Upstream transport and  distribution

900

639

-

639

5. Waste generated during  processing

9,200

2,369

-

2,369

6\. Business trips

1,800

1,971

36

2,007

8\. Lease assets upstream

900

2,520

-

2,520

Total GHG emissions

Total GHG (location- based) (tCO2eq)  emissions

339,700

216,959

38,971

255,930

-83,770

-24.7

Total GHG (market-based)  (tCO2eq) emissions

334,700

211,493

66,053

277,546

-57,154

-17.1

The results obtained in terms of emissions reduction (-20.7% Scope 1 and 2 market-based from 150.3 to 119.2  10 3 tCO 2 eq, -51.6% Scope 3 – Supply chain 83 , from 178.4 to 86.4 10 3 tCO 2 eq on a like-for-like basis compared  to 2023) have been achieved through the implementation of targeted actions and strategic initiatives, both at  Group level and along the entire value chain.

Also considering Acqua Campania (consolidated from 30 January 2024), with its Scope 1 and 2 market-based  emissions contribution of 54.4 10 3 tCO 2 eq, the Group's emissions in 2024 show an increase of 15.5% (from  150.3 to 173.6 10 3 tCO 2 eq).

For operationally controlled companies Siciliacque and Acqualatina, Scope 1 and 2 84 emissions data are  presented. For both, the commitment to sustainability translates into the definition of targets for the reduction  of consumption and emissions by 2030.

82 For 2024, the calculation perimeter for Scope 3 emissions – Supply Chain does not include Acqua Campania, as the percentage of its revenue in 2024  accounts for 0.8% of the total Group revenue. In the tabular representation, this is because the same calculation methodology could not be applied due to  the lack of alignment between the product categories of Acqua Campania and those of the Group, and therefore the correlation of specific CEDA emission  factors. By applying the average CEDA emission factor for the Italy perimeter, the estimated value for Acqua Campania is 9.6% of the Group's Scope 3 –  Supply Chain emissions (Acqua Campania's total Scope 3 emissions would represent 18% of the total Scope 3 emissions). The calculation will be  implemented in the same manner, also including direct engagement with suppliers, starting from 2025.

83 The reference should be made to items 1, 2, 4, 5, and 8 of the GHG categories reported for Scope 3. Data was obtained by applying the emission factors  specific to Italy and Greece from the CEDA database (spend-based methodology) and those directly obtained from suppliers (supplier-specific methodology).  Category 3 was calculated by applying DEFRA and IEA emission factors to the Group's consumption. Category 6 was calculated using data from the travel  service provider, applying DEFRA emission factors. The remaining categories are not reported as they are not relevant.

84 The data refers to 100% of the Scope 1 and 2 emissions of the Companies.

153

Operationally controlled company

GHG emissions

2024

Gross GHG Scope 1 (tCO 2 eq) emissions

1,505

Gross GHG market-based Scope 2 (tCO 2 eq) emissions

105,714

Gross GHG location-based Scope 2 (tCO 2 eq) emissions

57,913

Below is the emission intensity value calculated as the ratio between “total GHG Scope 1, 2 and 3 emissions  from activities in high climate impact sectors” and “Net revenues from activities in high climate impact sectors”.

2024

Emission intensity

GHG  emissions

Net revenues from  activities in high climate  impact sectors

Emission  intensity

Unit of measurement

tCO2eq

€ millions

tCO2eq/€  millions

Total GHG Scope 1 and 2 emissions from activities in high  climate impact sectors (MWh) / Net revenues from activities in  high climate impact sectors (million euros)

277,546

2,492.9

111.33

Since gas distribution is the Group's main business, we report an additional entity-specific KPI, defined as the  “gas leakage rate” relating to emissions specific to this business, which represents the ratio of fugitive  emissions of natural gas to the volumes of gas transported. For the year 2024, it was 0.069%, an improvement  of 0.020 pp compared to 2023 (0.089%), mainly due to the use and adoption of advanced leak detection  solutions. Already in 2018, Italgas introduced Picarro Surveyor, the most cutting-edge technology available in  the field of network monitoring and gas leak detection based on CRDS (Cavity Ring-Down Spectroscopy)  technology, that, compared to traditional technologies, offers significant advantages in terms of speed of  action, sensitivity of detection and size of the areas that can be inspected.

GHG removals and GHG mitigation projects financed through carbon credits (E1-7)

In 2024, the Italgas Group did not develop or contribute to climate change mitigation projects involving the  removal or storage of GHG emissions, nor did it purchase carbon credits.

However, Italgas is continuously researching innovative solutions and technologies for carbon storage. With a  view to “Net Zero Carbon” target at 2050, the Group has expressed its willingness to implement carbon removal  initiatives, including the purchase of carbon credits, for residual emissions (around 10% of the baseline value)  from 2030 onwards.

Internal carbon pricing (E1-8)

Although none of Italgas' operations are subject to the EU ETS system, the Group has integrated an internal  notional carbon price into its planning process, which quantifies potential risks from regulatory changes and  other climate change impacts. This notional price applies to the entire Group and its activities, supporting low- carbon investments, stress-testing investments, identifying low-carbon investment opportunities and promoting  energy efficiency. Carbon pricing helps to assign a value to expected CO 2 reductions and compare the  economic value generated against the costs of the initiative. Its use influences decision-making and supports 

154

specific projects aligned with CO 2 reduction targets. The value of the carbon price used internally refers to  carbon credit markets (including, for example, those for CORC credits, which had an indicative reference value  of around 120 €/tCO 2 eq in 2024) 85 .

ESRS E5 – Resource use and circular economy

Description of the processes to identify and assess material resource use and circular economy- related impacts, risks and opportunities (ESRS 2 IRO-1 ESRS E5)

The process of identifying impacts, risks and opportunities is part of the broader process of double materiality  (ESRS 2 – IRO 1) as required by the CSRD. 

Impacts related to waste management were identified at different stages of the value chain. 

The Group does not produce large amounts of waste from its operations; direct waste management is mainly  related to the disposal of smart meters (see E5-5 38a for details of waste generated). 

The materiality analysis of impacts showed that upstream activities, such as the extraction and processing of  steel and polyethylene pipe materials, can generate waste and hazardous waste, which requires appropriate  management to avoid environmental and health risks. Pipe maintenance activities carried out by contractors  produce waste, including excavated soil and solvents which, if not properly managed, could become a source  of contamination.

The Group encourages the recovery of waste, not only directly but also from its contractors, in order to favour  an increasingly circular and sustainable approach. 

The Group is mapping its assets and activities with increasing attention to the development of circular economy  projects. To support this, it has created an inter-departmental working group for the research and  implementation of possible applications, to activate participatory pathways, to scout and collect innovative  ideas from partners and suppliers.

In resource flows, incoming products and materials are monitored through the direct and indirect purchases of  its contractors. In outgoing resources, in addition to waste management, Italgas considers the Nimbus smart  meter to be its own product.

Policies related to resource use and circular economy (E5-1, MDR – P)

The Group's Policy on Health and Safety, Environment, Quality and Energy (HSEQE Policy) provides for the  adoption of an integrated management system for quality, occupational health and safety, environment and  energy, in compliance with the relevant regulations, the national collective labour agreement and the relevant  international standards. 

The IROs related to Waste Management and Circular Economy are managed through this policy, which  contains specific guidance on managing waste in line with the waste hierarchy, reducing the use of virgin 

85 It is specified that, with regard to the economic-financial balance sheet data reported in the relevant sections of the document, there are no considerations  related to the carbon price.

155

materials in its operations in favour of recycled and environmentally sustainable materials, promoting reuse  and the efficient use of water resources.

It applies to all Italgas Group companies and stakeholders along the entire value chain.

The Group CEO is ultimately responsible for overseeing the implementation of the HSEQE Policy. The Chief  Executive Officers of the subsidiaries are responsible for supervising and implementing the policy for each  subsidiary for which they are responsible. 

As a result of this Policy, Italgas adheres to the fundamental principles called for by the United Nations Global  Compact and the Oil and Gas Methane Partnership 2.0 (OGMP 2.0) relating to the pursuit of a sustainable  global economy, respect for human and labour rights, environmental protection and the fight against corruption.

The Italgas Group pursues constant discussion and dialogue with stakeholders and aims to increase their  involvement and awareness in compliance with this Policy.

In the spirit of cooperation and transparency, the document is available on the Group's official external and  internal communication channels. 

Actions and resources related to resource use (E5-2, MDR – A, MDR – M)

The correct management of waste and the related supply chains allows for maximum yield in terms of recycling  and/or treatment. In a circular economy perspective, this means maximising the extension of the life cycle of  products while at the same time minimising waste.

The scope of waste management activities includes all Group companies included in the scope of  consolidation. 

The action plan and the monitoring of waste management indicators (including the percentage of waste sent  for recovery, understood as the quantity of waste recovered/quantity of waste produced, whether produced by  the Group or by its contractors) are discussed monthly during a dedicated meeting with the Group CEO and  the CEOs of the subsidiaries. 

The future financial resources allocated for the management of the matter and the achievement of the  objectives amount to approximately 3.8 million euros for the 2025-2030 period 86 . In 2024, more than 630  thousand euros were spent on dedicated personnel and to cover contracts for the disposal of waste produced  by the Group. 

These OpEx are indicated in Note 28 “Total costs and other operating expenses” of the Consolidated Financial  Statements.

Targets related to resource use (E5-3, MDR – T)

86 The estimated amount for subsequent years is based on current conditions (operating prices) and the scope of consolidation as at 31 December 2024 and  takes into account the personnel cost.

156

In order to monitor the principles set out in the HSEQE Policy, the Group has defined targets for waste  recovery, based on direct activities and the involvement of its suppliers, in line with the strategy outlined in its  Sustainable Value Creation Plan.

Progress (2024)

TARGET

Target scope

Target

Target year 

%

Absolute value  (tonne)

Waste recovery percentage 87 for  the Italgas Group and its  contractors

Group 88

96-99%

Annual target

96.5

691,254.1

Data on the waste produced by the Group and the contractors are collected by means of dedicated data  management systems (also provided to the contractors themselves) or, where these are not available,  reporting by means of forms and/or invoices. The Group's partners are involved in specific engagement  activities, dedicated projects and workshops in order to define the strategy and targets. 

Actions and resources in relation to circular economy (E5-2, MDR – A, MDR-M)

The Nimbus project

A good example of how the Group promotes the circular economy is the development of the Nimbus meter,  which was launched at the end of 2023 and field tested in 2024 with the installation of 20,000 pieces  (prototypes or pre-series). Designed to be compatible with expected hydrogen blends and to improve  performance and guarantee safety, Nimbus has been created according to the principles of eco-design, thanks  to the use of recycled materials, and the modular design of the components that facilitates repair and extends  the life of the product. 

Nimbus is characterised by the use of recycled plastic materials between 50% and 85%.

For third-party verification, the engineering company, Tifernogas, has provided the necessary and mandatory  product certifications for its marketing and installation.

In 2024, 5.3 million euros of CapEx and 0.1 million euros of OpEx were spent on the development of the smart  meter design, the creation of prototypes installed in the field for monitoring and all the preparatory activities for  the definition of the winning project to be used for the Group's roll-out. 

In this document, these CapEx items are indicated in Note 14 “Intangible assets” of the Consolidated Financial  Statements, while the OpEx items are indicated in Note 28 “Total costs and other operating expenses”.

For the Nimbus project, due to the expected evolution of technologies for meters, development activities are  planned with consequent investments including for the years following 2025; in order to reach the objective, 

87  For the definition of "waste sent for recovery," reference should be made to what is stated in Directive 2008/98/EC.

88 The targets refer to the scope of the consolidated Group companies as at 31 December 2024 and its contractors. 

157

according to the Plan, of 6 million Nimbus installed by 2030, investments are expected to be less than one  billion 89 .

Actions and resources in relation to circular economy (E5-2, MDR – A)

Other initiatives relating to the circular economy

In line with the four key principles of the circular economy: eco-efficiency, reuse, recovery, recyclability, the  Group has set itself the goal of rethinking business processes and the materials used, either replacing them  or integrating them with more sustainable alternatives.

With various strategic suppliers, the sharing of best practices and the creation of synergies on sustainability  issues has developed. One example of this is the development of the green worksite project, which, from July  2023, will involve the use of recycled polyethylene pipes (PE 100 Raised Crack Bio) and recycled backfill  materials on worksites. The initiative, first adopted on an experimental basis in some networks in Sicily, was  then extended to large cities and smaller urban centres, aiming for an ever greater adoption and scouting of  new suppliers and cutting-edge solutions.

The use of the biotube in the Green Worksite was applied in 2024 at 6 construction sites (5.4 km of network),  leading to an improvement of the environmental impact in terms of tonnes of CO 2 avoided.

Other circular economy initiatives concern the reuse of soil and rocks from excavation at construction sites for  which specific environmental clauses have been adopted in the contracts to encourage, where possible, the  reuse of these materials as fill.

Targets related to circular economy (E5-3, MDR – T)

For the promotion of the circular economy and the use of recycled materials, the Group has set a target for the  adoption Nimbus.

Progress (2024)

TARGET

Target scope

Base year

Target

Target year 

%

Absolute value

6 million Nimbus smart meters installed,  designed according to Design for  Environment criteria, between now and  2030.

Group 90

2025

6 millions

2030

n.a. (the project will start from  2025)

The target is defined on the basis of the number of meters to be replaced due to product obsolescence and  communication technologies (GPRS) and is of a voluntary nature. 

89 It is not possible to make more accurate estimates at the moment as there are a number of activities taking place around the meter supply chain that will  determine the cost breakdown.

90 The targets refer to the scope of the Group companies consolidated as of 31 December 2024.

158

Resource inflows (E5-4)

For 2024, resource inflows were analysed by analysing the main volumes of products (including packaging)  and materials used for the Group's operations.

Data were collected from the management systems used for both direct material purchases and materials  purchased by contractors for the execution of works, based on the procurement model among the various  companies 91 . For these products, the relative weight was calculated and divided between the categories of  materials (metals, plastic, electronic material, other). 

Total incoming resources amount to 4,368 tonnes, consisting of metals (48% – mainly steel pipes, followed by  aluminium), plastic (46% – mainly polyethylene pipes) and, residually, electronics (4% – batteries, printed  circuit boards, displays) and other materials (2% – wood and wrapping paper). 

The Group used 53.8 tons of plant-based polyethylene pipes 92 in the gas distribution network, accounting for  2.7% of the total weight of plastic purchased in 2024. Additionally, 4.6 tons of recycled plastic 93 were used in  the 20,000 Nimbus devices installed (approximately 0.2% of the total weight of plastic purchased), a figure  expected to follow a positive trend as old meters are replaced with the new technology.

Resource outflows (E5-5)

Products and materials

The Group owns the Nimbus smart meter, designed with eco-design features, durability, repairability and  reusability. 

In the design and development of the product, all available technical solutions were used to minimise the use  of primary raw materials. Furthermore, thanks to the collaboration of experts, organisations and academic  institutions, studies have been conducted on technical criteria, batteries, fire resistance, compatibility of  materials with green gases and hydrogen tests, guaranteeing an innovative and sustainable approach. 

Its small size reduces the logistical impact, simplifying warehouse storage, transport and installation in the  field. Nimbus has a 50% longer useful life than the Italgas meters already installed to date. The mean time to  failure is 19 years, to achieve a useful life of 15 years.

Its modular design features an area dedicated to metrology and one dedicated to communications, and it is  functional in terms of product repairability. 

Resource outflows ( E5-5)

Waste

91 The analysis considered the main categories of material representing at least 80% of the value purchased during the reporting period.

92 Product for which the "Sustainability Declaration according to ISCC Plus" has been provided.

93 Based on the product datasheet provided by the manufacturer

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In 2024, waste from the Group's activities amounted to 726.6 tonnes. Hazardous waste amounted to 7.1 tonnes  and non-hazardous waste amounted to 719.5 tonnes (which accounts for 99% of the waste produced).

The total value of waste sent for recovery or disposal amounts to 769.1 tonnes (the value exceeds the figure  for total waste produced as it includes the 2023 stock managed during 2024), mainly composed of electronic  meters, which are the subject of the massive replacement campaign. 756.5 tonnes or 98.4% of the waste  produced by the Group were managed for recovery and 12.6 tonnes for disposal. 

Hazardous (tonne)

Non-hazardous (tonne)

Incineration

0.0

0.0

Landfill disposal

0.0

4.9

Other disposal activities

6.3

1.4

Non-recycled waste

%

Absolute value (tonne)

1.6%

12.6

The data indicated are actual (and not estimated) data extracted on the basis of forms of waste. 

The main types of waste produced are : decommissioned equipment, including smart meters (about 80%), iron  and steel (15%), mixed metals. There is no radioactive waste. 

Waste disposal is the last option in the waste hierarchy; disposal is only necessary and mandatory when the  waste characterisation shows no possibility of recovery (due to the nature of the waste).

Water losses

Policies adopted to manage material sustainability matters (MDR-P)

Through its integrated water service management policy, Italgas has reaffirmed its commitment to integrating  the challenges and opportunities associated with water management into its business strategy, leveraging the  skills it has developed for the innovation and digitisation of the gas distribution infrastructure. 

The Group places key importance on the resilience of its integrated water service infrastructures, to ensure  the continuity and sustainability of its activities, including in response to climate change.

The impacts, risks and opportunities associated with integrated water management are constantly analysed  and monitored to address any threats that could compromise the integrity of the infrastructure and water  quality.

The Group's commitment to the responsible management of water resources is supported by:

• investments aimed at upgrading, replacing and/or adapting deteriorated networks and integrated water  service systems, districtisation, continuous monitoring and proactive maintenance interventions in  order to reduce water losses and potential failures, as well as to improve the quality of service;

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• implementation of actions aimed at guaranteeing continuous improvement of the quality of the water  distributed and purified with the aim of complying with and, where possible, exceeding the quality  standards set by current national legislation, to protect public health and the environment through a  sampling and analysis plan, including continuous analysis;

• digitisation to enable the remote management of plants and the network, allowing not only the  improvement of the service offered, but also the collection of data in real time to prioritise future  interventions.

This Group policy applies to all company activities, in every geographical area in which it operates, including  relations with suppliers and partners, both upstream and downstream of the value chain, to ensure a  sustainable approach throughout the supply chain. This document is available on the Italgas Group website  and is accessible to all Group employees and stakeholders.

The CEO of the Group is ultimately responsible for overseeing the implementation of this Policy by the Group.  Finally, the CEOs of the Group Companies are responsible for overseeing and implementing this Policy for  each subsidiary Company for which they are responsible. 

Italgas has adhered to the United Nations Global Compact representing fundamental principles such as  pursuing a sustainable global economy, respect for human and labour rights, protecting the environment and  fighting corruption.

In pursuing its business objectives, Italgas recognises the strategic importance of an ongoing and productive  dialogue with all its stakeholders. One of the guiding principles of the Policy aims at enhancing interaction with  stakeholders, identifying appropriate measures to increase their involvement and awareness of Policy issues,  promoting discussions, dialogue and involvement with the territory, as well as participation and information; contributing to the well-being of the community and developing strategies and objectives that take into account  their demands for the creation of shared values.

Actions and resources in relation to material sustainability matters, Metrics in relation to material  sustainability matters, Tracking effectiveness of policies and actions through targets (MDR-A, MDR- M, MDR-T)

The Italgas Group operates in the water sector through Nepta SpA. In particular, the reporting boundary  includes the management of 5 municipalities in Caserta serving over 29,000 end users and Acqua Campania 94 which, through the Western Campania Aqueduct, indirectly serves around 3 million inhabitants. The two  companies operate respectively as distributor and wholesaler in the integrated water service.

Within the timeframe of the 2024-2030 Strategic Plan, the Group has planned specific actions to improve  operational efficiency and achieve the company targets for reducing water losses. 

In particular, for the companies included in the report, the following interventions are envisaged:

94 Company acquired as of 30 January 2024.

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• the massive replacement of pipes and connections, to modernise the network and improve its  resilience;

• the digitisation and automation of 100% of the network and systems, essential for optimising  management and collecting data in real time, including through the installation of smart meters for  measurement and billing processes;

• the implementation of remote control for all signals coming from the instruments in the field, which will  be connected to an advanced control system for remote process management;

• the creation of a centralised control room, equipped with advanced technologies such as leak detection  using artificial intelligence, smart maintenance and data analysis, to improve monitoring and reduce  inefficiencies.

All actions involve suppliers and partners to ensure sustainable management throughout the supply chain.

The actions completed by Nepta during 2024 are as follows: 

• The installation of pressure sensors, with their associated alarms, which can be monitored remotely  and continuously, and hydraulic valves for managing the pressure in the network;

• the installation of 3 flow meters, and the installation of smart meters (reaching 81% of active users by  the end of the year);

• the establishment of 5 other water districts (for a total of 15 districts across the 5 municipalities) and  the launch of the pilot project for leak detection using noise loggers.

In addition, for Acqua Campania, the installation of devices for the remote control of the flow rates supplied to  wholesale customers was completed in 2024, as well as additional in-line flow meters to expand the districting  of the managed water network.

To fulfil the commitment outlined in the Water Resource Management Policy, the Group has adopted  challenging medium and long-term targets aimed at gradually reducing water losses along its network starting  from 2023 (base year) in accordance with the 2024-2030 Strategic Plan. Thanks to the skills acquired in the  innovation and digitisation of natural gas distribution infrastructures, it has been possible to set ambitious  targets for the reduction of water leaks. 

The targets are applicable to all water companies of the Italgas Group (including Siciliacque and Acqualatina)  separated by distribution and transport 95 sectors.

In particular, for the sole Companies within the reporting scope of the Sustainability Report, in line with the  above Group targets, a reduction in water losses (M1b) 96 is expected from 2.9% in 2023 to 1.8% in 2026 for  Acqua Campania and from 62% in 2023 to 30.5% in 2030 for Nepta.

95 For the water sector, the Group has set specific targets to reduce water losses to 6% in transportation and 30% in distribution by 2030 compared to the  baseline 2023. Baseline 2023 for transportation (Siciliacque): 16.5%, for distribution (Acqualatina and Nepta): 73.7% (aggregated through the weighted  average of losses). The target does not include Acqua Campania as the concession is set to end in 2026.

96 In accordance with ARERA regulations, water losses are measured using the M1b indicator (%), defined as the ratio between the volume of total water  losses and the total volume entering the aqueduct system in the year in question. The billed volumes, used for calculating total water losses, are partially  subject to estimation as required by ARERA.

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The targets were developed internally within the Italgas Group and no external stakeholders were involved in  the validation process.

The 2024 performance records water losses for Acqua Campania of 2.6%, with values improving by 0.3  percentage points compared to the previous year.

As for Nepta, water losses are 60.4%, with an improvement of 1.6 percentage points compared to the previous  year.

All the above initiatives are part of a broad action plan aimed at responsible management of water resources.  The Strategic Plan for Acqua Campania foresees around 9 million euros in the period between 2024 and 2026  and for Nepta around 40 million euros in the period between 2024 and 2030.

In particular, for the year 2024, investments strictly dedicated to reducing water losses on Acqua Campania  amounted to 0.2 million euros together with 1.4 million euros for extraordinary maintenance of the aqueduct;  on Nepta, approximately 1 million euro of CapEx was spent on reducing losses on the network managed by  the company.

The CapEx aimed at reducing water losses are indicated in this document in Note 13 “Property, plant and  equipment” and Note 14 “Intangible assets” of the Consolidated Financial Statements .

Progress towards sustainable water resource management is constantly monitored through regular meetings,  called Sustainability Business Reviews, which are attended by the Top Management of the Group companies  and the Chief Executive Officer, and in which data relating to water losses, energy consumption and emissions  are reviewed, together with the effectiveness of the initiatives undertaken by the Group. The regular review of  results and performance indicators allows for the continuous improvement of sustainability practices, ensuring  the achievement of the objectives of conscious use of water resources.

7.3 Social information 

S1 – Own workforce

Interests and views of stakeholders (ESRS 2 SBM-2)

The Italgas Group places the utmost importance on the interests, rights and opinions of its workforce,  considering them fundamental elements in the development of company strategy and business model. This  commitment is realised with the formalisation and updating of internal policies and the Code of Ethics, in line  with the OECD (Organisation for Economic Cooperation and Development Convention) guidelines and with  the aim of promoting respect for and protection of human rights. The company is committed to guaranteeing  equal opportunities, ensuring conditions of health and safety at work and fostering an inclusive and respectful  environment. 

The Group regularly conducts climate surveys, involving the entire workforce to give employees a voice and  encourage continuous improvement. The findings are shared both with Company leadership, to identify areas  of excellence and opportunities for improvement, and with the workforce. This active listening approach allows 

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for specific and targeted actions to be implemented to improve the well-being and satisfaction of employees,  incorporating their opinions and needs into the Company's decision-making process. The description of  employees and nonemployees involved is represented in the analysis of individual impacts (ESRS 2 - SBM 3).

Material impacts, risks and opportunities and their interaction with strategy and business model (ESRS  2 SBM-3) 

Italgas acknowledges that the actual and potential impacts on its workers, reported below, are closely  connected to its strategy and business model. 

Although the probability of episodes of non-compliance with human rights, diversity and equal opportunities is  extremely low, the occurrence of isolated events that could compromise these principles cannot be completely  ruled out.

Negative Impacts

Failure to respect the human rights of its own workforce

The Group's direct activities could potentially expose its workforce to possible human rights violations related  to practices that do not comply with international standards on working conditions and hours, occupational  safety, adequate wages, freedom of association, collective bargaining and social dialogue, as well as forced  and child labour. 

However, Italgas, operating in Italy and Greece, operates in contexts that are highly regulated from a regulatory  point of view with regard to the respect of the human rights of workers. As will be explained below, the workers  are protected by national collective bargaining, which determines working conditions in terms of pay, working  hours, holidays and leave, etc., by agreement between the company and the trade unions, and by  supplementary measures aimed at promoting the welfare and development of the employee. Italgas has also  implemented an internal compliance system that allows for the verification of compliance with current  regulations as well as internal procedures.

Type of workers involved: all workers, including those working on a temporary basis or as collaborators. None of the activities carried out are exposed to the risk of forced or child labour in any of the geographical  areas in which the Group operates. Even in the case of recruitment with a professional apprenticeship contract,  the selection process requires the person to be of legal age.

Failure to respect diversity and equal opportunities in the workforce

The organisational and operational dynamics of the Group's direct activities could negatively affect diversity  and equal opportunities in the workforce, limiting the inclusion of diverse profiles, the enhancement of individual  skills and the full professional development of all workers. These impacts could result from the Group's  organisational structure and recruitment practices. 

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Types of workers involved: technical and operational roles, vulnerable workers such as people with  disability/frail persons or people on long-term leave.

Failure to protect the health and safety of employees

Direct Group operations could involve risks for the health and safety of workers. The use of complex equipment  and potentially dangerous machinery, if not adequately managed through protective devices, specific training  and safety protocols, could expose employees to the risk of serious or life-threatening accidents. The impacts  strictly related to the operational nature of the Group's business mainly concern risks associated with driving  operational vehicles, risks associated with gas commissioning and use (fire and explosion), risks of working  near excavations (e.g. falling into excavations), working in confined spaces or at height, and lifting operations.

Types of workers involved: specialised workers who carry out activities in the field.

With regard to the inadequate health and safety protection of employees, the events that occurred in 2024 are  mostly attributable to events that took place while the employee was driving a company vehicle; others concern  high-risk activities (vehicle handling, lifting operations, excavation work), while a small number concern  situations that occurred during the work process, therefore relating to individual episodes. All events were  subjected to systemic analyses in order to identify the causes and define corrective actions that were promptly  activated to avoid the recurrence of similar accidents. 

Positive impacts

Contribution to employee welfare through the implementation of welfare initiatives and measures

The Group implements welfare measures aimed at the wellbeing of its employees, values work-life balance  and promotes an inclusive and welcoming work environment.

Types of workers involved: all employees and their families.

In identifying the impacts on workers, the Group identifies the types of people who could be most impacted  due to specific personal characteristics. In particular, people who are care-dependent, people with disabilities  or frail individuals, people belonging to ethnic and cultural minorities who may be more susceptible to  significant impacts.

Increasing the professionalism and preparedness of employees through upskilling and reskilling

Training at Italgas is closely linked to the company strategy and contributes to the achievement of the its  strategic objectives. Training is an essential tool for promoting the adoption and integration of innovative  technologies, particularly those related to Artificial Intelligence, supporting the Company's digital  transformation process.

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Employees are made aware of the importance of environmental and social sustainability, and the adoption of  operating practices that reduce environmental impact is encouraged, thus strengthening the Group's  commitment to a responsible and sustainable energy transition.

Upskilling and reskilling activities play a key role in the integration of newly acquired companies, ensuring a  cultural and professional alignment that supports Italgas' business model, based on efficiency, innovation and  a results-oriented approach. This holistic approach to training not only improves the Group's competitiveness,  but also contributes to creating a safer, more inclusive and stimulating work environment, capable of attracting  and retaining the best talent.

Types of workers involved: all employees.

There are no significant financial risks and/or opportunities for the Group arising from the impacts and  dependencies in terms of its internal workforce.

The Group's energy transition strategy may have potential negative impacts due to the possible inadequacy  of the workforce's skills as a result of the evolution of the business model with the introduction of green gases  and other new or different operational processes (for example, as a result of their digitisation). The Group is  proactively managing these risks by developing reskilling and upskilling programmes to equip its workforce  with the skills needed for the energy transition.

Policies related to own workforce (S1-1, MDR-P)

The Group has various policies for managing material impacts, risks and opportunities relating to employees:  Diversity, Gender Equality, Inclusion, Prevention of Discrimination, and Protection of the Dignity of Group  Personnel Policy, HSEQE (Health, Safety, Environment, Quality, Energy Efficiency) Policy, Code of Ethics (for  the latter, see datapoint G1-1 and G1-3).. They all represent a point of reference for dealing with the main  issues related to the failure to respect human rights, the promotion of equal opportunities and the protection  of employee health and safety. 

The potential failure to respect human rights in its workforce is an issue fully addressed and monitored by the  Group through its Human Rights Policy , which promotes respect for and protection of fundamental rights,  including civil, political, social, economic and environmental rights. The key issues addressed in the document  include working conditions and trade union freedoms, with a firm commitment to ensuring safe and healthy  workplaces, supporting the right to union representation and collective bargaining, as well as offering fair and  appropriate remuneration. Wages are in line with collective agreements and industry standards, and are higher  than the minimum wage, in full compliance with current regulations on compensation, benefits, working hours  and overtime, with undue workloads being avoided. 

The Group takes a firm stance against forced and child labour, condemning all forms of exploitation and  prohibiting the employment of minors, in accordance with international regulations.

Italgas' Human Rights Policy explicitly covers the issues of human trafficking, forced labour and child labour.

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The issue of equal opportunities and respect for diversity is managed within the Diversity, Gender Equality,  Inclusion, Prevention of Discrimination, and Protection of the Dignity of Group Personnel Policy, which focuses  on valuing diversity, promoting inclusion and achieving gender equality, recognising these elements as  strategic advantages for the Group. In particular, the Policy establishes guidelines to guarantee an inclusive  and respectful work environment, with a commitment to preventing any form of discrimination based on sex,  age, health, ethnicity, nationality, disability or other personal characteristics, sexual orientation, political or  religious opinions, or union membership. 

Through its Diversity Policy, Italgas promotes positive actions in favour of particularly vulnerable groups within  its workforce. 

The Group implements its policies on diversity, inclusion and prevention of discrimination through specific  procedures aimed at preventing, mitigating and addressing episodes of discrimination, while promoting an  inclusive environment. 

With a view to continuous improvement and constant monitoring, Italgas uses periodic audits and self- assessments, including audit tools for its gender equality management system, with the aim of identifying  situations of risk and promoting processes that favour inclusion.

The Italgas Group is committed to guaranteeing and facilitating remedial measures in case of negative impacts  on human rights and episodes of discrimination such as harassment, violence and mobbing, by providing  channels for anonymous reporting, accessible via its website to both internal staff and third parties, which offer  different ways of sending reports and ensure the protection of confidentiality, through anonymity, to protect  those who report any irregularities or violations. Constant monitoring of these issues guarantees the  effectiveness and continuous updating of the measures put in place.

The protection of the health and safety of workers is a fundamental priority for the Italgas Group, and is  safeguarded through various company policies. The main one is the HSEQE Policy, which also serves as a  policy for the prevention of accidents in the workplace. Through a structured and targeted approach, it focuses  on eliminating hazards and reducing risks associated with work activities, with the planning of priority actions  aimed at continuously improving performance and ensuring a safe working environment. Furthermore, it  promotes employee training to increase awareness and sensitivity towards safety at work, encouraging good  behaviour and actively involving workers at all levels of the organisation. Monitoring and control activities are  carried out to guarantee maximum protection against risks related to the health and safety of employees.

The Human Rights Policy also addresses the issue of protecting fundamental health and safety rights with a  focus on accident prevention.

The Human Rights Policy, the Code of Ethics and the HSEQE Policy apply to all employees and Business  Partners who work for Italgas.

The Diversity, Inclusion and Gender Equality Policy applies in all work situations, and is aimed at all employees  of the Italgas Group.

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The CEO of the Group is ultimately responsible for overseeing the implementation of the Policies by Italgas  and the Group, while the CEOs of the subsidiaries are responsible for overseeing and implementing the  Policies for each subsidiary for which they are responsible.

The Diversity, Inclusion and Gender Equality policy is issued by the Group’s Chief Executive Officer in  agreement with the Steering Committee for UNI PDR 125/2022 Certification and promotes the implementation  of the fundamental principles of Italgas’ Code of Ethics.

The actions undertaken by the Italgas Group through the above Policies are developed in accordance with the  fundamental principles of the Global Compact, with particular reference to the first and second principles.  These policies are in line with the United Nations Universal Declaration of Human Rights, the fundamental  conventions of the ILO (International Labour Organization) and the OECD Guidelines for Multinational  Enterprises. The Group is committed to ensuring a workplace free from all forms of discrimination, whether  direct or indirect, and in accordance with the provisions of Article 25 of the Equal Opportunities Code, and to  respecting the human rights of its workforce, in accordance with the UN Guiding Principles on Business and  Human Rights, and the ILO Declaration on Fundamental Principles and Rights at Work. It pays particular  attention to the protection of the rights of minors and children, in line with the Children's Rights and Business  Principles. Although a process for integrating the interests of the main stakeholders within the aforementioned  policies has not yet been formalised, employees are involved through training and awareness-raising sessions,  which aim to increase workers' awareness of their rights, duties and good practices in terms of human rights  and working conditions. In addition, the Group provides opportunities for consultation and discussion for  gathering feedback from employees and identifying possible areas for improvement. These opportunities for  dialogue allow their opinions to be integrated into the decision-making process and strengthen their sense of  belonging.

Italgas employees and external stakeholders are made aware of the Policy for the prevention of discrimination  and the protection of dignity by means of appropriate information and training activities intended to promote  awareness of the principles contained herein. 

All Group Policies are communicated to stakeholders through their external and internal communication  channels, such as the website. 

Processes for engaging with own workforce and workers’ representatives about impacts (S1-2)

Involvement takes place through dialogue with trade unions and workers' representatives as provided for in  the Industrial Relations Protocol.

In 2024, the Italgas Group guaranteed structured involvement of the Trade Unions through various phases of  the decision-making process, both in Italy and in Greece (where a second-level agreement was stipulated, see  data point S1-8). The dialogue took place at key moments, such as company reorganisation, the  implementation of smart working, funded training and the drawing up of bonuses and collective contracts.

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The type of involvement includes consultations, negotiations and the creation of joint institutions (e.g. IPA \-  Joint Company Institution - for Smart Working and Training). Attendance was high, with 112 meetings in Italy  (41 at national level and 71 at local level) and 12 in Greece, demonstrating a constant and broad-based  commitment to the participation of workers' representatives.

The responsibility for ensuring that the involvement of workers' representatives is effective is entrusted to the  Labour Disputes and Industrial Relations Department for national trade union relations, and to the HR Business  Partner Departments for local relations. A meeting between the General Secretariats of the Trade Unions and  the CEO and the Head of People Innovation & Technology is scheduled once a year, according to the topics  to be discussed. In Greece, the operational responsibility for ensuring that the involvement of workers'  representatives takes place effectively is entrusted to the Human Resources Organisation Unit.

The establishment of joint bodies and the setting up of the RSU Coordination Committee promotes continuous  dialogue, allowing the Group to directly collect the concerns of employees and transform them into concrete  actions. In 2024, the discussion was also extended to issues relating to health and safety at work with the  members of the RLS Coordination Committee.

These agreements are not just formal instruments, but genuine drivers of change that allow Italgas to maintain  a respectful and inclusive work environment that is attentive to the perspectives of its employees, while  reinforcing social dialogue as a fundamental value of the Group.

This approach was reiterated in 2024 through significant agreements, such as the reorganisation of  fundamental services following innovation and digitisation, the review of smart working, discussions on  employment dynamics and the reinternalisation of fundamental services, as well as the signing of agreements  for funded training, the definition of bonuses and collective agreements.

Particular attention is also paid to the identification of any vulnerable groups. For example, caregivers (new  parents or employees who assist elderly parents or family members with disabilities or children with special  learning needs), people with health problems, protected categories, victims of gender-based violence,  employees with a proven history of drug or alcohol addiction, and foreign workers who are not EU citizens.  The inclusion of its people, the promotion of equal opportunities and the avoidance of any form of discrimination  are fundamental for the Group. In this sense, in 2023 Italgas S.p.A. obtained the UNI/PDR 125:2022  certification for gender equality. The Group is committed to protecting and supporting these groups by  addressing their specific needs and concerns, and safeguarding ethical business conduct.

Processes to remediate negative impacts and channels for own workforce to raise concerns (S1-3)

The Group adopts a responsible approach in the management of remedies for any significant negative impacts  on its employees caused or contributed to by the Group. The remediation process includes impact assessment,  dialogue with the affected workers, the definition of corrective actions and, where appropriate, the possible  involvement of trade unions. These activities are aimed at ensuring that the measures adopted effectively  respond to the needs of the affected workers.

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The effectiveness of the remedies is evaluated through continuous monitoring, to verify that the solutions  implemented are effective, thus ensuring that the remedies provided are adequate and consistent with their  standards of social responsibility.

The Group has implemented a Whistleblowing Procedure that allows its workers to directly raise concerns or  needs related to alleged irregularities through the whistleblowing channel: for example, working conditions,  discrimination, violation of human rights, safety. In the case of reports, appropriate corrective actions are taken,  which may include management interventions or disciplinary measures against the employees involved.

For a full explanation of the channel, please refer to data point G1-1.

Italgas promotes awareness about the whistleblowing channel by making mandatory online courses available  to all Group employees on Whistleblowing regulations and how to confidentially report any illegal or unethical  behavior. In order to assess awareness of this tool, levels of participation in the courses are monitored.  Currently, Italgas does not have a structured process to assess the level of trust of its own workers on these  channels. 

Taking action on material impacts on own workforce, and approaches to managing material risks and  pursuing material opportunities related to own workforce (S1-4)

The Group adopts a wide range of initiatives aimed at effectively managing the main issues related to human  rights, diversity, equal opportunities and health and safety. At the same time, it is committed to strengthening  and promoting employees’ skills, as well as continuously improving its welfare policies. The effectiveness of  the actions taken to mitigate negative impacts is monitored through the targets set for each impact.

Ensuring respect for human rights

The Group has developed a due diligence process designed to identify and assess potential human rights  impacts and risks, which involves identifying such risks within the Group's operations and business  relationships. 

The annual review of the due diligence process on the protection of human rights was carried out in 2024, as  outlined in the target of the Sustainable Value Creation Plan. In addition, the Group has participated in various  programmes, including the Business and Human Rights Accelerator of the UN Global Compact Network Italy,  in order to learn more and exchange views with international associations, peers and non-governmental  organisations on the main methodologies for managing risks related to human rights.

In the absence of specific legislation, Greek companies have introduced policies to support their employees  through company negotiations (for example, smart working introduced from 2024, and health coverage). 

Encouragement of women to take up management roles and guarantee a working environment that  offers equal opportunities, including equal pay 

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Italgas strongly reaffirms its commitment to Diversity & Inclusion in order to improve the inclusion, promote  equal opportunities, appreciate the value of diversity and promote the uniqueness of individuals in line with the  objectives set out in the Sustainable Value Creation Plan. A change management programme was launched  dedicated to Diversity & Inclusion through widespread awareness-raising initiatives, which in 2024 culminated  in the identification of over 60 Diversity & Inclusion Ambassadors, key figures of change focusing on: Age & Culture, Disability, Gender, Sexual and affective orientation. 

The D&I ambassador programme was recently launched in Greece, involving people from different areas of  the country and different roles.

In 2023 and 2024, Italgas launched a number of initiatives for inclusion, diversity and gender equality. Italgas  obtained UNI PDR 125/22 certification for two group companies and partnered with several organisations to  promote an inclusive business model. New initiatives include the Safe in Pink project for women's safety, an  anti-violence catalogue, training courses and workshops. To raise awareness of disability issues, Italgas  organised theatrical performances and a Dinner in the Dark in collaboration with the UICI (Italian Union of the  Blind and Visually Impaired) of Turin. It also introduced a Total Reward system to increase awareness of its  elements of remuneration. Italgas constantly monitors the effectiveness of its actions through the annual  survey “Your voice counts” and other targeted surveys. Thanks to employee feedback, initiatives such as the  Olympic Games, a day of sport and sharing, and Open Gest, an initiative aimed at all Italgas Reti employees,  have been launched to transform the company strategy into day-to-day work.

Promoting the welfare of employees

Italgas provides a Welfare Programme with a wide range of services and initiatives to meet the diverse needs  of the employee population, including support for family, income, health and physical wellbeing, leisure, and  daily tasks, with a target of 90% employee participation by 2030.

In 2024, the Welfare Plan was enhanced with new initiatives including the Telemedicine service, Healthcare  vouchers, sporting events and empowerment workshops for parents, as well as an increase in the number of  smart working days for parents with children up to 14 years of age. Paternity leave is extended, allowing all  new fathers to take an additional 5 days of paternity leave, in addition to the 10 currently required by law. The  Welfare Plan offers support for income and leisure (micro-credit, agreements with banking institutions, etc.),  for the family (day-care reimbursement, summer camps, study support), and for health and welfare (cancer  prevention). Welfare Days and webinars are an important opportunity for all company population to share and  learn more.

Promoting health and safety of employees

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The Italgas Group is committed to ensuring safe working conditions, aiming to maintain a combined accident  index for employees and contractors of 97 less than 0.15.

This objective is pursued through dedicated training activities, awareness-raising meetings and opportunities  to meet and discuss safety, promoting a corporate culture that is geared towards prevention and the protection  of workers' health.

In 2024, meetings were held between management and employees to examine organisational and operational  aspects with a particular focus on safety issues.

The main safety indicators are analysed and shared with managements on a monthly basis as part of the  Monthly Dashboard. In 2024, a project was launched to monitor safety conditions on construction sites with  constant inspections throughout the year regarding HSE aspects, with particular attention being paid to high- risk activities that may result in accidents. More than 3,100 site inspections were carried out across the Group. 

In the event of particularly significant accidents or near misses, the causes of the event and the main corrective  actions to be implemented in order to avoid the event recurring in other Group companies are shared with the  management and HSE bodies of their companies.

Every year the “Safety Trophy” is awarded to the groups of workers (for the companies Italgas Reti and Medea)  that have achieved the highest score, determined on the basis of specific HS management parameters,  including accidents, both to employees and contractors, and the number of inspections carried out.

The action plan includes the continuation of the actions already undertaken with a particular focus on reducing  the combined accident rate and increasing the reporting of unsafe actions and conditions by workers on the  Safe4You app, available to all workers on the Company intranet.

Actions to remedy current negative material impacts

The Italgas Group implements various activities aimed at minimising accidents involving its employees, as  illustrated in data point S1-4. In 2024, for the Italian scope, there was an increase in the number of accidents  that occurred during the work activities of employees. All events were subjected to systemic analyses in order  to define corrective actions that were promptly activated to avoid the recurrence of similar accidents. The  combined frequency index (FI) for employees and contractors in Italy therefore increased compared to the  previous year, from 1.20 in 2023 to 1.50 in 2024. With regard to the Greek scope, in 2024 there were 1 injury  related to its own workforce and 2 accidents to contractors, resulting in a combined FI of 0.59. The combined  IF for Group employees and contractors in 2024 was 1.28.

The development of digital skills and the optimisation of resources

97 It is obtained from the product of the accident frequency index, expressed as the number of accidents occurring per million hours worked, and the accident  severity index, expressed as the number of days of absence per thousand hours worked.

172

Through its training centre IGAcademy, the Group invests in upskilling and reskilling activities, including a  focus on digital learning and ESG, with a target of 45 hours of training per year per employee by 2030.

In 2024, about 141,000 training hours were provided for “Excellence”, 22,000 for “People” and 32,000 for  “Innovation”.

Programmes and collaborations: courses have been developed on emergency situations, innovative  technologies (Picarro, MadFlex Patch, 3D Asset Mapping), gas distribution and emergency interventions.  Project Management courses were offered in collaboration with the POLIMI Graduate School of Management,  with certifications and open badges.

Internal courses covered commercial topics, complaints management, economics and sustainability, with  sustainability ambassadors. Continuing HSE and Compliance courses (GDPR, whistleblowing, anti- corruption).

The WeSpeak programme provided 3,000 hours of training in English and Greek. WeTrain involved 105  teachers in intensive workshops.

Impact of digital platforms

Digital platforms have transformed learning from push to pull, encouraging proactivity. Gamification initiatives,  such as FantAcademy, have helped make training more engaging. In 2024, platforms such as Skilla, Ruling  Companies and Learning Square recorded more than 13,000 hours of on-demand training, involving around  1,450 people.

Personal development and leadership programmes

• WeBecome: Development Centre for evaluation and skills development;

• WeGrow: Pathway for the Individual Contributor on self-empowerment and 360°-feedback;

• WeLead: Programme for new managers on core management skills;

• ElevaTeam: Pathways for teams on change management and empowerment;

• Coaching: For managers and executives with greater responsibility;

• Inspire & Influence: For people managers, aimed at inspiration and involvement;

• Initiative & Decision-making: To face complex situations with determination.

International collaborations

Partnerships with SDA Bocconi, IESE, Headspring, Knauss and Innovit have enriched the training offer on  innovation and leadership. In San Francisco, a special programme involved 60 participants for a total of 2,200  hours of advanced training.

All the objectives described above are part of the Sustainable Value Creation Plan. The future financial  resources allocated for the management of the issue and the achievement of the objectives refer to 

173

approximately 246 million euros in CapEx and OpEx over the 2025-2030 reference period, of which 194 million  euros relate to CapEx security assets. In 2024, over 39 million euros were spent on activities related to safety of the employees, in operational activities and on construction sites, welfare initiatives, D&I, development and  staff training for the Group's employees.

These CapEx are indicated in this document in Note 13 “Property, plant and equipment” and Note 14  “Intangible assets” of the Consolidated Financial Statements; the OpEx, on the other hand, are indicated in  Note 28 “Total costs and other operating expenses” of the Consolidated Financial Statements.

The Group has allocated dedicated resources to manage its material impacts, involving several specialised  internal departments. In particular, the Human Resources Department is responsible for identifying, monitoring  and managing negative impacts, as well as promoting positive impacts.

The process of identifying actions includes risk assessment and analysis of legislative compliance regarding  the management of employment relationships within the Group. In the case of potential negative impacts,  Italgas uses internal audits, climate surveys and reporting channels to assess the likelihood and severity of  the impacts, while for actual impacts, in-depth internal investigations are conducted to assess the  implementation of actions towards employees and/or corrective measures.

The actions identified are selected based on their suitability in the specific context and their ability to resolve  the impact effectively, ensuring compliance with Company standards and workers' rights.

