SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

________________________

Form 6-K

Report of Foreign Issuer

Pursuant to Rule 13a-16 or 15d-16 of

the Securities Exchange Act of 1934

For the month of August 2020

Eni S.p.A.

(Exact name of Registrant as specified in its charter)

Piazzale Enrico Mattei 1 -- 00144 Rome, Italy

(Address of principal executive offices)

_________________________

(Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.)

Form 20-F x     Form 40-F ¨

_________________________

(Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2b under the Securities Exchange Act of 1934.)

Yes ¨        No x

(If "Yes" is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): )

Table of contents

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, hereunto duly authorised.

Date: August 31, 2020

Mission

We are an energy company.
We concretely support a just energy transition,
with the objective of preserving our planet
and promoting an efficient and sustainable access to energy for all.
Our work is based on passion and innovation,
on our unique strengths and skills, on the equal dignity of each person, recognizing diversity as a key value for human development,
on the responsibility, integrity and transparency of our actions.
We believe in the value of long-term partnerships with the Countries and communities where we operate, bringing long-lasting prosperity for all.

The new mission represents more explicitly the Eni’s path to face the global challenges, contributing to achieve the SDGs determined by the UN in order to clearly address the actions to be implemented by all the involved players.

THE SUSTAINABLE DEVELOPMENT GOALS

Global goals for a sustainable development

The 2030 Agenda for Sustainable Development, presented in September 2015, identifies the 17 Sustainable Development Goals (SDGs) which represent the common targets of sustainable development on the current complex social problems. These goals are an important reference for the international community and Eni in managing activities in those Countries in which it operates.

Interim Consolidated Report as of June 30, 2020 

Highlights

| Financial performance

Results were negatively and materially affected by the combined impact of the ongoing economic recession due to the COVID-19 effects on production, international commerce and travel, with a major impact on energy demand, and by oil and gas oversupplies.

|  Eni response to COVID-19 crisis

In response to COVID-19 crisis, Eni reviewed the industrial plan 2020-2021:

¹ They comprise a reduction in hydrocarbon production due to capex cut and lower global gas demand, lower offtakes at LNG supply in Asia, lower production sale volumes in R&M and Chemicals, higher allowances for doubtful accounts due to an expected deterioration in the counterparty risk.

| Operating performance

| Energy Solutions, decarbonization and circular economy

KEY OPERATING AND FINANCIAL RESULTS

Operating review

EXPLORATION & PRODUCTION

PRODUCTION AND PRICES

In the first half of 2020, oil and natural gas production averaged 1,744 kboe/d, down by 5% from the first half of 2019. Net of price effects, the decline was due to COVID-19 effects and related OPEC+ production cuts as well as lower gas demand, mainly in Egypt. The positive performance reported in Nigeria, Kazakhstan and Mexico and the additions due to the purchase of mineral interests in 2019 in Norway, more than offset the lower volumes in Libya driven by an anticipated contractual trigger, geopolitical instability and lower entitlements/spending. 

Liquids production (873 kbbl/d) was almost unchanged from the first half of 2019. Production growth in Kazakhstan and production ramp-up in Mexico, were offset by lower production in Libya and mature field declines. 

Natural gas production (4,711 mmcf/d) decreased by 483 mmcf/d, or 10% compared to the first half of 2019. Lower production in Libya and the impact of lower natural gas demand in certain areas (mainly in Egypt), as well as LNG demand were partly offset by the growth in Nigeria and Kazakhstan. 

Oil and gas production sold amounted to 286 mmboe. The 31 mmboe difference over production (317 mmboe) mainly reflected volumes consumed in operations (21.5 mmboe), changes in inventory levels and other changes.

MINERAL RIGHT PORTFOLIO AND EXPLORATION ACTIVITIES

In the first half of 2020, Eni performed its operations in 42 countries. As of June 30, 2020, Eni’s mineral right portfolio consisted of 879 exclusive or shared properties for exploration and development activities for a total acreage of 359,562 square kilometers net to Eni (357,854 square kilometers net to Eni as of December 31, 2019). In the first half of 2020, changes in total net acreage mainly derived from: (i) entry in Albania and acquisition of new leases mainly in Oman, Indonesia and Norway for a total acreage of approximately 13,150 square kilometers; (ii) the relinquishment of licenses mainly in Myanmar, Indonesia and Pakistan for a total acreage of approximately 11,800 square kilometers; (iii) net acreage increase also due to interest changes mainly in Myanmar and Australia for a total acreage of 2,200 square kilometers; and (iv) net acreage decrease mainly in Algeria, Cyprus and Egypt for a total acreage of 1,850 square kilometers.