For Group companies based in Italy and operating in the gas distribution sector, or which control or are  controlled by a gas distribution company, the possible impact in terms of loss of market, or loss of concessions  in one or more Minimum Territorial Areas (ATEMs) is managed by applying the employment protection  mechanism provided for by sector regulations, allocating workers correctly in the various ATEMs. In the case  of a change of operator following tenders for the award of the concession, the Ministerial Decree of 21 April  2011 “Provisions governing the social effects related to the new awards of gas distribution concessions,  implementing subsection 6, Article 28 of Legislative Decree no. 164 of 23 May 2000” guarantees the  employment protection of workers assigned to the ATEMs that may be the subject of a tender.

Similarly, for companies in the water sector, in the context of tenders concerning one or more Optimal Territorial  Areas, the calls for tenders for the award of the concession include specific social safeguard clauses relating  to staff and employment protection. 

More generally, in any case, where market contractions or losses occur, the instruments provided for by current  national legislation shall apply.

Targets related to managing material negative impacts, advancing positive impacts, and managing  material risks and opportunities (S1-5, MDR-T, MDR-M)

In order to apply the principles set out in the Code of Ethics, the Human Rights Policy, the HSEQE Policy and  the Diversity, Gender Equality, Inclusion, Prevention of Discrimination, and Protection of the Dignity of Group  Personnel Policy, the Group has established specific targets in line with the strategy outlined in its Sustainable  Value Creation Plan.

174

Category and units

Target scope 98

2030

Progress (2024)

Combined accident index for  employees and contractors (minimum  annual target) 99

Group

< 0.15

0.034

Use of welfare services

Group

> 90 %

81%

Training (with a focus also on digital  and ESG issues)

Group

45 hours per employee per year

45 hours

Women in positions of responsibility 100

Group

33%

28.8%

Gender Equity Pay Gap 101

Italy

3%

7.5%

Protection of human rights

Group

Annual review of due diligence  on the protection of human rights

Target achieved

The targets are aimed at the continuous improvement of the Group's performance and are not monitored with  reference to a specific base year but with respect to the pre-established value to be achieved. The targets  have been set on the basis of monitoring the Group's performance in the area of Human Resources  Management, taking into account the initiatives implemented over the years and the results obtained, as well  as benchmarking and best practice in the sector.

Based on the results derived from monitoring the performance, any modifications or areas for improvement in  the policies, initiatives, and services implemented by the company are assessed. In establishing the indicators  of profitability, productivity and sustainability that form the basis of the performance bonus, the Italgas Group  involves employees through their union representatives, discussing and sharing points for improvement and  establishing evaluation criteria. Through the climate survey, the opinions and perceptions of employees are  collected with respect to various areas, including the Group's performance and objectives, helping to identify  areas of excellence and improvement.

Characteristics of the undertaking's employees (S1-6)

In 2024 there was a change in the company's workforce equal to +0.98% compared to 2023, when the number  of employees amounted to 4,339. 

Gender

Unit of measurement

Country

2024

M

headcount

Italy and Greece

3449

F

headcount

Italy and Greece

890

Other

headcount

Italy and Greece

0

Employees

Not stated

headcount

Italy and Greece

0

Total no. of employees (headcount)

4339

headcount

Italy

3700

Employees in countries with more than 50  employees and who represent at least 10% of the  total number of the Group's workforce.

headcount

Greece

639

98 The targets refer to the scope of the Group companies consolidated using the line-by-line method as of 31 December 2024. 

99 Measured as the result of the frequency index (number of accidents per million hours worked) and the severity index (number of days of absence per  thousand hours worked) of accidents recorded at Group level during the year.

100 It refers to women in positions as heads of organizational units.

101 Calculated as the change in the average ratio of the hourly basic pay of women to men for comparable groups of employees according to organisational  weight, referred to the Italian scope. This indicator is calculated differently from the "Gender Pay Gap," as shown in S1-16.

175

Type of contract

Gender

Unit of  measurement

2024

M 

headcount

3296

F 

headcount

859

Other

headcount

0

Employees with permanent contracts

Not stated

headcount

0

M 

headcount

153

F 

headcount

31

Other

headcount

0

Employees on fixed-term contracts

Not stated

headcount

0

M 

headcount

0

F 

headcount

0

Other

headcount

0

Employees with a zero-hours contract

Not stated

headcount

0

M 

headcount

3440

F 

headcount

855

Other

headcount

0

Full-time employees

Not stated

headcount

0

M 

headcount

9

F 

headcount

35

Other

headcount

0

Part-time employees

Not stated

headcount

0

Employees leaving as at 31.12.2024

M

F

Other

Not stated

Employees leaving (no.)

273

55 

0

0

voluntarily

96

30 

0

0

Turnover rate (%)

7.92

6.18 

0

0

Voluntary turnover rate (%)

2.78

3.37 

0

0

Type of contract

Country

Unit of measurement

2024

Italy

headcount

3589

Employees with permanent contracts

Greece

headcount

566

Italy

headcount

111

Employees on fixed-term contracts

Greece

headcount

73

Italy

headcount

0

Employees with a zero-hours contract

Greece

headcount

0

Italy

headcount

3656

Full-time employees

Greece

headcount

639

Italy

headcount

44

Part-time employees

Greece

headcount

0

Quantitative information on the Group's employees is expressed in terms of headcount and refers to Group  employees as of 31 December 2024.

During 2024, a total of 263 people were hired by Group companies (212 in Italy and 51 in Greece).

176

It is noted that in note 28 of the Consolidated Financial Statements, relating to Total costs and other operating  expenses, the most representative number of employees of the Italgas Group is indicated in the section  "Average number of employees," in line with the requirements of datapoint S1-6.

Characteristics non-employees in the undertaking's own workforce (S1-7)

The number of workers who are not Italgas Group employees in 2024 is shown below:

Specifically, the categories of non-employee workers who worked for the Italgas Group during the year are  mainly temporary workers at the Italian offices and employees of third-party companies with which there are  service provision contracts at the Greek offices.

The above information on non-employee workers is expressed in terms of headcount and refers to the Group's  non-employee workers as of 31 December 2024.

In Italy in 2024, there were no significant fluctuations compared to the previous year, while in Greece the  variation in the indicator is linked to the progressive implementation of the new company organisation and the  related operating model.

Collective bargaining coverage and social dialogue (S1-8)

In 2024, the Group continued its commitment to maintaining strong relations with the trade unions, aiming to  implement the Industrial Relations Protocol.

Important agreements have been reached through dialogue with the unions on various issues, including the  reorganisation of the Integrated Supervision Centre at Group level, the verification of the leak detection service  using Picarro technology, the finalisation of the 2023 Performance Bonus and the establishment of objectives  for 2024.

The current agreement on Smart Working (hybrid working) has been revised thanks also to the process carried  out by the Joint Company Institution PA Smart Working. The work of the Joint Training Institution also  continued, with the sharing of Group training initiatives and the signing of agreements for financed training.  Important discussions on the topics of employment and the re-internalisation of fundamental activities such as  the emergency on-call service. An agreement was also signed regarding the experimental installation of dash  cams on vehicles used for Picarro activities, for the purposes of protecting the safety of employees and  company assets. 

The Group has signed trade union agreements with the trade unions for video surveillance, also following the  EU Critical Entities Resilience Directive, for the protection of company assets.

2024

Non-employed workers

Unit of measurement

Value

Total number of non-employee workers in the workforce

headcount

82

Total number of non-employee workers in the workforce – self- employed

headcount

0

Total number of non-employee workers in the workforce –  workers provided by Companies primarily engaged in  recruitment, selection, and staff supply activities 

headcount

82

177

With reference to Greece, the Company has signed an important second-level company agreement that  provides more favourable conditions for its employees than the national collective bargaining agreement,  especially with regard to:

• definition of salary categories and amounts;

• provision of additional allowances (for example: on-call allowance, allowance for technicians,  allowance for those who use heavy machinery, etc.);

• welfare and benefits (for example: marriage allowance, financial recognition in the case of  marriage/birth of a child, allowance for single parents, meal vouchers, etc.).

Below is the data relating to employees covered by collective agreements and participating in trade union  organisations in 2024. 

Unit of  measurement

Country

2024

The following data are provided regarding  employees covered by collective agreements and  participating in trade unions in 2024. No.  Employees covered by collective labour  agreements 

headcount

Italy + Greece 

3,700 (Italy) 

639 (Greece) to which the national  collective agreement applies, of which only  560 also have coverage under the  company collective agreement (permanent  workers). 

Total no. of employees 

headcount

Italy + Greece 

3,700 (Italy) 

639 (Greece) 

%

Italy

100% 

% of employees covered by collective labour  agreements

%

Greece

100% (87.64% of employees are also  covered by a company collective  agreement) 

2024

Workplace representation 

Paese

0-19%

20-39%

40-59%

60-79%

80-100%

ITALIA e GRECIA

2024

Rate of non-employees covered by collective labour agreements

Country

0-19%

20-39%

40-59%

60-79%

80-100%

ITALY + GREECE (covered by national collective agreements)

178

At 31 December 2024, 100% of employees were covered by collective labour agreements 102 .

Specifically, 100% of employees in Italy are covered by both national and company collective labour  agreements.

With reference to the employees of the Greek companies, 100% of them are covered by the national collective  labour agreement, while only employees hired on a permanent basis are also covered by an additional  collective agreement at company level providing more favourable conditions. The percentage of workers to  whom this company contract applies in Greece is 87.64% (or 560 employees out of a total of 639).

With regard to the Group's non-employee workers, their terms of recruitment and employment are defined in  accordance with the staff recruitment agencies (which apply national collective agreements). Those who have  entered into individual collaboration contracts with the companies of the Group are not included in the  calculation of the percentage indicated above, as by definition they do not refer to any national collective labour  agreement.

Regarding the percentage of the Group's employees in Italy who are guaranteed union representation, all  employees are represented by the Unitary Trade Union Representations, accounting for 100%. 

Specifically, the Industrial Relations Protocol defines the concept of a production unit not as a single plant  (except for headquarters) but at least as the territory of the regional hub. Therefore, we can say that 100% of  workers perform their duties in a production unit where union representation is present.

With reference to Greece, the percentage of the Group’s employees who are guaranteed union representation  is also 100%, as union representation is established at the company level, meaning that the production unit  corresponds to the company itself. 

There are no agreements between the Group's employees and trade union organisations at the European  level (European Works Council, Societas Europaea Works Council, or Societas Cooperativa Europaea Works  Council).

Diversity metrics (S1-9)

The Group is increasingly committed to creating a management system that is gender-balanced and promotes  the inclusion and enhancement of diversity. 

In 2024, the presence of women in the Italgas Group has improved considerably: in the Italy-Greece scope,  female managers account for 28.8% (in line with the 2023 performance) and women in Top Management –  understood here as level -1 and -2 reporting to the CEO – represent 34.5% (compared to 21.8% in 2023). 

The table below shows the gender distribution of the Group's Top Management 103 and the age distribution of  its employees.

Unità di misura

Genere

Dipendenti

Employees belonging to the Group's Top 

headcount

Men 

76

102 The percentages were calculated using the following formula: (Number of employees covered by collective agreements / Total number of Group employees)  x 100.

103 The definition of Top Management includes the levels -1 and -2 reporting to the Group’s Chief Executive Officer. 

179

headcount

Women 

40

headcount

Other 

-

Management (no.)

headcount

Not stated 

-

%

Men 

65.5%

%

Women 

34.5%

%

Other 

-

Employees belonging to the Group’s Top  Management (%) 

%

Not stated 

-

Total employees belonging to Top  Management

headcount

116

Unit of measurement 

Age group 

No. of Employees 

headcount

< 30 years 

499

headcount

30-50 years 

1749

Group employees (no.) 

headcount

> 50 years 

2091 

Adequate wages (S1-10)

The Italgas Group ensures that all employees receive fair compensation through the application of the  economic and regulatory provisions established by collective bargaining agreements.

The Italgas Group is committed to ensuring a remuneration policy in line with national and international best  practices, which supports and promotes the development of the business and its people, and is consistent  with the provisions of the Strategic Plan and the Sustainable Value Creation Plan and reflects the Group's  values and culture. In particular, remuneration policies are evaluated taking into account the following  elements: 

• market benchmarks, with the support of independent and highly specialised advisors, using specific  remuneration benchmarks updated at least annually, in order to ensure that all Group employees  receive fair remuneration in line with the main market and governance practices; 

• the leadership and performance model, which values the results achieved and the quality of the  professional contribution according to the responsibilities assigned and the commitment required; 

• the potential for personal development and professional and managerial skills. 

The remuneration policy for the majority of employees is strongly meritocratic and defined in accordance with  the principles of inclusion and plurality, equal opportunities, knowledge enhancement, fairness and non- discrimination. 

In order to guarantee pay fairness, including in terms of gender balance, in 2024 Italgas defined a specific  indicator aimed at reducing the Gender Equity Pay Gap, based on the principle of “equal pay for equal work”,  not only to promote fairness and justice in the workplace, but also to contribute to better motivation and  satisfaction of employees in order to reduce turnover while at the same time attracting talent and improving  company performance.

180

Social protection (S1-11)

Regarding social protection coverage for illness, unemployment, parental leave, workplace accidents,  disability, and retirement, all employees of the Group are covered by the relevant national legislation.

All Group workers are guaranteed all social rights thanks to institutions linked to the state legal system (access  to healthcare, maternity protection, pensions, etc.).

Persons with disabilities (S1-12)

In 2024, 4% of the Group's workforce 104 were people belonging to protected categories . 

More specifically, of these 4%, 74.1% are men and 25.9% are women. 

Training and skills development metrics (S1-13)

Italgas is aware that the main challenges of the digital transformation of the gas distribution sector are  people-related, for this reason, the Group has included a commitment in its 2024-2030 Sustainable Value  Creation Plan to continue investing in upskilling and reskilling activities, setting a target of 45 hours of  training per year per employee by the end of the Plan, with a specific focus on digital learning and matters  relating to ESG.

2024 – Employees who participated in performance assessments

Headcount

Headcount

M

F

Other

Not  stated

M

F

Other

Not stated

Executives

44

14

0

0

70%

70%

0

0

Managers 

283

117

0

0

91%

89%

0

0

Office Workers 

1,534

630

0

0

88%

86%

0

0

Field Workers 

1,078

5

0

0

81%

100%

0

0

Total

2,939

766

0

0

85%

86%

0

0

Non-employees

0

0

0

0

0%

0%

0

0

2024

Total hours of training delivered

Average hours of training provided

M

F

Other

Not stated

M

F

Other

Not stated

Executives 

2,507

1,162

0

0

42

65

0

0

Managers 

13,820

6,450

0

0

45

50

0

0

Office Workers 

73,841

28,925

0

0

43

40

0

0

Field Workers 

68,165

214

0

0

51

43

0

0

Total

158,333

36,751

0

0

46

42

0

0

Non-employees

902

541

0

0

22

17

0

0

104 In Italy, employees belonging to protected categories are those specified in Law 68/99; in Greece, the legislation defines such individuals differently.  Therefore, only the categories of "World War II Orphans" and "Employees with a disability greater than 50%" have been considered.

181

In 2024, approximately 195,000 hours of training were provided in Italy and Greece, with an average of 45  hours per employee, of which approximately 7 hours per capita were on ESG and digital topics (+12.5%  compared to 2023). 

Health and safety metrics (S1-14)

The management System is structured and implemented according to the requirements of the international  standards of reference. The regulatory instruments put in place contribute to regulatory compliance and to  ensuring the health and safety of the Group's people (employees, end customers, contractors, etc.) and  accident 105 prevention. 

All Group companies have a 45001 system for occupational health and safety management. 

100% of the Italgas Group employees, regardless of the type of contract, are covered by occupational health  and safety management systems.

2024

Indicator

Employees

Non-employed workers

Number of accidents at work 

11 

0 

Rate of accidents at work 

1.56 

0 

Number of cases of occupational diseases 

2 

n.a. 

Number of days lost due to work-related injuries, work-related illnesses and  deaths as a result of illnesses

269 

0 

of which were caused by accidents

269 

0 

of which were due to occupational diseases

n.a. 

n.a. 

2024

Indicator 

Employees 

Non-employed workers 

Value chain workers (within  Italgas Group sites) 

Total number of deaths due to workplace accidents and  occupational diseases 

0 

0 

0 

of which were as a result of accidents

0 

0 

0 

of which as a result of occupational diseases

0 

0 

0 

2024

Indicator 

Type of employee 

headcount 

%

Employee 

3,750

86% 

Workers covered by a Health and Safety management  system in accordance with the law or recognised  standards, and which has been either internally verified  or externally certified. 

Non-employee 

n.a.

n.a. 

105 An injury is considered an event that results in an absence from work of more than 3 days, according to the company procedure.

182

Work-life balance metrics (S1-15)

The Italgas Group provides initiatives to support family and parenting needs. 

Below are the figures on family leave for Group employees. 

Family leave 106

Gender 

Unit of measurement 

2024 

Employees with access to family  leave 

All 

% 

100 

M 

% 

8.9

F 

% 

2.8

Other 

% 

0

Not stated 

% 

0

Employees who have taken family  leave 

Total 

% 

11.7

Compensation metrics (pay gap and total remuneration) (S1-16)

Following the pathway initiated by the Group in the area of diversity and inclusion, the Company is committed  to reducing the gender pay gap by monitoring it on an annual basis. 

The gender pay gap values, calculated as the simple average of gross annual salaries 107 on an hourly basis  by employee category and geographical area, are shown below. In particular, given the Group's activities in  both Italy and Greece, a corrective factor has been applied to the Greek perimeter data using the Price Level  Index (PLI) values provided by the World Bank, in order to account for the different purchasing power between  the two countries.

Gender pay gap

Unit of measurement

2024

Employee category (Italy + Greece)

Executives

%

5.7

Middle Managers

%

4.6

Employees

%

2.3

Manual workers

%

16.3

Country

Italy

%

-10.6

Greece

%

-7.9

The overall gender pay gap, considering the total annual compensation 108 paid to employees, is -0.7% for the Group. If the PLI corrective factor is not used, the value is 0.5%.

Finally, the ratio between the total annual remuneration of the CEO and the median total gross annual  remuneration of the employees of the Italgas Group (known as the “pay ratio”) is also reported, represented  as the total personnel costs actually paid to employees during the year, equal to 1:39.

106 In Italy, family leave is understood to mean compulsory maternity, paternity, or parental leave, as well as leave to care for family members with disabilities  (Italian Law 104/92). In Greece, only compulsory maternity, paternity and parental leave are considered, as there is no provision for leave for family members  with disabilities.

107 Gross annual salary (RAL) refers to the fixed compensation that the employee receives over the course of the year. 

108 The total annual remuneration is composed of the gross annual salary (RAL) plus the annual amount of variable remuneration and also includes all  compensation elements that the employee receives on a continuous basis over time. For the purposes of the total annual remuneration analysis (pay ratio  and gender pay gap), only employees who have worked for the entire year have been considered. For Greece, all variable components, including the  contribution component, are considered in the calculation of total annual remuneration .

183

Incidents, complaints and severe human rights impacts (S1-17)

As indicated in the Human Rights Policy, as well as in the Group's Code of Ethics and the Suppliers Code of  Ethics, human rights are considered inalienable and essential prerogatives of human beings and the basis for  the construction of societies founded on principles of equality, solidarity, the repudiation of war and protection  of civil and political rights, social, economic and cultural rights and third-generation rights (right to self- determination, peace, development and the safeguarding of the environment).

Italgas is committed to promptly identifying any incidents or episodes of human rights violations against its  employees. Such episodes include cases of discrimination based on gender, ethnic origin, nationality, religion  or any other belief, disability, age, sexual orientation or other significant forms of discrimination.

In 2024, there were no recorded incidents of discrimination, human rights violations or any other form of  harassment within the Group.

During the year, no fines or sanctions were imposed as a result of incidents of discrimination or complaints  received through the appropriate channels indicated above.

Through the whistleblowing channel (illustrated in detail in data point G1-1), 53 reports were received in 2024,  of which 32 related to the internal control system (process anomalies related to the application of procedures  or instructions of the Group) and 21 on other issues (Model 231 – Code of Ethics). By 31 December 2024, all  reports had been examined and 47 were filed, while 6 are still being processed. Among the 32 reports relating  to the internal control system, 29 were dismissed (8 were forwarded to the Judicial Authority), while 3 are still  being evaluated. Of the 21 reports on other issues, 18 were dismissed (3 concerned breaches of employment  contract with disciplinary action taken dismissal, suspension from pay and work or charging of hours of pay, 3  are still being assessed, and do not concern offences related to corruption, discrimination, harassment,  breaches of privacy, conflicts of interest, money laundering or insider trading.

S2 – Workers in the value chain

Interests and views of stakeholders (ESRS 2 SBM-2)

Italgas is aware of its central role in the supply chain as a key player in the spread of sustainable and  responsible practices. The Group is committed to driving change by incentivizing virtuous behavior and  supporting the growth of a supplier network that is increasingly attentive to respect for human rights,  environmental protection and the creation of inclusive and safe working conditions. Through its numerous  engagement and listening activities, the Italgas Group integrates the interests, rights and opinions of workers  along the entire value chain into its strategy and business model. At the same time, it requires suppliers to  comply with high ethical standards, with particular regard to human rights, and compliance is monitored  through regular audits.

Material impacts, risks and opportunities and their interaction with strategy and business model (ESRS  2 SBM-3)

184

Italgas recognises that the actual and potential impacts on value chain workers, as reported below, are closely  related to its strategy and business model:

• Failure to respect the human rights of workers in the supply chain – the activities upstream in the value  chain, especially in high-risk sectors such as heavy industry and suppliers operating in non-European  countries with less stringent labour regulations, are more subject to potential human rights violations.  Although no supplier has been identified as being at significant risk of incidents of child labour and/or  forced labour, Italgas pays great attention to verifying the working conditions of its suppliers and  respect for human rights. Type of workers: workers from sub-supplier enterprises in non-EU countries  and heavy industry workers.

• Failure to respect diversity and equal opportunities for workers in the supply chain – the upstream  phases could potentially involve discrimination based on gender, age, ethnicity or religion, particularly  in production sectors that require specific skills, which may be less attainable for women. Type of  workers: female workers or workers from minority or fragile groups

• Failure to protect the health and safety of workers in the supply chain – activities in the upstream  phases, such as the extraction of raw materials and the processing of materials (such as polyethylene  and steel), and the operational activities of infrastructure construction and maintenance carried out on  construction sites by contractors and subcontractors, may expose workers to potential health and  safety risks. These potential negative impacts derive mainly from workplace accidents due, for  example, to the use of dangerous machinery and/or exposure to harmful substances that could occur  due to inadequate management of health and safety rules or lack of specific training and adequate  preventive measures. Type of workers: workers involved in operational activities at production sites or  construction sites.

These potential negative impacts are attributable to isolated and non-systemic events, also in view of the fact  that most Italgas suppliers are based in Italy or Greece where national regulations protecting workers' rights  are in place. To prevent and mitigate these impacts, the Group has implemented company policies and  procedures that include the regular review of contracts with suppliers as well as audits and assessments of  working conditions, promoting the social responsibility of contractors along the entire value chain.

There are no risks or opportunities arising from the analysis of financial relevance in relation to supply chain  workers. 

Policies related to value chain workers (S2-1, MDR-P)

The Italgas Group has adopted the following policies for the management of material IROs related to workers  along the value chain: the Human Rights Policy and the Suppliers' Code of Ethics. 

The aim of these policies is to prevent potential harmful practices related to the violation of human rights such  as forced and child labour, to promote equal opportunities and an inclusive work environment, as well as to  protect health and safety. 

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The Group is committed to sharing these documents with its suppliers, requiring them not only to respect the  ethical standards set out, but also to actively promote them throughout their supply chain, with the involvement  of subcontractors and other partners.

The Group regularly monitors compliance through audits and ongoing assessments to ensure that these  principles are adopted.

Furthermore, an integral part of Italgas' strategy for the development of a sustainable and long-lasting supply  chain is the continuous involvement of suppliers and their workers through training and support programmes  to improve their ESG practices.

The Human Rights Policy promotes, among the Group's business partners, respect for and protection of  fundamental rights, including civil, political, social, economic and environmental rights. The main areas of  intervention are listed below:

• Respect for dignity and equal opportunities – rejection of all forms of discrimination and violence, with  a commitment to fair and inclusive working conditions;

• Working conditions and freedom of association – promotion of a safe and healthy environment, support  for union representation and the right to collective bargaining;

• The fight against human trafficking, forced labour and child labour – condemning the exploitation of  workers and prohibiting child labour, in line with international regulations;

• Involvement of business partners – carrying out monitoring and audits to ensure respect for human  rights regulations in the supply chain;

• Health and safety protection – promoting a culture of safety and accident prevention at all levels of the  organisation;

• Sustainability and local communities – contributing to the development of the communities in which  the Company operates, in line with the principles of the Code of Ethics;

• Personal data protection – responsible management of personal data to guarantee the security and  privacy of stakeholders.

The Suppliers' Code of Ethics defines the fundamental principles that must guide the relations between the  Group and its suppliers, and provides for a zero tolerance policy towards any violation of human rights,  reiterating that no corporate interest can justify behaviour contrary to ethical standards. Italgas reserves the  right not to establish or to terminate at any time relationships with parties that do not comply with the provisions  of the Group's Code of Ethics or the Suppliers‘ Code of Ethics.

More specifically, the Suppliers’ Code of Ethics focuses on the following aspects:

• Compliance with the law: suppliers must adhere to national and international regulations;

• Fair competition: promotion of fair and transparent competition;

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• Prevention of corruption: prohibition of any form of corruption;

• Management of conflicts of interest: potential conflicts of interest must be reported;

• Data privacy and protection: guaranteeing the security and confidentiality of information;

• Human rights and equal opportunities: respect for personal dignity, combatting all forms of  discrimination, condemning and prohibiting forced and child labour;

• Health, safety and environmental protection: commitment to a safe and sustainable work  environment.

The Group conducts a due diligence process with regard to human rights that involves all the Group's  operations and companies, as well as its suppliers, and is subject to an annual review. 

The Human Rights Policy and the Suppliers Code of Ethics are periodically updated and integrated to ensure  their adherence to the evolution of the Group’s strategies and position by taking into account the guidelines  that have emerged from sustainability indexes and ratings, as well as the main international ESG trends. The Human Rights Policy applies to all employees and business partners working for the Group, while the  Supplier Code of Ethics is binding for all direct and indirect suppliers. 

The CEO of the Group is responsible for overseeing the implementation of the Human Rights Policy by the  Group, while the CEOs of the Group Companies are responsible for overseeing and implementing the policy  for each company under their responsibility. 

The actions outlined and carried out by the Italgas Group throughout the Human Rights Policy and the Supplier  Code of Ethics are developed, also in the context of alignment with the first and second principles of Global  Compact, within the reference framework of the United Nations’ Universal Declaration of Human Rights, the  International Labour Organization Conventions and the OECD Guidelines for Multinational Enterprises. 

The Group is also committed to protecting the rights of minors and children according to the Children's Rights  and Business Principles. The Human Rights Policy and the Supplier Code of Ethics are shared with  stakeholders with a view to transparency and collaboration, and are made available to the public on the  company website and to anyone who requests them. In 2024, no cases of violation of the above regulatory  principles involving supply chain workers were found.

Processes for engaging with value chain workers about impacts (S2-2)

In order to manage the real and potential impacts on workers in the supply chain, Italgas adopts a direct and  continuous involvement approach based on numerous initiatives, including e-learning courses and face-to- face training, collaborative workshops and participatory activities.

In 2024 the IG Academy for Suppliers was launched, with a training programme developed based on suppliers'  training requirements (as identified through direct consultation) that aims to promote skills in key areas such  as energy efficiency, climate change, human rights, safety, digitisation and innovation. 

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In order to promote a culture of safety among workers in the value chain and consolidate the partnership with  suppliers, three face-to-face workshops were organised during 2024 involving workers from construction sites  in Northern, Central and Southern Italy. The meetings focused on the analysis of high-risk safety activities that  emerged during the inspection phase and the related prevention, monitoring and remediation measures. 

Through initiatives such as “Ideas4Italgas” and “Worksites of the Future”, the Group encourages suppliers to  propose ideas and projects aimed at improving the sustainability, innovation and safety of operational activities. 

In addition, it promotes the participation of suppliers in training courses organised by associations to which the  Group belongs, such as “Valore D” and “Sustainability Makers”. 

The operational responsibility for ensuring that engagement with workers in the value chain is effective is  entrusted to the Procurement Department, which coordinates and liaises with the various company  departments to ensure that the initiatives are properly implemented. 

To assess the performance of suppliers throughout all stages of procurement, Italgas uses a monitoring system  based on Supplier Scores, which include indices and criteria such as Operational Vendor Rating, reputational  verification, sustainability index, financial soundness index and accident index. This approach provides a  measure of the effectiveness of audit, training and workshop activities on supplier performance throughout the  procurement stages.

Italgas adopts a series of measures to understand the perspectives of particularly vulnerable or marginalised  workers in the value chain. During the phase of qualification and participation in competitions, suppliers are  required to provide ISO certifications attesting to the creation, application and maintenance of a work  management and organisation system that complies with specific internationally recognised standards of  reference, thus ensuring employment organization that respects workers' fundamental rights. In addition to the  compulsory certifications for highly complex product classes (ISO 9001 on quality management systems, ISO  14001 or EMAS on environmental management systems, ISO 45001 on health and safety management  systems), the Group also considers other certifications relating to environmental, social and governance  impacts on the entire supply chain as award criteria in tenders, such as SA8000 on social responsibility and  UNI PDR 125 on gender equality. During the tender phase, suppliers must disclose information on the gender  composition of the company's workforce and demonstrate regular payment of wages and contributions. All of  these tools enable the Group to assess the equity of business practices and identify any situations of  vulnerability. Finally, through on-site audits, Italgas monitors the conditions of workers with particular attention  paid to respect for human rights and procedures regarding the health and safety of its most vulnerable workers. 

Processes to remediate negative impacts and channels for value chain workers to raise concerns (S2- 3)

The Group adopts a responsible approach to the management of remedial measures for any negative material  impacts on workers in the value chain caused or influenced by its activities. The remediation process includes  impact assessment, also in compliance with current legislation on joint and several liability, and the possible  involvement of trade unions in implementing the Industrial Relations Protocol, which aims to ensure that the  measures adopted effectively respond to the needs of potentially affected workers in the value chain.

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The effectiveness of the remedies is evaluated through internal checks with the managers of the procurement  contracts and constant monitoring of any effects, including those of an economic nature. When necessary, this  process includes discussions with the trade unions, in order to ensure that the solutions adopted have  effectively resolved the issues identified. By doing so, the Group ensures that the remedies provided are  adequate and consistent with its standards of social responsibility applied throughout the value chain. 

The Italgas Group has implemented a Whistleblowing Procedure that allows workers in the value chain to  directly report any concerns or irregularities. This procedure is described in detail in data point G1-1 10. 

The procedure classifies and handles reports according to specific subject areas, including violation of the  Code of Ethics and issues related to safety and human rights, and guarantees that workers in the value chain  who use the reporting channels are protected against any form of retaliation, discrimination or unfair conduct,  whether direct or indirect. At present, there are no reporting channels managed by third parties for workers in  the value chain.

The Italgas Group supports and requires information about the availability of reporting channels in the  workplace within the value chain.

Currently, there is no structured process to assess the awareness and level of trust of workers in the value  chain with regard to these channels. 

Taking action on material impacts on value chain workers, and approaches to managing material risks  and pursuing material opportunities related to value chain workers, and effectiveness of those actions  (S2-4)

Italgas promotes a sustainable value chain through a supplier qualification system based on a sustainability  questionnaire. This tool provides an overview of certifications, management systems, company information  and working conditions. The data is constantly monitored to identify areas for improvement and define action  plans on ESG issues. The checks are entrusted to third-party companies in accordance with the ISO/IEC  17021-1:2015 standard, and include ESG audits for analysing human rights, working conditions, consumption  and environmental impact. At the end of the audits, any critical issues are classified into three levels (Minor,  Serious, Critical), with an action plan shared and monitored with the supplier to evaluate its effectiveness.

In 2024, 45 on-site and 4 on-desk audits were carried out.

Italgas adopts initiatives to improve safety and reduce accidents, involving employees and suppliers in  awareness-raising meetings and setting up bodies such as the CCRLSA (Company Safety Workers'  Representative Coordination Committee) and IPA Training (Joint Company Institution) to promote a shared  culture of safety.

Suppliers must comply with Italgas' Code of Ethics and other Group standards on sustainability, anti-corruption,  human rights, cybersecurity and data protection. 

Supplier performance management is governed by the Supplier Regulations and monitored through technical  and operational audits, which guarantee adequate working conditions and compliance with standards.

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Since 2021, Italgas has launched training programmes for first and second level suppliers (Tier I and Tier II),  offering courses, workshops and webinars through the dedicated Academy, which aims to improve the  capabilities of suppliers and promote socio-economic development within the territories in which it operates.  During the twice-yearly Supplier Convention, Italgas also shares common objectives and challenges.

In the event of any negative impacts, such as violations of workers' rights or accidents at work, Italgas analyses  the causes, supports the supplier in preventive measures and monitors the effectiveness of corrective actions.  Supplier compliance is guaranteed through audits, reputational checks and, if necessary, measures such as  suspension or termination of the contract. Before reaching the termination of the contractual relationship,  Italgas takes a precautionary and gradual approach (warning and suspension) to avoid compromising workers'  conditions.

To date, no material violations of workers' rights have emerged. The data collected, such as those concerning  the reduction in "non-conformities", the identification of “near misses” and the improvements detected by  workers of suppliers through surveys relating to ESG issues, confirm the effectiveness of the actions taken in  promoting a responsible and sustainable value chain. All the actions described above are linked to the targets  given in the next section to which reference is made for specific time horizons.

Future financial resources allocated for the management of the issue and the achievement of the objectives  amount to 5.5 million euros of OpEx in the 2025-2030 reference period. In 2024, approximately 550 thousand  euros of OpEx were spent on dedicated staff and to cover ESG auditing of suppliers, supplier training and  consultancy. 

These OpEx are indicated in this document in Note 28 “Total costs and other operating expenses” of the  Consolidated Financial Statements.

The Group has not identified any risks or opportunities of financial significance to the workers in the value  chain.

There have been no significant events regarding the violation of human rights by suppliers or other workers in  the value chain in the last 4 years.

Targets related to managing material negative impacts, advancing positive impacts, and managing  material risks and opportunities (S2-5, MDR-T, MDR-M)

The Group has set targets to guaranteeing responsible and sustainable management along the value chain. 

TARGET

Target  scope 109

Base year

Target

Target year

Year of reporting (2024)

%

Absolute value

109 The targets refer to the scope of the Group companies consolidated using the line-by-line method as of 2024.

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Suppliers that pose a high risk  regarding sustainability 110

involved and trained in ESG topics

Group

-

100%

2026

80% 111

72

High-risk suppliers for Sustainability  subject to ESG audits in the field  (including human rights compliance)

Group

2024

100%

2028

17% 112

45

The targets have been defined within the reference framework of the United Nations Universal Declaration of  Human Rights, the fundamental Conventions of the International Labour Organization, the OECD Guidelines  for Multinational Enterprises and on the basis of benchmarks with other operators in the sector. 

In line with the Sustainable Value Creation Plan, the targets relating to the value chain contribute to the  reduction of potential negative impacts on the supply chain through the promotion of best practices in  sustainability. 

The targets refer to suppliers at high risk for sustainability, defined as those suppliers of strategic importance  for the Group's core business at potential risk of non-compliance with their contractual obligations regarding  sustainability, whose turnover represents approximately 80% of the total turnover.

Suppliers are indirectly involved in defining targets throughout the year, through sectoral workshops and events  such as the Supplier Conference and challenges open to start-ups and SMEs aimed at improving performance  (Ideas4Italgas). 

The monitoring of targets is carried out through the constant tracking of supplier performance, from the  evaluation during the qualification phase (ESG score) to the verification in the field (ESG audit). Training  activities are provided to support improvement plans for the gaps identified during both the evaluation and  audit phases.

S3 – Affected communities

Interests and views of stakeholders and Material impacts, risks and opportunities and their interaction  with strategy and business model (ESRS 2 SBM-2 and SBM-3)

The impact related to asset integrity is closely linked to the local community, as it may involve potential gas  leaks that could lead to explosions or fires, with serious consequences for the local population. No risks or  opportunities with significant financial impact have been identified concerning this issue. The potentially  affected communities include all citizens living in the Italian and Greek municipalities where the Group  manages the gas distribution network. Additionally, potential incidents of asset integrity failure along the  Group's value chain could impact communities located near raw material extraction and processing sites. In  both cases, these impacts are associated with specific potential incidents rather than systemic impacts. It has  not been possible to identify specific individuals or groups of individuals within these communities with 

110 Suppliers that pose a high risk regarding sustainability are defined as those suppliers of strategic relevance to the Group's core business at potential risk  of not meeting their contractual sustainability obligations.

111 The percentage is calculated as the ratio of high sustainability risk suppliers involved in training activities and/or having completed the ESG questionnaire  to the total number of high sustainability risk suppliers for Italy and Greece. Water suppliers were excluded from the 2024 calculation.

112 The percentage is calculated as the ratio of the number of high sustainability risk suppliers audited to the total number of high sustainability risk suppliers.

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particular characteristics that would make them more likely to be affected, as the potential impact applies to  the entire local community, with no significant distinctions between individuals. In assessing the financial  significance for the identification of relevant risks and opportunities, an analysis was conducted that identified  events, such as the risk of accidents or malfunctions that can cause temporary service interruptions, but whose  impact and probability are not sufficient to make them relevant. For further discussion, refer to ESRS 2 SBM- 2 and SBM-3.

Policies related to affected communities (S3-1, MDR-P)

As this is a central issue for the proper performance of its gas distribution activities, Italgas refers to a very  comprehensive internal regulatory framework.

The procedures refer to the maintenance activities of assets, emergency management, and other field  operations, which allow constant monitoring of the network and prompt intervention in case of reports and  incidents. Such procedures are explicitly geared toward compliance with current regulations, which set  minimum standards for safety and operational efficiency. However, the Group does not merely enforce  regulatory requirements: in fact, as indicated in DR S3-5, Italgas has set ambitious targets that respond to the  desire to ensure higher levels of efficiency, safety and sustainability, distinguishing itself by adopting practices  that not only meet regulatory requirements, but also go further to mitigate the “asset integrity” impact on local  communities. The procedures mentioned above are valid for all operational activities and in all areas served  by gas distribution activities. Top Management is ultimately responsible for implementing procedures that  govern technical and operational activities, reporting directly to the CEOs of the Group companies responsible  for gas distribution. The internal procedures also refer to the relevant legislation that is directly issued by the  public Authority through ARERA (in Italy) or RAE (in Greece). As a public body, the latter is considered a proxy  representing the relevant stakeholder (i.e. the local community).

The procedures are not only made available to all the Group staff specifically involved in network maintenance,  control and emergency response, but also to the rest of the Italgas workforce. The reference principles of the  Italgas Group for the protection of rights relating to impacts on health and safety associated with asset integrity  events are guided by the principles established in the OECD guidelines for multinational enterprises, the United  Nations Guiding Principles on Business and Human Rights and the fundamental Conventions of the ILO.  Furthermore, Italgas is a member of the United Nations Global Compact (UNGC) programme. The Group's  Human Rights Policy also applies to the rights of local communities in the areas where Italgas operates. For  further information on Huma Rights Policy, refer to DR S1-1. In the event of an asset integrity incident, the  Group immediately involves the local community through contacts with the relevant municipal administration.  Italgas has facilities dedicated to on-call and emergency response, with staff who are specially trained to  manage critical situations. Furthermore, two centralised command and control rooms (the Plants and Networks  Command and Control Centres, located in Turin and Florence) operating 24 hours a day, guarantee constant  support for the management of the distribution system. The Group operates in areas where there are no  indigenous populations.

Processes for engaging with affected communities about impacts (S3-2)

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The Company adopts a structured and continuous dialogue with local communities, managed through the  Local Institutional Relations (LIR) Department, which interacts directly and continuously with municipal  administrations to collect and respond to the needs of the community. Among the various topics dealt with, a  significant amount of time is dedicated to asset integrity (e.g. the extension of the gas distribution network, the  management of sensitive users such as schools, etc.). In emergency situations, such as the temporary  suspension of services or accidental pipe breakages, the Local Institutional Relations Department coordinates  the responses and actions taken to minimise the impact. The commitment to listening and dialogue is mainly  carried out through both physical and virtual meetings, and through formal and informal communications. The  LIR Department is responsible for actively involving municipal administrations and, when necessary, groups  of citizens, in order to ensure that company activities are consistent with the needs of local communities,  particularly with regard to aspects such as safety and prevention. With this in mind, the Group has also  committed to meet with a number of local administrations each year that are representative of at least 40% of  all re-delivery points.

The Head of the LIR Department ensures that the involvement is continuous and that the results are also used  in making company decisions. Since the topics dealt with are extremely varied, the approach to evaluating the  actions is flexible and not standardised, in order to respond in an flexible and adequate manner to the specific  needs of each situation, based on direct contacts with the members of the administrations.

Processes to remediate negative impacts and channels for affected communities to raise concerns  (S3-3)

Italgas has adopted procedures and activities aimed at minimising gas leaks, which could generate potential  problems for its infrastructure. In the event of an emergency, Italgas has emergency response teams that are  able to identify and resolve any issues that arise. Italgas provides various communication channels to facilitate  direct dialogue with local communities and ensure effective management of any issues.

Specifically, the Group has a toll-free number that is active 24 hours a day, 7 days a week: this channel  activates the emergency response structure for any potential asset integrity hazard reported by the community.  In addition to the specific channel for reporting gas leaks and faults, the Group has another toll-free number  and a dedicated section on its web portal for complaints and various reports. All the above toll-free numbers  related to emergencies, as well as commercial communication, are listed on the company's websites and are  printed on the bills of end customers.

The Group constantly monitors the KPIs relating to contacts from these channels; calls relating to emergency  service reports are also monitored to ensure that at least 90% of them are handled within 120 seconds, as  required by the Authority.

Taking action on material impacts on affected communities, and approaches to managing material  risks and pursuing material opportunities related to affected communities, and effectiveness of those  actions (S3-4, MDR-A)

The Group constantly applies measures to guarantee the safety and reliability of the gas distribution network,  minimising the risk of potential accidents and negative impacts on the surrounding communities. The main 

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actions taken include predictive maintenance of the network, which allows for constant monitoring of the  network's condition and identification of potential signs of wear or malfunctions before they become  problematic; research and monitoring activities on fugitive emissions, including the development of operational  guidelines that standardise the response to gas leaks; continuous monitoring of the performance of the  aforementioned processes, enabling the timely identification of potential issues, optimisation of operations,  and the implementation of corrective actions when necessary, ensuring that the network remains safe and  efficient.

During the year, the Group also continued its usual emergency response activities, with staff who are specially  trained to manage critical situations. Two Plants and Networks Command and Control Centres (located in  Turin and Florence) operate as centralised command and control rooms, operational 24 hours a day,  guaranteeing constant support for the management of the distribution system. Each emergency call means  that a specialised technician will arrive on site within 1 hour to ascertain and, if necessary, resolve the anomaly  reported by the user.

In the event of any emergency relating to the integrity of the distribution network, the Group has emergency  response teams that are able to identify and resolve the issues presented.

The Group reports all the operational KPIs relating to network investigation to the Top Management on a  monthly basis in dedicated meetings (Sustainability Business Review and the Operational Committee). In  addition, Italgas periodically communicates its asset integrity results in response to requests from regulatory  bodies.

The Group has Territorial Emergency Plans, related to each individual distribution plant, where equipment,  tools, companies operating in the area, public authorities and entities, sensitive Customers/Entities, reduction  groups, interceptor valves, critical points (pipes crimped on bridges, in crossings of important river basins,  active fronts of landslide movements, etc.) are identified, allowing for a complete view for handling any  emergencies.In 2024, 23 accidents were recorded, resulting in a total of 4 deaths. The cause of these accidents  is mainly attributable to the lack of maintenance or the unsuitability of the boilers or internal systems of end  users (e.g. inadequate evacuation of combustion products), to interventions by third parties (e.g. excavation  work) or atmospheric events (e.g. lightning). The Italgas Group is in no way responsible for these accidents.

To manage this impact, Italgas allocates both financial and human resources to manage any emergency in  the territory according to the deadlines set by the authorities. 

Future financial resources allocated for the management of the issue and the achievement of the objectives  amount to 1,726.1 million euros of CapEx and 412.2 of OpEx in the 2025-2030 reference period. In 2024,  399.4 million euros of CapEx and 75.5 million euros of OpEx were spent. These values mainly refer to  inspection and maintenance activities and to the Emergency Service activities.

These CapEx are indicated in this document in Note 13 “Property, plant and equipment” and Note 14  “Intangible assets” of the Consolidated Financial Statements; the OpEx, on the other hand, are indicated in  Note 28 “Total costs and other operating expenses” of the Consolidated Financial Statements.

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Targets related to managing material negative impacts, advancing positive impacts, and managing  material risks and opportunities (S3-5, MDR-M, MDR-T)

To assess its performance in managing the asset integrity, Italgas uses KPIs that are derived from specific  regulatory requirements established by ARERA. In particular, the KPIs used were:

• Network inspection - % of networks subjected to annual planned inspection for gas leaks. 

• Emergency interventions – % of emergency interventions carried out with arrival at the site within 60  minutes.

ARERA/RAE may conduct control activities on the values of the KPIs indicated and communicated to ensure  their accuracy.

Based on these KPIs, Italgas sets its own targets related to asset integrity. ARERA/RAE, as public authorities,  can be considered representative bodies of the impacted communities. Italgas' targets in this area refer to  these KPIs but have a much stricter performance level than what is strictly required by the regulations, with  the goal of achieving the operational efficiency and safety objectives for the Group and local communities as  outlined in the company procedures managing the issue.

The objectives and corresponding performance for 2024 are presented below:

Progress (2024)

Category and units

Scope 113

Annual

2028

%

Absolute  value

Type of  target

% of networks subjected to  annual planned inspection for gas  leaks 114

Gas  distribution

100% 115

200%

154%

N/A

Relative

% of interventions carried out on  site, with emergency intervention  performed within 60 minutes

Gas  distribution

98% 116

N/A

99.4%

N/A

Relative

The impacted stakeholders, namely the local community, indirectly participate in the definition of Italgas' asset  integrity targets, as the competent public authority, ARERA/RAE, sets specific legally binding performance  standards, which are far lower than the more ambitious target levels set by Italgas. For performance monitoring  and analysis, which allows the Group both to identify areas for improvement and implement corrective actions  to further reduce risk areas, and to report results in response to requests from regulatory bodies, Italgas uses  advanced technologies and digitised processes to constantly monitor the network and minimise the likelihood  of incidents concerning asset integrity. It also uses smart maintenance principles and Picarro CRDS  technology, which allows for extremely accurate monitoring of the network's conditions.

7.4 Governance information

113 The targets refer to the scope of the Group companies consolidated using the line-by-line method as of 31 December 2024. 

114 Value calculated as the ratio between the linear extension of the networks inspected in the calendar year and the total extension of the Group's gas  networks.

115 ARERA Target: network inspection equal respectively to 100% in the 3 mobile years for high and medium pressure networks and 100% in the 4 mobile  years for low pressure networks; RAE target: 2-4 times a year for ductile networks in densely populated areas, while targets for other types of networks vary  from once a year to once every 4 years, depending on the characteristics of the network.