In the first half of 2020, a total of 19 new exploratory wells were drilled (9.5 being Eni’s share), as compared to 19 exploratory wells drilled in the first half of 2019 (10.1 being Eni’s share).

OPERATING REVIEW | GAS & POWER       11

GAS & POWER

Supply of natural gas

In the first half of 2020, Eni’s consolidated subsidiaries supplied 29.49 bcm of natural gas, with a decrease of 8.30 bcm or 22% from the first half of 2019.

Gas volumes supplied outside Italy from consolidated subsidiaries (26.53 bcm), imported in Italy or sold outside Italy, represented approximately 90% of total supplies, with a decrease of 8.38 bcm or down by 24% from the first half of 2019 mainly reflecting lower volumes purchased in Russia (down by 2.82 bcm), Algeria (down by 1.90 bcm), and the Netherlands (down by 1.12 bcm) partially offset by higher purchases in Norway (up by 0.11 bcm). Supplies in Italy (2.96 bcm) slightly increased by 2.8% from the first half of 2019.

SALES

In the first half of 2020, natural gas sales were 30.67 bcm, down by 21.6% from the first half of 2019, due to weaker seasonal sales and the impact of an ongoing economic downturn driven by the lockdown measures adopted in Italy, Europe and Extra European Countries to contain the spread of COVID-19.

Sales in Italy were down by 11.5% to 18.10 bcm, mainly due to lower sales marketed in all segments, mainly to hub, wholesalers, industrial and thermoelectric segments. Sales in European markets (8.76 bcm) decreased by 26.1% as result of the challenging demand backdrop also following lower gas nominations made by Botas in Turkey and optimization initiatives in Germany.

Power sales were 18.27 TWh in the first half of 2020 and decreased by 5.8% mainly as result of lower volumes marketed to the free market due to an economic slowdown in connection with lockdown measures adopted to contain the COVID-19, partly offset by higher volumes sold to the Italian power exchange.

LNG SALES

LNG sales (4.5 bcm, included in worldwide gas sales) mainly concerned LNG from Qatar, Nigeria, Indonesia and Oman and mainly marketed in Europe, China, Pakistan and Taiwan.

REFINING & MARKETING AND CHEMICALS

REFINING & MARKETING

In the first half of 2020, Eni’s Standard Refining Margin – SERM – reported non-remunerative values (2.9 $/barrel, down by 19% from the first half of 2019) due to shrinking crack spreads of leading products (mainly gasoline and gasoil) due to a challenged demand backdrop with consumption levels severely hit by the pandemic. This trend was exacerbated by the start of an uptrend in the cost of the oil feedstock since the implementation of the production cuts resolved by the OPEC+ agreement. Furthermore, the reduction of Ural crude supplies drove its strong appreciation compared to light-sweet crudes, such as the Brent (-0.9 $/barrel the average half year discount of the Ural crude vs. the Brent crude), resulting in a sharp decrease of conversion margins. This was an uncommon occurrence, which highlights the relevance of market dislocations.

Eni refining throughputs on own account were 8.26 mmtonnes, down by 25% from the first half of 2019, when excluding to allow a like-for-like comparison, the effect of the acquisition of a 20% interest in ADNOC Refining effective August 1, 2019. The reduced performance was due to sharply lower refinery utilization rates reflecting a challenged demand backdrop as a result of pandemic-induced lockdown measures and storage saturation. Decreased by 20 percentage points the average plant utilization rate (67%).

Bio throughputs were 376 ktonnes, significantly higher than the same period of 2019, due to the start-up of the Gela bio-refinery in August 2019 and lower standstills at the Venice plant.

In the first half of 2020, sales volumes of refined products (12.49 mmtonnes) were down by 3.32 mmtonnes or by 21% from the first half of 2019.

Retail sales in Italy were 2.01 mmtonnes declining in all the segments (down by 29.7%). The decline was due to sharply lower consumption due to lockdown measures, which negatively affected travel. Eni’s retail market share was 23.6% (23.7% in the first half of 2019).

As of June 30, 2020, Eni’s retail network in Italy consisted of 4,153 service stations, recording a decrease from June 30, 2019 (4,204 service stations), resulting from the negative balance of acquisitions/releases of lease concessions (51 units).

Average throughput (621 kliters) slightly decreased by 241 kliters from the first half of 2019 (862 kliters).

Wholesale sales in Italy were 2.67 mmtonnes, down by 27.2% from the first half of 2019 mainly due to lower sales of jet fuel, following declining consumptions due to the lockdown to contain the spread of the COVID-19.

Supplies of feedstock to the petrochemical industry (0.30 mmtonnes) decreased by 28.6%.

Retail and wholesale sales in the rest of Europe of 2.11 mmtonnes were down by 10.2% from the first half of 2019 mainly as a result of lower volumes marketed in Spain, Austria, France and Switzerland, following the lower demand due to the lockdown, partly offset by higher sales in Germany due to the restart of the Vohburg plant.

Other sales in Italy and outside Italy were 5.17 mmtonnes, down by 17.7% from the first half of 2019.

CHEMICALS

Petrochemical production of 3,498 ktonnes decreased by 467 ktonnes (down by 11.8%) mainly in the intermediates business due to higher standstills at the Priolo, Brindisi and Dunkerque hubs following the the COVID-19 emergency, partly offset by lower downtimes at the Porto Marghera hub.

Petrochemical sales of 1,903 ktonnes decreased by 255 ktonnes (down by 11.8%). The reduction was reported mainly in the intermediate, elastomers and polyethylene product lines due to weaker demand at the main end-markets, particularly the automotive sector, as result of a global economic downturn following the lockdown measures to contain the spread of the COVID-19. These trends have been partly mitigated by higher sales volumes for styrenics due to brisk demand for certain sub-segments tied to the COVID-19 emergency, like packaging.

Petrochemical product margins reported a strong rebound in the intermediates and polyethylene segments driven by higher demand and lower availability of products imported from extra-European countries; other segments (styrenics and elastomers) reported margins in line y-o-y as result of a global economic downturn. In particular, the cracker margin reported a strong recovery in March and April when the oil market fell abruptly; nevertheless, this trend began reverting after the implementation of OPEC+ cuts, which supported the feedstock price.

Financial review

PROFIT AND LOSS ACCOUNT

Reported results

The collapse of the global energy demand and of hydrocarbon prices in the first half of 2020 due to the worldwide lockdown measure, which negatively affected economic activity and travel in response to the COVID-19 pandemic crisis, had negative and material effects on the Group results and net financial position at June 30, 2020. In the first half of 2020, net loss attributable to Eni’s shareholders was €7,335 million compared to the net profit of €1,516 million in the same period of 2019 due to an operating loss of €3,775 million (operating profit of €4,749 million in the first half of 2019). Net cash provided by operating activities decreased by over 60% to €2,378 million, while net borrowing excluding the IFRS 16 lease liabilities increased by €2,852 million. The management has promptly implemented widespread initiatives to strengthen liquidity and the robustness of the balance sheet by reviewing the Group 2020-2021 industrial plans. In particular capex has been cut by approximately €2.6 billion for 2020, approximately 35% lower than the initial capital budget, operating expenses are expected to be reduced by €1.4 billion on annual basis, with savings in all business units and the shareholders remuneration policy has been reviewed (for further information see related paragraph in the risk factors section).

Approximately 50% of the EBIT and 80% of the cash flow contraction were driven by a deteriorated scenario due as featured by a sharp decline both in the price of the Brent crude oil benchmark (down by 40%) and in the benchmark gas price at the Italian spot market “PSV” (down by 51%), leading to reduced equity production realization prices. In addition, the operating result was affected by the industrial and operational impacts associated with the COVID-19 emergency and impairment losses taken at non-current assets. In particular, the negative impacts associated with COVID-19 included lower hydrocarbon productions due to the capex cuts, reduced sales in all businesses due to the drop in demand for fuels, gas and power, lower offtakes at LNG supply contracts in Asia due to the lockdown and lower gas demand in certain markets.

Relating to the critical accounting estimates used in the preparation of consolidated financial statements, having considered the prospect of the COVID-19 pandemic having an enduring impact on the global economy and the energy scenario, management revised the Company’s outlook for hydrocarbons prices by reducing the long-term price of the Brent benchmark crude oil to 60 $ per barrel in real terms 2023, which represent the main driver in the Group’s capital allocation processes and to evaluate the recoverability of the book values of fixed assets.