116 ARERA targets: > 90%; RAE target: >90% within 120 minutes, without exceeding the 240 minutes in any case.

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G1 – Business conduct

The role of the administrative, supervisory and management bodies (ESRS 2 GOV-1 ESRS G1)

Italgas' administrative and corporate bodies, management and Supervisory Body play crucial roles in ensuring  the compliance and integrity of the company's operations. These bodies work together in synergy to ensure  that Italgas operates in a way that is ethical, transparent and compliant with regulations, thus contributing to  the Company's sustainability and growth. In particular, the Board of Directors defines the strategic guidelines  and company objectives, while the Board of Statutory Auditors supervises the accuracy of accounting and  financial operations. In addition, it verifies the adequacy of the internal control and risk management system,  ensuring that the decisions made by the Board of Directors comply with current regulations. To support these  activities, the Board's internal committees assist the Board of Directors in evaluating and managing strategic  decisions. The management of Italgas, guarantor of transparency and honesty in compliance with the rules  protecting competition, is responsible for implementing company policies and procedures in accordance with  the Code of Ethics. The Supervisory Body of each Group company, appointed by the Board of Directors, has  autonomous powers of initiative and control. Its tasks include monitoring the effectiveness of Model 231 and  the Code of Ethics (in collaboration with Management), analysing their adequacy and functionality over time,  and approving the annual programme of supervisory activities. In addition, it examines the results of the  activities carried out and verifies the information flows with the company departments and corporate bodies,  ensuring that Italgas maintains high standards of corporate conduct and regulatory compliance. The members  of the Board of Directors and the Board of Statutory Auditors have consolidated experience in business  conduct, gained through their roles at Italgas and also during their professional careers, for example by holding  positions of responsibility in the field of internal audit, acquiring in-depth skills in internal control processes and  risk management, and as members of Supervisory Boards, developing an in-depth knowledge of the  application of the organizational models provided for in Legislative Decree. Lgs. 231/2001, with a focus on key  aspects such as crime risk analysis, anti-corruption profiles and monitoring of ethical conduct in companies.

Description of the processes to identify and assess material impacts, risks and opportunities (ESRS 2  IRO-1)

In the process of identifying material Impacts, Risks and Opportunities in relation to its corporate conduct,  Italgas considers criteria that include the location and type of its activities and the reference value chain. For  further discussion, see ESRS 2 IRO-1.

Corporate culture and business conduct policies  (G1-1, MDR-P)

For the management of IROs relating to corporate conduct, Italgas has various regulatory documents,  including the Code of Ethics – a document that describes the values and responsibilities that the Group  recognises, accepts and shares, both internally and externally – the Organisation, Management and Control  Model pursuant to Legislative Decree 231/2001 (Model 231), a specific policy and management system for the  prevention of and fight against corruption in accordance with the requirements of the UNI EN ISO 37001:2016  standard. The Policy for the prevention and fight against corruption is based on the following principles: 1)  Oppose without exception any practices of corruption, illicit favours, collusive behaviour, or solicitations, 

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whether direct or through third parties, for personal or career advantages for oneself or others; 2) Conduct  activities in compliance with anti-corruption laws, all other administrative requirements, and any additional and  improved corporate regulations; 3) Develop and implement all necessary organisational and procedural  solutions to prevent and combat corrupt practices; 4) Select and promote the development of suppliers in  accordance with the principles of this policy, requiring them to maintain behaviour consistent with it.

The Policy is also adopted in compliance with the requirements set out by the UNI EN ISO 37001:2016  standard, "Anti-bribery management systems – Requirements and guidance for use", and the tenth principle  of the Global Compact, which states that "businesses should work against corruption in all its forms, including  extortion and bribery". Italgas considers the development and maintenance of the aforementioned documents  and its management systems as fundamental tools for raising awareness and engaging employees and  stakeholders, as well as for improving its processes. With this in mind, the objectives of the policy are the  following: 

(i) the minimisation of the risk of violations that could expose the organisation to sanctions, financial damage  and damage to its reputation; 

(ii) increasing stakeholder confidence in the organisation's ability to carry out its activities in accordance with  applicable regulations and highlight any non-compliance.

With a view to transparency and collaboration, including with regard to stakeholders, the Code of Ethics and  the Policy are published on the company intranet and on the Group's website, making them accessible to  anyone who is interested. For more information, refer to DR S2-2 and S2-3. In accordance with the provisions  of the UNI ISO 37001:2016 standard, the Group has identified company positions with a corruption risk higher  than low, in relation to which annual checks are carried out both by the internal departments set up for this  purpose and by the external certification body DNV. The above-mentioned Departments are the first levels of  the organisational structure of each company in the Italgas Group. Furthermore, Italgas undertakes to ensure  that its directors, auditors, management, employees and all those who work to achieve the company's  objectives respect the fundamental principles of the Code of Ethics, as essential behaviour for the efficiency,  reliability and reputation of the company. Italgas is committed to raising awareness of corporate conduct  issues, providing training on the company's Code of Ethics, Corporate Compliance Policy, Model 231, the  reporting procedure and management systems dedicated to the prevention of corruption, as well as  encouraging whistleblowing and compliance, and requiring acceptance of and compliance with the principles  contained therein. These initiatives are aimed at its own staff and relevant stakeholders, using internal  communications and specific training programmes, delivered both in the classroom and via e-learning. The  courses are updated periodically, at least every three years or when necessary. The Supervisory Body also  supervises the effectiveness of training on the Code of Ethics. The Code of Ethics and the Policy for the  Prevention and Fight against Corruption apply to Italgas's staff and its business partners; the ultimate  responsibility for the implementation of the above-mentioned documents lies with the Board of Directors and  the CEO.

In accordance with European regulations on whistleblowing (EU Directive 2019/1937) and their respective  national implementations, the Italgas Group has implemented a new platform for managing reports regarding,  for example, working conditions, discrimination, human rights violations, and safety. 

197

The platform (

https://segnalazioniwhistleblowing.integrityline.com/

), available in Italian, English and Greek, 

allows the reporter to choose whether to send anonymous or identifiable reports, either in written or oral form.  In the case of oral alerts, the channel ensures the protection of the whistleblower's voice. Sensitive data are  treated with the utmost care and in full compliance with the GDPR. Even for anonymous reports, it is possible  to communicate with whistleblowers through a secure mailbox to obtain further information or confirm receipt  of the report. 

The Italgas Group has updated its reporting procedures to align with current regulations, defining the process  for receiving, analysing, and managing reports, including anonymous or confidential ones. The Procedure is  widely disseminated both internally, through publication on the company intranet, notice board postings, and  training activities (especially for new hires), and externally via the company's website.

Specifically, the Whistleblowing Management System aims to:

• encourage the reporting of suspected violations of regulations in good faith, or based on reasonable  belief, without fear of reprisals;

• support and protect whistleblowers and other stakeholders involved;

• reduce the risk of misconduct.

The management of reports and the related data processing for privacy purposes is carried out by each Italgas  Group company through its own internal offices or through outsourcing arrangements by way of specific service  contracts. The platform offers adequate guarantees to protect the confidentiality of the identity of the  whistleblowers, the persons involved and the persons mentioned in the reports, as well as the contents of the  reports and the related documentation.

The platform is only accessible to the Internal Audit Department, which refers reports, depending on their  nature, to the Supervisory Body, the Whistleblowing Committee or the Qualified Whistleblowing Committee.

In addition, the reporting channel allows the Group to provide feedback to the whistleblower on the actions  taken within 90 days of the report. To ensure that they are known and accessible, the company communicates  the procedures and indicative management times transparently. In addition to the internal tools for compliance  with the Whistleblowing Decree, the Group has additional non-mandatory tools for handling complaints,  including the Anti-Corruption Compliance Standard and the management system in accordance with the  UNI:ISO 37001:2016 Standard.

Management of relations with suppliers (G1-2)

The Italgas Group has implemented a structured workflow for managing the procure-to-pay cycle. Upon receipt  of an incoming invoice, a verification and approval process begins, based on predefined thresholds and  authorisation levels, before the invoice is recorded in the accounting system. The procedure ensures that,  except in specific cases, authorisation and payment processing are carried out within standard contractual  terms based on the invoice due date. In cases where invoices are disputed or under review, the process is  suspended until the issue is resolved. For further details on the Group’s approach to supplier relationships and 

198

assessments related to sustainability issues, including social and environmental criteria for supplier selection,  please refer DR S2-4.

Prevention and detection of corruption and bribery (G1-3)

Italgas has implemented a robust system to prevent, detect and address risks and any episodes of corruption,  based on several integrated procedures and policies, including: 

• Corporate Compliance Policy, which illustrates the principles and objectives regarding the prevention  of and fight against corruption, integrated compliance and reporting, aiming at an integrated  compliance system to prevent and manage the risks of non-compliance;

• Policy for the prevention of and fight against corruption and an Anti-Bribery Management System in  compliance with the UNI ISO 37001:2016 Standard, which includes the assessment of corruption risks,  the planning and implementation of measures and controls to mitigate these risks, and periodic internal  and external audits to assess the effectiveness of the Management System as a precursor to the  renewal and maintenance of certification; 

• Anti-Corruption Compliance Standard, which provides a systemic framework of reference for internal  anti-corruption regulations and describes how to prevent and manage any episodes of corruption;

• Compliance Standard “Reports received by Italgas and its subsidiaries that regulates the process of  receiving, analysing and handling reports of conduct that is illegal or in conflict with the Code of Ethics  and/or Model 231. 

At Italgas, investigations into possible corruptive events are mainly carried out independently by the  Supervisory Body, which is made up of individuals from outside the organisation and has unlimited access to  company information for investigation, analysis and control activities. Investigations may be carried out with  the support of the Internal Audit and Security Departments and any other departments that may be necessary  for the investigations. The Anti-Corruption Management System, in accordance with ISO 37001, requires the  annual sharing of the Review Report by the Compliance Department for the Prevention of and Fight Against  Corruption with the Supervisory Body, the Control, Risk and Related Party Transactions Committee, the Board  of Statutory Auditors and the Board of Directors. The Report documents the results of the monitoring of the  management system, including any detected episodes of corruption and the related management methods.  With a view to transparency and collaboration towards all stakeholders, these documents are published on the  company intranet and on the Group's website, making them accessible to anyone who is interested. Italgas is  committed to raising awareness of the Anti-Corruption Management System among its employees and  suppliers. This objective is pursued through specific training programmes, delivered in the classroom or via e- learning, which are updated periodically and, in any case, at least every three years, and involve all Group  staff. Furthermore, Italgas provides anti-corruption training to its suppliers that do not have an adequate  training programme in this area, which is required for the purposes of qualification. Periodically, classroom  training sessions are held (administrative responsibility of entities - Legislative Decree 231/2001, code of ethics  and anti-corruption) involving all the top management of the Group Companies, i.e., CEOs and their front lines, 

199

who represent the corporate functions with higher than low risk of corruption according to the anti-corruption  risk assessment matrix. Of these recipients, 88% have benefited from such training programs. The topics  covered in the training are administrative responsibility of entities, the management system for preventing and  combating corruption adopted, the code of ethics as well as the system of sanctions provided for violation of  the same. Anti-corruption training covers both active and passive corruption, both public and private, with  relevant examples. The training is updated at least every 3 years. Members of the administrative, management  and supervisory bodies do not receive training directly from the company, but upon accepting their office, they  are given the relevant internal regulatory instruments and sign a declaration in which they undertake to know  and abide by its principles.

Confirmed incidents of corruption or bribery (G1-4)

In 2024, there were no convictions or commuted fines for corruption or bribery incidents. In any case, the  internal regulatory instruments provide for the application of disciplinary sanctions – up to and including  dismissal for just cause – in the event of a violation of the internal anti-corruption policy and procedures,  depending on the severity of the violation 117 . 

Political influence and lobbying activities (G1-5)

With regard to advocacy activities, the Group has defined clear roles and responsibilities for their management:  the final responsibility for this lies with the Head of Institutional Relations and Regulatory Affairs, as there is no  member of the corporate bodies with specific delegated powers regarding these issues. The issue at the basis  of advocacy, lobbying and stakeholder engagement activities centres around the recognition of innovation and  digitisation of the gas infrastructure as essential elements to enabling networks for the distribution of renewable  gases, thus contributing to energy transition.

Below is an overview of the specific issues addressed during 2024 and any references to the related legislative  dossiers:

• the strategic prospects for natural gas distribution infrastructures and their digital transformation;

• the role of biomethane and renewable gases (hydrogen) in the energy transition process;

• the progress of the development project for the methanisation of Sardinia and considerations on the  related tariff regulation;

• the acquisition and management of assets in the water sector of the companies Acqualatina,  Siciliacque and Acqua Campania, and other related open issues.

• participation in public conferences, such as Biogas Italy and the strategic role of biomethane in the  Italian and European scenario – Pordenone;

117 During 2024, no events of dismissal for just cause due to violation of the internal anti-corruption policy and procedures were recorded.

200

• participation in public consultations on: National Hydrogen Strategy, National Integrated Energy and  Climate Plan, MASE Decree for hydrogen incentives;

• support and expediting activities for funding that has already been allocated for: methanisation in  Southern Italy (gas), investments funded by the National Recovery and Resilience Plan (hydrogen and  water filling stations), the Development and Cohesion Fund, the National Plan for Infrastructure  Investments and the Safety of the Water System, and wastewater reuse.

The IROs that are most closely related to these issues are all the ones concerning climate change and the  impact of water leaks.

Italgas is registered in the European Union Transparency Register under identification number 477543424417- 73\. 

The Group does not make contributions to political figures or groups, either in cash or in kind; nor is it legally  obliged to register with a chamber of commerce or other organisation representing interests. Finally, no  member of the Board of Directors and the Board of Statutory Auditors held a comparable position in the public  administration (including regulatory authorities) in the two years prior to appointment in the current reporting  period

Payment practices (G1-6)

The Group's standard contractual payment terms provide for payment of supplier invoices within 60 days from  the last day of the month in which the invoice is issued. This payment standard applies to 97% of invoices of  the main suppliers category, namely those belonging to the “network and metering works” cluster 118 . In 2024,  in Italy, the average days between the Group's standard contractual payment deadline and the payment of the  invoice amount to approximately 26 days, or 86 days from the last day of the month of invoice issuance 119 .  The number of legal proceedings currently pending for late payment is 1 120 ..

Actions and resources in relation to material sustainability matters, Metrics in relation to material  sustainability matters, Tracking effectiveness of policies and actions through targets (MDR-A, MDR- M, MDR-T).

The performance related to the “anti-corruption” topic is assessed in relation to the target for the renewal of  the ISO 37001 certification on the management system for the prevention of and fight against corruption for  the following consolidated companies of the Group: Italgas SpA, Reti, Geoside, Bludigit, Medea, Nepta,  Toscana Energia, Enaon and Enaon EDA. The verification for the renewal of the certification is carried out 

118 Invoices for this category of suppliers make up about 74% of annual invoices for Group companies in terms of value. The terms of payment of the remaining  invoices are governed by their specific contractual terms.

119 The accounts payable cycle management procedure and the standard herein applies without distinction to large enterprises and SMEs. This amount was  calculated on the basis of the extraction from accounting systems of payables paid in FY2024 by Group companies, as the average number of differences  between the dates of invoices and the break-even date, i.e., the date of payment of invoices

120 This value refers to a medium-size enterprise

201

every 3 years by an external certification body. In 2024, ISO 37001 anti-corruption certifications were obtained  and/or renewed for all the companies listed above.

Each year, Italgas has its management system for the prevention of and fight against corruption submitted for  the maintenance of ISO 37001:2016 certification, which it has now obtained. The actions undertaken involve  all company processes and stakeholders, guaranteeing the effective implementation of the management  system for the prevention of and fight against corruption within the territory in which the Group operates.

In 2024, Italgas achieved all the objectives set out in the improvement plan for the Management system for  the prevention of and fight against corruption, in accordance with the ISO 37001:2016 standard. The objectives  achieved include:

• the integration of the gifts register;

• the updating of the M&A procedure;

• the provision of training activities;

• obtaining and renewing ISO 37001:2016 certification for all companies included in the scope of  reference.

Similarly, the improvement plans of the Group's other Italian companies have also been completed and the  activities necessary to achieve the objectives for 2025 and 2026 are ongoing.

The financial resources (OpEx), committed in 2024 and for future years to preventing and combating  corruption, amount to approximately 510 thousand euros annually. This figure includes the labour costs of the  Compliance & Anti-Corruption Departments and the related departmental budget.

202

Certification in sustainability reporting pursuant to Article 81- ter , subsection 1, of the Consob Regulation no. 11971 of 14 May 1999 as amended and supplemented

1. Pursuant to Article 154-bis , subsection 5 -ter , of Legislative Decree 58 of 24 February 1998, the undersigned  Paolo Gallo and Gianfranco Amoroso, as Chief Executive Officer and Officer responsible for the preparation  of financial reports of the Italgas Group respectively, certify that the sustainability report included in the  Directors’ report has been prepared:

a) in accordance with the reporting standards applied pursuant to Directive 2013/34/EU of the European  Parliament and of the Council of 26 June 2013 and Legislative Decree no. 125 of 6 September 2024;

b) with the specifications adopted pursuant to Article 8, subsection 4 of Regulation (EU) 2020/852 of the  European Parliament and of the Council of 18 June 2020.

2\. In this regard, no significant facts of note emerged.

Date:

Chief Executive Officer

Paolo Gallo

The officer responsible for the preparation of  financial reports 

Gianfranco Maria Amoroso

203

204

205

206

207

208

CONSOLIDATED FINANCIAL STATEMENTS

ITALGAS CONSOLIDATED FINANCIAL REPORT AS AT 31 DECEMBER 2024 - FINANCIAL STATEMENTS

209

Consolidated Statement of Financial Position

As of 31 December 2023

As of 31 December 2024

(€ thousands)

Notes

Total

of which, related  parties

Total

of which, related  parties

ASSETS

Cash and cash equivalents 

(7)

249,963

402,662

Current financial assets

(8)

4,248

2,127

3,592

2,125

Trade and other receivables 

(9)

853,488

184,114

905,092

234,138

Inventories 

(10)

79,052

57,232

Current tax receivables 

(11)

17,475

0

Other current financial assets

(20)

18,094

5,878

0

Other current non-financial assets

(12)

152,864

2

232,559

288

Total current assets

1,375,184

1,607,015

Property, plant and equipment

(13)

386,040

383,327

Intangible assets 

(14)

8,772,609

8,833,270

Investments accounted for using the  equity method

(15)

131,771

155,715

Non-current financial assets

(16)

23,778

3,655

339,747

1,570

Non-current tax receivables

(11)

12,876

17,612

Other non-current financial assets

(20)

13,708

0

10,982

0

Other non-current non-financial assets 

(12)

417,069

287

619,322

406

Total non-current assets

9,757,851

10,359,975

Assets held for sale

(17)

6,613

0

5,351

0

TOTAL ASSETS

11,139,648

11,972,341

LIABILITIES AND EQUITY

Current financial liabilities 

(18)

1,033,434

636

980,569

4,580

Trade and other payables 

(19)

829,862

65,775

1,184,609

64,410

Current tax liabilities 

(11)

20,448

0

25,562

0

Other current non-financial liabilities

(21)

17,393

222

14,063

1,093

Total current liabilities

1,901,137

2,204,803

Non-current financial liabilities 

(18)

5,886,922

1,566

6,205,299

141,566

Provisions for risks and charges 

(22)

109,851

0

92,122

0

Provisions for employee benefits 

(23)

65,330

0

61,279

0

Deferred tax liabilities

(24)

47,780

0

48,345

0

Other non-current non-financial liabilities

(21)

527,884

0

566,985

0

Total non-current liabilities

6,637,767

6,974,030

TOTAL LIABILITIES

8,538,904

0

9,178,833

0

EQUITY 

(25)

Share capital 

1,003,228

1,003,844

ITALGAS CONSOLIDATED FINANCIAL REPORT AS AT 31 DECEMBER 2024 - FINANCIAL STATEMENTS

210

Other reserves 

191,529

175,584

Retained earnings

645,747

799,635

Profit for the year 

439,568

478,854

Equity attributable to the Owners of  the parent company 

2,280,072

2,457,917

Non-controlling interests

320,672

335,591

TOTAL EQUITY

2,600,744

2,793,508

TOTAL LIABILITIES AND EQUITY

11,139,648

11,972,341

The accompanying notes are an integral part of these Consolidated Financial Statements

Consolidated Income Statement

For the year ended 31  December 2023

For the year ended 31  December 2024

(€ thousands)

Notes

Total 

of which,  related  parties 

Total 

of which,  related  parties 

Revenues

2,564,193

45,865

2,478,644

744,304

Other income

74,648

3,129

60,792

6,835

Total revenues and other income

(27)

2,638,841

2,539,436

Costs for raw materials, consumables, supplies  and goods

(195,869)

(14,166)

(168,459)

(6,622)

Costs for services

(792,394)

(13,300)

(604,545)

(10,198)

Lease expenses

(89,133)

(1,125)

(102,496)

(1,235)

Personnel costs

(276,800)

(285,133)

Impairment of trade receivables net

(124)

822

Other expenses

(57,718)

(72,858)

(60,921)

(86,154)

Total costs and other expenses

(28)

(1,412,038)

(1,220,732)

Amortisation, depreciation and impairment of  assets

(29)

(545,546)

(536,555)

Operating result

681,257

782,149

Financial expense

(103,642)

0

(149,566)

(1,171)

Financial income

5,490

1

28,521

253

Gain/(loss) on derivative financial instruments  measured at fair value

(77)

379

Total net financial expense

(30)

(98,229)

(120,666)

Share of the profit of investments in  associates/joint ventures

1,652

1,652

9,945

9,945

Other income (expense) from equity investments

1,416

25

1,264

0

Total net income from equity investments

(31)

3,068

11,209

Profit before taxes

586,096

672,692

Income taxes 

(32)

118,625

165,257

Profit for the year

467,471

507,435

Attributable to:

Owners of the parent company

439,568

478,854

Non-controlling interests

27,903

28,581

Earnings per share (€ per share)

(33)

\- basic and diluted from continuing operations

0.54

0.59

\- total basic and diluted

0.54

0.59

ITALGAS CONSOLIDATED FINANCIAL REPORT AS AT 31 DECEMBER 2024 - FINANCIAL STATEMENTS

211

The accompanying notes are an integral part of these Consolidated Financial Statements

Consolidated Statement of Comprehensive Income

For the year ended 31  December 2023

For the year ended 31  December 2024

(€ thousands) 

Profit for the year

467,471

507,435

Other comprehensive income

Components that may be reclassified subsequently to the income statement:

Fair value gain/(loss) arising form hedging instruments during the period 

(21,637)

(13,543)

Tax effect 

5,192

3,251

Total components that may be reclassified subsequently to the income statement

(16,445)

(10,292)

Components that will not be reclassified to the income statement:

Actuarial gains (losses) from remeasurement of defined benefit plans for employees

222

(626)

Change in fair value of investments measured at FVTOCI

(515)

112

Tax effect 

75

142

Total components that will not be reclassified to the income statement

(218)

(372)

Total other components of comprehensive income, net of tax effect 

(16,663)

(10,664)

Total comprehensive income for the year

450,808

496,771

Attributable to Owners of the parent company

423,790

467,371

Attributable to non-controlling interests

27,018

29,400

ITALGAS CONSOLIDATED FINANCIAL REPORT AS AT 31 DECEMBER 2024 - FINANCIAL STATEMENTS

212

Consolidated Statement of changes in Equity

(€ thousands) 

Share  capital

Consolidation  reserve

Share  premium  reserve

Legal  reserve

Reserve  for defined  benefit  plans for  employees,  net of tax  effect

Fair value  reserve for  cash flow  hedge  derivatives,  net of tax  effect

Reserve for  business  combinations  under  common  control

Stock  grant  reserve

Fair value  valuation  reserve for  equity  investments

Other  reserves

Retained  Earnings

Profit for  the year

Equity  attributable  to owners  of the  parent  company

Non- controlling  interests

Total  equity

Balance as of 1 January 2023 (a) (Note 25) 

1,002,608

(323,907)

624,449

200,246

(7,195)

38,261

(349,839)

7,202

609

12,534

496,006

407,288

2,108,262

282,308

2,390,570

2023 profit for the year

439,568

439,568

27,903

467,471

Other components of comprehensive  income:

Components that may be reclassified  subsequently to the income statement: 

-Fair value gain/(loss) arising from hedging  instruments during the period, net of tax effect

(15,578)

(15,578)

(867)

(16,445)

Components will not be reclassified to the  income statement:

\- Actuarial gains (losses) from remeasurement  of defined benefit plans for employees, net of  tax effect 

171

171

(18)

153

\- Change in fair value of investments  measured at FVTOCI, net of tax effect

(371)

(371)

(371)

Total comprehensive income 2023 (b)

171

(15,578)

(371)

439,568

423,790

27,018

450,808

Transactions with shareholders:

\- Allocation of 2022 profit for the year

400

406,888

(407,288)

\- Dividends to Owners of the parent company 

(257,147)

(257,147)

(257,147)

\- Dividends to non-controlling interests

(12,848)

(12,848)

\- Change in Stock grant reserve

2,215

2,215

2,215

Total transactions with shareholders (c)

400

2,215

149,741

(407,288)

(254,932)

(12,848)

(267,780)

Other changes in shareholders’ equity (d) 

620

1,803

529

2,952

24,194

27,146

Balance as at of 31 December 2023  (e=a+b+c+d) (Nots 25) 

1,003,228

(323,907)

626,252

200,646

(7,024)

22,683

(349,839)

9,417

238

13,063

645,747

439,568

2,280,072

320,672

2,600,744

ITALGAS CONSOLIDATED FINANCIAL REPORT AS AT 31 DECEMBER 2024 - FINANCIAL STATEMENTS

213

(€ thousands) 

Share  capital

Consolidation  reserve

Share  premium  reserve

Legal  reserve

Reserve  for defined  benefit  plans for  employees,  net of tax  effect

Fair value  reserve for  cash flow  hedge  derivatives,  net of tax  effect

Reserve for  business  combinations  under  common  control

Stock  grant  reserve

Fair value  valuation  reserve for  equity  investments

Other  reserves

Retained  Earnings

Profit for  the year

Equity  attributable  to owners  of the  parent  company

Non- controlling  interests

Total  equity

Balance as of 1 January 2024 (a) (note 25)

1,003,228

(323,907)

626,252

200,646

(7,024)

22,683

(349,839)

9,417

238

13,063

645,747

439,568

2,280,072

320,672

2,600,744

2024 profit for the year

478,854

478,854

28,581

507,435

Components that may be reclassified  subsequently to the income statement:

-Fair value gain/(loss) arising from hedging  instruments during the period, net of tax effect

Components will not be reclassified to the  income statement:

(11,159)

(11,159)

867

(10,292)

\- Actuarial gains (losses) from remeasurement  of defined benefit plans for employees, net of  tax effect 

\- Change in fair value of investments  measured at FVTOCI, net of tax effect

(405)

(405)

(48)

(453)

Components that may be reclassified  subsequently to the income statement:  reclassifiable to the income statement:

81

81

81

Total comprehensive income 2024 (b)

(405)

(11,159)

81

478,854

467,371

29,400

496,771

Transactions with shareholders:

\- Allocation of 2023 profit for the year

123

439,445

(439,568)

\- Dividends to Owners of the parent company 

(285,557)

(285,557)

(285,557)

\- Dividends to non-controlling interests

(14,179)

(14,179)

\- Change in Stock grant reserve

616

2,143

(1,185)

(616)

958

958

\- Change in scope of consolidation

668

668

Total transactions with shareholders (c)

616

2,143

123

(1,185)

(616)

153,888

(439,568)

(284,599)

(13,511)

(298,110)

Other changes in shareholders’ equity (d) 

(4,927)

(4,927)

(970)

(5,897)

Balance as of 31 December 2024  (e=a+b+c+d) (Nots 25) 

1,003,844

(323,907)

628,395

200,769

(7,429)

11,524

(349,839)

8,232

319

7,520

799,635

478,854

2,457,917

335,591

2,793,508

ITALGAS CONSOLIDATED FINANCIAL REPORT AS AT 31 DECEMBER 2024 - FINANCIAL STATEMENTS

214

ITALGAS CONSOLIDATED FINANCIAL REPORT AS AT 31 DECEMBER 2024 - FINANCIAL STATEMENTS

215

Consolidated Statement of Cash Flow

(€ thousands)

Note

For the  year  ended 31  December  2023

For the  year ended  31  December  2024

Profit for the year

467,471

507,435

Adjustments for:

Amortisation, depreciation and impairment of assets

(29)

544,327

536,555

Share of the profit of investments in associates/joint ventures 

(1,824)

(9,945)

Other income from equity investments (net of dividends received)

(42)

(1,264)

Stock grant

2,232

(931)

(Gains)/Losses arising from the disposal of non-current assets

38,485

37,868

Financial income

(5,412)

(28,900)

Financial expense

103,337

149,547

Income taxes

(32)

118,625

165,257

Change in provisions for employee benefits

(6,715)

(7,094)

Changes in working capital:

\- Inventories

41,305

25,952

\- Trade receivables

(511,296)

(191,383)

\- Trade payables

(431,738)

(43,114)

\- Provisions for risks and charges

(34,378)

(19,955)

\- Other assets

502,288

121,761

\- Other liabilities

(51,212)

(22,481)

Dividends cashed in 

672

961

Financial income collected

4,376

13,646

Financial expense paid

(88,722)

(107,364)

Income taxes paid, net of tax credits reimbursed

(119,107)

(27,836)

Net cash flow from operating activities

572,672

1,098,715

of which, related parties

(36)

386,300

805,594

Investments:

\- Property, plant and equipment

(24,534)

(33,489)

\- Intangible assets

(837,368)

(859,179)

\- Business combinations, net of cash acquired 

51,231

\- Equity investments

(78,291)

(15,810)

\- Change in financial receivables instrumental to operating activities

(16,589)

\- Change in payables for investments

60,729

36,967

Disinvestments:

\- Property, plant and equipment

159

3,323

\- Intangible assets

21,298

11,158

\- Business units

403

0

\- Equity investments

0

2,256

\- Change in receivables for disinvestments

0

10,998

Net cash flow used in investing activities 

(857,604)

(809,134)

Proceeds from non-current financial debt

537,980

1,167,540

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Repayment of non-current financial debt

(164,174)

(982,774)

Increase in current financial debt

8,532

11,672

Proceeds from financial asset

2,127

656

Dividends paid

(270,483)

(299,837)

Repayment of lease liabilities

(31,033)

(34,139)

Net cash flow from/ (used in) financing activities

82,949

(136,882)

of which, related parties

(36)

(97,338)

31,263

Net cash flow for the year

(201,983)

152,699

Opening cash and cash equivalents

(7)

451,946

249,963

Closing cash and cash equivalents

(7)

249,963

402,662

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N otes to the Consolidated Financial Statements

Company Information

The Italgas Group, comprising the parent company Italgas S.p.A. and its subsidiaries (collectively referred to  “Italgas”, “Italgas Group” or “Group”), operates in the regulated activities of natural gas distribution, water  services and energy efficiency. 

Italgas S.p.A. is a joint stock company incorporated under Italian law and listed on the Milan Stock Exchange,  with registered offices  in Milan, via Carlo Bo 11.

CDP S.p.A. has “de facto” control over Italgas S.p.A. pursuant to the accounting principle IFRS 10  “Consolidated Financial Statements”. 

As December 31, 2024, CDP S.p.A. holds, directly through CDP Reti S.p.A. 121 25.98% stake in Italgas S.p.A.  and, indirectly through Snam S.p.A., a 4.23% stake.

The parent company, Italgas S.p.A ., is not subject to direction and coordination activities. Italgas S.p.A.  exercises direction and coordination activities over its subsidiaries pursuant to Articles 2497 et seq. of the  Italian Civil Code .

1) Basis of preparation 

The Consolidated Financial Statements have been prepared in accordance with the IFRS Accounting  Standards (“IFRS”) issued by the International Accounting Standards Board (“IASB”) and adopted by the  European Commission according to the procedure pursuant to Article 6 of (EC) Regulation No. 1606/2002 of  the European Parliament and of the Council of 19 July 2002 and pursuant to Article 9 of Legislative Decree  no. 38/2005. The IFRS also include the International Accounting Standards (“IAS”) as well as the interpretive  documents still in force issued by the IFRS Interpretations Committee (“IFRS IC”), including those previously  issued by the International Financial Reporting Interpretations Committee (“IFRIC”) and, before that, by the  Standing Interpretations Committee (“SIC”).

In the 2024 Consolidated Financial Statements, the same consolidation principles and valuation criteria as the  previous year are applied, except for the international accounting standards that came into effect on 1 January  2024, as detailed in the following section “Accounting principles and interpretations applicable from 2024” of  these Consolidated Financial Statements. 

The Consolidated Financial Statements are prepared on a going-concern basis, using the historical cost  method, considering, where appropriate, value adjustments with the exception of the items which, according  to IFRS, must be measured at  fair value , as described in the valuation criteria. 

The Consolidated Financial Statements as at 31 December 2024 were approved and authorized for publication  by the Board of Directors of Italgas S.p.A. in the meeting of 12 February 2025 The Italgas S.p.A. Consolidated  Financial Statements as at 31 December 2024, are subjected to audit by Deloitte & Touche S.p.A..

The Consolidated Financial Statements are presented in Euro. Amounts in the Consolidated Financial  Statements and related Notes, considering their significance, are expressed in thousands of Euro, unless  otherwise indicated.

Certain information contained in the Notes to the Consolidated Financial Statements, when extracted from the  XHTML format into an XBRL instance document, due to certain technical limitations, may not be reproduced  identically to the corresponding information displayed in the Consolidated Financial Statements in XHTML  format.

121 CDP S.p.A. holds 59.10%.

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Accounting standards, amendments and interpretations issued by the IASB (International  Accounting Standards Board), approved by the European Union (EU) and that came into  effect on 1 January 2024

The following provisions issued by the IASB (International Accounting Standards Board) entered into effect in  the European Union on 1 January 2024: 

On 23 January 2020, IASB published a document named “Amendments to IAS 1 Presentation of Financial  Statements: Classification of Liabilities as Current or Non-current” and on 31 October 2022 published  an amendment named “Amendments to IAS 1 Presentation of Financial Statements: Non-Current  Liabilities with Covenants” . These changes seek to clarify how to classify debts and other short or long-term  liabilities. Furthermore, the changes also improve the information an entity must provide when its right to defer  settlement of a liability for at least twelve months is subject to compliance with certain parameters (i.e.  covenants). 

On 22 September 2022 the IASB issued the document “Lease Liability in a Sale and Leaseback  (Amendments to IFRS 16)” with amendments that clarify how the seller of an asset, subsequently the lessee  of that asset, measures sale and leaseback transactions pursuant to IFRS 15. The Board established that the  seller-lessee must measure the Liabilities arising from the leaseback in a way that does not recognise any gain  or loss connected to the right to continue to use the asset.

On 25 May 2023, the IASB published the "Supplier Finance Arrangements (Amendments to IAS 7 and  IFRS 7)" , which is an amendment to be applied in the case of arrangements involving supplier financing, in  order to require additional qualitative and quantitative information to be provided by the financing entity with  respect to existing obligations. This information relates to the characteristics of the arrangements, carrying  amounts, impacts on the entity's cash flows, etc. Furthermore, the IASB has decided that, in most cases,  aggregate information on an entity's supplier financing arrangements meets the information requirements of  users of financial statements. 

The adoption of these amendments had no effect on the Consolidated Financial Statements of the Group .

Accounting standards, amendments and interpretations issued by the IASB (International  Accounting Standards Board) but not yet in force

On 30 May 2024, the IASB published " Amendments to the Classification and Measurement of Financial  Instruments-Amendments to IFRS 9 and IFRS 7 ”. The document clarifies aspects that emerged from the  post-implementation review of IFRS 9, including the accounting treatment of financial assets whose returns  vary on achieving ESG objectives (i.e. green bonds). In particular, the amendments aim to:

• clarify the classification of financial assets with variable returns and linked to environmental, social and  corporate governance (ESG) objectives and the criteria to be used for the SPPI test assessment;

• determine that the settlement date of liabilities through electronic payment systems is the date on  which the liability is settled. However, an entity is permitted to adopt an accounting policy to allow a financial  liability to be derecognised before delivering cash at the settlement date if there are certain specific  conditions.

With these changes, the IASB has also introduced additional disclosure requirements relating in particular to  investments in equity instruments designated as FVOCI. The amendments will apply from financial years  beginning from 1 January 2026. 

On 9 April 2024, the IASB published the new standard, IFRS 18 “Presentation and Disclosures in Financial  Statements ”, which will replace IAS 1 “Presentation of Financial Statements”, with the aim of improving the  way companies disclose in their financial statements. 

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The main new features of the new standard concern the introduction of defined categories and subtotals in the  income statement, the introduction of requirements to improve aggregation and disaggregation, the  introduction of management-defined performance indicator (MPMs) disclosures in the notes to the financial  statements, and targeted improvements to the cash flow statement by amending IAS 7.

The standard will be effective for financial years beginning on or after 1 January 2027 and early application is  permitted.

On 18 July 2024, the IASB published “ “Annual Improvements to IFRS Accounting Standards-Volume 11” ”  containing amendments to IFRS 1, IFRS 7, IFRS 9, IFRS 10 and IAS 7. The IASB annual improvements are  limited to amendments intended to clarify the formulation of one IFRS standard or to correct unwanted  consequences related to discrepancies between the requirements of the various standards. 

The amendments contained in the above Annual Improvements refer to:

• IFRS 1 First-time Adoption of International Financial Reporting Standards in relation to the accounting  or not of hedging instruments by a first-time adopter following the transition to IFRS;

• IFRS 7 Financial Instruments: Disclosures for additional information with reference to the following  points:

- Gain or loss on derecognition

- Supplementary information on the difference between the fair value and the transaction price  of an asset

- Supplementary information on credit risk;

• IFRS 9 Financial Instruments in relation to:

- Derecognition of lease liabilities

- Transaction price;

• IFRS 10 Consolidated Financial Statements – Determination of a “De Facto Agent”, a party who acts  on behalf of another investor, for the purposes of supervision of an affiliate;

• IAS 7 Statement of Cash Flows – Cost Method.

The amendments will be mandatory for financial years starting on or after 1 January 2026; early application is  permitted. The administrators are currently assessing the possible effects of introducing the new principles .

2) Financial Statements

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The formats adopted for the preparation of the financial statements are consistent with the provisions of IAS 1  \- “Presentation of financial statements” (“IAS 1”). In particular:

• the Consolidated Statement of Financial Position items are broken down into assets and liabilities, and  then further into “current or non-current items  122 ”;

• the Consolidated Income Statement classifies costs by nature, since this is deemed to be the best way  of representing the Group’s operations and it is in line with international best practice;

• the Consolidated Statement of Comprehensive Income shows the profit or loss in addition to the  income and expense recognised directly in equity as expressly provided for by the IFRS;

• the Consolidated Statement of changes in Equity reports the total income (expense) for the financial  year, shareholder transactions and the other changes in equity; 

• the Consolidated Statement of Cash Flows is prepared using the “indirect” method, adjusting the profit  for the year for non-monetary components.

It is believed that these statements adequately represent the Group’s situation with regard to its Statement of  Financial Position, Income Statement and Statement of Cash Flows.

For a better representation and comparison of the financial statement items, the figures related to the  comparative financial year have been suitably reclassified where necessary. More specifically:

• With reference to the Consolidated Statement of Comprehensive Income, “Allocations to/releases  from provision for risks and charges” has been reclassified in the “Other expenses”, and “Dividends”  has been reclassified in “Net income from equity investments”;

• With reference to the Consolidated Statement of Cash Flow: (i) “Amortisation and depreciation” and  “Net impairment of assets” have been included in the “Amortisation, depreciation and impairment of  assets”; (ii) “Dividends” has been included in “Net income from equity investments”; (iii) “Other assets  and liabilities” has been split into “Other assets” and “Other liabilities”.

With regard to the same Consob Resolution, the balances of receivables/payables and transactions with  related parties, described in more detail in the note “Related party transactions”, are shown separately in the  Consolidated Financial Statements.

3) Consolidation principles

The Consolidated Financial Statements include the financial statements of Italgas S.p.A. and those of the  entities over which the Company has the right to exercise direct or indirect control, as defined by IFRS 10 –  “Consolidated Financial Statements”. Specifically, control exists where the controlling entity simultaneously:

• has the power to make decisions concerning the affiliate;

• is entitled to receive a share of or is exposed to the variable profits and losses of the affiliate; 

• is able to exercise power over the affiliate in such a way as to affect the amount of its economic  returns.

The Group reassesses whether or not it controls an investee if facts and circumstances indicate that there are  changes to one or more of the three elements of control listed above.

Subsidiaries, joint ventures, associates and other significant equity investments are indicated separately in the  Appendix “Subsidiaries, associates and equity investments of Italgas S.p.A. as at 31 December 2024”, which  is an integral part of these notes. 

All financial statements of consolidated companies close at 31 December and are presented in Euro.

122 The assets and liabilities are classified as current if: (i) their realisation/settlement is expected in the company’s normal operating cycle  or within twelve months after the financial year-end; (ii) they are composed of cash or cash equivalents which do not have restrictions on  their use over the twelve months following the year-end date; (iii) they are mainly held for trading purposes; or (iv) with reference to  liabilities, the company does not have the unconditional right to defer settlement of the liability for at least twelve months from the financial  year closing date.

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Companies included in the scope of consolidation 

Subsidiaries are fully consolidated on a line-by-line basis (“ full consolidation ”) from the date the Company  obtains control (either directly or indirectly) and are deconsolidated from the date the Company loses control.  In the event of loss of control, the Group derecognises the assets (including goodwill) and liabilities of the  subsidiary, any non-controlling interests and other equity components related to the subsidiary and recognises  the fair value of any consideration received for the transaction. Any investment held in the previously subsidiary  is measured at  fair value on the date control is lost. 

The equity shares and profit or loss attributable to non-controlling interests are separately recorded in specific  items of Equity, Income Statement and Statement of Comprehensive Income.

Changes in the equity investments held (either directly or indirectly) by the Company in subsidiaries that do  not result in a change in the qualification of the investment as a subsidiary are recorded as equity transactions.  The carrying amount of the equity attributable to the owners of the parent company and attributable to non- controlling interests are adjusted to reflect the change in the equity investment. The difference between the  carrying amount of non-controlling interests and the fair value of the consideration paid or received is recorded  directly under equity attributable to owners of the parent company.

Otherwise, the sale of interests that result in the loss of control leads to recognition in the income statement  of: (i) any gains or losses calculated as the difference between the consideration received and the  corresponding portion of equity sold; (ii) the effect of the revaluation of any remaining equity investment held  to align it with its fair value ; and (iii) any amounts recorded in other components of comprehensive income  related to the former subsidiary, for which reversal to the income statement is required. The fair value on the  date of loss of control of any remaining equity investment held represents the new carrying amount of the  equity investment, and, therefore, the value for the subsequent valuation of the equity investment according  to the applicable valuation criteria.

All intra-group balances and transactions, including any unrealised gains and losses on intra-group  transactions, are eliminated in the preparation of the Consolidated Financial Statements.

Investments in associates and joint ventures 

An associate is an affiliate over which the Group holds significant influence, meaning the power to participate  in the determination of the financial and operating policies, but without having control or joint control 123 . It is  presumed that the investor has significant influence (unless proven otherwise) if it holds, directly or indirectly  through subsidiaries, at least 20% of the exercisable voting rights. 

A joint venture is a joint arrangement in which the parties holding joint control have rights to the net assets of  the arrangement and, therefore, have an interest in the jointly controlled corporate vehicle.

The economic results and the assets and liabilities of associates and joint ventures are recognised, in the  Consolidated Financial Statements, using the equity method, starting from the date the Group holds a  significant influence or joint control, respectively, except in cases where they are classified as held for sale.

The Consolidated Financial Statements include the Group’s share of profit or loss of subsidiaries recognized  using the equity method until the date when significant influence or joint control ceases.

Business combinations 

Business combinations are recognized using the acquisition method, as required by IFRS 3 - “Business  Combinations”. Accordingly, the consideration transferred in a business combination is determined as of the 

123 Joint control is the contractual sharing of control pursuant to an agreement, which exists only where the unanimous consent of all the  parties that share power is required for decisions relating to significant activities.

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control acquisition date and is equal to the fair value of the transferred assets, the liabilities incurred or  assumed, as well as any equity instruments issued by the acquirer. Directly attributable costs of the transaction  are recognized to the income statement when incurred.

Goodwill arising from the acquisition of control of an equity investment or a business unit represents the excess  of the acquisition cost (defined as the sum of the considerations transferred in the business combination) over  the fair value of identifiable assets, liabilities and contingent liabilities of the acquired entity at the acquisition  date. Any residual difference, if negative, is recognised in the income statement as a bargain purchase gain.

Any adjustments to goodwill may be recognised during the measurement period (which cannot exceed one  year from the acquisition date) as a result of subsequent changes in the fair value of the contingent  consideration or the determination of the fair value of assets and liabilities acquired, if these were provisionally  recognised at the acquisition date and if such changes are determined as adjustments based on new  information regarding facts and circumstances existing at the date of the business combination.

In the case of acquisition of a non-total controlling interest, the goodwill and, correspondingly, the share  attributable to non-controlling interests may be determined at the acquisition date either based on the acquired  percentage of control (the “ partial goodwill method ”) or by measuring the share attributable to non-controlling  interests at fair value (the “ full goodwill method ”). The choice of the goodwill determination method (“ Partial  goodwill method ” or “ Full goodwill method ”) is made selectively for each business combination.

If the cases of acquiring control in stages, the acquisition cost is determined by adding the fair value of the  previously held equity investment in the acquired entity to the amount paid for the additional interest. The  difference between the fair value of the previously held equity investment, re-measured at the acquisition date,  and its carrying amount is recognised in the income statement. Upon the acquisition of the control, any  components previously recorded in other comprehensive income are reclassified to the income statement or  to another item of equity, if the reversal to the income statement is not required. 

Business combinations involving entities under joint control 

Business combinations involving companies that are ultimately controlled by the same company or companies  before and after the business combination, where such control is not temporary, are classed as “ Business  combinations of entities under common control ”. These transactions are excluded from the scope of IFRS 3  and are not governed by other IFRS. In the absence of a specific accounting standard, the selection of the  accounting principle for such transactions, where significant influence over future cash flows cannot be  established, is guided by the principle of prudence, leading to the application of the continuity of values method  for the acquired net assets. The assets are recognised at their carrying amount as reflected in the financial  statements of the acquired companies before the transaction or, if available, at the values resulting from the  consolidated financial statements of the common ultimate parent company. In relation to transfers of business  under common control, the receiving entity must recognised the transferred business at its historical carrying  amount, increasing its equity by an equal amount. The transferring entity will symmetrically recognise the  equity investment in the receiving entity for an amount equal to the increase in the equity of the latter.

This accounting treatment is based on the Preliminary Guidelines on IFRS (OPI 1 Revised) - “Accounting  treatment of business combinations of entities under common control in the separate and consolidated  financial statements” issued by Assirevi in October 2016.

4) Material accounting policies

The most significant accounting policies adopted when preparing the Consolidated Financial Statements are  described below.

Property, plant and equipment

Property, plant and equipment are recognised at the purchase or production cost, including directly attributable ancillary costs needed to make the assets  available for use. 

Property, plant and equipment may not be revalued, even through the application of specific laws.

Costs for improvements, upgrades and transformations that increase the value of property, plant and equipment are recognized as assets when it is probable  that they will increase the future expected economic benefits. Replacement costs of identifiable components of complex assets are recognized as assets and 

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depreciated over their useful life. The residual carrying amount of the replaced component is charged to the income statement. Ordinary maintenance and  repair expenses are recognized to the income statement in the period when they are incurred.

If impairment indicators are present, the carrying amount of property, plant and equipment is tested for potential impairment (refer to the section “Impairment  of property, plant and equipment and intangible assets with a finite useful life” for further details) .

Rights of use 

A contract is, or contains, a lease if it grants an entity the right to control the use of an identified asset for a certain period of time in exchange for a consideration.

For leases with a term over 12 months, (i) an asset, within the “Property, plant and equipment”, as the right of use of the asset and (ii) a financial liability,  representing the obligation to make the lease payments envisaged by the contract, are recognised to the financial statements at the commencement date,  when the asset is made available for use.

The cost of the asset consisting of right of use includes:

a) the amount of the initial measurement of the lease liability; 

b) lease payments due on or before the commencement date, net of any lease incentives received; 

c) initial direct costs incurred;

d) costs for dismantling and restoring the site.