The new vs long-term deck of the Brent crude at 60 $/barrel in 2023 real terms marks a significant decline compared to the previous assumption of 70 $/barrel utilized in the previous industrial plan which was included in the 2019 annual report accounting estimates. For the years 2021-2022, the Brent price is expected at 48 and 55 $/barrel respectively (compared to the previous assumptions of 55 and 70 $/barrel). Spot gas prices at the Italian hub (PSV) are expected at 5.5 $/mmBTU in 2023 compared to the previous assumption of 7.8 $/mmBTU). Following the new price assumptions and the review of the industrial plan in the short-to-medium term, management recorded impairment losses of €2.75 billion, of which €1.7 billion relating to oil&gas assets driven by a changed outlook for long-term hydrocarbons prices and lower expenditures and approximately €1 billion to refineries driven by the collapse of fuel consumption and lower margins. Finally the operating performance was affected by the impact of falling oil and product prices on inventories evaluation, which were aligned to their net realizable values at period end (resulting in an operating charge of €1.4 billion).

The economic crisis due to COVID-19 also negatively impacted results at equity-accounted JVs and associates. The Group incurred losses of €1,379 million at joint ventures and other industrial investments which were negatively affected by the same market and industrial trends as operated activities, as well as the impact of USD appreciation against all major currencies leading to the incurrence of exchange rate expenses, in addition to impairment losses of tangible assets and inventories valuation allowance.

In the first half 2020 the Group incurred income taxes despite a pre-tax loss of approximately €5.7 billion due to the economic crisis caused by the COVID-19 having an enduring impact on the hydrocarbons demand and the revision of the long-term prices and of future cash flows in Eni's activities.

The projections of lower, future taxable income against which offset deferred tax assets had two impacts: the recognition of tax charges due to a write-off of deferred tax assets (approximately €0.8 billion) and a reduced capacity to recognize deferred taxes on the losses of the period.

The following table shows the main scenario indicators reported in the first half of 2020:

(a) Price per barrel. Source: Platt’s Oilgram.

(b) Source: ECB.

(c) In $/bbl FOB Mediterranean Brent dated crude oil. Source: Eni calculations. Approximates the margin of Eni's refining system in consideration of material balances and refineries' product yields.

(d) €/kcm.  

Adjusted results and breakdown of special items

(a) For further information see table in the following page.

For better evaluate the main business trends, management prepares the adjusted results which exclude the extraordinary charges, above mentioned, relating mainly to non-current assets impairment losses, tax credits and inventory loss.

In the first half of 2020, the Group’s adjusted operating profit of €873 million was €3.76 billion lower than the first half 2019. Net of scenario effects of -€3.6 billion and the negative impacts associated with COVID-19 of €0.5 billion¹, the underlying performance was positive for €0.3 billion. This result leverages on the positive performance of the refining business, thanks to higher margins and volumes of bio throughputs which benefitted from the start-up of the Gela bio-refinery in August 2019, as well as the better operating performance in the G&P business due to optimization initiatives at the gas and power asset portfolio against the backdrop of high price volatility, and the performance of the retail business.

The Group reported an adjusted net loss of €655 million due to a weaker operating performance and to lower results at equity-accounted JVs and associates due to a deteriorated macroeconomic backdrop as well as a significantly increased tax rate.

The deteriorated scenario due to COVID-19 had a negative and material impact on the Group's adjusted tax rate of the first half (see the reconciliation table on page 31). The main driver was a sharply higher tax rate recorded in the E&P segment. This was due to a reduced capacity to recognize deferred taxes on the losses of the period, due to the projections of lower expected taxable income against which offset the deferred tax assets, the higher share of pre-tax profit earned in E&P countries with higher rates of taxes (such as Egypt, the United Arab Emirates, Libya and Algeria) and to the higher incidence of non-taxable/non-recoverable expenses (costs related to licenses in exploration phase), as well as by a tax disoptimization relating to a non-deductible loss incurred at the reselling of the gas entitlements of a Libyan partner, which increased due widening differentials between oil-linked prices and spot prices in Europe. Furthermore, the Group’s tax rate was affected by the fact that in the mid-downstream segments the deferred tax assets accrued at losses of the period were determined at lower tax rate compared to the E&P.

¹ They comprise a reduction in hydrocarbon production due to capex cut and lower global gas demand, lower offtakes at LNG supply in Asia, lower production sale volumes in R&M and Chemicals, higher allowances for doubtful accounts due to an expected deterioration in the counterparty risk.

The breakdown of special items of operating profit by segment (a net charge of €3,254 million in the first half) is the following:

Special items of investments included: (i) charges of €758 million relating to the Vår Energi JV, driven by impairment losses recorded at oil&gas assets due to a revised oil price outlook. A special charge was also recorded in connection with accrued currency translation differences at finance debt denominated in a currency other than the reporting currency for which the reimbursement cash outflows are expected to be matched by highly probable cash inflows from the sale of production volumes, in the same currency as the finance debt as part of a natural hedge relationship; (ii) a loss of €296 million relating to non-current assets impairment losses driven by a reviewed scenario of refining margins and the alignment of raw material and products inventories to their net realizable values at period end at ADNOC Refining; (iii) charges of €235 million relating to Saipem.

| Analysis of profit and loss account items

Revenues

Total revenues amounted to €22,490 million. Eni’s sales from operations in the first half of 2020 (€22,030 million) decreased by 40% from the first half of 2019, reflecting the COVID-19 effect, in particular: decline in price of oil (the Brent crude oil benchmark down by 40%) and of gas in all geographies (in particular, the Italian spot market “PSV” down by 51%), lower sales of energy, fuels and chemical products, as well as lower production availability due to full enactment of lockdown measure in response to the pandemic emergency.

Finance income (expense)

Net finance expense (€526 million) reduced by €26 million from the first half of 2019. The main drivers were: (i) a decrease of other finance expense (up by €82 million) reflecting the lower cost of debt, as well as the circumstance that in 2019 was reported the interest expense accrued on risk provisions, in particular in the E&P segment; (ii) the reduction of finance expense (up by €78 million) relating to the accretion discount of liabilities recognized at present value following lower discount rates. These positive changes were offset by the negative change in the fair value of exchange rate derivatives (down by €25 million), which changes are recognized in the income statement because such derivatives did not meet the formal criteria to be designed as hedges under IFRS 9, and by exchange rate derivatives (down by €50 million), whose net impact (down by €75 million) is due to the appreciation of the US dollar vs Euro.

Net income (expense) from investments

Net income from investments amounted to €1.379 million and related to:

SUMMARIZED GROUP BALANCE SHEET ²

As of June 30, 2020, fixed assets decreased by €5,301 million mainly due to: (i) the impairment losses and amortization and depletion of assets, partly offset by capex incurred in the period; (ii) the reduced item “Equity accounted investments and other investments” driven by losses incurred at equity-accounted entities (Vår Energi and ADNOC Refining); (iii) the write-down of compulsory stock following a decline in crude oil and product prices.

Net working capital (-€15,689 million) decreased by €898 million mainly driven by the lower value of oil and products inventories due to the alignment of the book value to market prices at the period-end (-€576 million), the write-off of deferred tax assets due to the deteriorated profitability outlook, as well as lower trade receivables, partly offset by lower trade liabilities (-€2,537 million) due to price effects.

Shareholders’ equity (€38,839 million) decreased by €9,061 million compared to December 31, 2019 mainly due to the net loss for the period (-€7,332 million), 2019 final dividend distribution (€1,536 million), as well as a negative change in the fair value of the cash flow hedge reserve (-€123 million) and foreign currency translation differences (-€164 million) reflecting the slight depreciation of the dollar vs. the euro as of June 30, 2020 vs. December 31, 2019.

² For a reconciliation to the statutory statement of cash flow see the paragraph “Reconciliation of Summarized Group Balance Sheet and Statement of Cash Flows to Statutory Schemes”.

Net borrowings³ as of June 30, 2020 was €19,971 million increasing by €2,846 million from 2019. When excluding the lease liabilities, net borrowings were re-determined at €14,329 million increasing by €2,852 million.

Leverage⁴ – the ratio of net borrowings to total equity - was 0.51 at June 30, 2020. The impact of the lease liability pertaining to joint operators in Eni-led upstream unincorporated joint ventures weighted on leverage for 5 points. Excluding the impact of IFRS 16 altogether, leverage would be 0.37.

³ Details on net borrowings are furnished on page 33.