Lease liabilities include the following payments for the right to use the underlying asset over the lease term that remain unpaid as at the commencement date: 

a) fixed payments, net of any lease incentives receivable;

b) variable payments due for the lease that depend on an index or rate;

c) amounts payable as residual value guarantees; 

d) the exercise price of the purchase option when it is the reasonably certain the option will be exercised; 

e) termination penalties when the lease is expected to be terminated. 

The discount rate used is the implicit interest rate of the lease for the lease term. If this rate cannot be easily determined, the Group’s incremental borrowing  rate, taking into account the frequency and payments under the lease agreement, is used.

After initial recognition, the right-of-use asset is systematically amortised over each period, at the lower of the lease term and the residual useful life of the  underlying asset. Amortisation begins on the lease commencement date. In the event of impairment, regardless of the amortisation already recognized, the  asset is written down in accordance with the criteria outlined in the Impairment of non-financial assets principle.

Lease term is calculated by considering the “non-cancellable” period, together with periods covered by an extension or early termination option, whose  exercise is deemed reasonably certain using information available at the inception date. In significant changes occur in facts and circumstances under the  Group’s control that would modify the assessment of the reasonable certainty of exercising the options, the Group will reassess the lease term.

As permitted by IFRS 16, the Group has applied the exemptions for short-term leases, i.e. leases with a duration of less than 12 months, and for leases  related to assets of low value .

Depreciation of property, plant and equipment

Property, plant and equipment are systematically depreciated on a straight-line basis over their useful life, defined as the period during which the asset is  expected to be usable by the entity. Depreciation begins when the asset is available and ready for use.

The depreciable amount is represented by the carrying amount, reduced by the estimated net realisable value at the end of its useful life, if significant and  reasonably determinable. 

The table below shows the annual depreciation rates used for the current year, unchanged from the comparative year, except for the “Other plant and  equipment” category, whose annual depreciation rate has changed due to the acquisition of assets as a result of the acquisition of Acqua Campania in the  current year :

Annual depreciation rate (%) 

Land and building

\- Industrial buildings

2%

\- Civil buildings 

3%

Plant and equipment

\- Other plant and equipment 

4% - 8.3%

Industrial and commercial equipment

\- Office furniture and machinery

10% - 33.3%

\- Vehicles

20% - 25%

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Rights of use

Depending on the term 

of the lease agreements

When an item included in “Property, plant and equipment” consists of several significant components with different useful lives, depreciation is applied to  each component separately (“component approach”). 

Land, even when purchased together with a building, construction in progress, advances and assets held for sale are not depreciated (for more details, refer  to section “Assets held for sale”).

Depreciation rates are reviewed annually and adjusted if no longer appropriately reflect the expected future benefits. Any changes to the depreciation plan,  resulting in a revision of the asset’s useful life, its residual value or the method of obtaining economic benefits from the asset is recognised for prospectively.

Assets that can be freely transferred are depreciated over the term of the concession or the asset’s useful life, if shorter .

Intangible assets

Intangible assets are assets without identifiable physical substance, but are identifiable, controlled by the  company and capable of producing future economic benefits, as well as goodwill, when acquired for  consideration. Intangible assets are recognised at the cost of purchase or internal production, when its  probable that their use will generate future economic benefits and their cost can be reliably determined. 

Revaluations are not permitted, even under specific laws.

Development costs are recognised as intangible assets only when the Group can prove the technical feasibility  of completing the intangible asset, as well as the ability, intention and availability of resources to complete the  asset for use or sale. Research costs are recognised in the income statement.

Intangible assets with a defined useful life are measured at cost, net of accumulated amortisation and  impairment losses. 

Goodwill and other intangible assets with an indefinite useful life are not amortised but are tested for  impairment at each reporting date, as required by IAS 36, to determine if any impairment losses need to be  reflected in the financial statements.

Intangible assets are derecognised when the disposal of or when no future economic benefit is expected from  their use; the related gain or loss is recognised in the income statement .

Service concession arrangements 

Intangible assets include service concession agreements between the public and private sectors for the  development, financing, management and maintenance of infrastructures under concession where the grantor:  (i) controls or regulates the services provided by the operator through the infrastructure and the applicable  price; and (ii) controls, through ownership, entitlement to benefits, or otherwise, any significant residual interest  in the infrastructure at the end of the concession. The accounting provisions for the service concession  agreements are applicable for the Italgas Group as a public service distributor of natural gas and other gases  and the integrated water service or where Italgas Group is committed to providing the public service distribution  of natural gas or the public water transport and distribution service at the tariff established in Italy by the Italian  Regulatory Authority for Energy, Networks and Environment (ARERA) and in Greece by the Regulatory  Authority for Energy Waste and Water (RAEWW or ΡΑAEY, each separately or jointly “Authority”), holding the  right to use the infrastructure, controlled by the grantor, to deliver the public service. 

The Group applies the intangible asset model as provided by IFRIC 12 for accounting service concession  agreements. The intangible asset is recognised at cost both at initial recognition and for subsequent  recognition. Construction and improvements activities of network and other services are recognised and  measured by applying IFRS 15.

Amortisation of intangible assets

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Intangible assets with a defined useful life are amortised systematically over their useful life, defined as the  period in which the asset is expected to be usable by the entity. Amortisation begins when the intangible asset  is available for use.

The amount to be amortised is the carrying value, reduced by the estimated net realisable value at the end of  its useful life if significant and reasonably determined.

The table below shows the annual amortisation rates used for the current year, unchanged from the  comparative year:

Annual depreciation rate (%) 

Patent rights and intellectual property rights

20% - 33.3%

Concession expenses

Depending on the term

of the agreement

Land and buildings (concession agreements)

\- Industrial buildings

1.67% - 5%

\- Other constructions

9% - 10%

Plant and equipment (concession agreements)

\- Network

1.67% - 5%

\- Principal and secondary facilities 

4% - 6%

\- Derivation plants

2% - 10%

Industrial and commercial equipment (concession  agreements)

\- Metering and control equipment

6.7% - 20%

Grants

Capital grants granted by public authorities are recognised when there is reasonable certainty that the  conditions set by the granting government agencies for their allocation will be met, and they are recognised as  a reduction in the purchase price, contribution or production cost of the related assets. 

Operating grants are recognised in the income statement on an accrual basis, consistent with the relative costs  incurred.

I mpairment of non-financial assets

Impairment of property, plant and equipment and intangible assets with a finite useful life

At least annually, property, plant and equipment and intangible assets with a finite useful life are assessed to  verify the existence of internal and external indicators of potential impairment.

If these indicators are present, recoverability is tested by comparing the carrying amount with its recoverable  amount, as the higher of the fair value less costs to sell (see section “Fair value measurement”) and the value  in use.

The assessment is carried out for each individual asset or for the smallest identifiable group of assets which,  through continuous use, generate cash inflows largely independent of those of other assets or groups of assets  (“ Cash-Generating Units ” or “ CGUs ”).

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The CGUs identified by the Group’s are as follows: Distribution and metering of natural and other gases  (regulated activity), Distribution and metering of natural gas abroad (regulated activity), Integrated water  service (regulated activity), Other activities (ESCos).

The recoverable amount of non-current non-financial assets that fall under the scope of regulated activities is  determined by considering: (i) the amount quantified by the Authority based on the rules that define the tariffs  for the provision of the services for which they are intended; (ii) the possible value that the Group expects to  recover from their sale or at the end of the concession regulating the service; (iii) the value of the expected  cash flows deriving from the use of the asset and, if significant and reasonably determined, from its sale at the  end of its useful life, net of any disposal costs; these cash flows are discounted at a rate that reflects the current  market conditions for the time value of money and specific risks of the asset not reflected in the estimated  cash flows.

Similarly to what happens for the quantification of tariffs, the quantification of the recoverable amount of the  assets within the scope of regulated activities is also based on the applicable current regulatory provisions. 

The value in use of non-current non-financial assets not within the scope of the regulated activities is  determined by discounting the expected cash flows resulting from the use of the asset and, if significant and  reasonably determined, from its sale at the end of its useful life, net of any disposal costs. Cash flows are  determined based on reasonable, documentable assumptions representing the best estimate of future  economic conditions expected to occur during the remaining useful life of the asset, with a greater emphasis  on outside information. Discounting is done using a rate reflecting current market conditions for the time value  of money and specific risks of the asset not reflected in the estimated cash flows.

If the reasons for impairment no longer exist, assets are revised and the adjustment is recognised to the  income statement. The adjustment is made at the lower of the recoverable amount and the carrying amount,  gross of any previous impairments, reduced by the depreciation that would have been recognised if an  impairment loss had not been recorded for the asset. 

Impairment of goodwill, intangible assets with an indefinite useful life and intangible assets under construction

The recoverability of the carrying amount of goodwill, intangible assets with an indefinite useful life and  intangible assets under construction is tested at least annually and whenever events occur that suggest a  reduction in value. For goodwill, the test is performed at the level of the smallest group based on which the  management evaluates, directly or indirectly, the return on investment, including goodwill itself. When the  carrying amount of the CGU, including the goodwill allocated to it, exceeds the recoverable amount, the  difference is the impairment, which is first allocated to goodwill up to its amount; any excess of the impairment  over goodwill is allocated proportionally to the carrying amount of the assets which constitute the CGU.  Goodwill impairment losses cannot be reversed.

Investments accounted for using the equity method

Investments in joint ventures and associates are accounted for using the equity method.

Under the equity method, investments in joint ventures and associates are initially recognised at cost and subsequently adjusted to account for: (i) the  participant’s share of the investee’s profits or losses after the acquisition date, and (ii) the participant’s share of other comprehensive income of the investee.  Dividends paid out by the investee are recognised as a reduction of the carrying amount of the investment. For the application of the equity method,  adjustments required for consolidation purposes are considered (see also the “Consolidation principles” section). 

In the case of acquiring a joint control in successive stages, the cost of the equity investment is measured as the sum of the fair value of the previously held  interests and the fair value of the consideration transferred at the date the equity investment is qualified as associated (or under joint control). The effect of  revaluing the carrying amount of the equity interest held before assuming the joint control (or significant influence) is recognized in the income statement,  including any components recognised in other comprehensive income. The sale of equity investments resulting in the loss of joint control or significant  influence over the investee results in the recognition in the income statement: (i) any gains or losses calculated as the difference between the consideration  received and the corresponding portion of the carrying amount of the disposed interest; (ii) the effect of revaluating any residual equity investment maintained,  to align it with the relative fair value; and (iii) any amounts recognized in other comprehensive income relating to the equity investee that are required to be  reclassified to the income statement. The value of any equity investment maintained, aligned with its fair value at the date of loss of joint control or significant  influence, represents the new carrying amount and, therefore, the value for subsequent valuation according to the applicable valuation criteria.

If there is objective evidence of impairment, the recoverability of the amount recognised is tested by comparing the carrying amount with the related  recoverable value determined using the criteria indicated in the section “Impairment of non-financial assets”.

When the reasons for the impairment losses no longer exist, equity investments are revalued up to the amount of the impairment losses entered with the  effect posted to the income statement under “Income (expense) from equity investments”.

The parent company’s share of any losses of the investee, exceeding the carrying amount of the equity investment, is recognised in a special provision to  the extent that the parent company is committed to fulfilling its legal or constructive obligations of the investee or, otherwise, covering its losses .

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Other minor equity investments

Financial assets representing other minor equity investments, not held for trading, are measured at fair value with the effects recognised in the income  statement .

Inventories

Inventories, including meters, are recorded at the lower of cost or production cost and net realisable value,  which is the amount that the entity expects to receive from their sale in the ordinary course of business. 

The cost of inventories is determined using the weighted average cost method. 

The value of obsolete and slow-moving inventories is written down in relation to the possibility of use or  realisation, through the allocation of a specific obsolescence fund.

Cash and cash equivalents

Cash and cash equivalents include cash on hand, on demand deposits, as well as other short-term financial  assets with a maturity of no more than three months, readily convertible into cash and subject to a negligible  risk of a change in their value.

They are recorded at their nominal value, which corresponds to the  fair value .

Financial instruments

Financial instruments refer to any contracts that give rise to a financial asset for one entity and a financial  liability or an equity instrument for another entity; they are recognised and measured in accordance with IAS  32 and IFRS 9.

Financial assets - debt instruments

Depending on the characteristics of the instrument and the business model adopted for its management,  financial assets representing debt instruments are classified in the following three categories: (i) financial  assets measured at amortised cost; (ii) financial assets measured at fair value with the effects recognised in  the other comprehensive income (“OCI”); (iii) financial assets measured at fair value with the effects recognised  in the income statement.

Initial recognition is at fair value ; for trade receivables without a significant financial component, the initial  carrying amount is represented by the transaction price. 

Following initial recognition, financial assets that generate cash flows representing only payments of capital  and interest are measured at amortised cost if held with the aim of collecting the contractual cash flows (so- called “ hold-to-collect ” business model). Based on the amortised cost method, the initial carrying amount is  then adjusted to account for principal repayments, any impairment losses and the amortisation of the difference  between the repayment amount and the initial carrying amount. 

Amortisation is carried out using the effective internal interest rate, which represents the rate that would make  equal, at initial recording, the present value of expected cash flows and the initial carrying amount. 

Receivables and other financial assets measured at amortised cost are presented in the statement of financial  position net of any provision for impairment losses. 

Financial assets representing debt instruments where the business model provides both the possibility to  collect contractual cash flows and realise capital gains through sales (so-called “hold-to-collect-and-sell”  business model) are measured at  fair value with the effects recorded on OCI (“FVTOCI”). 

In this case, the fair value changes of the instrument are recognised in equity under other comprehensive  income. The cumulative amount of the fair value changes, recognised in the equity reserve for other  comprehensive income, is reversed to the income statement upon the derecognition of the instrument. Interest  income, calculated using the effective interest rate, exchange rate differences and impairment losses are  recognised on the income statement.

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A financial asset representing a debt instrument that is not measured at amortised cost or at FVTOCI is  measured at  fair value with the effects recognised in the income statement (FVTPL). 

When the purchase or sale of financial assets is executed according to a contract that requires settlement and  delivery of the asset within a certain number of days, set by the market control authorities or market  agreements (e.g. purchase of securities on regulated markets), the transaction is recognised on the settlement  date.

Disposals of financial assets are derecognised from the financial position when the contractual rights to receive  the associated cash flows from the financial instrument expire or are transferred to third parties.

Impairment of financial assets

Recoverability of financial assets representing debt instruments, not measured at fair value with effects on the  income statement, is measured on the basis of the so-called “ expected credit loss ” model. 

In particular, expected losses are generally determined based on the product between: (i) the exposure to the  counterparty net of the relevant guarantees (“Exposure At Default” or “EAD”); (ii) the probability that the  counterparty does not meet its payment obligation (“Probability of Default” or “PD”); (iii) the estimated  percentage of credit loss that will not be recovered in the event of default (“Loss Given Default” or “LGD”),  defined based on past experience and potential recovery actions (e.g. out-of-court actions, legal disputes,  etc.). 

In this regard, in order to determine the probability of default of the counterparties, internal ratings already used  for concession purposes have been adopted. 

For retail customers, who do not have internal ratings, the expected losses are based on a provision matrix,  grouping credits, where appropriate, into relevant clusters and applying impairment percentages defined based  on past experience, adjusted, when necessary, for forward-looking credit risk information.

Financial liabilities 

Financial liabilities, other than derivative instruments, including financial debts, trade payables, other payables  and other liabilities, are initially recognised at fair value less any transaction-related costs; they are  subsequently recognised at amortised cost using the effective interest rate method, as described in “Financial  assets” section above. 

Financial liabilities are derecognised upon extinguishment or when the obligation specified in the contract is  fulfilled, cancelled, or expired.

Offsetting of financial assets and liabilities

Financial assets and liabilities are offset in the financial position when there is a legally enforceable right to  offset and there is an intention to settle on a net basis (i.e. to realise the asset and at the same time extinguish  the liability).

Derivative financial instruments and hedge accounting

Derivative financial instruments, including “embedded derivatives”, are initially measured at fair value in line  with IFRS 13 and IFRS 9, and any attributable transaction costs are recognised in the Income statement when  incurred. After initial recognition, the financial instruments are remeasured at fair value at each reporting date  (for further details, refer to “Fair value measurement” section).

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As part of the risk management strategy and objectives, the qualification of transactions as hedging requires:  (i) verification of the existence of an economic relationship between hedged item and hedging instrument, such  that their value changes offset each other and this offsetting ability is not impaired by the counterparty’s level  of credit risk; (ii) the definition of a hedge ratio consistent with the risk management objectives, within the  defined risk management strategy, including the appropriate rebalancing actions, if needed. Changes in risk  management objectives, the cessation of conditions for hedge qualification, or implementation of rebalancing  transactions will result in prospective total or partial discontinuation of the hedge. 

When derivatives hedge the fair value risk of the hedged items (“ fair value hedge ”, including, but not limited  to, hedging the variability of the fair value of fixed rate asset/liability), derivatives are recognised at fair value with the effects recognised in the income statement; consistently, the hedged items are adjusted for fair value changes associated with the hedged risk in the income statement, regardless of the normal measurement  criteria generally applied to the instrument. 

When the derivatives hedge the cash flow risk of the hedged items (“cash flow hedge”, including, but not limited  to, hedging the variability of cash flows of the asset/liability due to interest rates or exchange rate fluctuations),  the changes in fair value of the derivatives considered effective are initially recognised in the equity reserve  under other comprehensive income and afterwards reclassified in the income statement in line with the  economic effects of the hedged transaction. In the case of hedging future transactions involving the recognition  of a non-financial asset or liability, the cumulative fair value changes of the hedge derivatives recognised in  equity are reclassified to adjust the initial carrying amount of the non-financial item hedged (the “ basis  adjustment ”).

Fair value changes of derivatives that do not meet the hedging criteria, including any ineffective components  of hedging derivatives, are recognised in the income statement under “Gain/(loss) on derivative financial  instruments measured at fair value”. 

Embedded derivatives incorporated in financial assets are no longer separated in accounting; in these cases,  the entire hybrid instrument is classified based on the general classification criteria for financial asset.  Embedded derivatives incorporated in financial liabilities and/or non-financial assets are separated from the  main contract and accounted for separately if the embedded instrument: (i) meets the definition of derivative;  (ii) as a whole is not measured at fair value with the effects recognised in the income statement (FVTPL); (iii)  the characteristics and risks of the derivative are not closely related to those of the main contract. The existence  of embedded derivatives to separate and measure separately is checked when the company joins the contract  and afterwards when there are amendments to the conditions of the contract that bring about significant  changes in the cash flows it generates. 

Fair value measurement

Fair value is the amount that would be received to sell an asset or paid to transfer a liability in an regular  transaction between market participants at the measurement date (i.e. exit price). 

Fair value of an asset or liability is determined using the valuations that market participants would use in  determining the price of the asset or liability. The fair value measurement assumes that the asset or liability  would be traded on the main market or, failing that, on the most advantageous market accessible to the entity. 

The fair value of a non-financial asset is determined by considering the market participants’ ability to generate  economic benefits by using the asset in its highest and best use or selling it to another market participant that  would maximise its value. The determination of the highest and best use of the asset is determined from the  perspective of market participants, even if the entity intends to use it differently; it is assumed that the entity’s  current use of a non-financial asset is its highest and best use, unless the market conditions or other factors  suggest otherwise.

The fair-value measurement of a financial or non-financial liability, or of an equity instrument, considers the  quoted price for transferring an identical or similar liability or equity instrument; if such quoted price is not  available, the valuation of a corresponding asset held by a market participant as at the measurement date is  considered. The fair value of the financial instruments considers the credit risk of the counterparty of a financial 

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asset (“Credit Valuation Adjustment” or “CVA”) and the entity’s own default risk related to a financial liability  (“Debit Valuation Adjustment” or “DVA”).

When determining fair value , a hierarchy of inputs based on the origin, type and quality of the information used  in the calculation is defined. This classification aims to establish a hierarchy in terms of the reliability in fair  value , prioritizing the use of observable market parameters that reflect assumptions that market participants  would use when in measuring the asset/liability. The  fair value hierarchy includes the following levels:

• level 1: inputs represented by quoted prices (unadjusted) in active markets for identical assets or  liabilities that are accessible as at the measurement date; 

• level 2: inputs, other than quoted prices included in Level 1, that are observable, directly or indirectly,  for the assets or liabilities to be measured; 

• level 3: unobservable inputs for the asset or liability. 

In the absence of available market quotes, fair value is determined by using valuation techniques appropriate  for each situation, maximising the use of relevant observable inputs and minimising the use of unobservable  inputs.

Assets held for sale

Non-current assets and current and non-current assets of disposal groups are classified as held for sale, if  their carrying amount will be recovered mainly by their sale rather than through their continued use. This  condition is regarded as fulfilled when the sale is highly probable, and the asset or discontinued operations  are available for immediate sale in their current condition. In the case of a programme for the sale of a  subsidiary that results in loss of control, all assets and liabilities of that affiliate are classified as held for sale,  regardless of whether a non-controlling investment is maintained following the sale. Checking that the  conditions required to classify an item as held for sale requires that the management made subjective  assessments and formulate reasonable and realistic assumptions based on the information available.

Assets held for sale, current and non-current assets related to disposal groups and directly associated liabilities  are recognised in the Statement of Financial Position separately from other assets and liabilities. 

Assets and liabilities falling within a disposal group are measured according to the accounting standards  applicable to them right before being classified as held for sale. Afterwards, the assets held for sale are not  amortised or depreciated and are measured at the lower between the carrying amount and its fair value , less  costs to sell (see section “Fair value measurement”). 

The classification as “held for sale” of equity investments accounted for using the equity method implies  suspended application of this measurement criteria. Therefore, in this case, the carrying amount is equal to  the value resulting from the application of the equity method at the date of reclassification. 

Any negative difference between the carrying amount of the non-current assets and the fair value less costs  to sell is recognise to the income statement as an impairment; any subsequent reversal of impairment losses  is recognised up to the amount of the previously recognised impairment losses, including those recognised  prior to the asset being classified as held for sale . 

Provisions for risks and charges

Provisions for risks and charges relate to costs and charges of a specific nature and of certain or probable  existence, which, at the end of the year, are uncertain in terms of amount or date of occurrence. 

Provisions are recognised when: (i) it is probable that there is a current legal or constructive obligation, arising  from a past event; (ii) it is probable that fulfilling the obligation will be onerous; and (iii) the amount of the  obligation can be reliably determined. Provisions are recorded at the value that represents the best estimate  of the amount that the entity would reasonably pay to extinguish the obligation or transfer it to third parties at  the closing date of the financial year. Provisions related to onerous contracts are recorded at the lower of the 

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cost necessary to fulfil the obligation, less the expected economic benefits deriving from the contract, and the  cost to terminate the contract. 

When the financial effect of time is significant and the payment dates of the obligations can be reliably  estimated, the provision is calculated by discounting, at a rate reflecting the present market evaluations of the  time value of money, the expected cash flows in consideration of the risks associated with the obligation; the  increase in the provision due to the passing of time is recognised in the income statement under “Financial  income (expense)”.

When the liability relates to property, plant and equipment (e.g. site dismantlement and restoration), the  provision is recognised against the related asset and the charge to the income statement occurs through  depreciation. The costs that Company expects to incur for implementing restructuring programmes are  recognised in the period in which the programme is formally defined, and a valid expectation has been  generated among the affected parties that the restructuring will take place.

Provisions are periodically updated to reflect changes in cost estimates, selling periods and the discount rate;  revisions of provisions are recorded to the same income statement item that previously recognised the  provision or, when the liability is related to property, plant and equipment (e.g. site dismantling and restoration),  against the related asset, up to the carrying amount; any excess is recognised in the income statement.

The notes to the financial statements describe contingent liabilities represented by: (i) possible (but not  probable) obligations arising from past events, whose existence will be confirmed only if one or more future  uncertain events occur not entirely under the Company’s control; and (ii) current obligations resulting from past  events, whose amount cannot be reliably estimated, or whose fulfilment is likely to be not onerous.

Provisions for employee benefits

Post-employment benefits

Post-employment benefits are grouped into “defined-benefit” plans and “defined-contribution” plans. 

• Defined-benefit plans

The liability associated with defined-benefit plans is determined by estimating the present value of the  future benefits accrued by the employees during the current year and in previous years, and by  calculating the fair value of any assets servicing the plan. The present value of the obligations is  determined based on actuarial assumptions and is recognised on an accrual basis consistent with the  employment period necessary to obtain the benefits.

Actuarial gains and losses relating to defined-benefit plans arising from changes in actuarial  assumptions or experience adjustments are recognised in other comprehensive income when  occurred and are not subsequently recognised in the income statement. When a plan is changed,  reduced or extinguished, its effects are recognised in the income statement. 

Net financial expense represents the change that the net liability undergoes during the year due to the  passing of time. Net interest is determined by applying the discount rate to the liabilities, net of any  assets servicing the plan. The net financial expense of defined-benefit plans is recognised in “Financial  income (expense)”.

• Defined-contribution plans

In defined-contribution plans, the Company’s obligation is calculated, limited to the payment of state  contributions or to equity or a legally separate entity (fund), based on contributions due.

Costs arising from defined-contribution plans are expensed as incurred.

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Other long-term plans

Obligations relating to other long-term benefits are calculated using actuarial assumptions; the effects arising  from the amendments to the actuarial assumptions or the characteristics of the benefits are recognised entirely  in the income statement.

Dividends payments

Dividends payments to Company’s shareholders entails the recording of a payable in the financial statements  for the period in which distribution was approved by the Company’s Shareholders or, in the case of interim  dividends, by the Board of Directors.

Revenues

The Group recognises revenues when it transfers the control of a product or service to a customer. 

The recognition of revenues from contracts with customers is based on the following five steps: (i) identification  of the contract with the customer; (ii) identification of the performance obligations represented by the  contractual promises to transfer goods and/or services to a customer; (iii) determination of the price of the  transaction; (iv) allocation of the price of the transactions to the performance obligations identified based on  the standalone selling price of each good or service; (v) recognition of the revenue when its performance  obligation has been met, or when the promised good or service is transferred to the customer; the transfer is  considered completed when the customer gains control of the good or service, which can occur over time or  at a specific point in time.

Furthermore, in the presence of a third party involved in the supply of goods or services to a customer, the  correct recognition of revenues envisaged by IFRS 15 is connected to the fact that the company acts as a  principal or as an agent of the counterparty.

Revenue is recognized net of returns, discounts, allowances, and premiums, as well as taxes directly related  to the revenue.

Exchanges of goods or services of similar nature and value, as they do not represent sales transactions, do  not result in the recognition of revenue and costs.

Revenue from Gas Distribution and Integrated Water Services

For the gas distribution services and integrated water services performed by Italgas Group, the moment of

recognition of revenues occurs at the time the service is provided (over time) to customers.

The tariffs (transaction prices) to be applied to customers for the services provided, based on the volumes  consumed or the type of service provided, are defined by the Authority based on a predefined amount of annual  recognised revenues ("Revenue Cap") by ARERA in Italy and RAEWW in Greece.

In particular, gas distribution and metering services and integrated water services are subject to regulation by  ARERA and by RAEWW, which define, among other things, the frameworks for the remuneration of services. 

Specifically, the Revenue Cap includes a predefined return on the net invested capital, recognised for  regulatory purpose (Regulatory Asset Base or “RAB”), related amortisation/depreciation, and some operating  costs.

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The distribution of gas to the delivery point and the water service activities are considered a single performance  obligation, therefore Revenue Cap is recognised on a straight-line basis, since the services provided are  continuous and uniform over time, consisting mainly in the continuous provision of infrastructure.

In the case of natural gas distribution in Italy, the difference between the Revenue cap and the revenue charged  to customers for services actually rendered is recorded, if positive, under "Trade receivables and other  receivables" and, if negative, under "Trade payables and other payables," as it will be subject to financial  settlement by the Cassa per i Servizi Energetici e Ambienti (“CSEA”). Additionally, with respect to the  “Municipalities in Start-Up 124 ” in Italy, the recognition of revenue for gas distribution service is based on a  prospective evaluation of the expected delivery points at the end of the regulated start-up period as defined by  ARERA, where there is considered to be a high probability of not encountering a significant reversal of the  accumulated revenue. Revenue is reported net of items related to additional tariff components, above the  Italian tariff, intended to cover the general costs of the gas system. The amounts collected/charged by Italgas  are passed back in equal amounts to the CSEA.

In relation to natural gas distribution in Greece and integrated water services, the difference (“Recoverable  Difference”) between the Revenue cap and the revenue charged to customers for services actually rendered  is recorded, if positive, under “Other current and non-current non-financial assets,” and if negative, under  “Other current and non-current non-financial liabilities,” since Italgas has met the corresponding performance  obligation and is entitled to recover or obliged to return any amounts not charged or excessively charged to  customers during the year in subsequent regulatory periods or at the end of the concession.

Revenue from Construction and Infrastructure Improvements

Revenue from construction and infrastructure improvements provided under concession service agreements,  gas distribution activities and integrated water services is recognized over-time as work in progress based on  the progress of the work, deduced from the total estimated costs incurred. Revenues are determined equal to  costs actually incurred.

Revenue from Energy Efficiency Interventions

Within the energy efficiency activities, the Group, through its subsidiary Geoside, deals with the renovation  and recovery of residential building heritage, allowing customers to access tax deductions provided by the  relevant regulations, such as the so-called Superbonus, introduced by Articles 119 and following of DL  34/2020, as amended, as well as other minor bonuses (e.g., Sismabonus, Ecobonus, etc.).

Revenue is recognized over the contract period ("over-time“), for an amount equal to the sum that the Group  expects to receive for the operation based on the progress of the works, deduced from the total estimated  costs incurred.

Revenue allocations for partially rendered services are recognized for the amount earned, provided it is  possible to reliably determine the stage of completion and there are no significant uncertainties about the  amount and existence of the revenue and related costs; otherwise, they are recognized up to the recoverable  costs incurred.

124 Locations with year of first supply after 2017.

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Technical assistance, engineering, IT and various services

Regarding technical assistance, engineering, IT and various services, Italgas Group recognises revenues at  the time of the delivery of service (point in time) to customers. The services are invoiced to customers based  on the contractually agreed prices for regulated activities or the prices defined by the Network Code,  concerning ancillary activities to the gas distribution service.

Dividends received

Dividends are recognised at the date of the resolution passed by the Shareholders’ Meeting, unless it is not  reasonably certain that the shares will be sold before the ex-dividend date.

Costs

Costs are recognised in the period when they relate to goods and services sold or consumed during the same  period or when it is not possible to identify their future use.

Costs sustained for share capital increases are recorded as a reduction of equity, net of taxes.

Energy efficiency certificates

The Energy Efficiency Certificates purchased during the year are entered in the income statement at the cost  borne. The relevant contribution that CSEA will pay at the time the certificates are cancelled is booked as a  reduction of the cost borne and is calculated based on the repayment price scheduled at year-end. A special  risk provision is allocated to cover the future expected charges to fulfil the year’s objective calculated as the  difference between the cost to be borne and its cancellation contribution. 

Income taxes

Current income taxes are calculated by estimating the taxable income. Receivables and payables for current  income taxes are recognised based on the amount which is expected to be paid/recovered to/from the tax  authorities under the prevailing tax regulations and rates or those essentially approved at the reporting date.

Regarding Italian corporation tax (“IRES”), Italgas has exercised the option to join the national tax consolidation  scheme, to which the consolidated companies Italgas, Italgas Reti, Italgas Newco, Bludigit, Nepta, Geoside,  Acqua, Idrolatina and Idrosicilia have officially signed up. The projected payable is recognised under “Current  income tax liabilities”.

The regulations governing Italgas Group companies’ participation in the national tax consolidation scheme  stipulates that:

• subsidiaries with positive taxable income pay the amount due to Italgas. The taxable income of the subsidiary,  used to determine the tax, is adjusted to account for the recovery of negative components that would have been  non-deductible without the consolidation scheme (e.g. interest expense), and any negative taxable income  relating to the subsidiary’s equity investments in consolidated companies;

• subsidiaries with negative taxable income, if and insofar as they have prospective profitability which, without  the national tax consolidation scheme, would have enabled them to recognise deferred tax assets related to the  negative taxable income on the separate financial statements, receive from their shareholders – in the event that  these are companies with a positive taxable income or a negative taxable income with prospective profitability  – or from Italgas in other cases, compensation amounting to the lower of the tax saving realised by the Group  and the aforementioned deferred tax assets.

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Tax receivables and tax payables on Italian regional production tax (“IRAP”) are recognised under the item  “Current tax liabilities” and “Current tax receivables”, respectively.

As for Greece, corporate income tax is calculated according to the tax laws in force in the country. 

Deferred tax assets and liabilities are calculated on the timing differences between the values of the assets  and liabilities entered in the balance sheet and the corresponding values recognised for tax purposes, based  on the prevailing tax regulations and rates or those essentially approved for future years. Deferred tax assets  are recognised when their recovery is considered probable; specifically, the recoverability of deferred tax  assets is considered probable when taxable income is expected to be available in the period in which the  temporary difference is cancelled, allowing the activation of the tax deduction. Similarly, unused tax receivables  and deferred tax assets on tax losses are recognised up to the limit of recoverability; with reference to deferred  tax assets, their recoverability is verified at least annually.

Deferred tax assets and deferred tax liabilities are classified under non-current assets and liabilities and are  offset at individual company level, if they refer to taxes that can be offset and/or at the level of the consolidating  company in the presence of the taxation regime provided by the National Tax Consolidation. The balance of  the offsetting, if it results in an asset, is recognised under the item “Deferred tax assets”; if it results in a liability,  it is recognised under the item “Deferred tax liabilities”. When the results of transactions are recognised directly  in equity, deferred tax assets and liabilities, and current taxes are also recognised to equity.

In the presence of uncertainties in the application of tax regulations: (i) in cases where it is considered likely  that the tax authority will accept the uncertain tax treatment, income taxes (current and/or deferred) to be  recognized in the financial statements are determined based on the tax treatment applied or expected to be  applied in the tax return; (ii) in cases where it is considered unlikely that the tax authority will accept the  uncertain tax treatment, the uncertainty is reflected in the determination of income taxes (current and/or  deferred) to be recognized in the financial statements.

Operating segments

The segment reporting was prepared in accordance with the provisions of IFRS 8, therefore, the identification  of operating segments and the information presented is defined on the basis of the internal reporting used by  management for the purposes of allocating resources to the various segments and analysing their  performance.

An operating segment is defined by IFRS 8 as a component of an entity that: (i) engages in revenue- and cost- generating business activities (including revenues and expenses relating to transactions with other  components of the same entity); (ii) whose operating results are reviewed periodically at the entity's highest  operational decision-making level for the purpose of making decisions about resources to be allocated to the  segment and assessing performance; and (iii) for which separate financial statement information is available.

With respect to the 2024 financial year, the reportable segments in accordance with IFRS 8 are: 

- Gas distribution;

- Water service;

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- Energy efficiency;

- Corporate.

Until 2023, the activities related to the water service business did not constitute an operating segment subject  to separate reporting. The change occurred following the first consolidation of Acqua Campania S.p.A. in 2024.

Group mainly operates in Gas distribution and, residually, is active in water service and energy efficiency.  Corporate segment refers to services carried out exclusively in support of the other business (i.e.:  administrative, tax and legal services, HR management, IT services).

Gas Distribution segment aggregates the activities carried out in Italy and Greece, reflecting the structure of  the internal reporting that is periodically analyzed by the management to manage and plan the Group's  business. The management has, in fact, considered that the gas distribution service in Italy and Greece shares  similar characteristics, both from an economic and regulatory perspective, taking into account the following  aspects:

a) nature of the products and services, i.e. gas distribution and metering;

b) nature of the production processes, i.e. the development and maintenance of assets related to the gas  distribution service under concession;

c) type or class of customer according to their products or services, i.e. sales companies;

d) methods used to distribute its products or provide its services; i.e. the transport of gas through local  pipeline networks;

e) nature of the regulatory environment, i.e. the operation of a regulated business that is essentially  based on the return on invested capital and the coverage of costs incurred by the operator. In fact,  both regulatory systems guarantee a return on investment and coverage of the management costs  regardless of volumes and the WACC formulas. They are entirely similar and essentially able to  neutralise differences in risk between the two countries;

Therefore, the gas distribution service in Italy and in Greece are combined in the “Gas distribution” operating  segment.

5) Use of estimates 

The application of generally accepted accounting principles for the preparation of financial statements involves  management making accounting estimates based on complex and/or subjective judgements, estimates based  on past experience and assumptions regarded as reasonable and realistic on the basis of the information  known at the time of the estimate. The use of these accounting estimates has an influence on the carrying  amount of assets and liabilities and on the information about potential assets and liabilities at the reporting  date, as well as the amount of revenues and costs in the reference period. The actual results may differ from  the estimated results owing to the uncertainty that characterises the assumptions and the conditions on which  the estimates are based. 

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Details are given below about the main accounting estimates involved in the process of preparing the financial  statements and interim reports, since they involve a high degree of recourse to subjective judgements,  assumptions and estimates regarding matters that are by nature uncertain. Any change in the conditions  forming the basis of the judgements, assumptions and estimates used could have a significant impact on  results of subsequent years.

Impairment of  non-financial  assets

Measurement of tangible and intangible assets, including goodwill, requires recording  of these in the financial statements for a value no higher than their recoverable value  (so-called  Impairment test ). 

Recoverable amount is the higher of the fair value less cost to sell criteria and the  value in use criteria. Having regard to the assets of regulated sectors, the fair value may be represented as follows: 

(i) in relation to gas distribution services in Italy, the estimated value of net  invested Capital updated to the reference date attributed to these assets  for tariff purposes (RAB - Regulatory Asset Base) by the Authority. RAB  is the reference basis for determining the service tariffs and, therefore, the  cash flows generated from assets. The RAB value is defined using the  revalued historical cost method for Fixed Capital net of capital grants and  contributions received from users, and on a flat-rate basis for Working  Capital and employee severance pay;

(ii) in relation to gas distribution services in Greece, the estimated value of  net invested capital updated to the reference date attributed to these  assets for tariff purposes (RAB – Regulatory Asset Base) by the Authority,  including the flat-rate value of the net working capital, where positive;

(iii) in relation to gas distribution services in Italy, the reimbursement value  (RV) valid for ATEM (Minimum Territorial Areas) tenders, which is the  value to be paid to the operator selling the infrastructure after the tender  procedure. In Greece, the reimbursement value is calculated as the value  of the RAB at the date of interruption/expiry of the licence, increased by  at least 15%;

(iv) for the integrated water service, the estimated value of the Net Invested  Capital recognized for tariff purposes by the Authority (CIN) adjusted for  tariff adjustments (RC component of the Revenue Cap for the Operator,  also called “Recoverable difference“).

Value in use refers to:

(v) the present value of the future cash flows expected to be derived from the asset  being measured. These flows are determined in line with the most recent business  plan approved by management, which is based not only on developments in the  regulations, but also on estimates relating to reference market trends and  investment and divestment decisions. In the process of determining the  recoverable value, flows are discounted at a discount rate (WACC post-tax) that  reflects current market conditions, the time value of money and the specific risks  of the asset .

More information on the impairment test carried out by the Company’s management  on property, Plant and equipment and on intangible Assets can be found in the  “Impairment of non-current non-financial assets” section.

The recoverable value is sensitive to the estimates and assumptions used to  determine the total invested capital, cash flows and discount rates applied. Therefore,  possible variations in the estimation of the factors on which the calculation of the  aforesaid recoverable values is based could result in different measurements. 

Analysis of each of the groups of non-financial assets is unique and requires use by  the company’s management of estimates and assumptions considered prudent and  reasonable in relation to the specific circumstances .

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Business  combinations

Recognition of business combination transactions requires determination of the fair  value of any assets and liabilities acquired as a result of obtaining control of the  business. With the help of independent professionals, the company’s management  measured the fair value of assets, liabilities and potential liabilities, on the basis of  information on facts and circumstances available at the acquisition date.

Determination of the fair value of assets and liabilities acquired is subject to estimates  and measurements by the company’s management. Possible variations in the  estimation of the factors on which determination of the fair value is based could  generate different measurements. 

Analysis of each business combination transaction is unique and requires use by the  company’s management of estimates and assumptions considered prudent and  reasonable in relation to the specific circumstances.

Environmental  liabilities

The Italgas Italgas Group is subject, in relation to its activities, to numerous laws and  regulations on environmental protection at European, national, regional and local  level, including the laws which implement international conventions and protocols  relating to the activities carried out. 

The measurement of future liabilities in connection with reclamation and restoration  obligations in relation to sites and/or land on which the company carries out its  business is a complex process based on technical and financial assumptions made  by the company’s management and supported by independent experts where  necessary.

The restoration cost estimate is discounted using a risk-free rate in accordance with  IAS 37. The estimate is made using a principle of prudence based on the known  market, legislative and technological conditions at the time of measurement. 

The estimates are reviewed at each balance sheet date to verify that the amounts  recorded are the best reflection of the costs the Group will face. If any significant  variations are found, the amounts are adjusted. The key factors for revising cost  estimates are the revision of the timeframes for implementing the site reclamation and  restoration plan, developments in the technologies and environmental regulations and  discount rate trends.

Measurement of environmental liabilities recorded in the financial statements takes  into account the environmental legislation currently in force. However, this  measurement could be subject to variations, even to a significant extent, in relation to:  (i) the possibility of further contamination arising; (ii) the results of current and future  refurbishment and the other possible effects arising from the application of the laws in  force; (iii) the possible effects of new laws and regulations for environmental  protection; (iv) the effects of any technological innovations for environmental  cleansing; and (v) the possibility of disputes concerning the environmental liability for  specific sites and the difficulty of determining the potential consequences of this,  including in relation to the liability of other parties and any indemnity.

Provisions for  employee  benefits

Defined-benefit plans are valued on the basis of uncertain events and actuarial  assumptions which include, inter alia, the discount rates, the expected returns on the  assets servicing the plans (where they exist), the level of future remuneration, mortality  rates, the retirement age and future trends in the healthcare expenses covered.

The main assumptions used to quantify defined-benefit plans are determined as  follows: (i) the discount and inflation rates representing the base rates at which the  obligation to employees might actually be fulfilled are based on the rates which mature  on high-quality bonds and on inflation expectations; (ii) the level of future remuneration  is determined on the basis of elements such as inflation expectations, productivity,  career advancement and seniority; (iii) the future cost of healthcare services is  determined on the basis of elements such as present and past trends in healthcare  costs, including assumptions regarding the inflationary growth of costs, and changes  in the health of the participating employees; and (iv) the demographic assumptions 

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239

reflect the best estimates of trends in variables such as mortality, turnover, invalidity  and others in relation to the population of the participating employees. 

Differences in the value of net liabilities relating to employee benefit plans, arising due  to changes in the actuarial assumptions used and the difference between the actuarial  assumptions previously adopted and actual events, occur routinely and are called  actuarial gains and losses. Actuarial gains and losses relating to defined-benefit plans  are recognised in the statement of comprehensive income. Actuarial assumptions are  also used to determine other long-term employee benefit obligations; to this end, the  effects arising from changes to the actuarial assumptions or the characteristics of the  benefit are fully recognised in the income statement. 

Provisions for  risks and  charges 

In addition to the amounts allocated to the provisions for environmental liabilities,  Italgas recorded provisions mainly relating to the following in the financial statements:  (i) legal and tax disputes; (ii) staff leaving incentives; (iii) expenses related to meeting  the Energy Efficiency Certificates targets (EEC) set by the Authority; (iv) provision for  contractual risks.

Provisions are made to cover the risk of future outlay for the cases set out above. The  value of the provisions recorded in the financial statements for such risks reflects the  best estimate made by the company’s management with the support of independent  professionals at the preparation date of this document. This estimate involves making  assumptions based on factors that may vary over time, which could, therefore,  produce a significantly different outcome with respect to the current estimates made  by the company’s management for the preparation of the Group’s financial statements.

6) Business combination transactions

As part of the Group’s development in the water industry, on January 30, 2024, (acquisition date in which the  group gained control) Italgas completed the acquisition of 47.8% interest of Acqua Campania S.p.A. from  Vianini Lavori S.p.A.  In addition, on April 24, 2024, a further acquisition of 47.9% of the same company held  by the Veolia Group was finalised, bringing its total holding to 96.23%.

Acqua Campania is currently the manager of the Western Campania Aqueduct under concession from the  Campania Region. It carries out activities of capturing, purifying, adduction and transportation of drinking water  destined for water distribution companies for a total user basin of approximately 4 million inhabitants.

Acqua Campania holds 51% of Laboratorio Acqua Campania S.r.l. (“L.A.C.”), which performs chemical and  microbiological analyses for water quality control.

The analysis of the transaction is given below:

Acquisition of companies

(€ thousands)

ACQUA CAMPANIA AND  L.A.C.  Fair values at the  acquisition date

Cash and cash equivalents 

65,748

Trade and other receivables 

109,589

Inventories 

4,132

Tax assets

2,231

Other current assets 

21,112

Current assets

202,812

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Property, plant and equipment 

1,698

Intangible assets 

35,444

Equity investments

26

Financial assets

10,998

Deferred tax assets

1,196

Other non-current assets

110,003

Non-current assets

159,365

TOTAL ASSETS

362,177

Current financial liabilities

56,136

Trade and other payables 

269,386

Tax liabilities

5

Other current liabilities

1,802

Current liabilities

327,329

Provisions for risks and charges 

1,542

Provisions for employee benefits 

609

Deferred tax liabilities

3,981

Other non-current liabilities 

9,401

Non-current liabilities

15,533

TOTAL LIABILITIES

342,862

VALUE OF NET ASSETS ACQUIRED

19,315

PRICE FOR THE NET ASSETS ACQUIRED

19,315

of which, paid

16,823

of which, to be paid

2,492

The values shown in the previous table, as envisaged by IFRS 3:45, were reported in the financial statements  ended as of 31 December 2024 on a provisional basis.

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7) Cash and cash equivalents

Cash and cash equivalents , equal to 402,662 thousand euro (249,963 thousand euro as at 31 December  2023), refer to current account deposits held at banks.

Cash and cash equivalents are not subject to any usage restrictions, except for 43,400 thousand euro (nihil as  at 31 December 2023) relating to collections on behalf of the Region Campania for water monitoring activities,  which have not yet been paid to the Region Campania at the reference date.

8) Current financial assets

Current financial amounting to 3,592 thousand euro (4,248 thousand euro as at 31 December 2023) mainly  relate to financial receivables from credit institutions, that are convertible in cash in short term.

9) Trade and other receivables

Trade and other receivables, amounting to 905,092 thousand euro (853,488 thousand euro as at 31 December  2023) include the following: 

(€ thousands)

As of 31  December 2023

As of 31  December 2024

Trade receivables 

694,330

751,969

Receivables from investment/divestment activities

5,278

5,278

Other receivables

153,880

147,845

853,488

905,092

Trade receivables (751,969 thousand euro as at 31 December 2024 and 694,330 thousand euro as at 31  December 2023) increased by 57,639 thousand euro mainly due to (i) the increase in receivables from the  sales companies for the gas distribution service in Italy (134,400 thousand euro) and in Greece (14,175  thousand euro); (ii) from the CSEA for gas equalisation for the gas distribution in Italy (27,236 thousand euro);  (iii) from customers of water service arising from the contribution to the Group of Acqua Campania (64,399  thousand euro). These effects were partially offset by the gradual conclusion of the “Superbonus”, introduced  by Italian Decree Law 34/2020 (or “Decreto Rilancio”) and the recognition of the related trade receivables as  tax credits by the Italian Revenue Agency (183,831 thousand euro).

Receivables for investment/divestment activities (5,278 thousand euro as at 31 December 2024 unchanged as at 31 December 2023) refer to the sale of  property, plant and equipment and intangible assets.