⁴ Non-GAAP financial measures and other alternative performance indicators disclosed throughout this press release are accompanied by explanatory notes and tables in line with guidance provided by ESMA guidelines on alternative performance measures (ESMA/2015/1415), published on October 5, 2015. For further information, see the section “Non-GAAP measures” of this press release.

SUMMARIZED GROUP CASH FLOW STATEMENT ⁵

Net cash provided by operating activities in the first half of 2020 was €2,378 million, 64% lower than the same period of the previous year due to a deteriorated scenario and the circumstance that the 2019 amount included higher dividends paid by the JV Vår Energi (€1,047 million in the first half of 2019 vs. €190 million in the first half of 2020).

Changes in working capital in the first half of 2020 were positive for €688 million and reflected a lower amount of trade receivables due in subsequent reporting periods divested to financing institutions compared to the fourth quarter 2019 (-€0.8 billion) as well as a reduction in the book value of inventories due to the alignment to their net realizable values at period-end, following the worsening scenario.

Adjusted net cash before changes in working capital at replacement cost was €3,258 million declining by 52% from the same period of the previous year due to scenario effects of -€3.5 billion, including the impact of dividends from equity accounted entities, operational impacts associated with the COVID-19 for -€0.6 billion, a non-cash change in fair valued derivatives for -€0.3 billion, while the underlying performance was a positive of €0.8 billion.

⁵ For a reconciliation to the statutory statement of cash flow see the paragraph “Reconciliation of Summarized Group Balance Sheet and Statement of Cash Flows to Statutory Schemes”.

Group cash tax rate was 34% (32% in the first half of 2019).

Cash outflows for capital expenditure and investments were €2,832 million, including the acquisition of the Evolvere company and an interest in Falck Renewables. Net of the above-mentioned non-organic items and of utilization of trade advances cashed by Egyptian partners in previous reporting periods in relation to the financing of the Zohr project (€0.2 billion), net capital expenditures amounted to €2.86 billion.

In the first half of 2020 net capex were fully funded by the adjusted cash flow, thanks also to a 24% cut implemented by management following a review of the industrial plan 2020-2021 in response to the pandemic crisis.

Capital expenditure

In the first half of 2020, capital expenditure amounted to €2,568 million (€4,236 million in the first half of 2019) and mainly related to:

- development activities (€1,740 million) mainly in Egypt, Indonesia, the United Arab Emirates, Mexico, the United States, Iraq, Mozambique and Kazakhstan;

- refining activity in Italy and outside Italy (€245 million) mainly aimed at reconstruction works of the EST conversion plant at the Sannazzaro refinery, maintain plants’ integrity as well as HSE initiatives; marketing activity for regulation compliance and stay in business initiatives in the refined product retail network in Italy and in the rest of Europe (€29 million);

- initiatives relating to gas marketing (€85 million).

| Results by segment ⁶

Exploration & Production

In the first half of 2020, the Exploration & Production segment reported an adjusted operating profit of €230 million, with a reduction of €4.22 billion compared the first half of 2019. The scenario effect of -€3.6 billion reflects the decline in both the price of the Brent crude oil benchmark (down by 40%) and of gas in all geographies (in particular the Italian spot market “PSV” down 51%), leading to reduced equity realization prices. Furthermore, the result of the period was affected by a loss incurred in reselling the gas entitlements of a Libyan partner, which were marketed in Europe. This reselling price is excluded from the calculation of Eni’s average realized gas prices disclosed in the table of page 9, because Eni’s realized prices are calculated only with reference to equity production. Scenario effects included higher amortization charges driven by an increased asset retirement cost capitalized as part of property, plant and equipment due to lower discount rates y-o-y. Unfavorable volume/mix effects and bigger write-off expenses relating to unsuccessful exploration wells also negatively affected the performance and were partly offset by savings at operating expenses.

The segment reported an adjusted net loss of €573 million due to a lower operating profit and lower results accrued at the equity-accounted entities, mainly Eni’s share of results at the JV Vår Energi (a reduction of €57 million) and at Angola LNG (a reduction of €51 million) driven by a significantly deteriorated trading environment.