Other receivables (147,845 thousand euro as at 31 December 2024 and 153,880 thousand euro as at 31 December 2023) break down as follows :

(€ thousands)

As of 31  December 2023

As of 31  December 2024

IRES receivables for the national tax consolidation scheme

5,154

5,154

Receivables due from CSEA

94,837

68,152

Receivables from the Public administration

6,824

2,833

Advances to suppliers

35,684

43,386

Receivables from personnel

2,625

2,633

Receivables from ex Casmez users

-

18,668

Sundry other

8,756

7,019

153,880

147,845

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242

IRES receivables for the national tax consolidation regime (5,154 thousand euro as at 31 December 2024 and  unchanged compared with 31 December 2023) mainly relate to receivables from the former parent company,  Eni, for IRES refund request, arising from the partial deduction of IRAP for the tax periods 2004 - 2007  (pursuant to Article 6, Decree-Law no. 185 of 28 November 2008, converted into Law no. 2 of 28 January  2009) and for tax periods 2007 - 2011 (pursuant to Decree-Law no. 201/2011). 

Receivables esigible from CSEA (68,152 thousand euro as at 31 December 2024 and 94,837 thousand euro  as at 31 December 2023) mainly refer to additional gas distribution tariff components and premiums relating  to safety recoveries of the gas distribution service. 

Receivables from public Administrations (2,833 thousand euro at 31 December 2024 and 6,824 thousand euro  as at 31 December 2023) relate to receivables from Municipalities, mainly for the public space occupation fee  (the so-callesd “Canone per l’occupazione di spazi e aree pubbliche” or “COSAP“).

Receivables from the customers of the Acquedotto Campano (previously “Casmez” or “Cassa del  Mezzogiorno”), amounting to 18,668 thousand euro refer to the metering service (system for accounting  potable water consumption) managed in the name and on behalf of the Regione Campania.

With the exception to receivables arising from energy efficiency services provided as part of the so-called  Superbonus, the amortised cost method has not been applied to “Trade receivales and other receivables”,  since the effects arising from its application are immaterial due to the fact that they are related to receivables  expected to be collected within the next 12 months and any costs, commissions and any other difference  between the initial value and the maturity value are negligible. 

Trade and other receivables are reported net of the bad debt provision (18,674 thousand euro at 31 December  2024 and 16,507 thousand euro at 31 December 2023). Changes during the current and previous year are  shown below :

(€ thousands)

A of 31 December  2022

Assets  acquired  through  business  combination

Provisions

Uses

Other  changes

As of 31  December 2023

Trade receivables

15,376

0

124

0

(353)

15,147

Other receivables

1,366

0

0

0

(6)

1,360

16,742

0

124

0

(359)

16,507

(€ thousands)

As of 31 December  2023

Assets  acquired  through  business  combination

Provisions

Uses

Other  changes

As of 31  December 2024

Trade receivables

15,147

3,211

257

(1,079)

(225)

17,311

Other receivables

1,360

0

0

0

3

1,363

16,507

3,211

257

(1,079)

(222)

18,674

Bad debt provision reflects estimated losses in connection with the Group’s credit portfolio. Impairment are made for expected losses on receivables,  estimated both on the basis of past experience with receivables with similar credit risk and on the basis of future expected loss on open positions as at the  reference date, as well as careful monitoring of the quality of credit portfolios.

The following table provides the aging of Trade and other receivables:

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As of 31 December 2023

As of 31 December 2024

(€ thousands)

Trade  receivables

Other  receivables

Total

Trade  receivables

Other  receivables

Total

Receivables not overdue

664,320

159,158

823,478

684,109

153,123

837,232

Receivables overdue:

30,010

30,010

67,860

67,860

\- from 0 to 3 months

8,202

8,202

25,440

25,440

\- from 3 to 6 months

3,185

3,185

3,240

3,240

\- from 6 to 12 months

5,252

5,252

10,323

10,323

\- over 12 months

13,371

13,371

28,857

28,857

694,330

159,158

853,488

751,969

153,123

905,092

Receivables overdue, amounting to 67,860 thousand euro, mainly relate to receivables from end users for gas  and water supply (61,189 thousand euro) and ESCo service customers (6,662 thousand euro).

Receivables from related parties are described in section “Related party transactions”. 

Specific information on credit risk is provided in section “Guarantees, commitments and risks - Financial risk  management - Credit risk”. 

10) Inventories

Inventories , amounting to 57,232 thousand euro (79,052 thousand euro as at 31 December 2023), are  analysed in the table below:

As of 31 December 2023

As of 31 December 2024

(€ thousands)

Gross  value

Provision for  impairment  losses

Net value

Gross  value

Provision for  impairment  losses

Net value

Raw materials, consumables and  supplies

89,317

(10,265)

79,052

64,426

(7,194)

57,232

89,317

(10,265)

79,052

64,426

(7,194)

57,232

Inventories of Raw materials, consumables and supplies, equal to 57,232 thousand euro as at 31 December 2024, mainly include smart meters (26,973  thousand euro) and assets arising from contracts for works on behalf of the Campania Region relating to the Western Campania Aqueduct (1,526 thousand  euro). Inventories are net of provision for obsolete inventories for 7,194 thousand euro (10,265 thousand euro as at 31 December 2023).

Provision for impairment losses, equal to 7,194 thousand euro (10,265 thousand euro as of 31 December 2023), mainly relates to defective or malfunctioning  gas meters and it has been reduced by 3,071 thousand euro for the utilizations for the year. 

Inventories are not collateralised. Inventories do not secure liabilities, nor are recognised at net realisable value. 

11) Current and non-current tax receivables/liabilities

Current  and non-current tax receivables/liabilities  break down as follows :

As of 31 December 2023

As of 31 December 2024

(€ thousands)

Current

Non-current

Total

Current

Non-current

Total

Tax receivables

17,475

12,876

30,351

0

17,612

17,612

\- IRES

4,257

12,876

17,133

0

17,612

17,612

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\- IRAP

9,893

9,893

0

0

\- Foreign Taxes

3,325

3,325

0

0

Tax liabilities

20,448

0

20,448

25,562

0

25,562

\- IRES

8,144

0

8,144

6,449

0

6,449

\- IRAP

11,213

11,213

14,822

14,822

\- Foreign Taxes

1,091

1,091

4,291

4,291

Taxes  pertaining to current year are shown in section “Income taxes” .

12) Other current and non-current non-financial assets

Other current non-financial assets , amounting to 232,559 thousand euro (152,864 thousand euro as at 31  December 2023) and other non-current non-financial assets , amounting to 619,322 thousand euro (417,069  thousand euro as at 31 December 2023), break down as follows:

As of 31 December 2023

As of 31 December 2024

(€ thousands)

Current

Non-current

Total

Current

Non-current

Total

Other regulated activities(*)

43,988

227,802

271,790

53,386

392,928

446,314

Other assets

108,876

189,267

298,143

179,173

226,394

405,567

\- Other current taxes

20,013

0

20,013

37,885

0

37,885

\- Accrued income and  deferrals(*)

8,001

726

8,727

10,468

785

11,253

\- Security deposits

0

3,949

3,949

0

3,970

3,970

\- Super/Ecobonus(*)

80,862

183,262

264,124

128,910

219,760

348,670

\- Other(*)

0

1,330

1,330

1,910

1,879

3,789

152,864

417,069

569,933

232,559

619,322

851,881

(*) Please note that, for a better presentation, other assets related to Super/Ecobonus has been included in the line item “Super/Ecobonus”, whereas they were presented  in the line item “Other” as at 31 December 2023 for 183.262 thousand euro. In addition, prepayments has been included in the line item “Other regulated activities”,  whereas they were presented in the line item “Prepayments” (now " Accrued income and deferrals“) as at 31 December 2023 for 104.802 thousand euro.

Other regulated activities (446,314 thousand euro as at 31 December 2024 and 271,790 thousand euro as at 31 December 2023) include mainly (i) receivables  from the gas distribution tariff in Greece (so-called “Recoverable Difference”) for 154,972 thousand euro (111,346 thousand euro as at 31 December 2023);  (ii) receivables from the water service in Italy (so-called “Tariff Adjustments”) for 135,677 thousand euro (563 thousand euro as at 31 December 2023),  attributable to the entrance of Acqua Campania into the scope of consolidation in the current year; (iii) receivables from gas distribution in Italy for 111,110  thousand euro (123,000 thousand euro as at 31 December 2023) relating to the tariff recognition by the Authority as a result of the plan to replace traditional  meters with electronic ones pursuant to Article 57 of ARERA Resolution no. 367/14 as amended and the recovery of the residual non-depreciated costs (so- called “IRMA”) pursuant to DCO 545/2020/R/gas, Resolution no. 570/2019/R/gas and Determination no. 3/2021, and the tariff recognition pursuant to  Resolution no. 737/2022/R/gas and Determination no. 1/2023 of 11 October 2023 - DINE of the residual unamortised costs of the smart meters installed in  the first roll-out phase of the installation plans provided for by the Gas Smart Meter Directives, which had to be decommissioned earlier than the end of their  useful life – this recognition concerned the smart meters decommissioned early, of a class not exceeding G6 produced up to the year 2016 and entered into  operation by the year 2018. 

Super/Ecobonus receivables (348,670 thousand euro as at 31 December 2024 and 264,124 thousand euro as at 31 December 2023) include receivables  recognised by the Italian Revenue Agency, mainly for the energy efficiency interventions falling under the provision of Decree 34/2020, as amended, which  can be used to offset taxes payables by the Group. Management has assessed the recoverability of the Super/Ecobonus receivables based on the Group’s  expected overall tax contribution in the following years in accordance with regulatory requirements and, after its assessments, it is believed that the  recoverability of the receivable is adequately guaranteed by the Group’s ample tax capacity.

Other current tax assets, amounting to 37,884 thousand euro (20,013 thousand euro as at 31 December 2023) mainly refer to VAT receivables.

It should be noted that the Group has finalised factoring agreements with financial counterparties on the basis of which the Group’s receivables can be  factored without recourse. In particular, with reference to 31 December 2024 the assignment of VAT receivables and receivables for EECs were finalised for  7.6 million euro and 53.5 million euro, respectively.

13) Property, plant and equipment

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245

Property, plant and equipment , amounting to 383,327 thousand euro as at 31 December 2024 (386,040  thousand euro at 31 December 2023), breaks down as follows:

As of 31 December 2023

(€ thousands)

Land

Buildings

Plant and  equipment

Industrial and  commercial  equipment

Other  assets

Work in progress  and payments on  account

Total

Cost at 31.12.2022

16,846

512,795

38,429

167,913

73,514

8,983

818,480

Right of Use as at 31.12.2022

2,368

57,470

52,699

46,539

159,076

Additions

3

5,718

1,395

2,538

870

14,010

24,534

Right of Use Additions

1,627

13,787

8,593

13,202

37,209

Disposals

(42)

(667)

(120)

(624)

(27)

(112)

(1,592)

Disposals of Right of Use

0

(2,944)

(2,348)

0

(5,292)

Reclassifications

2

2,882

327

865

0

(3,740)

336

Reclassifications of rights of use

371

(20)

351

Other changes

0

0

922

0

0

(6,816)

(5,894)

Other change in rights of use

32

0

0

(93)

(61)

Cost at 31.12.2023

18,839

531,551

40,953

176,937

87,466

12,325

868,071

Accumulated depreciation at 31.12.2022

(92)

(241,612)

(20,092)

(131,033)

(46,514)

(439,343)

Amortisation of Right of Use as of 31.12.2022

(92)

(24,658)

(35,665)

(22,242)

(82,657)

Depreciation

0

(9,238)

(2,449)

(5,196)

(836)

(17,719)

Amortisation of Right of Use

(178)

(8,690)

(10,950)

(9,873)

(29,691)

Disposals

0

248

0

591

17

856

Disposals of Right of Use

0

1,611

1,963

3,574

Other change in rights of use

(4)

25

129

244

394

Accumulated depreciation at 31.12.2023

(274)

(257,656)

(22,541)

(144,496)

(56,962)

0

(481,929)

Provision for impairment of asset at 31.12.2022

0

0

0

0

0

(111)

(111)

Disposals

0

0

0

0

0

11

11

Other changes

0

0

(2)

0

0

0

(2)

Provision for impairment of asset at 31.12.2023

0

0

(2)

0

0

(100)

(102)

Net balance at 31.12.2022

16,754

271,183

18,337

36,880

27,000

8,872

379,026

Net balance at 31.12.2023

18,565

273,895

18,410

32,441

30,504

12,225

386,040

\- of which Right of Use

4,124

36,581

0

14,421

27,777

0

82,903

As of 31 December 2024

(€ thousands)

Land

Buildings

Plant and  equipment

Industrial and  commercial  equipment

Other assets

Work in progress  and payments on  account

Total

Cost at 31.12.2023

18,839

531,551

40,953

176,937

87,466

12,325

868,071

Right of Use as at 31.12.2023

4,398

68,293

0

58,944

59,648

0

191,283

Additions

36

8,439

4,225

5,802

852

14,135

33,489

Right of Use additions

707

6,885

6,695

7,691

21,978

Disposals

(163)

(5,668)

(983)

(2,387)

(530)

(4)

(9,735)

Disposals of Right of Use

0

(6,746)

(4,949)

0

(11,695)

Reclassifications

5

2,527

29

745

0

(3,306)

0

ITALGAS CONSOLIDATED FINANCIAL REPORT AS AT 31 DECEMBER 2024 – NOTES TO THE CONSOLIDATED  FINANCIAL STATEMENTS

246

Reclassifications of rights of use

0

0

1,806

(1,806)

0

Assets acquired through business  combination consolidation

0

0

297

11,102

937

106

12,442

Right of use  acquired through business

0

288

0

0

288

Cost at 31.12.2024

19,424

537,276

44,521

195,751

94,610

23,256

914,838

Accumulated depreciation at 31.12.2023

(274)

(257,656)

(22,541)

(144,496)

(56,962)

(481,929)

Amortisation of Right of Use as at of  31.12.2023

(274)

(31,712)

(44,523)

(31,871)

(108,380)

Depreciation

0

(9,974)

(2,651)

(5,363)

(2,559)

(20,547)

Amortisation of Right of Use

(553)

(9,678)

(9,978)

(12,253)

(32,462)

Disposals

0

3,643

68

719

1,721

6,151

Disposals of Right of Use

0

3,659

4,749

8,408

Assets acquired through business  combination

0

0

(297)

(10,735)

0

(11,032)

Reclassifications

0

0

0

(617)

617

0

Other change in rights of use

0

0

(2,517)

2,517

0

Accumulated depreciation at 31.12.2024

(827)

(270,006)

(25,421)

(168,238)

(66,919)

0

(531,411)

Provision for impairment of asset at  31.12.2023

0

0

(2)

0

0

(100)

(102)

Other changes

0

0

(3)

0

0

5

2

Provision for impairment of asset at  31.12.2024

0

0

(5)

0

0

(95)

(100)

Net balance at 31.12.2023

18,565

273,895

18,410

32,441

30,504

12,225

386,040

Net balance at 31.12.2024

18,597

267,270

19,095

27,513

27,691

23,161

383,327

\- of which Right of Use

4,278

30,989

0

10,227

23,926

0

69,420

Additions (55,467 thousand euro) mainly refer to industrial and commercial equipment (5,802 thousand euro), office buildings (8,439 thousand euro), work in  progress and payments on account (14,135 thousand euro) and leased assets (21,978 thousand euro). 

Depreciation (53,009 thousand euro) refers to economic and technical depreciation determined on the basis of the useful life of the assets or their remaining  possible use by the Group. Amortisation related to right of use amounted to 32,462 thousand euro.

The provision for impairment of asset for 100 thousand euro mainly relates to a cogeneration plant required for the gas distribution service in Italy.

Rights of use are detailed in the following table :

(€ thousands)

As of 31  December  2023

Depreciation

Business  combination

Increases

Decreases

Reclassification s

As of 31  December  2024

Land

4,124

(553)

0

707

0

0

4,278

Buildings

36,581

(9,678)

288

6,885

(3,087)

0

30,989

\- operating properties

36,581

(9,678)

288

6,885

(3,087)

0

30,989

Industrial and commercial equipment

14,421

(9,978)

0

6,695

(200)

(711)

10,227

\- cars and ICT

14,421

(9,978)

0

6,695

(200)

(711)

10,227

Other assets

27,777

(12,253)

0

7,691

0

711

23,926

82,903

(32,462)

288

21,978

(3,287)

0

69,420

Interest expense (included in financial  expense)

1,132

1,376

Land and buildings, equal to 285,867 thousand euro (292,460 thousand euro as at 31 December 2023), mainly include buildings for office use, workshops,  warehouses and depots used in the corporate business, of which rights of use for 35,267 thousand euro.

Plant and machinery (19,095 thousand euro as at 31 December 2024 and 18,410 thousand euro as at 31 December 2023) mainly relates to photovoltaic  plants and electric car charging points. 

Industrial and commercial equipment (27,513 thousand euro as at 31 December 2024 and 32,441 thousand euro as at 31 December 2023) include rights of  use for 10,227 thousand euro relating to IT infrastructures and leased vehicles.

During the year, there were no changes in the estimated useful life of assets or in the depreciation rates applied and explained by category in section \-  “Measurement criteria - Property, plant and equipment”.

ITALGAS CONSOLIDATED FINANCIAL REPORT AS AT 31 DECEMBER 2024 – NOTES TO THE CONSOLIDATED  FINANCIAL STATEMENTS

247

Property, plant and equipment are not collateralised and there are no restrictions on ownership and property.

Contractual commitments to purchase property, plant and equipment, and to provide services related to the construction thereof, are reported in section  “Guarantees, commitments and risks”. During the year, no impairment indicators were observed, nor any significant variations to the measurement of the  recoverability of the value recognised in the financial statements for Property, plant and equipment.

13.1 Property, plant and equipment by business segment

Property,  plant and equipment by operating segment are broken down as follows :

(€ thousands)

As of 31 December 2023

As of 31 December 2024

Historical cost

868,070

914,839

Gas distribution

807,657

836,656

Water service

118

13,875

Energy efficiency

36,006

38,714

Corporate

24,289

25,594

Depreciation, amortisation and impairment of  asset

(482,030)

(531,511)

Gas distribution

(451,811)

(485,393)

Water service

(109)

(11,960)

Energy efficiency

(18,780)

(20,853)

Corporate

(11,330)

(13,305)

Net book value

386,040

383,328

Gas distribution

355,846

351,263

Water service

9

1,915

Energy efficiency

17,226

17,861

Corporate

12,959

12,289

14) Intangible assets

Intangible assets , amounting to 8,833,270 thousand euro as at 31 December 2024 (8,772,609 thousand euro  as at 31 December 2023) break down as follows.

As of 31 December 2023

Finite useful life

Indefinite  useful life

(€ thousands)

Service  concession  arrangements

Industrial patent  rights and  intellectual  property rights

Work in  progress and  payments on  account IFRC 12

Work in progress  and payments on  account

Other  Intangible  Assets

Goodwill

Total

Historical cost at 31.12.2022

13,599,743

564,772

272,693

14,721

178,281

190,463

14,820,673

Additions

620,811

29,677

167,458

21,147

5,786

0

844,879

Government grants

0

0

(22,806)

0

0

0

(22,806)

Disposals

(151,028)

0

(89)

(110)

(356)

0

(151,583)

Reclassifications

187,089

9,791

(185,489)

(9,921)

(1,470)

0

0

Other changes

5,894

0

(6,602)

0

370

0

(338)

Historical cost at 31.12.2023

14,262,509

604,240

225,165

25,837

182,611

190,463

15,490,825

Accumulated amortisation at  31.12.2022

(5,662,046)

(467,907)

(151,157)

(6,281,110)

Amortisation

(430,921)

(39,724)

(4,475)

(475,120)

Disposals

90,189

0

92

90,281

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248

Reclassifications

0

(60)

60

0

Other changes

0

0

(28)

(28)

Accumulated amortisation at  31.12.2023

(6,002,778)

(507,691)

0

0

(155,508)

0

(6,665,977)

Provision for impairment losses at  31.12.2022

(28,047)

(10)

(846)

0

(1,292)

(30,195)

Write-down

(23,016)

0

0

0

0

(23,016)

Disposals

895

0

77

0

0

972

Other changes

1,917

0

(1,917)

0

0

0

Provision for impairment of asset at  31.12.2023

(48,251)

(10)

(2,686)

0

(1,292)

0

(52,239)

Net balance at 31.12.2022

7,909,650

96,855

271,847

14,721

25,832

190,463

8,509,368

Net balance at 31.12.2023

8,211,480

96,539

222,479

25,837

25,811

190,463

8,772,609

As of 31 December 2024

Finite useful life

Indefinite  useful life

(€ thousands)

Service  concession  arrangement s

Industrial patent  rights and  intellectual property  rights

Work in  progress and  payments on  account  IFRC 12

Work in  progress and  payments on  account

Other  Intangible  Assets

Goodwill

Total

Historical cost at 31.12.2023

14,262,509

604,240

225,165

25,837

182,611

190,463

15,490,825

Additions

638,950

15,500

182,870

14,062

27,305

0

878,687

Government grants

0

0

(21,424)

0

0

0

(21,424)

Assets acquired through business  combination

37,476

5

0

0

0

0

37,481

Disposals

(80,340)

(595)

0

0

(45)

0

(80,980)

Reclassifications

169,475

36,976

(171,973)

(13,539)

(20,939)

0

0

Other changes

(874,964)

0

0

0

0

0

(874,964)

Hisorical cost at 31.12.2024

14,153,106

656,126

214,638

26,360

188,932

190,463

15,429,625

Accumulated amortisation at  31.12.2023

(6,002,778)

(507,691)

(155,508)

(6,665,977)

Amortisation

(454,151)

(38,305)

(3,655)

(496,111)

Assets acquired through business  combination

(2,037)

0

0

(2,037)

Disposals

31,061

135

44

31,240

Reclassifications

3,234

(1,532)

(1,702)

0

Other changes

575,364

0

0

575,364

Accumulated amortisation at  31.12.2024

(5,849,307)

(547,393)

0

0

(160,821)

0

(6,557,521)

Provision for impairment of asset at  31.12.2023

(48,251)

(10)

(2,686)

0

(1,292)

(52,239)

Uses

12,565

0

0

0

0

12,565

Disposals

839

0

0

0

1

840

Reclassifications

(238)

0

238

0

0

0

Provision for impairment of asset at  31.12.2024

(35,085)

(10)

(2,448)

0

(1,291)

0

(38,834)

Net balance at 31.12.2023

8,211,480

96,539

222,479

25,837

25,811

190,463

8,772,609

Net balance at 31.12.2024

8,268,714

108,723

212,190

26,360

26,820

190,463

8,833,270

The additions for 878,687 thousand euro includes technical investments made during the year (774,630 thousand euro for, mostly, extension and extraordinary  maintenance of the network and replacement of meters), the acquisition finalized on 1 February 2024 of the Belluno ATEM Concession for the management  of the natural gas distribution service, with a term of 12 year (47,190 thousand euro) and investment in other intangible assets for 56,610 thousand euro.

Service concession arrangements including the related work in progress, amounting to 8,480,904 thousand euro (8,433,959 thousand euro as at 31 December  2023), refer to agreements between the public and private sectors ("Service concession arrangements") on the development, financing, management and 

ITALGAS CONSOLIDATED FINANCIAL REPORT AS AT 31 DECEMBER 2024 – NOTES TO THE CONSOLIDATED  FINANCIAL STATEMENTS

249

maintenance of infrastructure under concession by a contracting party. The provisions relating to the service concession agreements are applicable for Italgas  in its role as a public service natural gas distributor in Italy and Greece and in water service management, i.e. they are applicable to the agreements under  which the operator is committed to providing the public natural gas distribution and water service at the tariff established by the Authority, holding the right to  use the infrastructure, which is controlled by the grantor, for the purposes of providing the public service. This item also includes for 121,749 thousand euro  the residual value of the intangible asset “licences” measured during the purchase price allocation of the Enaon Group relating to the licences for gas  distribution in Greece expiring in 2043. 

Other changes to Service concession arrangements, amounting to 299,600 thousand euro (historical cost of 874,964 thousand euro and accumulated  amortisation of 575,364 thousand euro) represent the reclassification to “Non-current financial assets” of the residual value of the gas distribution concession  in Rome (started into in 2012 and expired in November 2024). The concession established that the operator (Italgas Reti S.p.A.) had the unconditional right  to receive such amount at the expiry of the aforementioned concession.

Changes to the scope of consolidation refer to the business combination transaction of Acqua Campania, which manages the Western Campania Aqueduct  under a concession contract 128 .

Work in progress and payments on account IFRIC 12 for 212,190 thousand euro (222,479 thousand euro at 31 December 2023) mainly refers to new networks  under construction and digitisation of natural gas distribution networks.

Industrial patent rights and intellectual property rights of 108,723 thousand euro (96,539 thousand euro as at 31 December 2023) mainly concern information  systems and applications in support of operating activities. 

Other intangible assets of 26,820 thousand euro (25,811 thousand euro as at 31 December 2023) concern mainly the customer lists relating to the acquisition  of an ESCo business (10,953 thousand euro).

Intangible assets with an undefined useful life of 190,463 thousand euro (unchanged compared to 31 December 2023) mainly refer to goodwill arising in  relation to the process of allocation of prices paid for the companies acquired in previous financial years.

The provision for impairment losses, amounting to 38,834 thousand euro (52,239 thousand euro as at 31 December 2023), mainly relates to service  concession arrangements and metering instruments, the reduction of which over the course of the year is linked to the disposals made during the financial  year of metering instruments that were not working, in advance of their useful life.

Advanced research and development costs for the period are included in the item Work in progress and include the costs incurred for the development of the  meter developed in-house, Nimbus.

Contractual commitments to purchase intangible assets, and to provide services related to the development thereof, are reported in section “Guarantees,  commitments and risks”. 

Impairment test

The carrying amount of property, plant and equipment and intangible assets is periodically revised as per IAS 36, which requires that the existence of  impairment indicators be assessed. In the case of goodwill, intangible assets with an indefinite useful life or intangible assets not yet available for use, this  assessment is done at least once a year and whenever there is an indication of possible impairment. In 2024, the impairment test was performed for all of  the following cash generating units (CGUs):

- Distribution and metering of natural and other gases;

- Distribution and metering of natural gas abroad;

- Integrated water service;

- Other activities (ESCos).

As envisaged by IAS 36, the recoverability of the values recognised is verified by comparing the carrying amount of the net invested capital recognised in the  financial statements referring to each CGU, including goodwill where present, with the recoverable amount, determined as the higher of value in use of the  asset in its current condition and the value obtainable from selling the asset (fair value), less costs of sell. 

The goodwill recognised following the business combination is attributable to the CGUs that benefit from the synergies arising from the acquisition, and  allocated as follows:

- Distribution and metering of natural and other gases: 66.2 million euro (unchanged from previous year);

- Distribution and metering of natural gas abroad: 115.8 million euro (unchanged from previous year);

- Other activities (ESCo): 8.3 million euro (unchanged from previous year).

With reference to the “Distribution and metering of natural and other gases” CGU, the recoverable value was estimated as the value of the Net invested  capital attributed for tariff purposes (RAB – Regulatory Asset Base) by the Authority. The use of the RAB for estimating recoverable amount is a generally  accepted method in regulated utility sectors.

No impairment was found as a result of the test carried out. 

With reference to the CGU “Distribution and metering of natural gas abroad”, the recoverable amount was estimated according to the value in use method  determined on the basis of the Discounted Cash Flow (DCF) method. The expected cash flows for the explicit period 2024-2030 are taken from the 2024- 2030 Strategic Plan approved by Italgas’ Board of Directors on 7 October 2024 (“2024-2030 Strategic Plan”) and the terminal value was estimated as equal  to the RAB at the end of the plan period increased by 15% (as predicted by the regulation applicable in Greece). Cash flows were discounted at a WACC  post-tax of 4.7% (5% as at 31 December 2023).

The main assumptions underlying the expected cash flows for the explicit period concerned: (i) the amount and the timing of the investments for the expansion,  digitisation of the distribution network and replacement of traditional meters with smart meters; (ii) the number of re-delivery points to be acquired over the 

128 On 5 November 2024, the Regional Council of Campania – General Department for the Integrated Cycle of Water and Waste and  Environmental Authorisations – notified Acqua Campania of the extension of the management of the service under the same conditions  envisaged in the existing concession, until the takeover of the new Operator and the material transfer of the assets to it and, in any case,  by 31 December 2025.

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250

duration of the plan with a compound annual growth rate (CAGR) of 6.4%, and (iii) the assumptions related to the volumes of gas distributed over the duration  of the plan (an increase in consumption with a CAGR of +10% was estimated), relevant for the generation of cash,  including the timing of the collection of  the Recoverable Difference. These assumptions are based on historical data and public reports on the evolution of the gas market and related consumption.

No impairment was found as a result of the test carried out. A sensitivity analysis was conducted on the recovery of 50% of the Recoverable Difference  beyond the timeframe of the plan (2030) and this analysis did not detect any impairment either. The recoverable amount is equal to the carrying amount if  there’s a 1.3-percentage-point increase in the.WACC post-tax.

With reference to the “Integrated water service” CGU, the recoverable amount was estimated as the value of the net invested capital recognised for tariff  purposes by the Authority (NIC) taking into account the Recoverable Difference (Rc component of the constraint on the operator’s revenues). The use of the  tariff NIC including adjustments for estimating the recoverable amount is a generally accepted method in the sector. 

The value of the CIN is estimated by updating the latest data approved by the designated authorities with the variations that occurred up to the balance sheet  date; the estimate includes the variations of the CIN (increments, disposals, contributions and amortizations) and the revaluation rate.

No impairment was found as a result of the test carried out.

With reference to the “Other activities (ESCos)” CGU, the recoverable value was determined, as value in use, on the basis of the cash flows deriving from  the 2024-2030 Strategic Plan approved by management using the Discounted Cash Flow (DCF) method. These cash flows were adjusted as envisaged by  IAS 36.44 to eliminate the effects arising from the M&A operations.

Cash flows were discounted at a WACC post-tax of 4.7% and 8.1% (the range as at 31 December 2023 was 5.6% – 9.9%), for photovoltaic activities and  energy efficiency services, respectively. The terminal value was estimated for the business of energy efficiency interventions as perpetuity at the end of the  plan (2030) taking into account a growth rate (g) of 2%, in line with expected inflation. For the photovoltaic business portion, flows for the period of the plan  were extended along the period of residual life of the plants.

The value in use determined according to the methods described above is higher than the value of the net invested capital of the CGU. Therefore, no  impairment losses were found.

The recoverability of the value of the invested capital of the CGU was also confirmed by a sensitivity analysis, providing for a terminal value based on an  EBITDA 2030 multiple of 7x. The headroom of approximately 39 million euro referring to the baseline case with TV perpetuity. In order for the fair value to be  equal to the carrying amount, is necessary an increase  in the discount rate of 1.7 percentage-point for energy efficiency services and 10.4 percentage-point  for photovoltaic. 

14.1 Intangible assets by business segment

Intangible  assets by operating segment are analysed as follows :

(€ thousands)

As of 31 December 2023

As of 31 December 2024

Historical cost

15,490,824

15,429,624

Gas distribution

15,424,869

15,272,145

Water service

27,781

117,935

Energy efficiency

36,079

36,643

Corporate

2,095

2,901

Depreciation, amortisation and impairment of asset

(6,718,215)

(6,596,354)

Gas distribution

(6,692,389)

(6,515,969)

Water service

(13,863)

(66,335)

Energy efficiency

(11,402)

(13,007)

Corporate

(561)

(1,043)

Ne book value

8,772,609

8,833,270

Gas distribution

8,732,480

8,756,176

Water service

13,918

51,600

Energy efficiency

24,677

23,636

Corporate

1,534

1,858

15) Investments  accounted for using the equity method

Investments accounted for using the equity method , amounting to 155,715 thousand euro (131,771 thousand  euro at 31 December 2023) break down as follows:

ITALGAS CONSOLIDATED FINANCIAL REPORT AS AT 31 DECEMBER 2024 – NOTES TO THE CONSOLIDATED  FINANCIAL STATEMENTS

251

(€ thousands)

As of 31  December  2022

Investment

Share of the  profit of  investments in  associates/joint  ventures (*)

Dividends  paid

Other  changes

As of 31  December  2023

Umbria Distribuzione Gas  S.p.A.

1,397

0

70

0

0

1,467

Metano Sant'Angelo Lodigiano  S.p.A.

1,033

0

94

(50)

0

1,077

Gesam Reti S.p.A.

21,130

0

867

(580)

0

21,417

Enerpaper S.r.l.

488

0

0

0

0

488

Gaxa S.p.A.

93

0

(93)

0

0

0

Energie Rete Gas S.r.l.

23,102

0

(1,206)

0

21,896

Siciliacque S.p.A.

0

52,299

529

0

0

52,828

Acqualatina S.p.A.

0

31,488

1,110

0

0

32,598

47,243

83,787

1,371

(630)

0

131,771

(*) The values reported are integrated with the adjustments made in application of the equity valuation criterion

(€ thousands)

As of 31  December  2023

Investment

Share of the  profit of  investments in  associates/joint  ventures (*)

Dividends  paid

Other  changes

As of 31  December  2024

Umbria Distribuzione Gas SpA

1,467

0

(418)

0

0

1,049

Metano Sant'Angelo Lodigiano  S.p.A.

1,077

0

73

(93)

0

1,057

Gesam Reti S.p.A.

21,417

0

1,556

(868)

0

22,105

Enerpaper S.r.l.

488

0

(488)

0

0

0

Energie Rete Gas S.r.l.

21,896

0

(268)

0

0

21,628

Siciliacque S.p.A.

52,828

15,000

4,292

0

(40)

72,080

Acqualatina S.p.A.

32,598

0

5,198

0

0

37,796

131,771

15,000

9,945

(961)

(40)

155,715

(*) The values reported are integrated with the adjustments made in application of the equity valuation criterion

Equity investments are not collateralised, with the exception of (i) shares in Acqualatina S.p.A., which are  encumbered by a pledge in favour of FMS Wertmanagement Service Gmbh to guarantee the project finance  granted to the affiliate; (ii) shares held in Siciliacque S.p.A., which are encumbered by a pledge in favour of  the financing banks Unicredit S.p.A. and Intesa Sanpaolo S.p.A. to guarantee the non-recourse project finance  granted to the affiliate. 

The Group verified the recoverable amount for all equity investments held, regardless of the existence of  impairment indicators.

With reference to the Gesam Reti S.p.A., Umbria Distribuzione Gas S.p.A. and Metano Sant’Angelo Lodigiano  S.p.A. equity investments, the recoverable amount was estimated as the value of the net invested capital  attributed for tariff purposes (RAB – Regulatory Asset Base) by the Authority net of the net financial position.  The use of the RAB for estimating recoverable amount is a generally accepted method in regulated utility  sectors. No impairment was found as a result of the test carried out.

The recoverable value of Energie Rete Gas was determined, as value in use, on the basis of the cash flows  deriving from the 2025-2040 Plan, developed by the Group's management, using the Discounted Cash Flow  (DCF) method. Furthermore, the terminal value was estimated to be equal to the value of the RAB at the end  of the plan period, plus 10%. The cash flows were discounted at a rate representative of the weighted average 

ITALGAS CONSOLIDATED FINANCIAL REPORT AS AT 31 DECEMBER 2024 – NOTES TO THE CONSOLIDATED  FINANCIAL STATEMENTS

252

cost of capital (WACC) equal to 4.5%. The value in use determined according to the methods described above  was higher than the value of the equity investment. Therefore, no impairment losses were found.

The recoverable amount of the equity investments in Siciliacque S.p.A. and Acqualatina S.p.A. was estimated  as the value of the Net Invested Capital attributed for tariff purposes taking into account the tariff adjustments  (Rc component of the constraint on the operator’s revenue) net of the net invested position. The use of the  tariff NIC including adjustments for estimating the recoverable amount is a generally accepted method in the  sector. No impairment was found as a result of the test carried out. It should be noted that the companies  operating in the water service have submitted tariff proposals to the competent authorities and are awaiting  formal approval. 

Consolidated companies, joint ventures, associates and other significant equity investments are indicated  separately in the Appendix “Subsidiaries, associates and equity investments of Italgas S.p.A. at December 31, 2024”, which is an integral part of these notes.

Other information on equity investments

In accordance with the provisions of IFRS 12 - “Disclosure of interests in other entities”, the economic and  financial data for joint ventures and associates are provided below. The aggregated presentation does not  obscure relevant information and gives a clearer overview of the equity investments in similar entities .

Equity investments in joint ventures

The IFRS-compliant economic and financial data on equity investments in joint ventures operating in the  distribution of natural gas 129 are reported below according to their relevance: 

As of 31 December 2023

(€ thousands)

Gas distribution 

Gas transmission (*)

Current assets

8,845

14,577

\- of which Cash and Cash equivalents

4,463

164

Non-current assets

24,018

113,607

Total assets

32,863

128,184

Current liabilities

(17,010)

(8,084)

\- of which Current financial liabilities

(2,235)

(943)

Non-current liabilities

(10,439)

(85,410)

\- of which Non-current financial liabilities

(1,980)

(85,410)

Total liabilities

(27,449)

(93,494)

Equity

5,414

34,690

Equity attributable to the Group

2,544

16,998

Other adjustments

0

4,898

Carrying amount

2,544

21,896

Revenues

7,732

10,293

Operating costs

(6,520)

(3,758)

Amortisation, depreciation and impairment of asset

(974)

(4,417)

Operatin result

238

2,118

Financial Income (Expense)

(147)

(4,191)

Income taxes

(78)

363

Net profit

13

(1,710)

Total comprehensive income

13

(1,710)

129 The financial statement figures for joint ventures values refer to the preliminary and/or approved reporting packages.

ITALGAS CONSOLIDATED FINANCIAL REPORT AS AT 31 DECEMBER 2024 – NOTES TO THE CONSOLIDATED  FINANCIAL STATEMENTS

253

Group interest

18

(838)

(*) Includes equity investment in Energie Rete Gas reclassified as at 31 December 2024 from joint ventures to Equity investments in associates.

As of 31 December 2024

(€ thousands)

Gas distribution 

Current assets

1,125

\- of which Cash and Cash equivalents

865

Non-current assets

6,751

Total assets

7,876

Current liabilities

(2,895)

\- of which Current financial liabilities

(2,606)

Non-current liabilities

(2,867)

\- of which Non-current financial liabilities

0

Total liabilities

(5,762)

Equity

2,114

Equity attributable to the Group

1,057

Other adjustments

0

Carrying amount

1,057

Revenues

1,619

Operating costs

(909)

Amortisation, depreciation and impairment of asset

(299)

Operatin result

411

Financial Income (Expense)

(129)

Income taxes

(79)

Net profit

203

Total comprehensive income

203

Group interest

102

Metano Sant’Angelo Lodigiano S.p.A. 

Metano Sant’Angelo Lodigiano S.p.A. operates in the natural gas distribution sector in the municipalities of  Sant’Angelo Lodigiano (LO), Villanova del Sillaro, Bargano (LO), Castiraga Vidardo (LO), Marudo (LO) and  Villanterio (PV).

The share capital of Metano Sant’Angelo Lodigiano S.p.A. is held by Italgas S.p.A. (50%) and by Comune di  Sant’Angelo Lodigiano (50%). The corporate governance rules establish that the decisions on the significant  activities have to be taken with the unanimous consent of the private partner (Italgas S.p.A.) and the Public  Partner (Municipalities) .

Equity investments in associates

Some economic and financial data for each significant associate 130 , considered material and accounted for  using the equity method as required by IFRS 12 “Disclosure of Interests in Other Entities”: 

As of 31 December 2023

(€ thousands)

Gas distribution 

Water service 

ESCo companies

Current assets

7,708

361,387

2,176

130 The financial statement figures for associated companies values refer to the preliminary and/or approved reporting packages.

ITALGAS CONSOLIDATED FINANCIAL REPORT AS AT 31 DECEMBER 2024 – NOTES TO THE CONSOLIDATED  FINANCIAL STATEMENTS

254

\- of which Cash and Cash equivalents

0

35,886

192

Non-current assets

54,983

301,802

423

Total assets

62,691

663,189

2,599

Current liabilities

(10,481)

(264,683)

(1,178)

\- of which Current financial liabilities

(4,350)

(4,350)

(143)

Non-current liabilities

(13,681)

(196,876)

(517)

\- of which Non-current financial liabilities

(10,334)

(92,687)

(397)

Total liabilities

(24,162)

(461,559)

(1,695)

Equity

38,529

201,630

904

Equity attributable to the Group

16,552

119,824

181

Other adjustments

4,865

(34,398)

307

Carrying amount

21,417

85,426

488

Revenues

14,428

15,859

6,700

Operating costs

(7,370)

(3,693)

(5,646)

Amortisation, depreciation and impairment of asset

(2,983)

(5,316)

(220)

Operating Result 

4,075

6,850

834

Financial Income (Expense)

(783)

(6,405)

(28)

Income taxes

(1,197)

(929)

(202)

Net profit

2,095

(484)

604

Total comprehensive income

2,095

(484)

604

Group interest

900

(237)

121

As of 31 December 2024

(€ thousands)

Gas distribution 

Gas  transmission 

Water service 

Current assets

23,086

25,616

375,205

\- of which Cash and Cash equivalents

5,643

4,420

63,624

Non-current assets

71,274

119,880

391,156

Total assets

94,360

145,496

766,361

Current liabilities

(29,378)

(11,128)

(346,260)

\- of which Current financial liabilities

(7,238)

(1,721)

(36,139)

Non-current liabilities

(21,977)

(99,932)

(181,517)

\- of which Non-current financial liabilities

(10,814)

(99,932)

(88,786)

Total liabilities

(51,355)

(111,060)

(527,777)

Equity

43,005

34,436

238,584

Equity attributable to the Group

18,616

16,874

144,795

Other adjustments

4,538

4,755

(34,918)

Carrying amount

23,154

21,629

109,877

Revenues

21,936

15,859

203,578

Operating costs

(12,381)

(3,693)

(134,534)

Amortisation, depreciation and impairment of asset

(3,979)

(5,316)

(47,257)

Operating Result 

5,576

6,850

21,787

Financial Income (Expense)

(723)

(6,405)

827

Income taxes

(1,614)

(929)

(6,049)

ITALGAS CONSOLIDATED FINANCIAL REPORT AS AT 31 DECEMBER 2024 – NOTES TO THE CONSOLIDATED  FINANCIAL STATEMENTS

255

Net profit

3,239

(484)

16,565

Total comprehensive income

3,239

(484)

16,565

Group interest

1,378

(237)

9,529

Umbria Distribuzione Gas S.p.A. 

Umbria Distribuzione Gas S.p.A. operates in the natural gas distribution segment in Umbria. 

The share capital of Umbria Distribuzione Gas S.p.A. is held by Italgas S.p.A. (45%), by A.S.M. Terni S.p.A.  (40%) and by Acea S.p.A. (15%).

Umbria Distribuzione Gas manages the natural gas distribution service in the Municipality of Terni, using an  integrated system of infrastructure, mostly owned by Terni Reti S.r.l., a wholly-owned subsidiary of said  Municipality.

Gesam Reti S.p.A. 

Gesam Reti S.p.A. operates in the natural gas distribution and network management sector (owned 42.96%  by Toscana Energia S.p.A.) in the municipality of Lucca and in another 7 municipalities of the province.

Energie Rete Gas S.r.l. 

Energie Rete Gas S.r.l. is a company active in gas transmission through a network of regional methane  pipelines located in Valle D’Aosta, Piedmont, Liguria, Tuscany and Sardinia.

The share capital of the company is held by Energetica S.p.A. (51%) and Medea S.p.A. (49%).

Siciliacque S.p.A.

Siciliacque S.p.A. operates in Sicily, under concession, the services of water collection, storage, purification  and water adduction at a supra-regional level. It is 75% owned by Idrosicilia S.r.l. and the remaining 25% by  the Sicily Region, which exercises control.

Acqualatina S.p.A.

Acqualatina S.p.A. is a joint publicly controlled company operating in the Water Service in the Province of  Latina and lower Lazio (Optimal Territorial Areas (OTA) n. 4 Lazio Meridionale or ATO 4). 51% of its capital is  held by the municipalities in ATO 4 and the remaining 49% by Idrolatina S.r.l.

Enerpaper S.r.l. 

Enerpaper S.r.l. is a company based in Turin, owned 20.01% by Geoside S.p.A., specialised in the production  of insulation materials containing cellulose used in high energy efficiency buildings. 

16) Non-current financial assets

Non-current financial assets , amounting to 339,747 thousand euro (23,778 thousand euro as at 31 December  2023), are broken down as follows :

(€ thousands)

As of 31 December  2023

As of 31 December  2024

ITALGAS CONSOLIDATED FINANCIAL REPORT AS AT 31 DECEMBER 2024 – NOTES TO THE CONSOLIDATED  FINANCIAL STATEMENTS

256

Financial receivables

2,571

319,388

Other equity investments

21,207

20,359

23,778

339,747

The increase in financial receivables by 316,817 thousand euro is mainly due to the reclassification from  “Service concession arrangements” of the residual value of the gas distribution concession in Rome (started  into in 2012 and expired in November 2024) amounting to 299.6 million euro. The concession established that  the operator (Italgas Reti S.p.A.) had the unconditional right to receive such amount upon expiry.

Other equity investments for 20,359 thousand euro relates to the fair value measurement of the investments  in Picarro Inc. (13,996 thousand euro) and Reti Distribuzione S.p.A. (6,293 thousand euro) .

17) Assets held for sale

Assets held for sale, amounting to 5,351 thousand euro (6,613 thousand euro as at 31 December 2023) are  mainly related to the sale to the affiliate Energie Rete Gas of assets falling within the scope of the investment  agreement signed with Energetica S.p.A. in 2022 .

ITALGAS CONSOLIDATED FINANCIAL REPORT AS AT 31 DECEMBER 2024 – NOTES TO THE CONSOLIDATED  FINANCIAL STATEMENTS

257

18) Current and non-current financial liabilities

Current financial liabilities, amounting to 980,569 thousand euro (1,033,434 thousand euro as at 31 December  2023) and non-current financial liabilities, amounting to 6,205,299 thousand euro (5,886,922 thousand euro  as at 31 December 2023), break down as follows:

As of 31 December 2023

Current liabilities

Non-current liabilities

(€ thousands)

Current  liabilities

Current portion  of long-term  liabilities

Total current  liabilities

Non-current  portion due  within 5 years

Non-current  portion due  beyond 5 years

Total non- current  liabilities

Bank loans

498,656

75,274

573,930

551,610

517,414

1,069,024

Notes

426,392

426,392

1,741,112

3,030,803

4,771,915

Lease liabilities (IFRS 16 and IFRC 12)

33,112

33,112

43,022

2,961

45,983

498,656

534,778

1,033,434

2,335,744

3,551,178

5,886,922

As of 31 December 2024

Current liabilities

Non-current liabilities

(€ thousands)

Current  liabilities

Current portion  of long-term  liabilities

Total current  liabilities

Non-current  portion due  within 5 years

Non-current  portion due  beyond 5 years

Total non- current  liabilities

Bank loans

250,334

70,744

321,078

429,099

483,548

912,647

Notes

569,817

569,817

3,111,521

2,136,922

5,248,443

Lease liabilities (IFRS 16 and IFRC 12)

24,625

21,649

46,274

34,940

9,269

44,209

Other shareholders loans

43,376

24

43,400

318,335

662,234

980,569

3,575,560

2,629,739

6,205,299

On 1 February 2024, as part of the EMTN Programme, Italgas issued a note maturing on 8 February 2029,  with a nominal value of 650 million euro at an issue price of 98.975% and a fixed annual nominal interest rate  of 3.125%. On 24 September 2024, through a reopening of said bond already in circulation, Italgas issued  another tranche for a nominal value of 350 million euro and an issue price of 99.683%. The placement was  aimed at institutional investors only and the notes are listed on the Luxembourg Stock Exchange.

On 24 October 2024, Italgas’ Board of Directors resolved to renew the EMTN Programme, launched in 2016  and already renewed in each previous financial year, for a maximum nominal amount of 10 billion euro.

As required by IAS 7 (§44A), below is the statement showing the reconciliation of the changes in financing  liabilities, distinguishing between changes arising from cash flow and other non-monetary changes changes.

As of

Other non-monetary changes

As of

(€ thousands)

31 December  2023

Cash flow

Conversion  differences

Other  changes

Business  combinations

31 December  2024

Bank loans

1,642,954

(392,964)

(16,265)

1,233,725

of which current

573,930

(553,776)

300,924

321,078

of which non-current

1,069,024

160,812

(317,189)

912,647

Notes

5,198,307

589,402

30,551

5,818,260

of which current

426,392

(417,326)

560,751

569,817

of which non-current

4,771,915

1,006,728

(530,200)

5,248,443

ITALGAS CONSOLIDATED FINANCIAL REPORT AS AT 31 DECEMBER 2024 – NOTES TO THE CONSOLIDATED  FINANCIAL STATEMENTS

258

Lease liabilities (IFRS 16 and IFRIC 12)

79,095

(34,139)

20,787

24,740

90,483

of which current

33,112

(34,139)

22,561

24,740

46,274

of which non-current

45,983

(1,774)

44,209

Other loans

12,004

31,396

43,400

of which current

12,004

31,396

43,400

of which non-current

6,920,356

162,299

47,077

56,136

7,185,868

Current financial liabilities

Current financial liabilities amounting to 980,569 thousand euro (1,033,434 thousand euro as at 31 December 2023) are mainly related to the current portion  of non-current liabilities. The decrease of 52,865 thousand euro is attributable to the combined effect of (i) the reduction in bank loans maturing in 2025  compared to 2024, (ii) the increase in the notes and related interest to be paid in 2025, (iii) the increase in financial liabilities (pursuant to IFRS 16 and IFRIC  12) and other loans mainly associated with the first-time consolidation of Acqua Campania.

There are no current financial liabilities in currencies other than Euro.

Non-current financial liabilities 

Non-current financial liabilities amount to 6,205,299 thousand euro (5,886,922 thousand euro as at 31 December 2023).

Net of lease liabilities, the increase is mainly attributable to the note issued in implementation of the EMTN Programme on 1 February 2024 and subsequent  reopening, concluded on 24 September 2024 for a total 1,000 million euro, partially offset by the short-term reclassification of the EMTN bond maturing in  2025.

The breakdown of the notes for 5,818,260 thousand euro, with the issuing company, year of issue, currency, average interest rate and due date, is provided  in the following table.

Notes issued by Italgas S.p.A:

(€ thousands)

Issuing company

Issue  (year)

Currency

Nominal  Value

Adjustment to  amortized cost

Financing value as  at 31.12.2024

Interest  accrual

Balance as at  31.12.2024

Rate (%)

Due date  (year)

Euro Medium Term Notes

ITALGAS S.p.A.

2017

euro

750,000

(2,082)

747,918

11,553

759,471

1.63%

2027

ITALGAS S.p.A.

2017

euro

750,000

(2,239)

747,761

11,587

759,348

1.63%

2029

ITALGAS S.p.A.

2019

euro

600,000

(4,524)

595,476

3,609

599,085

0.88%

2030

ITALGAS S.p.A.

2019

euro

500,000

(3,269)

496,731

273

497,004

1.00%

2031

ITALGAS S.p.A.

2020

euro

500,000

(676)

499,324

649

499,973

0.25%

2025

ITALGAS S.p.A.

2021

euro

500,000

(3,622)

496,378

496,378

0.00%

2028

ITALGAS S.p.A.

2021

euro

500,000

(5,096)

494,904

2,178

497,082

0.50%

2033

ITALGAS S.p.A.

2023

euro

500,000

(6,685)

493,315

11,638

504,953

4.13%

2032

ITALGAS S.p.A.

2024

euro

1,000,000

(9,033)

990,967

27,918

1,018,885

3.13%

2029

5,600,000

(37,226)

5,562,774

69,405

5,632,179

Bond loans by the subsidiary Enaon:

(€ thousands)

ITALGAS CONSOLIDATED FINANCIAL REPORT AS AT 31 DECEMBER 2024 – NOTES TO THE CONSOLIDATED  FINANCIAL STATEMENTS

259

Issuing company

Issue  (year)

Currency

Nominal  Value

Adjustment  to amortized  cost

Financing value  as at 31.12.2024

Interest  accrual

Balance as  at  31.12.2024

Rate (%)

Due date  (year)

ENAON S.A.

2022

euro

130,000

(693)

129,307

279

129,586

1,70% + 3M  Euribor

2029

ENAON S.A.

2022

euro

24,500

(5,192)

19,308

53

19,361

1,90% + 3M  Euribor

2034

ENAON S.A.

2022

euro

38,000

(947)

37,053

81

37,134

1,90% + 3M  Euribor

2034

192,500

(6,832)

185,668

413

186,081

The breakdown of bank loans, amounting to 1,233,725 thousand euro is provided in the table below.

(€ thousands)

Type

Issue (year)

Currency

Nominal  Value

Adjustment  to amortized  cost

Financing  value as at  31.12.2024

Interest  accrual

Balance as  at 31.12.2024

Rate (%)

Due date  (year)

ITALGAS S.p.A. - EIB

2017

euro

312,000

(102)

311,898

394

312,292

0,35+Euribor  6M

15.12.2037

ITALGAS S.p.A. - EIB

2015

euro

90,933

(19)

90,914

577

91,491

0,14+Euribor  6M

22.10.2035

ITALGAS S.p.A. - EIB

2016

euro

200,000

(74)

199,926

565

200,491

0,47+Euribor  6M

30.11.2032

ITALGAS S.p.A. - EIB

2022

euro

150,000

(11)

149,989

214

150,203

3.180%

15.12.2037

ITALGAS S.p.A. - EIB

2023

euro

12,000

(95)

11,905

174

12,079

2.770%

04.07.2042

ITALGAS S.p.A. - EIB

2024

euro

36,000

0

36,000

92

36,092

0,829+Euribo r 6M

05.12.2044

TOSCANA ENERGIA S.p.A - EIB

2016

euro

53,209

0

53,209

0

53,209

1.050%

30.06.2031

ITALGAS S.p.A. - TL  MEDIOBANCA

2024

125,000

(180)

124,820

124,820

0,65+Euribor  6M

18.10.2027

ITALGAS S.p.A. - TL INTESA  SANPAOLO

2022

euro

250,000

(31)

249,969

249,969

0,60+Euribor  3M

20.05.2025

ITALGAS S.p.A. - RCF

2024

euro

(764)

(764)

2,660

1,896

05.03.2027

GEOSIDE - FIN LT INTESA  SANPAOLO

2021

euro

444

444

7

451

0.830%

23.12.2025

Loans due to other banks

732

732

732

1,230,318

(1,276)

1,229,042

4,683

1,233,725

There are no non-current financial liabilities in currencies other than Euro.

There were no breaches of loan agreements as at the reporting date. 

Other shareholders loans amounting to 43,400 thousand euro refer to amounts due for collections to be  transferred in relation to the metering service carried out in the name and on behalf of the Regione Campania.

There were no breaches of loan agreements as at the reporting date. For more information, see “Financial  covenants and negative pledge contractual clauses” below.

Breakdown of total financial liabilities by interest rate type

As at 31 December 2024, 2024, fixed-rate debt accounted for 85.4% of total financial liabilities (91.9% as at  31 December 2023), while floating-rate debt stood at 14.6% (8.1% as at 31 December 2023). The reduction  in fixed-rate liabilities was mainly due to the maturity in December 2024 of a fixed-rate derivative on an EIB  loan, an effect partially offset by the bond issues in 2024 (with a total nominal value of 1 billion euro), which  refinanced the repayment of the bond that matured in March (381.3 million euro) as well as certain bank  loansloans.

Financial covenant and negative pledge contractual clauses 

ITALGAS CONSOLIDATED FINANCIAL REPORT AS AT 31 DECEMBER 2024 – NOTES TO THE CONSOLIDATED  FINANCIAL STATEMENTS

260

As at 31 December 2024 Italgas had unsecured bilateral and syndicated loan agreements in place with banks and other financial institutions. As at 31  December 2024, there are no loan agreements containing financial covenants, with the exception of the EIB loan signed by Toscana Energia which provides  for compliance with certain financial covenants. 

In particular, the loan agreement with the EIB requires compliance with financial covenants, such as the ratio between (i) net financial position (calculated on  an aggregate basis for the entire Italgas Group) and EBITDA, as defined in the contractual documentation, (ii) the sum of FFO and financial charges and the  sum of repayments of the principal portion of financial debt over the last 12 months, as defined in the contractual documentation, and (iii) net financial position  and RAB, as defined in the contractual documentation. As at 31 December 2024, these financial covenants were respected.

Some of the loan agreements provide, inter alia, for the following: (i) negative pledge undertakings, pursuant to which Italgas and the subsidiaries are subject  to limitations regarding the creation of real rights of guarantee or other restrictions concerning all or part of the respective assets, shares or goods; (ii) pari  passu and change of control clauses; (iii) limitations on some extraordinary transactions that the Company and its subsidiaries may carry out. 

Furthermore, limited to the EIB loans subscribed by the Italgas Group, the lender has the option to request additional guarantees if the credit rating assigned  to Italgas is below BBB- (Fitch Ratings Limited) or Baa3 (Moody’s) or in the event of the loss of any rating. If these additional guarantees are not deemed  satisfactory, the European Investment Bank would have the right to request the immediate early repayment of the loans it has provided.

Failure to comply with the commitments established for these loans - in some cases only when this non-compliance is not remedied within a set time period  - and the occurrence of other events, such as cross-default events, some of which are subject to specific threshold values, may result in Italgas and Toscana  Energia failure to comply and could trigger the early repayment of the relative loan.

As at 31 December 2024, these covenants and commitments were respected.

Bonds issued by Italgas mainly referred to securities issued under the Euro Medium Term Notes programme. The covenants established for the programme's  securities are typical of international market practice and consist of, inter alia, negative pledge and pari passu clauses.

Analysis of net financial debt

An analysis of net financial debt with evidence of related party transactions is shown in the table below.

(€ thousands)

As of 31  December 2023

As of 31  December 2024

A. Cash

248,911

401,610

B. Cash equivalents

1,052

1,052

C. Other current financial assets

22,342

9,470

D. Liquidity (A+B+C) 

272,305

412,132

E. Current financial debt

498,656

318,335

F. Current portion of non-current financial debt

534,778

662,234

G. Current financial debt (E+F)

1,033,434

980,569

of which, related parties

636

4,580

H. Net current financial debt (G-D)

761,129

568,437

I. Non-current financial debt (excluding the current portion and debt instruments)

1,101,299

945,874

J. Debt instruments

4,771,915

5,248,443

K. Trade and other non-current payables

L. Non-current financial debt (I+J+K)

5,873,214

6,194,317

of which, related parties

1,566

141,566

M. Net financial debt (H+L)

6,634,343

6,762,754

(*) Including IFRS 16 and IFRIC 12 financial debts of which 44,209 thousand euro non-current (45,983 thousand euro as at 31 December 2023), 21,649 thousand euro current portions  of non-current financial debts (33,112 thousand euro as at 31 December 2023) and 24,625 thousand euro current portions of IFRIC 12 financial debts.

Cash, amounting to 402,662 thousand euro, is held in current accounts and fixed-term deposits that can be  immediately liquidated with leading banks. With the exception of 43,400 thousand euro, cash and cash  equivalents are not subject to any usage restrictions. 

Net financial debt does not include payables for dividends resolved and yet to be distributed and payables for  investing activity for contractually agreed earn-out .

ITALGAS CONSOLIDATED FINANCIAL REPORT AS AT 31 DECEMBER 2024 – NOTES TO THE CONSOLIDATED  FINANCIAL STATEMENTS

261

19) Trade and other payables

Trade and other payables, which amount to 1,184,609 thousand euro (829,862 thousand euro as at 31  December 2023), comprise the following:

(€ thousands)

As of 31  December 2023

As of 31  December 2024

Trade payables

278,312

249,659

Payments on account and prepayments

4,402

5,345

Other payables

547,148

929,605

829,862

1,184,609

Trade payables of 249,659 thousand euro (278,312 thousand euro as at 31 December 2023) relate to payables  to suppliers for the purchase of goods and services. The reduction of 28,652 thousand euro is mainly due to  the progressive decrease in works pertaining to the energy efficiency activities linked to the Super/Ecobonus.

Other payables (929,605 thousand euro as at 31 December 2024 and 547,148 thousand euro as at 31  December 2023) break down as follows:

(€ thousands)

As of 31  December  2023

As of 31  December  2024

Payables - shareholders for dividends

3,090

5,776

Payables for investment activities

375,723

412,689

Payables to the Campania Region for ACO concession

241,566

Payables to the public administration

85,634

105,822

Payables to CSEA

21,037

92,300

Payables to personnel

31,456

32,304

Payables to social security institutions

15,807

17,949

Payables to consultants and professionals

9,494

5,187

Sundry other

4,907

16,012

547,148

929,605

Payables for investment activities equal to 412,689 thousand euro (375,723 thousand euro as at 31 December  2023) mainly relate to payables to suppliers for technical activities.

Payables to the Regione Campania for ACO concession, amounting to 241,566 thousand euro, relate to the  fee for the concession to manage the Acquedotto della Campania Occidentale (ACO) and the system for  metering (for drinking water consumption), arising from the entry of Acqua Campania S.p.A. into the  consolidation area.

Payables to the public administration (105,822 thousand euro as at 31 December 2024 and 85,634 thousand  euro as at 31 December 2023) primarily involve payables to municipalities for concession fees for the gas  distribution business.

Payables to the CSEA (92,300 thousand euro as at 31 December 2024 and 21,037 thousand euro as at 31  December 2023) mainly relate to several ancillary components of tariffs for the gas distribution service to be  paid to the Fund (RE, RS, UG1 and GS)  135 for the remaining amount. 

135 Tali componenti si riferiscono a: (i) RE – Quota variabile a copertura degli oneri per misure e interventi per il risparmio energetico e lo  sviluppo delle fonti rinnovabili nel settore del gas naturale; (ii) RS – Quota variabile a copertura degli oneri per la qualità dei servizi gas;  (iii) UG1 – Quota variabile a copertura di eventuali squilibri dei sistemi di perequazione e a copertura di eventuali conguagli; (iv) GS –  Quota variabile a copertura del sistema di compensazione tariffaria per i clienti economicamente disagiati.

ITALGAS CONSOLIDATED FINANCIAL REPORT AS AT 31 DECEMBER 2024 – NOTES TO THE CONSOLIDATED  FINANCIAL STATEMENTS

262

Amortised cost method was not applied considering that the effects arising from its application are irrelevant,  because they are due within the next 12 months and any costs, commissions and any other difference between  the initial value and the maturity value are negligible.

20) Other current and non-current financial assets/liabilities 

The market value of the derivative financial instruments as at 31 December 2024 is analysed below:

As of 31 December 2023

As of 31 December 2024

(€ thousands)

Current

Non-current

Total

Current

Non-current

Total

Other assets

18,094

13,708

31,802

5,878

10,982

16,860

Derivative financial instruments Cash  flow hedge

\- Fair value interest rate hedging  instruments

17,228

13,255

30,483

4,727

10,436

15,163

Derivative financial instruments for  foreign exchange risk

\- Fair value instruments for foreign  exchange risk

866

453

1,319

1,151

546

1,697

Other liabilities

0

0

0

0

0

0

Other current and non-current assets for 16,860 thousand euro (31,802 thousand euro as at 31 December  2023) is mainly related to the fair value of derivative financial instruments to hedge the risk of fluctuations in  interest rates accounting for according to IFRS 9 in hedge accounting. 

On 12 December 2016 Italgas entered into an EIB loan for 300 million euro, expiring on 30 November 2032\.  The loan involves the payment of half-yearly coupons at a variable rate of Euribor 6M + spread 0.47%. On 24  July 2019 Italgas also entered into an Interest Rate Swap (IRS), effective from 24 July 2019, expiring in 2029  and with the same coupon frequency as the loans. 

The IRS characteristics are summarised below:

Date stipulated

Amount

ITG rate

Bank rate

Coupon

Expiration  date

IRS derivative

24.07.2019

200,000,000

(0.06)%

var EUR 6m

half-yearly

30.11.2029

The derivatives stipulated to hedge the interest rate are booked according to the rules of hedge accounting.  The effectiveness testing carried out as at 31 December 2024 did not show any impacts on the income  statement in terms of ineffectiveness.

The item also contains, for 1,453 thousand euro, the fair value of the instruments for foreign exchange risk to  hedge future payment flows in USD on Picarro invoices (for a total hedged amount of 5,980 thousand dollars).  The Group did not apply hedge accounting under IFRS 9 for instruments to hedge payment flows in USD, as  it is for operational hedging only.

Date stipulated

Initial amount USD  hedging

Residual value as  of 31.12.2024 USD

Foreign exchange  rate on the  subscription date

Expiry date (last  hedge)

ITALGAS CONSOLIDATED FINANCIAL REPORT AS AT 31 DECEMBER 2024 – NOTES TO THE CONSOLIDATED  FINANCIAL STATEMENTS

263

Foreign exchange risk  derivative

15.01.2021

16,300,000.00

3,640,000.00

1.2131

31.07.2026

Foreign exchange risk  derivative

20.05.2024

2,340,000.00

2,340,000.00

1.1161

15.07.2027

21) Other current and non-current non-financial liabilites

Other current non-financial liabilities, amounting to 14,063 thousand euro (17,393 thousand euro as at 31 December 2023) and other non-current non-financial  liabilities, amounting to 566,985 thousand euro (527,884 thousand euro as at 31 December 2023), are broken down as follows:

As of 31 December 2023

As of 31 December 2024

(€ thousands)

Current

Non-current

Total

Current

Non-current

Total

Other tax liabilities

9,746

9,746

13,630

13,630

Other liabilities related to connection fees

522,331

522,331

527,667

527,667

Other liabilities for works prepayments

16,317

16,317

Liabilities for security deposits

5,553

5,553

15,689

15,689

Sundry other

7,647

7,647

433

7,312

7,745

17,393

527,884

545,277

14,063

566,985

581,048

Current indirect tax liabilities of 13,630 thousand euro mainly refer to payables to the tax authorities for IRPEF withholdings for employees.

Other non-current liabilities, amounting to 566,985 thousand euro, mainly refer to gas connection contributions (526,916 thousand euro), water connection  contributions (751 thousand euro), to liabilities for works prepayments for 16,317 thousand euro related to Acquedotto della Campania Occidentale (ACO)  and liabilities for security deposits for 15,689 thousand euro.

22) Provisions for risks and charges 

Provisions for risks and charges, amounting to 92,122 thousand euro as at 31 December 2024 (109,851  thousand euro as at 31 December 2023), comprise the following:

.

As of 31 December 2023

(€ thousand)

Opening  balance

Provisions

Discounting

Uses against  charges

Releases

Other  changes

Closing  balance

Provisions for environmental risks and charges

75,048

0

336

(13,714)

(3,554)

0

58,116

Provisions for site decommissioning risks and charges

3,933

0

658

(186)

0

520

4,925

Risk provision for litigation

11,250

3,922

0

(2,283)

(2,816)

(50)

10,023

Provisions for other risks - energy efficiency certificates

3,421

1,585

0

(404)

0

0

4,602

Provision for retirement risks

14,677

0

0

(2,058)

(500)

0

12,119

Provision for operational restoration of metering  instruments

12,847

0

0

(12,847)

0

0

0

Other personnel risk provisions

2,807

485

0

(599)

0

0

2,693

Risk provision for tax disputes

283

92

0

(152)

0

0

223

Other provisions 

20,011

2,955

0

(5,604)

(212)

0

17,150

144,277

9,039

994

(37,847)

(7,082)

470

109,851

As of 31 December 2024

(€ thousand)

Opening  balance

Provisions

Discounting

Uses against  charges

Releases

Other  changes

Closing  balance

ITALGAS CONSOLIDATED FINANCIAL REPORT AS AT 31 DECEMBER 2024 – NOTES TO THE CONSOLIDATED  FINANCIAL STATEMENTS

264

Provisions for environmental risks and charges

58,116

0

446

(15,596)

(70)

0

42,896

Provisions for site decommissioning risks and charges

4,925

0

238

(186)

0

0

4,977

Risk provision for litigation

10,023

3,264

0

(3,335)

(1,845)

0

8,107

Provisions for other risks - energy efficiency certificates

4,602

216

0

(1,617)

(158)

1,291

4,334

Provision for retirement risks

12,119

0

0

(1,481)

0

(85)

10,553

Other personnel risk provisions

2,693

541

0

(571)

(78)

0

2,585

Risk provision for tax disputes

223

70

0

(10)

0

0

283

Other provisions 

17,150

1,910

0

(653)

(1,561)

1,541

18,387

109,851

6,001

684

(23,449)

(3,712)

2,747

92,122

.

Provision for environmental risks and charges of 42,896 thousand euro (58,116 thousand euro as at 31 December 2023) mainly included costs for  environmental soil reclamation, pursuant to Law no. 471/1999, as subsequently amended, primarily for the disposal of solid waste, in relation to the gas  distribution business. The decrease, of 15,220 thousand euro, is mainly due to uses in view of period expenses (15,596 thousand euro).

Discounting was carried out using a rates curve representative of the risk-free rate.

Risk provision for litigation (8,107 thousand euro as at 31 December 2024 and 10,023 thousand euro as at 31 December 2023) included costs which the  Group has estimated it will incur for existing lawsuits. For further information, please see subsection “Disputes and other measures”. 

Energy Efficiency Certificates (EEC) risk provision of 4,334 thousand euro (4,602 thousand euro as at 31 December 2023) represents the Group's estimated  liability for fulfilling the obligations to deliver Energy Efficiency Certificates (TEE) arising from gas distribution activities in Italy.

Risk provision for early retirement of 10,553 thousand euro (12,119 thousand euro as at 31 December 2023) involves personnel incentive and mobility  schemes.

Other provisions amounting to 18,387 thousand euro (17,150 thousand euro as at 31 December 2023) mainly refer to the estimated costs for various types  of litigation in relation to the gas distribution service.

The effects on provisions of risks and charges arising from a reasonably possible change to the discount rate used at year-end are shown below. The  sensitivity analysis on the discounting rates shows the change in value of the actuarial liabilities obtained with the year-end assessment data, by changing  the discounting rate, without prejudice to other hypotheses.

(€ thousands)

% change in discounting rates

Effect on net obligation at 31.12.2024

10% reduction

10% increase

Provision for site decommissioning risks and charges

156

(150)

Provisions for environmental risks and charges

858

(832)

23) Provisions for employee benefits

Provisions for employee benefits , amounting to 61,279 thousand euro as at 31 December 2024 (65,330  thousand euro as at 31 December 2023) comprise the following:

(€ thousands)

As of 31  December  2023

As of 31  December  2024

Employee severance pay (TFR)

46,233

43,153

Supplementary healthcare provision for company executives of Eni (FISDE)

6,556

6,179

Gas Fund

8,487

8,200

Other provisions for employee benefits

4,054

3,747

65,330

61,279

Employee severance fund (TFR) (43,153 thousand euro as at 31 December 2024 and 46,233 thousand euro as at 31 December 2023), governed by Article  2120 of the Italian Civil Code, represents the estimated liability determined on the basis of actuarial procedures for the amount to be paid to employees at  the time that the employment is terminated. The principal amount of the benefit is equal to the sum of portions of the allocation calculated on compensation  items paid during the employment and revalued until the time that such relationship is terminated. Due to the legislative changes introduced from 1 January  2007 for companies with more than 50 employees, a significant part of severance pay to be accrued is classified as a defined-contribution plan since the  company’s only obligation is to pay the contributions to the pension funds or to INPS. 

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265

The supplementary healthcare provision (FISDE) (6,179 thousand euro as at 31 December 2024 and 6,556 thousand euro as at 31 December 2023) includes  the estimate of costs (determined on an actuarial basis) related to contributions benefiting current 136 and retired executives.

FISDE provides financial supplementary healthcare benefits to Eni Group 137 executives executives and retired executives whose most recent contract of  employment was as an executive with the Eni Group. FISDE is funded through the payment of: (i) contributions from member companies; (ii) contributions  from individual members for themselves and their immediate family; and (iii) ad hoc contributions for specific benefits. The amount of the liability and the  healthcare cost are determined on the basis, as an approximation of the estimated healthcare expenses paid by the fund, of the contributions paid by the  company in favour of pensioners.

The Gas Fund (8,200 thousand euro as at 31 December 2024 and 8,487 thousand euro as at 31 December 2023) relates to the estimate, made on an  actuarial basis, of the charges sustained by the employer due to the elimination, as at 1 December 2015, of the fund pursuant to Law no. 125 of 6 August  2015. In particular, Articles 9-decies and 9-undecies of the Law stipulate that the employer must cover: (i) an extraordinary contribution to cover expenses  related to supplementary pension benefits in place at the time of the elimination of the Gas Fund for the years 2015 to 2020 138 ; and (ii) a contribution in favour  of those registered or in voluntary continuation of the contribution, that as at 30 November 2015 were not entitled to supplementary pension benefits from the  eliminated Gas Fund, of 1% for each year of registration in the supplementary fund, multiplied by the social security tax base relating to the same  supplementary fund for 2014, to be allocated through the employer or the supplementary pension scheme. 

At present, the criteria, procedures and time periods for payment of the extraordinary contribution have not yet been announced. Employee selection of where  the amounts would be allocated (supplementary pension scheme or to the employer) were concluded, pursuant to the law, on 14 February 2016.

The other provisions for employee benefits (3,747 thousand euro as at 31 December 2024 and 4,045 thousand euro as at 31 December 2023) relate to  seniority bonuses and the long-term incentive plans (LTI). 

Long-term incentive plans (IAS 19) envisage, after three years of assignment, the disbursement of a variable monetary benefit linked to a corporate  performance parameter, not linked to the share price. Obtaining the benefit depends on the achievement of certain future performance levels and is conditional  on the beneficiary remaining with the Company for the three-year period following the allocation (the “vesting period”). This benefit is allocated pro rata over  the three-year period depending on the final performance parameters.

Seniority bonuses are benefits paid upon reaching a minimum service period at the Company and are paid in kind. 

Deferred cash incentive plans, long-term cash incentive plans and seniority bonuses are classified as other long-term benefits pursuant to IAS 19.

The composition of and changes in provisions for employee benefits, determined by applying actuarial methods, are as follows 139 :

As of 31 December 2023

As of 31 December 2024

(€ thousands)

Employee  severance  fund

FISDE

Gas  Fund

Other  provisions

Total

Employee  severance  fund

FISDE

Gas  Fund

Other  provisions

Total

Current value of the obligation at the  start of the year

49,824

6,543

9,942

3,608

69,917

46,233

6,556

8,487

4,054

65,330

Current cost

160

165

751

1,076

1,208

165

1,493

2,866

Cost for interest 

1,625

249

363

82

2,319

1,250

209

321

93

1,873

Revaluations / (Impairment):

(358)

(401)

168

(22)

(613)

184

(751)

999

(280)

152

\- Actuarial (Gains) / Losses resulting  from changes in the demographic  assumptions

91

91

157

(119)

658

1

697

\- Actuarial (Gains) / Losses resulting  from changes in the financial  assumptions

557

6,556

82

398

7,593

464

(535)

(71)

14

(128)

\- Actuarial (Gains) / Losses from past  experience adjustments

(593)

(6,957)

86

2

(7,462)

(1,398)

(97)

410

(25)

(1,110)

\- Other changes

(413)

(422)

(835)

961

2

(270)

693

Paid benefits

(5,303)

(1,986)

(365)

(7,654)

(5,724)

(1,609)

(1,613)

(8,946)

Effect of transfers

285

285

2

2

4

Current value of the obligation at the  end of the year

46,233

6,556

8,487

4,054

65,330

43,153

6,179

8,200

3,747

61,279

The main actuarial assumptions used to determine liabilities at the end of the year and to calculate the cost for the following year are indicated in the table  below.

As of 31 December 2023

As of 31 December 2024

136 For executives in service, contributions are calculated from the year in which the employee retires and refer to the years of service  provided.

137 The fund provides the same benefits for Italgas Group executives.

138 Article 9-quinquiesdecies also stipulates that “... If monitoring shows that the extraordinary contribution pursuant to Article 9-decies is  insufficient to cover the relative expenses, a decree issued by the Ministry of Labour and Social Policy, in concert with the Ministry of  Economic Development and the Ministry of Economy and Finance, provides for the redetermination of the extraordinary contribution, the  criteria for redistribution of the contribution between employers and the time periods and procedures for payment of the extraordinary  INPS contribution“.

139 The table also provides a reconciliation of liabilities recorded for provisions for employee benefits. 

ITALGAS CONSOLIDATED FINANCIAL REPORT AS AT 31 DECEMBER 2024 – NOTES TO THE CONSOLIDATED  FINANCIAL STATEMENTS

266

Employee  severance  fund

FISDE

Gas  Fund

Other  provisions

Employee  severance  fund

FISDE

Gas  Fund

Other  provisions

Discount rate (%)

2.98

3.17

2.97

3.40

2.67

3.26

2.63

2.83

Inflation rate (%) (*)

1.80

N/A

N/A

2.00

1.60

1.70

N/A

1.80

(*) With reference to the other provisions, the rate refers only to the seniority bonuses

The discount rate adopted was determined by considering the yields on corporate bonds issued by Eurozone companies with AA ratings.

The employee benefit plans recognised by Italgas are subject, in particular, to interest rate risk, in the sense that a change in the discount rate could result in  a significant change in the liability.

The table below illustrates the effects of a reasonably possible change 140 in the discount rate at the end of the year. The sensitivity of the discount rate  represents the change in the value of the actuarial liability obtained using the end-of-year valuation data, changing the discount rate by a certain number of  basis points, without any change in the other assumptions.

(€ thousands)

Discount rate

reduction

increase

Effect on net obligation at 31.12.2024

%

amount

%

amount

Employment severance pay

2.17

759

3.17

(723)

FISDE

2.76

225

3.76

(207)

Gas Fund

2.13

176

3.13

(170)

Other provisions for employee benefits

2.33

108

3.33

(73)

1,268

(1,173)

The maturity profile of the obligations for employee benefit plans is shown in the following table:

As of 31 December 2023

As of 31 December 2024

(€ thousands)

Employee  severance  fund

FISDE

Gas Fund

Other  provisions

Total

Employee  severance  fund

FISDE

Gas Fund

Other  provisions

Total

Within the next year

9,643

334

515

1,949

12,441

10,865

346

1,341

2,006

14,558

Within five years

19,856

1,171

4,731

2,105

27,863

19,988

1,139

5,267

1,111

27,505

Beyond five and up to ten years

16,601

1,080

3,241

20,922

9,233

1,050

1,523

554

12,360

Beyond ten years

133

3,971

4,104

3,067

3,644

69

76

6,856

46,233

6,556

8,487

4,054

65,330

43,153

6,179

8,200

3,747

61,279

24) Deferred tax liabilities 

Net deferred tax liabilities of 48,345 thousand euro (47,780 thousand euro as at 31 December 2023) are stated net of offsettable deferred tax assets and are  analysed in the tables below:

(€ thousands)

As of 31  December 2022

Business  combination

Provisions

Uses

Other  changes

As of 31  December  2023

Deferred tax liabilities

358,878

0

547

(18,869)

(5,087)

335,469

Deferred tax assets

(267,245)

0

(44,364)

26,722

(2,802)

(287,689)

91,633

0

(43,817)

7,853

(7,889)

47,780

140  With reference to the FISDE, any changes relating to mortality do not have significant effects on the liability.

ITALGAS CONSOLIDATED FINANCIAL REPORT AS AT 31 DECEMBER 2024 – NOTES TO THE CONSOLIDATED  FINANCIAL STATEMENTS

267

(€ thousands)

As of 31  December 2023

Business  combination

Provisions

Uses

Other  changes

As of 31  December  2024

Deferred tax liabilities

335,469

3,981

9,278

(17,566)

(2,612)

328,550

Deferred tax assets

(287,689)

(1,196)

(25,826)

26,836

7,670

(280,205)

47,780

2,785

(16,548)

9,270

5,058

48,345

There are no deferred taxes which cannot be offset.

Deferred tax liabilities and deferred tax assets break down as follows, based on the most significant temporary differences:

As of 31 December 2023

(€ thousands)

Opening  balance

Business  combination

Provisions

Uses

Impacts  recorded in  equity

Other  changes

Closing  balance

of which:  IRES

of  which:  IRAP

Deferred tax liabilities

358,878

0

547

(18,869)

(117)

(4,970)

335,469

284,894

50,575

Amortisation and depreciation exclusively  for tax purposes

174,923

24

(8,170)

166,777

140,724

26,053

Revaluations of property, plant and  equipment

80,819

248

(7,423)

73,644

61,607

12,037

Capital gains subject to deferred taxation

6,687

(2,073)

4,614

4,614

Employee benefits

12,197

41

(38)

12,200

12,200

Capitalisation of financial expense 

2,212

(122)

2,090

1,761

329

Impairment losses on receivables in  excess of tax deductibility

316

205

(403)

180

298

298

Other temporary differences

81,724

70

(719)

(117)

(5,112)

75,846

63,690

12,156

Deferred tax assets

(267,245)

0

(44,364)

26,722

(4,766)

1,964

(287,689)

(275,140)

(12,549)

Provisions for risks and charges and  other non-deductible provisions

(31,829)

(10,400)

11,443

(30,786)

(30,786)

Non-repayable and contractual grants

(52,746)

2,722

(50,024)

(43,187)

(6,837)

Non-deductible amortisation and  depreciation

(150,993)

(22,480)

2,464

(171,009)

(170,352)

(657)

Employee benefits

(5,486)

(23)

(560)

(6,069)

(4,915)

(1,154)

Other temporary differences

(26,191)

(11,461)

10,653

(4,766)

1,964

(29,801)

(25,900)

(3,901)

Net deferred tax liabilities

91,633

0

(43,817)

7,853

(4,883)

(3,006)

47,780

9,754

38,026

As of 31 December 2024

ITALGAS CONSOLIDATED FINANCIAL REPORT AS AT 31 DECEMBER 2024 – NOTES TO THE CONSOLIDATED  FINANCIAL STATEMENTS

268

(€ thousands)

Opening  balance

Business  combination

Provisions

Uses

Impacts  recorded in  equity

Other  changes

Closing  balance

of which:  IRES

of which:  IRAP

Deferred tax liabilities

335,469

3,981

9,278

(17,566)

(8,417)

5,805

328,550

301,441

27,109

Amortisation and depreciation  exclusively for tax purposes

166,777

5,411

(7,895)

3,667

167,960

158,930

9,030

Revaluations of property, plant  and equipment

73,644

(5,243)

42,359

110,760

94,205

16,555

Capital gains subject to deferred  taxation

4,614

(2,075)

117

2,656

2,656

Employee benefits

12,200

8

(38)

1

(10,942)

1,229

1,229

Capitalisation of financial expense 

2,090

(123)

1,967

1,674

293

Impairment losses on receivables  in excess of tax deductibility

298

374

(99)

995

1,568

1,564

4

Other temporary differences (*)

75,846

3,973

3,493

(2,093)

(8,418)

(30,391)

42,410

41,183

1,227

Deferred tax assets

(287,689)

(1,196)

(25,826)

26,836

4,996

2,674

(280,205)

(262,765)

(17,440)

Provisions for risks and charges  and other non-deductible  provisions

(30,786)

(260)

(1,589)

11,100

(12,601)

(34,136)

(29,543)

(4,593)

Non-repayable and contractual  grants

(50,024)

2,684

(28,933)

(76,273)

(65,903)

(10,370)

Non-deductible amortisation and  depreciation

(171,009)

(450)

(22,773)

8,852

36,345

(149,035)

(148,184)

(851)

Employee benefits

(6,069)

(6)

(1,185)

632

249

(3,024)

(9,403)

(8,043)

(1,360)

Other temporary differences (**)

(29,801)

(480)

(279)

3,568

4,747

10,887

(11,358)

(11,092)

(266)

Net deferred tax liabilities

47,780

2,785

(16,548)

9,270

(3,421)

8,479

48,345

38,676

9,669

(*) Other temporary differences related to deferred tax liabilities show additional variations attributable to the reclassification of 27,022 thousand euro.

(**) Other temporary differences related to deferred tax assets show additional variations attributable to the reclassification of 2,010 thousand euro

Deferred  tax assets and deferred tax liabilities are classified as non-current.

The Group has booked deferred tax assets on the timing differences at 31 December 2024, insofar as it believes it is likely they will be recovered. As of 31  December 2024, based on the industrial plan, the company's management has assessed the recoverability of deferred tax assets on tax losses attributable  to the Enaon Group as reasonably certain. 

Section “Income taxes” provides information about taxes for the year.

25) Equity 

Equity , which amounts to 2,793,508 thousand euro as at 31 December 2023 (2,600,744 thousand euro as at  31 December 2023) breaks down as follows:

(€ thousands)

As of 31 December  2023

As of 31 December  2024

Equity attributable to the Owners of the parent company

2,280,072

2,457,917

Share capital

1,003,228

1,003,844

Legal reserve

200,646

200,769

Share premium reserve 

626,252

628,395

Reserve Cash flow hedge on derivative contracts

22,683

11,524

First-time consolidation reserve

(323,907)

(323,907)

Reserve for business combinations under common control

(349,839)

(349,839)

Stock grant reserve

9,417

8,232

OCI Fair value valuation reserve for equity investments

238

319

Other reserves

13,063

7,520

Retained earnings

645,747

799,635

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269

OCI Reserve for remeasurement of defined-benefit plans for employees

(7,024)

(7,429)

Net profit for the year

439,568

478,854

Equity attributable to non-controlling interests

320,672

335,591

2,600,744

2,793,508

Share capital

S hare capital as of 31 December 2024 consisted of 811,242,309 shares without nominal value (809,768,354  as of 31 December 2023), with a total value of 1,003,844 thousand euro (1,003,228 thousand euro as of 31  December 2023)

On 20 April 2021, the Italgas Shareholders' Meeting approved the 2021-2023 Co-investment Plan and the  proposed free share capital increase, in one or more tranches, for the purposes of the aforesaid 2021-2023  Co-investment Plan for a maximum nominal amount of 5,580,000.00 euro, by means of the issuance of up to  4,500,000 new ordinary shares. These shares are to be assigned, in accordance with Article 2349 of the Italian  Civil Code, for a corresponding maximum amount taken from retained earning reserves, to the beneficiaries  of the Plan only; in other words, only to employees of the Company and/or of the companies in the Group.

On 12 March 2024, in execution of the 2021-2023 Co-Investment Plan approved by the Ordinary and  Extraordinary Shareholders' Meeting of 20 April 2021, the Board of Directors resolved on the free allocation of  a total of 497,089 new ordinary shares of the Company to the beneficiaries of said Plan (first cycle of the Plan)  and executed the first tranche of the capital increase resolved on by the aforesaid Shareholders' Meeting, for  a nominal amount of 616,390 euro, taken from retained earnings reserves.

On 6 May 2024, the Italgas Shareholders' Meeting approved the 2024-2025 Co-investment Plan and the  proposed free share capital increase, in one or more tranches, for the purposes of the aforesaid 2024-2025  Co-investment Plan for a maximum nominal amount of 3,720,000 euro, by means of the issuance of up to  3,000,000 new ordinary shares. These shares are to be assigned, in accordance with Article 2349 of the Italian  Civil Code, for a corresponding maximum amount taken from retained earning reserves, to the beneficiaries  of the Plan only; in other words, only to employees of the Company and/or of the companies in the Group .

Legal reserve

The legal reserve as at 31 December 2024 stood at 200,769 thousand euro. The increase of 123 thousand  euro relates to the resolution of the Shareholders' Meeting of 6 May 2024. 

Share premium reserve

The share premium reserve, which totalled 628,395 thousand euro (626,252 thousand euro as at 31 December  2023), was created after the equity investment in Italgas Reti S.p.A. was acquired. The increase of 2,143  thousand euro relates to the implementation of the Co-Investment Plan.

OCI Reserve Cash Flow Hedge on derivative contracts 

The reserve, amounting to 11,524 thousand euro (22,683 thousand euro as at 31 December 2023), includes  the fair value of the IRS derivative net of the related tax effect. The reserve changes with the accounting of  cash flows deriving from instruments which, for the purposes of IFRS 9, are designated as “cash flow hedging  instruments”. The related tax effect is reported in the “tax effect” item of the “Components reclassifiable to the  income statement” in the Statement of comprehensive income .

First-time consolidation reserve

The first-time consolidation reserve, negative for 323,907 thousand euro, was determined during the first-time  consolidation (year 2016) following the sale by Snam S.p.A. to Italgas S.p.A. of 38.87% of the equity investment 

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270

in Italgas Reti S.p.A. (include the difference between the purchase cost of the equity investment of Italgas Reti  and the related shareholders' equity pertaining to the group). 

Reserve for business combinations under common control

The reserve for business combinations under common control, negative for 349,839 thousand euro, relates to  the acquisition by Snam S.p.A. of 38.87% of the equity investment in Italgas Reti S.p.A. occured in 2016.

To this regard it should be specified that the natural gas distribution activities were acquired through three  simultaneous transactions (transfer, sale and demerger) of the equity investment held by Snam S.p.A. in  Italgas Reti S.p.A. in favour of Italgas S.p.A. This transaction led to the deconsolidation of the natural gas  distribution sector for Snam, and the acquisition of the equity investment in Italgas Reti and, at consolidated  level, of the net assets of the gas distribution sector for Italgas S.p.A. The reader is reminded that the  shareholder of reference of Snam, CDP, is simultaneously the shareholder of reference of Italgas. The  exposure described above reflects an approach based on the continuity of carrying amount (as regards Snam)  since the transaction represents an “aggregation of corporate entities or activities under common control”  within the scope of the broader group of which Italgas is part. The companies taking part in the business  combination (Snam, Italgas and Italgas Reti) remained subject to control because of the transactions and  therefore they were fully consolidated by the same subject (CDP) pursuant to the IFRS 10.

Stock grant reserve

The reserve, amounting to 8,232 thousand euro (9,098 thousand euro as at 31 December 2024), includes the  valuation pursuant to IFRS 2 of the co-investment plans approved by the Italgas S.p.A. Shareholders' Meeting.

Italgas Shareholders' Meeting held on 20 April 2021 approved the 2021-2023 co-investment Plan and the  proposed free share capital increase, in one or more tranches, for the purposes of the aforesaid 2021-2023  co-investment Plan for a maximum nominal amount of 5,580,000.00 euro, by means of the issuance of up to  4,500,000 new ordinary shares to be assigned free of charge, by means of assignment pursuant to Article  2349 of the Italian Civil Code, for a corresponding maximum amount taken from retained earning reserves, to  the beneficiaries of the Plan only; in other words, only to employees of the Company and/or of the companies  in the Group. In connection with this plan, the Board of Directors attributed, upon the recommendation of the  Appointments and Remuneration Committee and in keeping with the 2021 Remuneration Policy, rights to  receive 254,765 Italgas shares for the 2021-2023 co-investment plan. The unitary fair value per share is 5.55  euro.

On 6 May 2024, the Italgas Shareholders' Meeting approved the 2024-2025 co-investment Plan and the  proposed free share capital increase, in one or more tranches, for the purposes of the aforesaid 2024-2025  Co-investment Plan for a maximum nominal amount of 3,720,000 euro, by means of the issuance of up to  3,000,000 new ordinary shares. These shares are to be assigned, in accordance with Article 2349 of the Italian  Civil Code, for a corresponding maximum amount taken from retained earning reserves, to the beneficiaries  of the Plan only; in other words, only to employees of the Company and/or of the companies in the Group. 

OCI Fair value valuation reserve for equity investments

The fair value valuation reserve for 319 thousand euro as at 31 December 2024 (238 thousand euro as at 31  December 2023) includes the change in fair value, net of tax effects, of non-controlling interests which on initial  recognition were designated as valued at FVTOCI (fair value recognised through other comprehensive  income). For more details, see the note “Non-current financial assets”. 

Other reserves

The other reserves relate to the effects deriving from the valuation of equity investments.

OCI Reserve for remeasurement of defined-benefit plans for employees

The negative reserve for remeasurement of employee benefit plans for 7,429 thousand euro as at 31 December 2024 and (negative for 7,024 as at 31  December 2023) included actuarial losses, net of the related tax effect, recognised under other components of comprehensive income pursuant to IAS 19\.  The changes in the reserve during the course of the year are shown below:

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271

(€ thousands)

Gross reserve

Tax effect

Net reserve

Reserve as of 31 December 2022

(10,018)

2,823

(7,195)

Changes of the year 2023

245

(74)

171

Reserve as of 31 December 2023

(9,773)

2,749

(7,024)

Changes of the year 2024

(533)

128

(405)

Reserve as of 31 December 2024

(10,306)

2,877

(7,429)

Equity attributable to non-controlling interests

The Equity attributable to non-controlling interests is broken down below: 

(€ thousands)

Equity

attributable to non- controlling interests as  of 31 December 2023

Equity

attributable to non- controlling interests as  of 31 December 2024

Net income attributable  to non-controlling  interests as of 31  December 2023

Net income attributable  to non-controlling  interests as of 31  December 2024

Toscana Energia S.p.A.

206,862

215,934

18,394

21,831

Medea S.p.A.

60,989

62,858

1,272

3,326

Geoside S.p.A.

19,627

18,859

5,479

(758)

Italgas Newco  subconsolidated

29,913

33,882

2,870

3,981

Immogas S.r.l.

2,488

2,396

(116)

(92)

Idrosicilia S.p.A.

793

761

4

34

Acqua Campania S.p.A.

0

652

0

232

LAC S.r.l.

0

249

0

27

320,672

335,591

27,903

28,581

Dividends

In its meeting of 12 February 2025, the Board of Directors proposed to the Shareholders’ Meeting the distribution of an ordinary dividend of 0.406 euro per  share. The dividend will be paid out as at 21 May 2025, with an ex-coupon date of 19 May 2025 and a record date of 20 May 2025.

Reconciliation statement of the result for the year and of the shareholders' equity of Italgas S.p.A. with  the consolidated ones.

(€ thousands) 

Profit 2024

Equity as of 31  December 2024

Financial statements Italgas S.p.A.

422,455

1,961,862

Profit of the companies included in the consolidation

512,740

Difference between carrying amount of investments consolidated companies and  shareholders’ equity of the financial statements, including the result

546,287

Adjustments consolidation:

Dividends net of the tax effect

(431,598)

Income from valuation of equity investments with the equity method and other income  from equity investments

9,384

61,741

Other consolidation adjustments net of the tax effect

(5,547)

223,619

Attributable to non-controlling interests

(28,580)

(335,592)

Adjustments consolidation

56,399

496,055

478,854

2,457,917

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272

26) Guarantees, commitments and risks 

Guarantees, commitments and risks, amounting to 2,015,158 thousand euro as at 31 December 2023  (1,982,007 thousand euro as at 31 December 2023) comprise:

(€ thousands)

As of 31  December 2023

As of 31  December 2024

Bank guarantees given in the interest of Group companies

445,703

505,240

Financial commitments and risks:

1,536,304

1,509,918

Commitments

1,219,646

1,275,737

Commitments for the purchase of goods and services

1,219,646

1,275,737

Risks

316,658

234,181

\- for compensation and litigation

316,658

234,181

1,982,007

2,015,158

Guarantees 

Guarantees of 505,240 thousand euros (445,703 thousand euro as at 31 December 2023) refer mainly to guarantees issued with regard to sureties and other  guarantees issued in the favour of subsidiaries.

In addition, it should be noted that as part of the transaction for the acquisition of ERG's share capital and the sale of assets, Medea issued two guarantee of  66 million euro on the loan obtained by ERG in preparation for the transaction.

Commitments 

As at 31 December 2024, commitments amounted to 1,275,737 thousand euro (1,219,646 thousand euro as at 31 December 2023). Commitments with  suppliers to purchase property, plant and equipment and provide services relating to the purchase of property, plant and equipment and intangible assets  under construction amounted to 1,275,737 thousand euro. 

In addition, the residual commitments made by the Italgas Group with the Contracting Authorities for the implementation of investments arising from the  awarding of gas distribution service area tenders amount to approximately 783.7 million euro. Furthermore, the Italgas Group made commitments with the  Municipalities with existing non-expired concessions, including new methane gasifications, and concessions assigned on the basis of Italian Legislative  Decree no. 164/2000, known as the “Letta Decree”, for over 36.7 million euro.

In Greece, with Decision E-173/2024 published in the Official Gazette of the Greek government B’ 6152/07.11.2024, a Development Programme was  approved for the company Enaon EDA for the natural gas distribution networks in the regions of Attica, Thessaloniki, Thessalia and remainder of Greece for  the 2024-2028 period for a total of 732.4 million euro in investments. As at 31 December 2024, the residual investment commitment of the programme  amounted to approximately 612 million euro. In accordance with the time frames envisaged by Greek regulation, the process to define the Development  Programme for the 2025-2029 period is ongoing. 

The investments will be predominantly allocated to the development and upgrading of the gas distribution network in Italy and Greece.

Other unvalued commitments 

The acquisition of the equity investment of Enerco Distribuzione by the subsidiary Italgas Reti, which took place in 2017, is subject to an ownership price  adjustment (so-called “earn-out”) clause.

The acquisition of the “Alessandria 4 ATEM” business unit by the subsidiary Italgas Reti, which took place in 2020, is subject to a price adjustment (so-called  “earn-out”) clause if the Alessandria 4 ATEM tender is awarded within 10 years of the signing date and if the contracting authority in the aforesaid tender  procedure recognises a higher reimbursement value than the pro-forma value under the agreement, for the same year of reference.

On 27 December 2022, Alia Servizi Ambientali S.p.A. (“Alia”), Toscana Energia and Italgas signed a contract concerning, among other things, “put and call”  options, on the basis of which Italgas is entitled to purchase 30,134,618 shares held in Toscana Energia by Alia, amounting to approximately 20.6099% of  the share capital of Toscana Energia (“Alia’s TE Shares” and “Toscana Energia Call Option”) and Alia is entitled to sell Alia’s TE Shares to Italgas.

In accordance with the terms and conditions set out by the contract, on 14 January 2025 Italgas exercised the Toscana Energia Call Option by sending the  relative notice to Alia. The envisaged contractual price to purchase Alia’s TE shares is to be determined as the “fair market value” at the date of execution of  the Toscana Energia Call Option, calculated by an international financial institution named jointly by the parties.

As part of the investment agreement signed on 26 July 2022, and subsequently amended, between Energetica S.p.A. and Medea S.p.A. related to the entry  of the latter into the share capital of Energie Rete Gas S.r.l. (“ERG”) for a 49% stake through the contribution, and subsequent sale, to ERG of assets and  activities of Medea relating to gas transmission (the “Medea ERG Transaction”), the Parties, inter alia, agreed to restore the legal situation prior to the Medea  ERG Transaction if ERG does not obtain, by 31 December 2025, (i) recognition, from the competent ministry, among the infrastructure and/or regional  transmission services of natural gas, and (ii) recognition, under the tariff regulatory profile, as regional transport service.

The acquisition in 2023 of the business unit to which the concessions held in Italy in the water sector belonged is subject to an ownership price adjustment  (so-called “earn-out”) clause, to be determined for four years according to annual measurements based on net takings on certain receivables by the associated  companies Siciliacque and Acqualatina.

ITALGAS CONSOLIDATED FINANCIAL REPORT AS AT 31 DECEMBER 2024 – NOTES TO THE CONSOLIDATED  FINANCIAL STATEMENTS

273

On 5 October 2024, a purchase and sale agreement was signed by Italgas as the purchaser, and by F2i SGR S.p.A., in the name and on behalf of the F2i  Terzo Fondo per le Infrastrutture, and Finavias S.à r.l., as sellers. The agreement regulates the terms and conditions of the acquisition of 99.94% of the share  capital of 2i Rete Gas S.p.A. The contractual consideration for the purchase amounts to 2,060 million euros for 100% of the share capital of 2i Rete Gas, in  addition to interest accrued on the offered price by the Locked Box Date (i.e., December 31, 2023) at the closing date with an interest rate indicated in the  contract (the so-called ticking fee), deducted by any leakages and interest accrued on them from the date on which the leakages occurred until the closing  date.

The completion of the acquisition of 2i Rete Gas is subject to the fulfilment (or the waiver, if possible) of certain conditions precedent. According to the relevant  contract, the completion of the acquisition of 2i Rete Gas is subject to the fulfillment (or waiver, where provided in the Purchase agreement) by May 31, 2025  (expiry date or Longstop date) of regulatory authorisations, such as those to be obtained from the Italian Antitrust and the Italian Prime Minister's Office, as  well as the Foreign Subsidies Regulation (FSR) authorization provided for under Regulation (EU) 2022/2560..

Risks

Risks concerning compensation and litigation (234,181 thousand euro) relate to possible claims for compensation arising from ongoing litigation, with a low  probability that the pertinent economic risk will arise.

FINANCIAL RISK MANAGEMENT

Foreword

Italgas has established the Enterprise Risk Management (ERM) unit, which reports directly to the CFO and  oversees the integrated process of managing corporate risk for all Group companies. The main objectives of  the ERM are to define a homogeneous and transversal risk assessment model, to identify priority risks and to  guarantee the consolidation of mitigation actions and the development of a reporting system. 

The ERM methodology adopted by the Italgas Group is in line with the reference models and existing  international best practices (COSO Framework and ISO 31000).

The ERM unit operates as part of the wider Italgas' Internal Control and Risk Management System.

The main corporate financial risks identified, monitored and, where specified below, managed by Italgas are  as follows: 

- risk arising from exposure to fluctuations in interest rates;

- credit risk arising from the possibility of counterparty default; 

- liquidity risk arising from not having sufficient funds to meet short-term financial commitments;

- rating risk;

- debt covenant and default risk.

There follows a description of Italgas’ policies and principles for the management and control of the risks arising  from the financial instruments listed above. In accordance with IFRS 7 - “Financial instruments: Additional  information”, there are also descriptions of the nature and size of the risks resulting from such instruments. 

Information on other risks affecting the business (operational risk and risks specific to the segment in which  Italgas operates) can be found in the “Elements of risk and uncertainty” section of the Directors’ Report. 

Interest rate risk

Fluctuations in interest rates affect the market value of Italgas’ financial assets and liabilities and its net  financial expense. 

An increase in interest rates, not implemented – in full or in part – in the regulatory WACC, could have negative  effects on the assets and on the economic and financial situation of the Italgas Group for the variable  component of the debt in place and for future loans.

At full performance, Italgas aims to maintain a debt ratio between a fixed rate and floating rate to minimise the  risk of rising interest rates. As at 31 December 2024 the financial debt at floating rate was 14.6% and at fixed  rate was 85.4%. Please refer to the paragraph “Short-term and long-term financial liabilities” for further details.

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274

Below are the impacts on equity and the net period result at 31 December 2024 of a hypothetical positive and  negative variation of 10 basis points (bps) of the interest rates effectively applied during the year.

(€ thousands)

Result of the income  statement

Other items of the  statement of  comprehensive  income

interest  +10 bps

interest - 10 bps

interest  +10 bps

interest - 10 bps

Variable-rate loans not hedged

Effect of change in interest rate

(615)

615

Variable-rate loans converted into fixed-rate loans by means of IRSs

Effect of change in interest rate on the fair value of the hedge derivative contracts  \- effective portion of hedge

3,787

(3,490)

Impacts gross of the tax effect

Tax effect

166

(166)

(1,022)

942

Impacts net of the tax effect

(449)

449

2,765

(2,548)

Credit risk 

Credit risk is the exposure to potential losses arising from counterparties failing to fulfil their obligations. Default  or delayed payment of amounts owed may have a negative impact on the Italgas financial results and financial  situation.

The rules for customer access to the gas distribution service in Italy are established by the relevant regulatory  Authority and set out in the Network Codes, namely, in documents that establish, for each type of service, the  rules regulating the rights and obligations of the parties involved in the process of providing said services and  contain contractual conditions that reduce the risk of non-compliance by customers, such as the provision of  bank or insurance guarantees on first request.

In addition to this, in order to manage credit risk, the Group has established procedures for monitoring and  assessing its customer portfolio. The reference markets are the Italian and Greek markets.

In the energy efficiency sector activities, credit risk is mitigated by the use of incentive instruments (mainly the  Superbonus) – the latter in any case being influenced by the risk of managing the obligations that allow for the  tax recognition of the credits – which guarantee the financial hedging of significant portions of the amounts of  the interventions. In this context, the contracts entered into by the Group provide for clauses that guarantee  the possibility of recourse against customers in the event that the incentive cannot be obtained/withdrawn.  Recourse against customers, however, implies continued exposure to credit risk.

As at 31 December 2024 there were no significant credit risks. Note that on average: (i) in Italy, 97.4% of trade  receivables relating to gas distribution are settled by the due date and 99% within the next 4 days; (ii) in  Greece, an average of 95.0% of trade receivables relating to gas distribution are settled by the due date and  almost all within the next 4 days, confirming the strong reliability of the customers.

It cannot be ruled out that Italgas could incur liabilities and/or losses due to its customers’ failure to fulfil their  payment  obligations.

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Please refer to note “Trade and other receivables” for the breakdown of receivable by due date bracket.

Liquidity risk

Liquidity risk is the risk that new financial resources may not be available (funding liquidity risk) or that the  company may be unable to convert assets into cash on the market (asset liquidity risk), meaning that it cannot  meet its payment commitments. This may affect profit or loss should the company incur extra costs to meet its  commitments or, in extreme cases, lead to insolvency and threaten the company’s future as a going concern.

Also on the basis of the investment plans in place and the transactions contemplated in the short term, Italgas  does not expect any significant negative impact on liquidity risk considering that: (i) the Company has liquidity  deposited with primary credit institutions for an amount of 402.7 million euro as at 31 December 2024, and (ii)  at 31 December 2023, Italgas had a Euro Medium Term Notes (EMTN) programme in place for a maximum  total nominal value of 10 billion, of which €5.6 billion drawn, (iii) on 8 March 2024, Italgas entered into a 600  million euro Sustainability Linked Revolving Credit Facility with a pool of leading financial institutions with a  maximum maturity of 5 years, (iv) on 5 October 2024, Italgas signed a loan agreement (“Bridge Loan”) by  virtue of which certain financial institutions and, in particular, J.P. Morgan Chase Bank, N.A. – Milan Branch,  Banco BPM S.p.A., Bank of America Europe Designated Activity Company – Milan Branch, Citibank N.A. –  Milan Branch, Morgan Stanley Bank AG and Société Générale – Milan Branch, agreed to grant a long-term  credit line “Bridge Credit Facility”) denominated in Euro and in the amount of 2,000 million euro. The Bridge  Credit Facility should be used for the acquisition of 2i Rete Gas.

Italgas aims, in financial terms, at establishing a financial structure that, in line with its business objectives,  ensures a level adequate for the group in terms of the duration and composition of the debt. The achievement  of this financial structure will take place through the monitoring of certain key parameters, such as the ratio  between debt and the RAB, the ratio between short-term and medium-/long-term debt, the ratio between fixed  rate and floating rate debt and the ratio between bank credit granted and bank credit used.

Although the Italgas Group has relationships with diversified counterparties with a high credit standing, based  on a policy of managing and continuously monitoring their active credit risk, the default of an active  counterparty or the difficulty of selling off assets on the market could have a negative impact on the Italgas  Group's financial position and performance.

Future payments for financial liabilities, trade and other payables

The table below shows the repayment plan contractually established in relation to the financial payables,  liabilities for leased assets and IFRIC12, including interest payments, trade and other payables: 

Due date

(€ thousands)

Balance as  of

31.12.2023

Balance as of

31.12.2024

2025

2026

2027

2028

2029

Beyond

Financial liabilities

Bank loans

1,144,298

983,391

70,744

65,705

202,724

79,790

80,880

483,548

Notes

5,198,307

5,818,260

569,817

747,918

496,378

1,867,225

2,136,922

Current liabilities

498,656

250,334

250,334

Interest on notes

108,218

89,130

89,130

76,905

76,905

87,230

Interest on bank loans

26,820

28,457

24,572

18,813

16,431

58,670

Lease liabilities (IFRS 16  and IFRC 12)

79,095

90,483

46,274

14,635

10,432

6,100

3,772

9,270

Interest of lease liabilities  (IFRS 16 and IFRC 12)

1,376

24

23

15

9

15

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Other shareholders loans

43,400

43,400

Trade and other payables

829,862

1,184,609

1,184,609

7,750,218

8,370,477

2,301,592

197,951

1,074,799

678,001

2,045,222

2,775,655

As for the sensitivity on the interest rate, any changes in interest rates do not lead to significant effects in  consideration of the fact that 85.4% of the Group’s financial debt is at fixed rate.

Please refer to note “Trade and other receivables” for the breakdown of receivable by due date bracket.

Rating risk

Among the factors that define the risk perceived by the market, creditworthiness, assigned to Italgas by rating  agencies, plays a decisive role since it influences the ability to access sources of financing and the related  economic conditions. A worsening of this creditworthiness could, therefore, limit access to the capital market  and/or increase the cost of financing sources, with consequent negative effects on the Group's financial  position and performance

On 9 October 2024, the rating agency Fitch confirmed the long-term credit rating of Italgas S.p.A as BBB+,  with Stable outlook. 

On 10 October 2024, the rating agency Moody’s confirmed the Baa2 long-term credit rating, with Stable  outlook.

Based on the methodologies adopted by the rating agencies, the downgrade of one notch in the Italian  Republic’s current rating could trigger a downward adjustment in Italgas’ current rating, which in turn could  have an impact on the cost of future debt.

Debt covenant and default risk

As at 31 December 2024 there are no loan agreements containing financial covenants and / or secured by  collateral, with the exception of the EIB loan signed by Toscana Energia which provides for compliance with  certain financial covenants 141 . Some of these contracts provide, inter alia, for the following: (i) negative pledge  undertakings, pursuant to which Italgas and the subsidiaries are subject to limitations regarding the creation  of real rights of guarantee or other restrictions concerning all or part of the respective assets, shares or goods;  (ii) pari passu and change of control clauses; (iii) limitations on some extraordinary transactions that the  company and its subsidiaries may carry out. As at 31 December 2024, these commitments were respected.

The bonds issued by Italgas as at 31 December 2024 as part of the Euro Medium Term Notes programme  provide for compliance with covenants that reflect international market practices regarding, inter alia, negative  pledge and pari passu clauses.

Failure to comply with the commitments established for these loans - in some cases only when this non- compliance is not remedied within a set time period - and the occurrence of other events, such as cross-default  events, some of which are subject to specific threshold values, may result in Italgas’ failure to comply and  could trigger the early repayment of the related loan.

With reference to the EIB, the related contracts contain a clause whereby, in the event of a significant loss of  concessions, there is a disclosure obligation to the EIB and a subsequent consultation period, after which the  early repayment of the loan may be required.

The Group monitors these cases closely in the context of financial management and business performance. 

141 The contracts contain a clause whereby, in the event of a significant reduction in EBITDA resulting from the loss of concessions, there  is a disclosure obligation to the EIB and a subsequent consultation period, after which the early repayment of the loan may be required.  The economic and financial parameters as at 31 December 2024 have been respected.

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Market value of financial instruments

Below is the classification of financial assets and liabilities measured at fair value in the Statement of Financial Position in accordance with the fair value  hierarchy defined on the basis of the significance of the inputs used in the measurement process. More specifically, in accordance with the characteristics of  the inputs used for measurement, the fair value hierarchy comprises the following levels:

a) level 1: listed prices (unadjusted) on active markets for identical financial assets or liabilities;

b) level 2: measurements made on the basis of inputs differing from the quoted prices referred to in the previous point, which, for the assets/liabilities  submitted for measurement, are directly (prices) or indirectly (price derivatives) observable;

c) level 3: inputs not based on observable market data.

In connection with the above, classification of the assets and liabilities measured at fair value in the Statement of Financial Position according to fair value  concerned the IRS and exchange rate derivative instruments (16,860 thousand euro as of 31 December 2024 and 31,802 thousand euro as of 31 December  2023) classified level 2 and recorded under in Note 20 “Other current and non-current financial assets/liabilities”.

Equity investments measured at fair value in Note 16 “Non-current financial assets” (20,359 thousand euro as of 31 December 2024 and 21,207 thousand  euro as of 31 December 2023) decreased for 848 thousand euro. The change in value includes the acquisition of an additional stake in Picarro (325 thousand  euro), the effect on the income statement regarding the valuation of Reti Distribuzione (1,264 thousand euro) and the effect on OCI of the valuation of Picarro  (81 thousand euro) and fall under the level 3 fair value category.

Other information on financial instruments

With reference to the categories established by IFRS 9 “Financial instruments”, the carrying amount of financial  instruments and their relative effects on results and on equity can be analysed as follows:

Income / expense recognised

Income / expense recognised

Carrying amount

to income statement

to shareholders’ equity (a)

(€ thousands)

Balance as at  31.12.2023

Balance as at  31.12.2024

Balance as at  31.12.2023

Balance as at  31.12.2024

Balance as  at 31.12.2023

Balance as at  31.12.2024

Financial instruments measured at  amortised cost

\- Cash

249,963

402,662

\- Current financial assets

4,248

3,592

\- Trade and other receivables

853,488

893,667

\- Non-current financial assets

13,708

10,982

\- Other current and non-current non- financial assets

569,933

863,306

\- Trade and other payables

829,862

1,184,609

\- Financial payables (b)

6,920,356

7,185,868

(94,289)

(122,362)

\- Other current and non-current non- financial liabilities

545,277

581,048

\- Financial instruments measured at fair  value

\- Other investments

21,207

20,359

(371)

468

\- Financial assets (liabilities) for hedge  derivative contracts

31,802

16,775

30,483

15,163

(a) Net of tax effect

(b) The effects on the income statement are recognized under the item "Financial income/(charges)"

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The table below provides a comparison between the book value of financial assets and liabilities and their  respective fair v alue.

Balance as at 31.12.2023

Balance as at 31.12.2024

(€ thousands)

Carrying  amount

Market value

Carrying  amount

Market value

Financial instruments measured at amortised cost

\- Non-current financial debt

5,934,309

5,497,477

6,187,329

5,775,157

The carrying amount of trade receivables, other receivables and financial payables is close to the related fair  value measurement, given the short period of time between when the receivable or the financial payable arises  and its due date.

Disputes and other measures

Italgas is involved in civil, administrative and criminal cases and legal actions related to its normal business activities. According to the information currently  available and considering the existing risks, Italgas believes that these proceedings and actions will not have material adverse effects on its consolidated  financial statements. 

Below is a summary of the most significant proceedings; no provisions have been made pursuant to IAS 37 for these proceedings in the financial statements,  as the company deems that the risk of an adverse outcome is possible, but not likely, or the amount of the allocation cannot be reliably estimated.

Civil dispute

Italgas Reti S.p.A. / Municipality of Rome – Rome Civil Court

The Municipality of Rome, where Italgas Reti carries out the gas distribution service on the basis of a specific  service contract, after a series of discussions aiming at reaching an agreement for the adjustment of timetable  for the implementation of the business plan, charged Italgas Reti with contractual breaches given by alleged  delays in the execution of the plan itself. In rejecting the claims of the Municipality of Rome, Italgas Reti had  already filed an appeal with the Lazio Regional Administrative Court on 11 January 2019 for cancellation of  the notice with which the Municipality of Rome had starting the procedure to apply default penalties.  Subsequently, on 19 December 2019, the Municipality of Rome notified Italgas Reti of a managerial resolution  in which it quantified the amount allegedly owed by Italgas Reti by way of penalty for the alleged failure to  timely implement the Business Plan at 91,853,392.79 euro, and reserved the right to enforce the bank  guarantee issued to guarantee the proper performance of the aforesaid contract. On 20 January 2020, Italgas  Reti contested the aforementioned managerial resolution at the Lazio Regional Administrative Court and  submitted, as a precautionary measure, a petition to suspend the effect of the measure, disputing, among  other things, (i) the invalidity due to vagueness of the penalty clause, (ii) non-existence and/or in any case non- chargeability of Italgas Reti for the breaches challenged by the Municipality of Rome, (iii) waiver by the  Municipality to promptly apply the penalty clause, (iv) violation of the procedure to apply the penalty clause. 

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The Regional Administrative Court of Lazio, however, expressed some doubts as to the applicability of its  jurisdiction. In light of these circumstances, the lodging of an appeal before the Court of Cassation was  proposed for the prior settlement of jurisdiction. 

During the chamber proceedings of 22 April 2020, the Regional Administrative Court with Order no. 4140/2020  acknowledged the proposal for prior settlement of jurisdiction and suspended the proceedings and, considering  itself to be without jurisdiction, declared the precautionary application inadmissible. On 13 May 2020, Italgas  Reti challenged this order before the Council of State, which upheld the precautionary appeal filed by Italgas  Reti, suspending the effectiveness of the first instance order until the definition of the merits. 

On 12 January 2021, following the aforesaid jurisdictional ruling, the Court of Cassation declared the  Jurisdiction of the Ordinary Court. Therefore, on 11 February 2021, Italgas Reti resumed the proceedings  before the Civil Court of Rome.

In addition, on 5 June 2020, Italgas Reti lodged an appeal with the Regional Administrative Court of Lazio, by  which it requested that the Municipality of Rome be ordered to pay Italgas Reti compensation of the total  amount of 106,290,396.25 euro resulting from the failure of the Municipality of Rome to comply with the  concession contract. Subsequently, consistent with the previous judgement, the Regional Administrative Court  reaffirmed the jurisdiction of the Ordinary Court and Italgas Reti resumed the judgement before the Ordinary  Court of Rome, asking for a joining with the judgement concerning the penalties applied by Municipality of  Rome. The evidentiary hearing for both court cases, which have been combined, has been set for 11 July  2023. Following the hearing, the judge ordered an Expert’s Report (CTU) to be carried out in the course of  2024. At the hearing on 11 December 2024, the judge invited the parties to come to a settlement agreement  on the dispute, adjourned – in the absence of a settlement – the hearing to 18 February 2025 for closing  arguments.

Lastly, it should also be noted that on 17 November 2021, Italgas Reti obtained an order from the Court of  Rome suspending the effects of the penalty quantification measure and preventing the Municipality of Rome  from enforcing the surety given in relation to the penalty payment claims. 

Also on the basis of an external legal opinion, the Company, at present, does not believe that the risk of losing  the dispute it’s more likely than not.

Municipality of Venice / Italgas Reti S.p.A. – Court of Venice 

On 24 April 2019, the Municipality of Venice served, at the Court of Venice, a writ of summons, aimed at the  verification and consequent payment by Italgas Reti of 59,006,552.03 euro as a consideration for use of the  portion of the network subject to free acquisition for the period between 1 June 2010 and 31 December 2018  as well as the sums due for the same reason for the period after 31 December 2018 and until the final  judgement. 

Italgas Reti disputed the payment request brought by the Municipality, requesting the rejection of the claims  on the basis of the fact that: a) the Municipality had received the network as a free transfer, thus without any  financial outlay to be remunerated; b) no legislative reference exists that makes it possible to tie the  determination of the fee for use of the network to the tariffs defined by ARERA; c) the fee for use of the assets  of the so-called Block A had been included in the fee agreed with a later additional deed. In the alternative,  Italgas Reti requested: a) the redetermination of the “appropriate” fee that Italgas Reti would have to pay to  the Municipality in the period between 1 January 2013 and 31 December 2018 since, as a result of the Letta  Decree, the concession had expired by law on 31 December 2012; b) that the Municipality be ordered to return  the amount paid by Italgas Reti in the period between 1 January 2013 and 31 December 2018 but not due to  the Municipality (as the difference between the fee paid and the sum of the fees due), namely both the  concession fee as well as that related to the use of Block A, as redetermined by the judge. 

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Having carried out the introductory procedural steps, by order of 26 April 2021, the judge ordered Italgas Reti  to produce relevant documentation and consequently scheduled the hearing for 31 May 2022 for examination  of the documentation. On 31 May 2022, the Municipality requested that Italgas Reti be ordered to supplement  the documentation produced. Italgas Reti opposed the request for supplementation formulated by the  Municipality and requested, principally, the postponement of the case for the clarification of the conclusions  or, alternatively, the granting of a time limit to possibly counter-respond. At the outcome of the hearing, the  Judge requested additional documentation and adjourned the hearing to 17 January 2023. On the date of this  document, the Municipality insisted on the admission of a technical expert's report, while Italgas Reti requested  that the hearing for clarification of the conclusions be postponed. 

At this stage, the judge decided to order an Expert’s Report (CTU). At the Date of the Registration Document,  the expert’s operations had begun. The next hearing, for examination of the CTU, is set for 24 April 2025. 

Supported by a technical and economic appraisal issued by an expert and on the basis of an external legal  opinion, the Company does not believe that the risk of losing the dispute it’s more likely than not. 

Municipality of Cavallino Treporti / Italgas Reti S.p.A. – Court of Venice

Following the judgement of the Council of State on the acquisition, free of charge, of the assets included in  Block A, the Municipality of Cavallino-Treporti brought a civil proceeding before the Court of Venice in order to  recover the sums that it deemed due for the use by Italgas Reti of the Block A assets. The first hearing, set for  17 December 2020, was adjourned to 1 April 2021 and, lastly, until 22 April 2021 for the admission of evidence  in support of the respective defence arguments, and subsequently until 13 January 2022 for the final hearing.  With judgement delivered on 27 June 2022, the Court of Venice rejected the case of the Municipality of  Cavallino-Treporti.

The Municipality of Cavallino-Treporti filed an appeal before the Court of Appeals of Venice. With judgement  of 22 April 2024, the Court of Appeals of Venice, albeit raising several doubts on the jurisdiction, rejected the  appeal of the Municipality of Cavallino-Treporti.

The Municipality of Cavallino-Treporti then lodged a Court of Cassation appeal against the judgement of the  Court of Appeals of Venice, Italgas Reti filed an appearance and, at this stage, a date for the hearing is  currently pending. The amount of the claim is 4,699,129.00 euro.

Italgas manages the public natural gas distribution service in the aforementioned Municipality under the terms  of the same concession agreements in place with the Municipality of Venice. This is due to the fact that the  Municipality of Cavallino-Treporti was established in 1999 as a spin-off portion of the geographic area already  falling within the Municipality of Venice.

Supported by an external legal opinion, the Company does not, at present, believe that the risk of losing the  dispute it’s more likely than not .

Publiservizi S.p.A. / Italgas S.p.A. – Florence Court

On 25 July 2019, a writ of summons was served on the Issuer by Publiservizi, on its own behalf and as agent  of other Municipalities with stakes in Toscana Energia, which claimed the alleged violation of a shareholders’  agreement signed on 28 June 2018 between Italgas S.p.A. and Publiservizi, thus requesting that Italgas be  ordered to acquire a 3% stake in Toscana Energia S.p.A. (for the price of 70,000,000.00 euro indicated in the  tender notice of 20 July 2018) or, in any case, to fulfil the aforementioned shareholders’ agreement and, in the  alternative, to pay Publiservizi an amount of 59,800,000.00 euro by way of compensation for damages for  breach or, alternatively, by way of enrichment without just cause. 

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Following the exchange of introductory documents, by order of 30 April 2021, the Judge ruled that the case  could be settled at that stage and therefore scheduled the hearing for specification of the pleadings for 13  September 2023. With judgement delivered on 11 June 2024, the Court of Florence fully rejected the requests  of the writ of summons of Publiservizi. On 13 January 2025, Publiservizi (now Alia) lodged an appeal before  the Court of Appeals of Florence against the judgement of the Court of Florence of 11 June 2024.

Criminal dispute

The main criminal disputes in which the Group is involved are set out below.

Italgas Reti S.p.A. – Ravanusa Event 

The Public Prosecutor's Office at the Court of Agrigento opened an investigation into an explosion that  occurred in the town of Ravanusa on 11 December 2021. The event caused a total of 9 victims and the collapse  of and damage to several buildings. On 31 December 2021, the Public Prosecutor’s Office at the Court of  Agrigento served a notice of indictment on ten Italgas Reti employees, to allow for the execution of technical  assessments that could not be repeated in joint consultation.

These assessments found the rupture of the steel pipe laid along Via Trilussa in 1988 by Siciliana Gas S.p.A.  (company subject to a merger by incorporation into Società Italiana per il gas S.p.A. in 2008, which in turn  became Italgas Reti on 7 November 2016). In addition, further laboratory investigations were carried out on  odorising gas and soil samples taken near the site of the event in the days following the explosion and the  presence of the odorising molecule was confirmed. 

An extension of the preliminary investigation was requested and granted in July 2022, and a subsequent  extension request for a further six months was notified in February 2023.

On 16 May 2023, the Public Prosecutor's Office requested the dismissal of the proceedings against all Italgas  Reti's defendants, while it issued a notice of conclusion of the preliminary investigation pursuant to Article 415- bis of the Italian Code of Criminal Procedure against individuals of Siciliana Gas S.p.A and the company that  had laid the pipeline. It should be noted that the natural person of Siciliana Gas S.p.A. involved in the  proceeding did not transfer to Italgas Reti as part of the aforementioned merger by incorporation of Siciliana  Gas S.p.A. into Società Italiana per il gas S.p.A. 

Following the opposition to the request for dismissal filed by the injured parties, hearings were held before the  Court of Preliminary Investigations on 17 October 2023, 5 December 2023, 27 February 2024, 30 April 2024  and 31 May 2024. 

Following the hearings, the judge for preliminary investigations ordered further investigations, specifically  aimed at studying the inspection and maintenance activities on the network, assigning the Public Prosecutor’s  Office a term of six months to complete them. The resulting determinations of the Public Prosecutor’s Office  are pending. On 31 May 2024, the judge for preliminary investigations also ordered the committal for trial of  the representatives of Siciliana Gas S.p.A. and of the construction company. 

In this proceeding, Italgas Reti appeared as the “civilly liable” party (i.e. the party assuming civil liability on  behalf of the representative of Siciliana Gas S.p.A., subsequently merged into Italgas Reti) in the context of  the claim opened with the insurance companies for the orderly handling of the claims under the third-party  liability policy.  At the trial hearing on 12 December 2024, the defence of the Siciliana Gas representative  requested an abbreviated trial subject to the expert examination, on which the judge reserved his decision,  adjourning the hearing to 6 February 2025.

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Italgas Reti, after having granted its willingness to the Municipality of Ravanusa to carry out a project for the  removal of the rubble resulting from the explosion, completed the work in 2023.

Informative priorities ESMA 2024

In October 2024, the European Securities and Markets Authority (ESMA) published the document “Public  Statement: European Common Enforcement Priorities for 2024”, which contained the annual  recommendations for reporting purposes of the Cosolidated Financial Statement in accordance with IFRS.

ESMA encourages companies, auditors and supervisory bodies to carefully consider the recommendations  contained in the Public Statement when preparing, reviewing and supervising the 2024 annual financial  statements, in light of their relevance and materiality on operations and the budget.

In particular, the enforcement topics in terms of statement of cash flow for the 2024 financial statements are  related to: 

- Liquidity within financial reporting; 

- Covenants;

- Accounting policies, judgements and significant estimates

- Classification of subsidiaries, jointly controlled companies and significant influence;

- Revenues from contracts with customers.

An additional aspect highlighted in the Statement concerns the connections between financial reporting and  sustainability reporting (for the latter, ESMA provides further specific recommendations in the document).

Though these connections do not represent enforcement priorities for 2024, ESMA considers them to be  additional focus points for an improvement in the business reporting process, for impacts on specific sectors  or on particular activities of the company, for future reporting requirements. 

As for priorities related to financial reports pursuant to IFRS, ESMA identified the topics described below.

The Group has considered these issues for the purposes of preparing the consolidated financial statements  as of 31 December 2024:

Climate-related risks and impairment

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The Group, through ERM, monitors risks related to climate-change issues, which are divided into physical  risks, directly due to weather-climate variations, and transition risks, linked to society's socio-economic reaction  to climate change.

The identified physical risks are the increased frequency of extreme natural events in the areas where Italgas  operates and the rise in average temperatures in the same areas. Italgas constantly monitors the integrity of  its infrastructure and adopts new technologies to reduce environmental impact, identify critical issues in  advance, and avoid negative impacts on the service level.

The transition risks, on the other hand, are represented by: (i) changes in the regulatory and legislative context  regarding greenhouse gases with the aim of limiting emissions, (ii) technological evolution, (iii) uncertainty  about the role of natural gas in the future energy mix. To mitigate these risks, Italgas invests in innovative  technologies (Picarro Surveyor, Power to Gas), in transforming the network into a digital infrastructure ready  for the distribution of gases other than methane (such as hydrogen, biomethane, and e-gas), and in projects  in the water and energy efficiency sectors. Additionally, Italgas pursues specific objectives for reducing  greenhouse gas emissions, also through energy efficiency projects.

The rise in temperatures and transition risks could have, among other things, a negative impact on the number  of active delivery points served and on revenues for the component related to covering operating costs.  However, this risk is mitigated by Resolution 570/19 and Determination 4/2023, with which ARERA introduces  a revenue adjustment mechanism aimed at compensating for the consequences of the reduction in delivery  points in individual locations.

Finally, with reference to the risk related to gas demand, it is noted that under the tariff system currently applied  to natural gas distribution services, revenue hedging mechanisms are envisaged.

For these reasons, it is believed that, also considering the specific business and sectors in which it operates,  the Group currently has limited exposure to the impacts that possible climate risks could have on the valuation  of non-current assets and other assets, including receivables, recorded in the financial statements.

Similarly, due to the systematic monitoring of its assets and the areas on which they are located, the Italgas  Group is able to identify in advance possible situations that could generate the emergence of potential liabilities  related to climate risks.

International Tax Reform – Pillar Two Model Rules

Legislative Decree no. 209 of 27 December 2023, transposing Council Directive (EU) no. 2022/2523 on “Global  Minimum Tax” (also known as “Pillar Two”), introduced a reference regulation in Italy to guarantee a minimum  level of taxation for multinational and national groups of businesses, applicable from 1 January 2024. Council  Directive (EU) no. 2022/2523 was also adopted in Greece with Law 5100/2024.

The new provisions apply to undertakings operating in Italy and Greece belonging to multinational or national  groups with consolidated annual revenues of 750 million euro or higher, calculated as an average in at least  two of the four financial years immediately prior to the reporting year. The objective of the legislation is to 

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ensure that such undertakings are subject to an effective minimum tax rate of 15%, with possible tax  supplements required in jurisdictions that do not reach this level.

The regulation in question applies to Italgas S.p.A. and its subsidiaries since they form part of the CDP Group.  Cassa Depositi e Prestiti S.p.A., as ultimate parent entity (“UPE”), is responsible for carrying out the minimum  tax calculations based on the data provided by the subsidiaries.

At the approval date of these financial statements, Cassa Depositi e Prestiti S.p.A. has not yet finalised the  calculations. However, on the basis of preliminary estimates and analyses that Italgas and the CDP Group  have made for the jurisdictions where Italgas and its subsidiaries operate (Italy and Greece), no liabilities for  supplementary tax of a significant amount were found .

Public funds received in Italy 

With reference to the new rules introduced by Law no. 124 of 4 August 2017 “Annual competition law”, under  Article 1, paragraphs 125-129, please note that the following grants from public authorities relating to the  construction of gas networks in Italy were collected in 2024.

Grantor

Type of transaction

Amount €

Designation

Beneficiary

Company name

Tax code

VAT  Number

ITALGAS RETI S.P.A.

BENESTARE

81000530808

81000530808

Plant account grants - Reg. Law no. 25 of 3  APRIL 1995 and - REGIONAL LAW NO. 84  of 27.12.2001 

278,365.00

ITALGAS RETI S.P.A.

CAMINI

81000690800

81000690800

Plant account grants - Reg. Law no. 25 of 3  APRIL 1995 and - REGIONAL LAW NO. 84  of 27.12.2001 

71,505.00

ITALGAS RETI S.P.A.

FOSSATO

00296630791

00296630791

Plant account grants - Reg. Law no. 25 of 3  APRIL 1995 and - REGIONAL LAW NO. 84  of 27.12.2001 

134,424.00

ITALGAS RETI S.P.A.

NOCERA TERINESE

00297930796

00297930796

Plant account grants - Reg. Law no. 25 of 3  APRIL 1995 and - REGIONAL LAW NO. 84  of 27.12.2001 

529,422.00

ITALGAS RETI S.P.A.

RIACE

81000670802

81000670802

Plant account grants - Reg. Law no. 25 of 3  APRIL 1995 and - REGIONAL LAW NO. 84  of 27.12.2001 

49,905.00

ITALGAS RETI S.P.A.

TIRIOLO

00297960791

00297960791

Plant account grants - Reg. Law no. 25 of 3  APRIL 1995 and - REGIONAL LAW NO. 84  of 27.12.2001 

105,602.00

ITALGAS CONSOLIDATED FINANCIAL REPORT AS AT 31 DECEMBER 2024 – NOTES TO THE CONSOLIDATED  FINANCIAL STATEMENTS

285

ITALGAS RETI S.P.A.

AUTORITÀ DI REGOLAZIONE  PER ENERGIA RETI E  AMBIENTE

97190020152

97190020152

Innovative project development – 3D  ASSET

534,912.00

ITALGAS RETI S.P.A.

AUTORITÀ DI REGOLAZIONE  PER ENERGIA RETI E  AMBIENTE

97190020152

97190020152

Innovative project development –  REVERSE FLOW

428,604.00

TOSCANA ENERGIA S.P.A.

BAGNO A RIPOLI

1329130486

1329130486

Plant account grants - Reg. Law no. 25 of 3  APRIL 1995 and - REGIONAL LAW NO. 84  of 27.12.2001 

8,472.67

TOSCANA ENERGIA S.P.A.

FIGLINE/INCISA

6396970482

6396970482

Plant account grants - Reg. Law no. 25 of 3  APRIL 1995 and - REGIONAL LAW NO. 84  of 27.12.2001 

10,236.00

TOSCANA ENERGIA S.P.A.

AZIENDA OSPEDALIERO  UNIVERSITARIA PISANA 

1310860505

1310860505

Plant account grants - Reg. Law no. 25 of 3  APRIL 1995 and - REGIONAL LAW NO. 84  of 27.12.2001 

67,910.00

MEDEA S.P.A.

CONSORZIO  INTERCOMUNALE DI  SALVAGUARDIA AMBIENTALE

91005820922

02413680923

Plant account grants - Del. 54/28  22.11.2005 Art. 5 of autonomous region of  Sardinia

6,803,489.27

MEDEA S.P.A.

COMUNE DI SANT'ANNA  ARRESI

81001910926

01351570922

Plant account grants - Del. 54/28  22.11.2005 Art. 5 of autonomous region of  Sardinia

1,157,622.80

TOTAL

10,180,469.74

ITALGAS CONSOLIDATED FINANCIAL REPORT AS AT 31 DECEMBER 2024 – NOTES TO THE CONSOLIDATED  FINANCIAL STATEMENTS

286

27) Revenues and other income

The breakdown of revenues and other income is shown in the following table.

(€ thousands)

For the year ended 31  December 2023

For the year ended  31 December 2024

Revenues

2,564,193

2,478,644

Other income

74,648

60,792

2,638,841

2,539,436

Group revenues are generated in Italy and Greece.

An analysis of revenue by operating segment is provided in Note 34 “Information by operating segment”.

Revenues from related parties are described in Note 36 “Related party transactions”.

Revenues 

Revenues,  which amount to 2,478,644 thousand euro (2,564,193 thousand euro as at 31 December 2023), are analysed in the table below:

(€ thousands)

For the year ended  31 December 2023

For the year ended  31 December 2024

Gas distribution 

1,422,281

1,536,573

Revenues for infrastructure construction and improvements (IFRIC 12)

787,136

746,503

Technical assistance, engineering, IT and various services

47,199

53,109

Energy efficiency interventions

281,866

31,869

Integrated water service

8,435

96,125

Gas sales

1,748

0

Other ESCo revenues

13,499

14,358

Sale of other products

2,029

107

2,564,193

2,478,644

Revenues refer primarily to the consideration for the natural gas distribution service and other gas regulated revenues (1,536,573 thousand euro as at 31  December 2024 and 1,422,281 thousand euro as at 31 December 2023) and revenues deriving from the construction and upgrading of gas and water  distribution infrastructure connected with concession agreements pursuant to IFRIC 12 (746,503 thousand euro as at 31 December 2024 and 787,136  thousand euro as at 31 December 2023).

Gas distribution revenues in Italy are reported net of the following items, involving tariff components in addition to the tariff applied to cover gas system  expenses of a general nature. The amounts in question are paid, where positive, or charged, where negative, for an equal amount, to the CSEA.

(€ thousands)

For the year ended 31  December 2023

For the year ended 31  December 2024

RE-RS-UG1 fees

9,022

180,998

UG3 fees

(2)

43,364

Gas Bonus and GS fees

(292,661)

(56,262)

UG2 fees

(727,529)

(32,640)

(1,011,170)

135,460

ITALGAS CONSOLIDATED FINANCIAL REPORT AS AT 31 DECEMBER 2024 – NOTES TO THE CONSOLIDATED  FINANCIAL STATEMENTS

287

The additional fees of the distribution service (135,460 thousand euro as at 31 December 2024 and -1,011,170  thousand euro as at 31 December 2023) mainly relate to the following components: (i) RE, to cover the  expenses burdening the Fund for calculating and implementing energy savings and the development of  renewable energy sources in the gas sector; (ii) RS, to cover expenses burdening the Account for gas services  quality; (iii) UG1, to cover any imbalances in and adjustments to the equalisation system; (iv) UG2, to cover  the costs of retail sales marketing; (v) UG3int, to cover expenses connected to the interruption of services; (vi)  UG3ui, to cover expenses connected to any imbalances in specific equalisation mechanism balances for the  Default Distribution Service Provider (FDD) as well as the expenses for payment delays incurred by Suppliers  of Last Instance (FUI), limited to end customers for which the supply cannot be suspended; (vii) UG3ft, to  cover the arrears paid to temporary providers on the transport system; (viii) GS, to cover the tariff compensation  system for economically disadvantaged customers.

Gas distribution revenue (1,536,573 thousand euro as at 31 December 2024 and 1,422,281 thousand euro as  at 31 December 2023) refers to natural gas distribution on behalf of all commercial operators requesting access  to the networks of the distribution companies and include the effects arising from (i) the implementation of  Resolution no. 737/2022/R/gas in terms of recognition of the residual value of smart meters of a class not  exceeding G6 produced up to the year 2016 and commissioned by the year 2018, (ii) the higher revenues  associated with the contribution pursuant to Article 57 of ARERA Resolution no. 570/2019/R/gas relating to  the replacement of traditional meters with electronic smart meters and the recovery of non-depreciation (so- called IRMA) pursuant to Consultation Document DCO 545/2020/R/gas, Resolution no. 570/2019/R/gas,  Resolution no. 287/2021 and Determination no. 3/2021.

Gas distribution revenue was also reduced as a result of the effects of (i) Resolution no. 207/2024/R/gas,  which retroactively, for the 2011-2016 period, did not recognise the costs previously approved for the natural  gas metering services related to the smart reading/remote management systems and concentrators (9.9 million  euro), (ii) Resolution no. 704/2016/R/Gas, supplemented by Resolution no. 525/2022/R/gas, relating to the  tariff recognition of capital costs in start-up locations starting from the 2018 financial year in which Italgas Reti  did not reach the ceiling (re-delivery point density per km of network) expected in the years following the first  gas supply (4.6 million euro relating to the 2018-2023 period, 0.9 million euro relating to 2024). 

Italgas has taken action to challange these resolutions.

Revenues from energy efficiency measures (31,869 thousand euro as at 31 December 2024 and 281,866  thousand euro as at 31 December 2023) decreased mainly due to the expiration of the so-called “Superbonus”  boost (Decree Law 34/2020; or “Relaunch Decree”). In this context, the Group ESCo is now focused on the  development of industrial efficiency projects and the integration of the offer for the residential sector.

Revenues from integrated water service for 96,125 thousand euro as at 31 December 2024 (8,435 thousand  euro as at 31 December 2023) are relate to water capture, supply, transport, distribution and sale in Campania .

Other income

Other income, which amounted to 60,792 thousand euro as at 31 December 2024 (74,648 thousand euro as at 31 December 2023), can be broken down as  follows:

(€ thousands)

For the year ended  31 December 2023

For the year ended  31 December 2024

Income from gas distribution service safety recovery incentives

27,179

2,436

Plant safety assessment pursuant to ARERA Resolution no. 40/04

1,778

1,541

Other income from regulated activities

8,472

9,721

Release of connection contributions relating to the year

19,184

18,999

Capital gains from sale of assets

1,210

1,892

Sundry management refunds and chargebacks

9,062

18,148

ITALGAS CONSOLIDATED FINANCIAL REPORT AS AT 31 DECEMBER 2024 – NOTES TO THE CONSOLIDATED  FINANCIAL STATEMENTS

288

Contractual penalties receivable

885

418

Income from real estate investments

230

287

Revenues from seconded personnel

357

1,215

Sundry other

6,291

6,135

74,648

60,792

Income from gas distribution service safety recovery incentives, in the amount of 2,436 thousand euro, relates to refunds paid by the Authority associated  with achieving quality and technical standards relating to the natural gas distribution service. The reduction essentially refers to the effects of Resolution no.  490/2024/R/gas, which cancelled the gas distribution service safety premiums for the year 2020, and therefore the non-recognition of approximately 24.0  million euro. Italgas does not agree with the contents of Resolution no. 490/2024/R/gas and has taken action to enforce its rights and interests in the relevant  offices.

Refunds and operating charge-backs include 18,148 thousand euro of reimbursements from suppliers related to faulty meters under warranty.

Revenues from capital gains from sale of assets, in the amount of 1,892 thousand euro as at 31 December 2024, mainly refer to the sale of buildings and  cryogenic LNG tanks .

28) Costs and other operating expenses

The breakdown of costs and other operating expenses, amounting 1,220,732 thousand euro as at 31 December 2024 (1,412,036 thousand euro as at 31  December 2023), is shown in the the following:

.

(€ thousands)

For the year ended 31  December 2023

For the year ended 31  December 2024

Purchase costs for raw materials, consumables, supplies and goods

195,869

168,459

Costs for services

794,466

606,581

Lease expenses

89,133

102,496

Personnel costs

279,587

291,004

Impairment of trade receivables net

124

(822)

Other operating expenses

57,717

60,921

To be deducted:

Increases for own work

(4,860)

(7,907)

\- of which costs for services

(2,073)

(2,036)

\- of which labour costs

(2,787)

(5,871)

1,412,036

1,220,732

.

Costs for raw materials, consumables, supplies and goods , amounting to 168,459 thousand euro (195,870  as at 31 December 2023), comprise the following:

(€ thousands)

For the year ended  31 December 2023

For the year ended  31 December 2024

Inventories

182,473

137,045

Purchase of gas 

3,307

3,472

Purchase of water

2,720

195

Motive power and water lifting

1,279

22,704

Purchase of fuel

4,697

4,046

Consumables

1,394

997

195,870

168,459

ITALGAS CONSOLIDATED FINANCIAL REPORT AS AT 31 DECEMBER 2024 – NOTES TO THE CONSOLIDATED  FINANCIAL STATEMENTS

289

Inventories refer in particular to the acquisition of meters and gas pipes. it also includes 2,248 thousand euro in materials related to services delivered to the  Campania Region.

The purchase of water decreased by 2,525 thousand euro predominantly following the first-time consolidation of Acqua Campania.

Motive power and water lifting amounting to 22,704 thousand euro (1,279 thousand euro as at 31 December 2023) increased following the entry into the  scope of consolidation of Acqua Campania.

Purchase costs for raw materials, consumables, supplies and goods include costs relating to the construction and upgrading of gas distribution and water  service infrastructure amounting to 127,284 thousand euro (159,872 thousand euro as at 31 December 2023), recorded in accordance with IFRIC 12. 

Costs for services  of 604,545 thousand euro (792,394 thousand euro as at 31 December 2023) relate  to:

(€ thousands)

For the year ended 31  December 2023

For the year ended 31  December 2024

Project management and plant maintenance

620,170

414,957

Consultancy and professional services

70,181

67,110

Costs for personnel services

18,803

20,259

IT and telecommunications services

47,737

43,538

Electricity, water and other (utility) services

6,474

4,884

Insurance

6,849

6,840

Cleaning, security service and guard services

4,095

4,281

Advertising and entertainment

5,060

5,334

Costs for seconded personnel

1,510

698

Works performed on behalf of the Campania Region

0

13,832

Other services

38,864

40,374

Use of risk provision

(25,276)

(15,526)

794,467

606,581

To be deducted:

Increases for own work

(2,073)

(2,036)

792,394

604,545

Costs for services include costs relating to the construction and upgrading of gas distribution and water distribution infrastructure amounting to 478,116  thousand euro (501,283 thousand euro as at 31 December 2023) recognised pursuant to IFRIC 12. 

Costs for project management and plant maintenance planning (414,957 thousand euro as at 31 December 2024 and 620,170 thousand euro as at 31  December 2023) essentially relate to the extension and maintenance of gas distribution plants, as well as work carried out on buildings for energy efficiency  purposes. The reduction of 205,213 thousand euro is mainly due to the progressive conclusion of “Superbonus” works (DL no. 34/2020, also known as the  “Relaunch Decree”).

Lease expense , of 102,496 thousand euro (89,139 thousand euro as at 31 December 2023), regard:

(€ thousands)

For the year ended 31  December 2023

For the year ended 31  December 2024

Patent, license and concession fees

78,221

85,242

Leases and rentals

10,934

17,254

Use of risk and charges provision

(23)

0

89,132

102,496

ITALGAS CONSOLIDATED FINANCIAL REPORT AS AT 31 DECEMBER 2024 – NOTES TO THE CONSOLIDATED  FINANCIAL STATEMENTS

290

Fees, patents and licences (85,242 thousand euro as at 31 December 2024 and 78,221 thousand euro as at 31 December 2023) refer primarily to fees  recognised to contracting parties for the running of natural gas distribution activities under concession.

Costs for use of third-party assets include costs relating to the construction and upgrading of gas distribution infrastructure amounting to 16,425 thousand  euro (10,172 thousand euro as at 31 December 2023) recognised in accordance with  IFRIC 12. 

Personnel costs , totalling 285,133 thousand euro (276,800 thousand euro as at 31 December 2023), breaks down as follows:

(€ thousands)

For the year ended 31  December 2023

For the year ended 31  December 2024

Wages and salaries

198,722

209,744

Social charges

57,854

60,684

Employee benefits

17,982

16,659

Other expenses

5,029

3,917

279,587

291,004

To be deducted:

Increases for own work

(2,787)

(5,871)

276,800

285,133

The item includes costs relating to the construction and upgrading of gas distribution infrastructure amounting to 118,104 thousand euro (113,673 thousand  euro as at 31 December 2023) recognised pursuant to IFRIC 12.

Employee benefits (16,659 thousand euro as at 31 December 2024 and 17,982 thousand euro as at 31 December 2023) mainly regard the employee  severance pay accrued, to be paid to pension funds or to INPS.

Other expenses of 3,917 thousand euro (5,029 thousand euro as at 31 December 2023), in particular refer to charges for the incentive plan for senior  executives (co-investment plan). 

For Stock Grant plans for Company employees, the fair value of the option, determined at the time it is granted (calculated on the basis of the “Black-Scholes”  economic and actuarial method) is posted to the income statement as a cost throughout the vesting period, with a corresponding balancing item in a reserve  under equity. 

More details are provided in the “Provisions for employee benefits”  note .

Average number of employees

The average number of payroll employees of the consolidated entities, broken down by status, is as follows:

Professional qualification

For the year ended  31 December 2023

For the year ended  31 December 2024

Executives 

75

82

Middle Managers

381

431

Employess

2,471

2,513

Manual workers

1,329

1,312

4,256

4,338

The average number of employees is calculated on the basis of the monthly number of employees for each category. The increase stems mainly from the  entry of Acqua Campania into the scope of consolidation. 

There were 4,330 employees on average.

Remuneration due to key management personnel

The remuneration due to persons with powers and responsibilities for the planning, management and control of the Company, i.e. executive and non-executive  directors, general managers and executives with strategic responsibilities (“key management personnel”), in office at 31 December 2024, amounted to 10,302  thousand and breaks down as follows:

ITALGAS CONSOLIDATED FINANCIAL REPORT AS AT 31 DECEMBER 2024 – NOTES TO THE CONSOLIDATED  FINANCIAL STATEMENTS

291

(€ thousands)

For the year ended  31 December 2023

For the year ended  31 December 2024

Wages and salaries

7,979

8,081

Post-employment benefits

759

755

Other long-term benefits

1,406

1,466

10,144

10,302

Remuneration due to Directors and Statutory Auditors 

Remuneration due to Directors, except for the Chairperson and the CEO who form part of the key management personnel as explained in the foregoing  paragraph, amounted to 2,584 thousand euro and remuneration due to Statutory Auditors amounted to 721 thousand euro (Article 2427, no. 16 of the Italian  Civil Code). This remuneration includes emoluments and any other amounts relating to pay, pensions and healthcare due for the performance of duties as a  director or statutory auditor giving rise to a cost for the Company, even if not subject to personal income taxes. 

Other operating expenses , 60,921 thousand euro (57,718 thousand euro as at 31 December 2023), are analysed below:

(€ thousands)

For the year ended 31  December 2023

For the year ended 31  December 2024

Other penalties

3,069

6,887

Indirect taxes, local taxes

6,625

5,697

Allocations to/releases from provision for risks and charges

1,118

673

Capital losses from disposal/recovery of property, plant and equipment and  intangible assets

40,302

39,760

Sundry other

6,604

7,904

57,718

60,921

Other penalties for 6,887 thousand euro (3,069 thousand euro as at 31 December 2023) mainly refer to the gas distribution sector.

Net allocations to provisions for risks and charges totalled 673 thousand euro (1,118 thousand euro as at 31 December 2023). For more details on the  changes during the financial year, please refer to the note “Provisions for risks and charges”.

The capital losses from the disposal/recovery of fixed assets (39,760 thousand euro as at 31 December 2024 and 40,302 thousand euro as at 31 December  2023) mainly relate to the replacement of meters, as well as pipes and connections.

Operating costs relating to the construction and upgrading of gas distribution and water service infrastructure connected with concession agreements pursuant  to what is set forth in IFRIC 12, amount to 746,504 thousand euro and are broken down as follows:

(€ thousands)

For the year ended 31  December 2023

For the year ended 31  December 2024

Purchase costs for raw materials, consumables, supplies and goods

159,872

127,284

Costs for services

501,283

478,116

Costs for the use of third-party assets

10,172

16,425

Personnel cost

113,673

118,104

Other operating expenses

2,136

6,575

787,136

746,504

29) Amortisation, depreciation and impairment of assets

Amortisation, depreciation and impairment of assets, totalling 536,555 thousand euro (545,546 thousand euro as at 31 December 2023), breaks down as  follows:

ITALGAS CONSOLIDATED FINANCIAL REPORT AS AT 31 DECEMBER 2024 – NOTES TO THE CONSOLIDATED  FINANCIAL STATEMENTS

292

(€ thousands)

For the year ended 31  December 2023

For the year ended 31  December 2024

Amortisation and depreciation

522,530

549,120

\- Property, plant and equipment

17,719

20,547

\- Right of use pursuant to IFRS 16

29,691

32,462

\- Intangible assets

475,120

496,111

Impairment

23,016

(12,565)

\- Use of provision

0

(12,565)

\- Impairment of intangible assets

23,016

0

545,546

536,555

Net impairment asset, amounting to a net use of -12,565 thousand euro (a net impairment of 23,016 thousand euro in 2023) refer to the use of provision for  impairment of assets related to faulty gas smart meters.

30) Net financial expense

Net financial expense, amounting to 120,666 thousand euro (98,229 thousand euro as at 31 December 2023), comprises:

(€ thousands)

For the year ended 31  December 2023

For the year ended 31  December 2024

Total financial expense

(94,289)

(122,362)

Financial expense 

(100,009)

(139,862)

Financial income

5,720

17,500

Total financial income (expense)

(3,863)

1,317

Other financial expenses

(3,633)

(9,704)

Other financial income 

(230)

11,021

Gain/(loss) on derivatives measured at fair value

(77)

379

(98,229)

(120,666)

Below is the breakdown of financial charges, financial income and other financial income and charges:

(€ thousands)

For the year ended  31 December 2023

For the year ended  31 December 2024

Net financial expense

(94,289)

(122,362)

Borrowing costs:

(100,009)

(139,862)

\- Interest expense on bonds

(70,312)

(108,218)

\- Commission expense on bank loans and credit lines

(8,860)

(4,824)

\- Interest expense on credit line and loan expense due to banks and other lenders

(20,837)

(26,820)

Financial expense capitalised

Income on financial receivables:

5,720

17,500

\- Interest income and other income on financial receivables non-held for operations

5,720

17,500

Total net financial expense:

(3,863)

1,317

\- Capitalised financial expense

1,424

1,293

ITALGAS CONSOLIDATED FINANCIAL REPORT AS AT 31 DECEMBER 2024 – NOTES TO THE CONSOLIDATED  FINANCIAL STATEMENTS

293

\- Financial income (expense) connected with the passing of time (accretion discount) (*)

(3,590)

(2,769)

\- Expense for right of use pursuant to IFRS 16

(1,132)

(1,376)

\- Other expenses

(334)

(6,852)

\- Other income

(231)

11,021

Gain/(loss) on derivatives measured at fair value

(77)

379

(98,229)

(120,666)

(*) The item relates to the increase in the provisions for risks and charges and provisions for employee benefits that are specified, at a discounted value,  in the notes “Provisions for risks and charges” and “Provisions for employee benefits”.

.

31) Net income from equ ity investments 

Net income from equity investments, totalling 11,209 thousand euro (3,068 thousand as at 31 December 2023), breaks down as follows:

(€ thousands)

For the year ended  31 December 2023

For the year ended  31 December 2024

Share of the profit of investments in associates/joint ventures

1,652

9,945

Income from share of the profit of equity investments in associates/joint ventures

1,652

9,945

Other income from equity investments

1,416

1,264

Dividends

25

0

Other income from equity investments

1,391

1,264

3,068

11,209

Details of capital gains and capital losses accounted for using the equity method can be found in the note “Investments accounted for using the equity  method”.

Other income from equity investments refers to the contribution deriving from equity investments in other companies (Distribution Networks).

32) Income taxes

Income taxes for the year, amounting to 165,257 thousand euro (118,626 thousand euro as at 31 December 2023) comprise: 

For the year ended 31 December 2023

(€ thousands)

IRES

IRAP

FOREIGN

Total

Current taxes

123,374

23,902

5,309

152,585

Current taxes for the year

149,410

29,088

5,309

183,807

Patent box

(32,860)

(6,539)

(39,399)

Adjustments for current taxes pertaining to previous years

6,824

1,353

8,177

Deferred and prepaid taxes

(40,048)

(2,332)

8,421

(33,959)

Deferred taxes

(15,988)

(1,643)

8,129

(9,502)

Prepaid taxes

24,060

689

(292)

24,457

83,326

21,570

13,730

118,626

For the year ended 31 December 2024

(€ thousands)

IRES

IRAP

FOREIGN

Total

Current taxes

130,893

29,400

3,667

163,960

Current taxes for the year

156,056

33,292

3,667

193,015

Patent box

(18,311)

(3,639)

(21,950)

ITALGAS CONSOLIDATED FINANCIAL REPORT AS AT 31 DECEMBER 2024 – NOTES TO THE CONSOLIDATED  FINANCIAL STATEMENTS

294

Adjustments for current taxes pertaining to previous years

(6,852)

(253)

(7,105)

Deferred and prepaid taxes

(12,261)

727

12,831

1,297

Deferred taxes

(13,412)

(1,186)

12,831

(1,767)

Prepaid taxes

(1,151)

(1,913)

0

(3,064)

118,632

30,127

16,498

165,257

Income taxes include current taxes of 163,960 thousand euro (152,585 thousand euro as at 31 December 2023) and net deferred taxes of 1,297 thousand  euro. 

Current taxes (IRES and IRAP) take into account the patent box benefit – pursuant to Article 1, subsections 37 to 45, Law no. 190/2014, as amended –  resulting in an estimated tax benefit of 21,951 thousand euro (39,399 thousand euro in 2023).

The rates applied and provided for by the Italian tax regulations for current taxes are 24% for IRES and 4.2% for IRAP. The rate applied and provided for by  the Greek tax regulations for current taxes is 22%.

The reconciliation of the theoretical tax charge, calculated by applying the corporation tax (IRES) rate in force in Italy of 24%, with the actual tax charge for  the year can be broken down as follows:

For the year ended 31  December 2023

For the year ended 31  December 2024

(€ thousands)

Tax rate

Balance

Tax rate

Balance

IRES and FOREIGN

Profit before Tax

586,097

672,691

IRES tax calculated based on the theoretical tax rate

24.00%

140,663

24.00%

161,446

Tax effect on:

\- Income from equity investments

0.7%

3,880

0.8%

5,179

\- Patent box

(5.6)%

(32,860)

(2.7)%

(18,311)

\- Current taxes for previous years

0.0%

140

(1.0)%

(6,852)

\- “Super Iper amortisation and depreciation” tax benefit

(1.5)%

(8,738)

(1.3)%

(8,594)

\- Other permanent differences

(1.0)%

(6,029)

0.3%

2,262

IRES taxes for the year through profit or loss

16.6%

97,056

20.1%

135,130

For the year ended 31  December 2023

For the year ended 31  December 2024

(€ thousands)

Tax rate

Balance

Tax rate

Balance

IRAP

Operating profit for IRAP

603,239

782,147

IRAP tax calculated based on the theoretical tax rate

4.2%

25,336

4.2%

32,850

Tax effect on:

\- Taxes for previous years

0.2%

1,353

0.0%

(253)

\- Patent box

(1.1)%

(6,539)

(0.5)%

(3,639)

\- Regional IRAP adjustments

0.5%

2,777

0.6%

4,201

\- Other permanent differences

(0.2)%

(1,357)

0.2%

(3,032)

IRAP taxes for the year through profit or loss

3.6%

21,570

4.5%

30,127

ITALGAS CONSOLIDATED FINANCIAL REPORT AS AT 31 DECEMBER 2024 – NOTES TO THE CONSOLIDATED  FINANCIAL STATEMENTS

295

An analysis of deferred tax assets and liabilities grouped based on the nature of the significant temporary differences that generated them can be found in  the note “Deferred tax liabilities”.

Taxes related to components of comprehensive income 

Current and deferred taxes related to other components of comprehensive income can be broken down as follows:

For the year ended 31 December  2023

For the year ended 31 December  2024

(€ thousands)

Gross  value

Tax  impact

Net tax  value

Gross  value

Tax  impact

Net tax  value

Remeasurement of defined-benefit plans for  employees

48

(13)

35

(629)

176

(453)

Change in fair value of investments measured at  FVTOCI

(489)

117

(372)

106

(25)

81

Fair value gain/(loss) arising from hedging  instruments during the period

(19,860)

4,766

(15,094)

(15,321)

3,677

(11,644)

Other components of comprehensive income

(20,301)

4,870

(15,431)

(15,844)

3,828

(12,016)

Deferred tax assets/liabilities

4,870

3,828

.

33) Earnings per share

The earnings per basic share, equal to 0.59 euro (0.54 euro as at 31 December 2023), was calculated by dividing the net profit attributable to Italgas equal  to 478,854 thousand euro (439,568 thousand euro as at 31 December 2023) by the weighted average number of Italgas shares during the year equal to  811,242,309 shares (810,745,220 shares as at 31 December 2023).

The diluted earnings per share is calculated by dividing the net profit attributable to Italgas, equal to 478,854 thousand euro, by the weighted average number  of shares during the period, excluding any treasury shares, increased by the number of shares that could potentially be added to those as a result of the  assignment or disposal of treasury shares in the portfolio for stock grant plans. The diluted earnings per share, calculated also considering the co-investment  plan, was 0.59 euro per share (0.54 euro per share as at 31 December 2023).

34) Information by operating segment

In accordance with IFRS 8 "Operating Segments", the Group's identified segments as at 31 December 2024  are as follows:

- Gas distribution;

\- Water service;

- Energy efficiency;

\-  Corporate.

The Gas Distribution operating segment aggregates the activities carried out in Italy and Greece.

Until 2023, the activities related to the water service business did not constitute an operating segment subject  to separate reporting. The change occurred following the first consolidation of Acqua Campania S.p.A. in 2024.

Operating result is the key profit measure used by Group Management to assess performance and allocate  resources to the Group’s operating segments, as well as to analyze operating trends, perform analytical  comparisons and benchmark performance between periods and among the segments. Operating result is  defined as profit or loss before income taxes plus net financial expenses and net income from equity  investments.

ITALGAS CONSOLIDATED FINANCIAL REPORT AS AT 31 DECEMBER 2024 – NOTES TO THE CONSOLIDATED  FINANCIAL STATEMENTS

296

Investments in property, plant and equipment and Investments in intangible assets are the key measure used  by the Group Management to allocate resources to the Group’s operating segments.

The following tables summarize selected financial information by segment for the years ended 31 December,  2024 and 2023.

(€ thousands)

Gas  distribution

Water  service

Energy

efficiency

Corporate

Total

For the year ended 31 December 2023

Total revenues and others revenues

2,344,941

11,010

299,909

82,747

2,738,607

to be deducted: inter-sector others  revenues

(17,017)

(15)

(1,742)

(80,992)

(99,766)

Total revenues and others revenues  from third parties

2,327,924

10,995

298,167

1,755

2,638,841

Operating result

636,925

(737)

51,208

(6,139)

681,257

Total net financial expense

(98,229)

Total net income from equity  investments

3,068

Profit before tax

586,096

Investments in property, plant and  equipment

53,074

9

3,283

5,377

61,743

Investments in intangible assets

840,357

3,404

1,118

844,879

Total investments in property, plant and  equipment and intangible assets

893,431

3,413

4,401

5,377

906,622

(€ thousands)

Gas  distribution

Water  service

Energy

efficiency

Corporate

Total

For the year ended 31 December 2024

Total revenues and others revenues

2,408,448

99,093

48,608

85,293

2,641,442

to be deducted: inter-sector others  revenues

(16,707)

(47)

(2,022)

(83,230)

(102,006)

Total revenues and other revenues and  income from third parties

2,391,741

99,046

46,586

2,063

2,539,436

Operating result

773,734

12,262

407

(4,254)

782,149

Total net financial expense

(120,666)

Total net income from equity  investments

11,209

Profit before tax

672,692

Investments in property, plant and  equipment

46,477

2,751

3,770

2,469

55,467

Investments in intangible assets (*)

851,102

26,958

577

50

878,687

Total investments in property, plant and  equipment and intangible assets

897,579

29,709

4,347

2,519

934,154

(*) The item includes, for the gas distribution sector, the amount of 47,190 thousand euros relating to the acquisition completed on 1  February 2024 of the Belluno ATEM concession for the management of natural gas distribution service, with a term of 12 years.

ITALGAS CONSOLIDATED FINANCIAL REPORT AS AT 31 DECEMBER 2024 – NOTES TO THE CONSOLIDATED  FINANCIAL STATEMENTS

297

35) Information by geographical area

In accordance with Subsection 33 of IFRS 8, revenues, non-current assets and investments by geographic area are shown below:

(€ thousands)

As of 31 December 2023

Italy

Greece

Revenues

2,384,087

254,754

Non-current assets

8,579,093

1,178,758

Investments in tangible and intangible assets

799,726

106,734

(€ thousands)

As of 31 December 2024

Italy

Greece

Non-EU  countries

Revenues

2,258,800

279,196

1,440

Non-current assets

9,061,549

1,287,444

Investments in tangible and intangible assets

765,979

120,984

36) Related party transactions

Considering the equity investment of CDP S.p.A. in Italgas S.p.A., pursuant to international accounting standard IFRS 10 – Consolidated Financial Statements,  Italgas’ related parties are represented, as well as by the subsidiaries, associates and joint ventures of Italgas, by the parent company CDP S.p.A. and its  subsidiaries, including those under joint control, and associates, as well as by the subsidiaries, including under joint control, and associates of the Ministry of  Economy and Finance (MEF), and in any case any other related parties pursuant to IAS 24. Members of the Board of Directors, Statutory Auditors and Key  Managers of Italgas and of the companies that, even jointly, control Italgas, as well as their family members and the entities controlled by them, even jointly,  are also regarded as related parties.

As explained in detail below, related-party transactions involve the trading of goods and the provision of regulated services in the gas sector. Transactions  between Italgas and related parties are part of ordinary business operations and are generally settled at arm’s length, i.e. at the conditions that would be  applied between two independent parties. All the transactions carried out were in the interest of the companies of the Italgas Group. 

Pursuant to the provisions of the applicable legislations, the Company has adopted internal procedures to ensure that transactions carried out by the Company  or its subsidiaries with related parties are transparent and correct in their substance and procedure. In particular, Italgas has adopted the compliance standard  “Transactions involving the interests of Directors and Statutory Auditors with Related Parties” (“RPT Procedure”), which is available on the company’s website.  The RPT Procedure defines, among other things, the methods for maintaining and updating the database of Italgas’ related parties, the thresholds applicable  for related-party transactions of negligible value, of lesser and greater importance, and the procedure for investigating and approving such transactions. 

Italgas is not subject to management and coordination activities. Italgas exerts management and coordination activities over its subsidiaries pursuant to  Articles 2497 et seq. of the Civil Code.

The amounts involved in commercial, financial and other transactions with the above-mentioned related parties, are shown below. The nature of the most  significant transactions is also stated.

With reference in particular to the balances exposed towards the Eni Group and Enel Group, the underlying relations refer to the natural gas distribution  service business, according to the terms of the Network Code, defined by the Italian Regulatory Authority for Energy, Networks and Environment (Autorità di  Regolazione per Energia Reti e Ambiente, ARERA). The Network Code regulates the non-discriminatory conditions, including tariffs, applicable to all  distribution users.

Commercial and other transactions 

Commercial and other transactions are analysed below:

As of 31 December 2023

For the year ended 31 December 2023

Costs (a)

Revenues (b)

ITALGAS CONSOLIDATED FINANCIAL REPORT AS AT 31 DECEMBER 2024 – NOTES TO THE CONSOLIDATED  FINANCIAL STATEMENTS

298

(€ thousands)

Receivables

Payables

Assets

Services

Other

Services

Other

Parent company

\- CDP Group

0

209

0

94

21

0

0

0

209

0

94

21

0

0

Companies under joint control and associates

\- Umbria Distribuzione Gas

4,552

21

0

(32)

0

2,749

236

\- Metano Sant'Angelo Lodigiano

732

(2)

0

(7)

0

426

92

\- Gesam Reti

61

0

0

0

0

58

6

\- Enerpaper

329

2,879

0

6,548

0

0

0

\- Energie Rete Gas

1,541

5,863

0

4,160

1,755

1,352

38

7,215

8,761

0

10,669

1,755

4,585

372

Companies owned or controlled by the State

\- Eni Group

130,542

41,681

6,845

727

2,024

64,497

4,522

\- Snam Group

410

477

0

161

1

240

(96)

\- Enel Group

42,291

9,384

(6)

327

611

(28,124)

(3,196)

\- Anas Group

839

1,201

0

9

410

0

1,063

\- Ferrovie dello Stato Group

904

38

0

4

700

65

772

\- GSE Gestore Servizi Group

956

1,043

0

45

68,433

4,601

20

\- Poste italiane Group

2

171

0

224

0

0

0

\- Leonardo Group

28

157

0

129

0

0

105

\- Saipem Group

3

27

0

0

0

0

3

175,975

54,179

6,839

1,626

72,179

41,279

3,193

Other related parties

\- Zecca dello Stato

0

0

0

0

0

1

0

\- Acqua Campania

0

1,378

2,689

0

0

0

0

\- Eur Group

0

4

0

0

2

0

0

\- Valvitalia Group

0

1,112

4,637

37

0

0

0

\- Gruppo SMAT

0

0

0

0

0

0

2

\- Autovie Venete

0

0

0

0

6

0

0

\- Oper Fiber

0

0

0

0

0

0

6

\- Dispositivi protezione individuale

1

11

1

14

14

0

0

\- Monte Titoli

0

11

0

17

0

0

0

\- Borsa Italiana

0

0

0

193

0

0

0

\- Zurig Investment Life

0

1

0

1

0

0

0

\- Ferrovienord

0

0

0

0

6

0

0

\- Petrolig

15

0

0

0

0

0

0

\- LT S.r.l.

306

1

0

380

0

0

0

\- CESI - Giacinto Motta

0

21

0

19

0

0

0

\- Assicurazioni Generali

891

0

0

0

0

0

(444)

ITALGAS CONSOLIDATED FINANCIAL REPORT AS AT 31 DECEMBER 2024 – NOTES TO THE CONSOLIDATED  FINANCIAL STATEMENTS

299

\- Valdarno

0

22

0

0

0

0

0

\- Trevi

0

287

0

250

0

0

0

1,213

2,848

7,327

911

28

1

(436)

Total

184,403

65,997

14,166

13,300

73,983

45,865

3,129

(a) Include costs for goods and services for investment.

(b) Gross of the regulation components having contra entry in costs.

As of 31 December 2024

For the year ended 31 December 2024

Costs (a)

Revenues (b)

(€ thousands)

Receivables

Payables

Assets

Services

Other

Services

Other

Parent company

\- CDP Group

0

95

1

100

195

0

0

0

95

1

100

195

0

0

Companies under joint control and associates

\- Umbria Distribuzione Gas

2,972

30

0

(31)

0

839

86

\- Metano Sant'Angelo Lodigiano

474

2

0

(8)

0

340

106

\- Gesam Reti

81

0

0

0

0

78

6

\- Enerpaper

45

290

0

403

0

0

0

\- Energie Rete Gas

2,007

10,835

92

7,876

1,579

1,322

367

5,579

11,157

92

8,240

1,579

2,579

565

Companies owned or controlled by the State

\- Eni Group

177,500

40,716

4,468

704

2,402

570,429

3,723

\- Snam Group

413

376

0

156

167

240

111

\- Enel Group

49,177

11,625

(3)

150

1,342

167,987

2,928

\- Anas Group

353

1,248

12

7

525

0

699

\- Ferrovie dello Stato Group

696

56

0

33

710

245

176

\- GSE Gestore Servizi Group

1,073

(678)

0

60

80,466

2,823

(1,372)

\- Poste italiane Group

5

150

0

277

0

0

0

\- Leonardo Group

33

115

0

186

0

1

5

\- Rai Group

0

0

0

0

1

0

0

\- Saipem Group

3

27

0

0

0

0

0

229,253

53,635

4,477

1,573

85,613

741,725

6,270

Other related parties

\- Zecca dello Stato

0

12

12

0

0

0

0

\- Eur Group

0

4

0

0

2

0

0

\- Valvitalia Group

0

488

2,040

(3)

0

0

0

\- CESI - Giacinto Motta

0

22

0

11

0

0

0

ITALGAS CONSOLIDATED FINANCIAL REPORT AS AT 31 DECEMBER 2024 – NOTES TO THE CONSOLIDATED  FINANCIAL STATEMENTS

300

\- Trevi

0

90

0

277

0

0

0

0

616

2,052

285

2

0

0

Total

234,832

65,503

6,622

10,198

87,389

744,304

6,835

(a) Include costs for goods and services for investment.

(b) Gross of the regulation components having contra entry in costs.

Parent company

Commercial relations with the CDP Group are essentially related to fees due to directors.

Companies under joint control and associates

With Umbria Distribuzione Gas S.p.A. and Metano Sant’Angelo Lodigiano S.p.A., the main receivable commercial transactions mainly refer to IT and staff  services.

With Enerpaper S.r.l., the payable commercial transactions refer to activities related to Superbonus construction sites managed by the Group.

With Energie Rete Gas S.r.l., the main receivable commercial transactions refer to technical services on the gas network and sale of cryogenic LNG tanks;  the main payable transactions refer to services associated with the transport of natural gas by road.

Companies owned or controlled by the State 

The main receivable commercial transactions predominantly refer to:

\-  the distribution of natural gas to the Eni Group and Enel Group;

\-  IT services and chargebacks of gas supply truck costs related to the Snam Group;

- energy efficiency certificates and net metering/dedicated collection of energy efficiency produced by photovoltaic plants in relation to the GSE Gestore  Servizi Group;

- services associated with natural gas distribution in relation to the Ferrovie dello Stato Group and the Anas Group.

The main payable commercial transactions refer to:

\-  the supply of electricity and methane gas for internal consumption by the Eni Group;

\-  rental expenses and additional charges to lease contracts with the Snam Group;

- acquisition of energy efficiency certificates in relation to the GSE Gestore Servizi Group

Financial transactions

Financial transactions can be broken down as follows:

As of 31 December 2023

For the year ended 31 December  2023

(€ thousands)

Receivables

Payables

Income

Expense

Parent company

\- CDP Group

1,075

0

1

0

1,075

0

1

0

Companies under joint control and associates

\- Energie Rete gas

2,126

0

0

0

ITALGAS CONSOLIDATED FINANCIAL REPORT AS AT 31 DECEMBER 2024 – NOTES TO THE CONSOLIDATED  FINANCIAL STATEMENTS

301

2,126

0

0

0

State-owned or controlled enterprises

\- Ferrovie dello Stato Group

0

405

0

0

\- Anas Group

0

331

0

0

\- Snam Group

0

1,466

0

0

0

2,202

0

0

Other companies

\- Acqua Campania

2,581

0

0

0

2,581

0

0

0

Total

5,782

2,202

1

0

As of 31 December 2024

For the year ended 31 December  2024

(€ thousands)

Receivables

Payables

Income

Expense

Parent company

\- CDP Group

1,570

143,944

0

1,171

1,570

143,944

0

1,171

Companies under joint control and associates

\- Energie Rete gas

2,125

0

0

0

\- Umbria Distribuzione Gas

0

0

253

0

2,125

0

253

0

State-owned or controlled enterprises

\- Ferrovie dello Stato Group

0

405

0

0

\- Anas Group

0

331

0

0

\- Snam Group

0

1,466

0

0

0

2,202

0

0

Total

3,695

146,146

253

1,171

Parent company

The main financial transactions conducted with the CDP Group concern portions of bond loans issued by Italgas as part of the EMTN Programme and portions  of a mutual investment fund subscribed by Italgas.

Companies under joint control and associates 

The main financial transactions with Energie Rete Gas relate to a shareholder loan agreement.

The main financial transactions conducted with Umbria Distribuzione Gas are related to the chargeback of interest in arrears due to non-payment.

Companies  owned or controlled by the State

T he main financial transactions conducted with the Ferrovie dello Stato Group, the Anas Group, Eni Group  and the Snam Group relate to IFRS16 debt for real estate operating leases .

Transactions with Directors, Statutory Auditors and key managers, with reference in particular to their remuneration, are described in the note “Operating  costs”, to which reference is made.

ITALGAS CONSOLIDATED FINANCIAL REPORT AS AT 31 DECEMBER 2024 – NOTES TO THE CONSOLIDATED  FINANCIAL STATEMENTS

302

Impact of related-party transactions or positions on the statement of financial position, income  statement and statement of cash flows

The impact of related-party transactions or positions on the Statement of Financial Position is summarised in the following table:

As of 31 December 2023

As of 31 December 2023

(€ thousands)

Total

Related  entities

Incidence  %

Total

Related  entities

Incidence  %

Statement of financial position

Current financial assets

4,248

2,127

50.07%

3,592

2,125

59.16%

Trade and other receivables

853,488

184,114

21.57%

905,092

234,138

25.87%

Other current financial assets

18,094

0

0.00%

5,878

0

0.00%

Other current non-financial assets

152,864

2

0.00%

232,559

288

0.12%

Non-current financial assets

23,778

3,655

15.37%

339,747

1,570

0.46%

Other non-current financial assets

13,708

0

0.00%

10,982

0

0.00%

Other non-current non-financial assets

417,069

287

0.07%

619,323

406

0.07%

Current financial liabilities

1,033,434

636

0.06%

980,569

4,580

0.47%

Trade and other payables

829,862

65,775

7.93%

1,184,609

64,410

5.44%

Other current non-financial liabilities

17,393

222

1.28%

14,063

1,093

7.77%

Non-current financial liabilities

5,886,922

1,566

0.03%

6,205,299

141,566

2.28%

Other non-current non-financial liabilities

527,884

0

0.00%

566,985

0

0.00%

The impact of related-party transactions on the income statement is summarised in the following table:

For the year ended 31 December 2023

For the year ended 31 December  2024

(€ thousands)

Total

Related  entities

Incidence %

Total

Related  entities

Incidence %

Income Statement

Revenues

2,564,193

45,865

1.79%

2,478,644

744,304

30.03%

Other income

74,648

3,129

4.19%

60,792

6,835

11.24%

Purchase costs for raw materials, consumables,  supplies and goods

195,869

14,166

7.23%

168,459

6,622

3.93%

Costs for services

792,394

13,300

1.68%

604,545

10,198

1.69%

Lease expenses

89,133

1,125

1.26%

102,496

1,235

1.20%

Personnel costs

276,800

0

0.00%

285,133

0

0.00%

Other operating expenses

57,718

72,858

126.23%

60,921

86,154

141.42%

Financial expense

103,642

0

0.00%

149,566

1,171

0.78%

Financial income

5,490

1

0.02%

28,521

253

0.89%

Related-party transactions are generally carried out at arm’s length, i.e. at the conditions that would be applied  between two independent parties. 

ITALGAS CONSOLIDATED FINANCIAL REPORT AS AT 31 DECEMBER 2024 – NOTES TO THE CONSOLIDATED  FINANCIAL STATEMENTS

303

The principal cash flows with related parties are shown in the following table:

(€ thousands)

For the year  ended 31  December 2023

For the year ended  31 December 2024

Revenues and income

48,994

751,139

Costs and charges

101,449

104,209

Change in current financial assets

119

2

Change in trade and other current receivables

(155,526)

(50,024)

Change in non-current financial assets

(3,043)

2,085

Change in other assets 

(55)

(405)

Change in trade and other payables

(378,265)

(1,365)

Change in other current liabilities

28

871

Interest collected (paid)

(1)

(918)

Net cash flow from operating activities

(386,300)

805,594

Net cash flow from investment activities

0

0

Dividends distributed to minority shareholders

(101,470)

(112,681)

Increase (decrease) in financial debt

4,132

143,944

Net cash flow from financing activities

(97,338)

31,263

Total cash flows to related entities

(483,638)

836,857

.

The incidence of cash flows with related parties are shown in the following table:

For the year ended 31 December 2023

For the year ended 31 December 2024

(€ thousands)

Total

Related  entities

Incidence  %

Total

Related  entities

Incidence  %

Cash flow / (used in) operating activities

572,672

(386,300)

(67.46)%

1,098,715

805,594

73.32%

Cash flow used in investment activities

(857,604)

0

0.00%

(809,134)

0

0.00%

Cash flow / (used in) financing activities

82,949

(97,338)

(117.35)%

(136,882)

31,263

(22.84)%

37) Significant non-recurring events and transactions

Pursuant to Consob Communication DEM/6064293 of 28 July 2006, it should be stated that no significant non- recurring events or transactions took place during the course of the year.

38) Positions or transactions arising from atypical and/or unusual transactions

Pursuant to Consob Communication DEM/6064293 of 28 July 2006, it should be stated that no atypical and/or  unusual positions or transactions took place during the course of the year. 

39) Significant events after year end 

The significant transactions carried out after 31 December 2024 are summarised below. The Integrated Annual  Report has been submitted to the examination of the Company’s Board of Directors and its publication was  authorised within the terms and in accordance with the procedure prescribed by law. Therefore, this document  does not note any events that occurred subsequent to that date.

ITALGAS CONSOLIDATED FINANCIAL REPORT AS AT 31 DECEMBER 2024 – NOTES TO THE CONSOLIDATED  FINANCIAL STATEMENTS

304

Extraordinary transactions and area tenders

On 27 December 2022 Italgas, Toscana Energia and Alia Servizi Ambientali signed an agreement that granted  Italgas an option to purchase 30,134,618 shares in Toscana Energia held by Alia Servizi Ambientali following  their transfer by the Municipality of Florence.

Italgas exercised the option on 14 January 2025. The envisaged contractual price to purchase the shares of  Toscana Energia is to be determined as the “fair market value” at the date of execution of the option, calculated  by an international financial institution named jointly by the parties.

Legal and Regulatory Framework

Italgas Reti challenged on additional grounds Resolution no. 513/2024/R/com through which the Authority,  following an update for the 2025-2027 sub-period of the parameters common to all regulated services and  following a review of the criteria for updating the β-asset (beta asset) parameter for all regulated infrastructural  services of the electricity and gas sectors, updated the WACC for the year 2025. The setting of a date for the  hearing is currently pending.

Capital operations 

On 12 February 2025, in execution of the 2021-2023 Co-investment Plan approved by the Ordinary and  Extraordinary Shareholders' Meeting of 20 April 2021, the Board of Directors determined the free assignment  of a total of 511,604 new ordinary shares of the Company to the beneficiaries of the Plan itself (so-called  second cycle of the Plan) and resolved to carry out the second tranche of the share capital increase approved  by the aforementioned Shareholders' Meeting, for a nominal amount of 634,388.96 euro taken from retained  earnings reserves. 

Other events

On 7 February 2025, Italgas was confirmed for the third consecutive year by CDP (Carbon Disclosure Project)  in the “Climate A list” which groups together the best players globally in terms of transparency and performance  in combating climate change.

On 11 February 2025, Italgas was included for the sixth consecutive year in the S&P Global Sustainability  Yearbook, S&P Global's annual publication that collects best practices, experiences and success stories of  the world's leading companies on sustainability issues. Italgas also confirmed its leadership with inclusion in  the “Top 1% S&P Global CSA Score”, category, based on the results of the Corporate Sustainability  Assessment (CSA) 2024. 

40) Publication of the financial statements

The financial statements were authorised for publication by the Board of Directors of Italgas at its meeting of  12 February 2025. The Board of Directors authorised the Chairperson and the Chief Executive Officer to make  any changes which might be necessary or appropriate for finalising the form of the document .

305

Certification of the consolidated financial statements pursuant to Article 154- bis, paragraph 5 of Legislative Decree 58/1998 (Consolidated Finance Act)

1. Pursuant to article 154-bis, paragraphs 3 and 4 of Legislative Decree no. 58 of 24 February 1998, the  undersigned Paolo Gallo and Gianfranco Maria Amoroso, as Chief Executive Officer and Director in  charge of preparing company accounting documents of Italgas S.p.A. respectively, certify:

• the adequacy, considering the Company’s characteristics, and

• the effective implementation

of the administrative and accounting procedures for the preparation of the consolidated financial  statements during the course of 2024.

2. The administrative and accounting procedures for the preparation of the consolidated financial  statements at 31 December 2024 were defined and their adequacy was assessed using the rules and  methods in line with the Internal Control – Integrated Framework model issued by the Committee of  Sponsoring Organizations of the Treadway Commission, which represents a benchmark framework for  the internal control system generally accepted at international level. 

3. It is also certified that:

3.1 The consolidated financial statements at 31 December 2024:

a) were prepared in accordance with the applicable international accounting standards recognised in the  European Community pursuant to Regulation (EC) no. 1606/2002 of the European Parliament and of the  Council of 19 July 2002;

b) are consistent with the accounting books and records;

c) are able to provide a true and fair view of the financial position, results of operations and cash flows  of the issuer and the consolidated companies.

3.2  The Directors’ Report includes a reliable analysis of the operating performance and results, as well  as the position of the issuer and of all the companies included in the scope of consolidation, together  with a description of the principal risks and uncertainties to which they are exposed. 

12 February 2025

Chief Executive Officer Officer responsible for the preparation 

of financial reports 

Paolo Gallo Gianfranco Maria Amoroso

306

307

308

309

310

311

312

313

314

ANNEXES  TO THE NOTES TO THE 

CONSOLIDATED FINANCIAL STATEMENTS

315

316

Annexes to the notes to the consolidated financial statements

Companies and equity investments of Italgas S.p.A. as at 31 December 2024

In compliance with the provisions of Consob communication DEM/6064293 of 28 July 2006 and of articles  38 and 39 of Italian Legislative Decree 127/1991, the list of subsidiary and related companies of Italgas  S.p.A as at 31 December 2024, as well as other relevant shareholdings, are reported below. 

The name, registered office, share capital, shareholders and respective percentages of ownership are  reported for each company. For companies consolidated using the line-by-line method, the consolidated  percentage pertaining to Italgas and the segment to which they belong is indicated. The measurement  criterion is indicated for companies not consolidated using the line-by-line method. 

The companies of Italgas S.p.A. as at 31 December 2024 are broken down as follows:

CONSOLIDATING COMPANY

Name

Registered  office

Currency

Share capital

Shareholders

% ownership

% consolidated  pertaining to Italgas

Consolidation method or  measurement criterion

Operating

sector

Italgas S.p.A.

Milan

Eur

1,003,843,958.76

CDP Reti S.p.A.

25.98%

100.00%

full consolidation

Corporate

Snam S.p.A.

13.46%

Non-controlling Interests 

60.56%

SUBSIDIARY COMPANIES

Designation

Registered office

Currency

Share capital

Shareholders

% ownership

% consolidated  pertaining to Italgas

Consolidation method or  measurement criterion

Operating

sector

Italgas Reti S.p.A.

Turin

Eur

252,263,314

Italgas S.p.A.

100.00%

100.00%

full consolidation

Gas distribution

Nepta S.p.A.

Milan

Eur

50,000

Italgas S.p.A.

100.00%

100.00%

full consolidation

Water service

Geoside S.p.A.

Casalecchio di  Reno (BO)

Eur

57,089,254

Italgas S.p.A.

67.22%

83.82%

full consolidation

Energy efficiency

Toscana Energia S.p.A.

32.78%

Medea S.p.A.

Sassari

Eur

95,500,000

Italgas Reti S.p.A.

51.85%

51.85%

full consolidation

Gas distribution

Non-controlling Interests

48.15%

Toscana Energia S.p.A.

Florence

Eur

146,214,387

Italgas S.p.A.

50.66%

50.66%

full consolidation

Gas distribution

Non-controlling Interests

49.34%

Italgas Newco S.p.A.

Milan

Eur

50,000,000

Italgas S.p.A.

Non-controlling Interests

90.00%

10.00%

90.00%

full consolidation

Gas distribution

Bludigit S.p.A.

Milan

Eur

11,000,000

Italgas S.p.A.

100.00%

100.00%

full consolidation

Gas distribution

Enaon S.A.

Athens

Eur

79,709,919

Italgas Newco S.p.A.

100.00%

90.00%

full consolidation

Gas distribution

317

Enaon EDA S.A.

Athens

Eur

580,273,050

Enaon S.A.

100.00%

90.00%

full consolidation

Gas distribution

Immogas S.r.l.

Florence

Eur

1,718,600

Toscana Energia S.p.A.

100.00%

50.66%

full consolidation

Gas distribution

Acqua S.r.l.

Milan

Eur

20,350,000

Nepta S.p.A.

100.00%

100.00%

full consolidation

Water service

Idrolatina S.r.l.

Milan

Eur

6,902,587

Acqua S.r.l.

100.00%

100.00%

full consolidation

Water service

Idrosicilia S.p.A.

Milan

Eur

22,520,000

Acqua S.r.l.

Non-controlling Interests

99.22%

0.78%

99.22%

full consolidation

Water service

Acqua Campania S.p.A.

Naples

Eur

4,950,000

Nepta S.p.A.

Italgas Reti S.p.A.

Non-controlling Interests

95.70%

0.53%

3.77%

96.23%

full consolidation

Water service

LAC Laboratorio Acqua  Campania S.r.l.

Naples

Eur

30,000

Acqua Campania S.p.A.

Non-controlling Interests

51,00%

49.00%

49.08%

full consolidation

Water service

ASSOCIATED AND JOINT CONTROL COMPANIES

Name

Registered office

Currency

Share capital

Shareholders

% ownership

Consolidation method  or measurement  criterion 

Metano Sant'Angelo Lodigiano S.p.A. (a)

Sant'Angelo Lodigiano (LO)

Eur

200,000

Italgas S.p.A.

Non-controlling Interests

50.00%

50.00%

equity measurement

Umbria Distribuzione Gas S.p.A.

Terni

Eur

2,120,000

Italgas S.p.A.

Non-controlling Interests

45.00%

55.00%

equity measurement

Energie Rete Gas S.r.l.

Milan

Eur

11,000,000

Medea S.p.A.

Non-controlling Interests

49.00%

51.00%

equity measurement

Gesam Reti S.p.A.

Lucca

Eur

20,626,657

Toscana Energia S.p.A.

Non-controlling Interests

42.96%

57.04%

equity measurement

Enerpaper S.r.l.

Turin

Eur

20,156

Geoside S.p.A.

Non-controlling Interests

20.01%

79.99%

equity measurement

Siciliacque S.p.A.

Palermo

Eur

20,400,000

Idrosicilia S.p.A.

Non-controlling Interests

75.00%

25.00%

equity measurement

Acqualatina S.p.A.

Latina

Eur

23,661,533

Idrolatina S.r.l.

Non-controlling Interests

49.00%

51.00%

equity measurement

(a) Company subject to joint control

OTHER COMPANIES

318

Name

Registered office

Currency

Share capital

Shareholders

% ownership

Consolidation method or  measurement criterion

Reti Distribuzione S.r.l.

Ivrea (TO)

Eur

20,000,000

Italgas Reti S.p.A.

Non-controlling Interests

15.00%

85.00%

fair value measurement

Picarro Inc.

Santa Clara (USA)

Dollar

Italgas S.p.A.

Non-controlling Interests

6.75%

93.25%

fair value measurement

Gaxa S.p.A.

Cagliari

Eur

3,100,000

Italgas S.p.A.

Non-controlling Interests

1.00%

99.00%

fair value measurement

CHANGE IN SCOPE OF CONSOLIDATION

Name

Registered office

Currency

Share capital

Shareholders

% ownership

Consolidation method  or measurement  criterion

Acqua Campania S.p.A. (a)

Naples

Eur

4,950,000

Nepta S.p.A.

Italgas Reti S.p.A.

Non-controlling Interests

95.70%

0.53%

3.77%

full consolidation

LAC S.r.l. (a)

Naples

Eur

30,000

Acqua Campania S.p.A.

Non-controlling Interests

51.00%

49.00%

full consolidation

(a) Companies joined the scope of consolidation following the acquisition.

Fees for auditing and services other than auditing

Pursuant to Article 149-duodecies, subsection 2, of CONSOB Resolution no. 11971 of 14 May 1999 as  amended, the fees for the year due to the independent auditing firm Deloitte & Touche S.p.A. for services  provided to the Parent Company Italgas S.p.A., its subsidiaries and joint ventures, are specified below.

319

(€ thousands)

Type of services

Subject that provided the service

Recipient

Remuneration

Parent company’s independent auditor

Parent company

337

Parent company’s independent auditor

Subsidiaries

844

Audit (*)

Parent company’s independent auditor

Company subject to joint control

6

Parent company’s independent auditor

Parent company

277

Parent company’s independent auditor

Subsidiaries

34

Certification services (**)

Parent company’s independent auditor

Company subject to joint control

1

1,499

(*) The services basically include: (i) the audit of the Consolidated Financial Statements and the Financial Statements for the year of Italgas S.p.A., its subsidiaries and joint  ventures; (ii) the limited audit of the half-year financial report; (iii) audits during the year pursuant to Article 14, letter b of Legislative Decree no. 39/2010; (iv) the audit of  the separate annual accounts pursuant to the Integrated Text on Accounting Unbundling (TIUC); (vi) the audit of the conformity of the Non-Financial Statement.

(**) The certification services regard: (i) the audit of the financial reporting control system; (ii) EMTN programme procedures carried out; (iii) procedures connected with  certification of the investments for tariff purposes.