The adjusted tax rate in the first half was negatively and materially affected by a worsening scenario that on one hand reduced the business capacity to recognize deferred tax assets on the losses of the period, due to the projections of lower future taxable income, also determining the concentration of positive pre-tax results in countries with higher taxation and on the other hand exacerbated the impact of certain trends such as the non-deductibility/non-recoverability of some cost items (such as costs related to licenses in exploration phase). Furthermore, the tax rate was negatively affected by a tax disoptimization due to the fact that a loss incurred at reselling the gas entitlements of a Libyan partner was a non-deductible tax item, whose amount increased significantly in the quarter due to the widening differentials between oil-linked gas prices and spot prices in Europe.

⁶ Explanatory notes and tables detail certain other alternative performance indicators in line with guidance provided by ESMA guidelines on Alternative performance measures (ESMA/2015/1415), published on October 5, 2015. For a detailed explanation, see section “Alternative performance measures” in the following pages of this interim report.

Gas & Power

In the first half of 2020, the Gas & Power segment reported an adjusted operating profit of €649 million, up by 72%, compared to the same period of 2019. The better operating performance of the GLP business was driven by optimization initiatives at the gas and power asset portfolio against the backdrop of high price volatility, partly offset by a declining performance at the LNG business due to the lockdown of Asian economies in response to the COVID-19, which forced a number of buyers to reduce liftings at LNG supply contracts, exacerbating a global glut in the gas market and pricing pressure. The retail business reported an improved performance (the adjusted operating profit was up by €17 million vs. the first half of 2019, up by 10%), despite lower sales due to the COVID-19 pandemic-induced economic downturn and higher provisions for doubtful accounts based on an expected deterioration in the counterparty risk. Those negatives were more than offset by gains due to commercial/efficiency initiatives, increasing in customer base, the contribution of extra-commodity products and services in Italy as well as by the development in France and Greece.

Adjusted net profit increased by 63% to €431 million.

Refining & Marketing and Chemicals

In the first half of 2020, the Refining & Marketing and Chemicals segment reported an adjusted operating profit of €89 million more than doubled compared to the first half of 2019 due to an improved performance of the Refining & Marketing business.

In the first half of 2020, the Refining & Marketing business reported an adjusted operating profit of €220 million, €113 million higher than the operating profit in the first half of 2019. The refining business reported a positive performance thanks to higher margins and volumes of bio throughputs which benefitted from the start-up of the Gela bio-refinery in August 2019. Those positives were partly offset by lower refinery utilization rates at traditional cycles and lower refining margins and profitability at complex throughputs due to COVID-19 widespread effects. The marketing business reported lower results both in the retail and wholesale segments, due to a collapse of fuel sales due to full enactment of lockdown measures in Italy in response to COVID-19 pandemic, partly offset by the efficiency and optimization initiatives.

In the first half of 2020, the Chemical business reported an adjusted operating loss of €131 million, worsening from the first half 2019 (down by 77%). This result was affected by ongoing weak demand trends in the main elastomers end-markets, in particular the automotive sector, which were exacerbated by the ripple effects on the global economic caused by the lockdown measures related to COVID-19, as well as lower product availability due to longer maintenance standstills at the main production hubs in response to the COVID-19 emergency (particularly at the Priolo and Brindisi hub). These trends were offset by a recovery in polyethylene margins, driven by the higher demand and lower extra-European imports which helped mitigate the competitive pressure.

The Refining & Marketing and Chemicals reported an adjusted net profit of €16 million compared to a net loss of €12 million in the first half of 2019, due to better operating performance and dividends earned from entities valued at fair value through OCI, partially offset by a loss related to the investment in ADNOC Refining, which was negatively affected by a weak margins scenario in the Middle East and planned maintenance activities.

| Alternative performance measures (Non-GAAP measures)

Management evaluates underlying business performance on the basis of Non-GAAP financial measures, which are not provided by IFRS (“Alternative performance measures”), such as adjusted operating profit, adjusted net profit, which are arrived at by excluding from reported results certain gains and losses, defined special items, which include, among others, asset impairments, including impairments of deferred tax assets, gains on disposals, risk provisions, restructuring charges, the accounting effect of fair-valued derivatives used to hedge exposure to the commodity, exchange rate and interest rate risks, which lack the formal criteria to be accounted as hedges, and analogously evaluation effects of assets and liabilities utilized in a relation of natural hedge of the above mentioned market risks. Furthermore, in determining the business segments’ adjusted results, finance charges on finance debt and interest income are excluded (see below). In determining adjusted results, inventory holding gains or losses are excluded from base business performance, which is the difference between the cost of sales of the volumes sold in the period based on the cost of supplies of the same period and the cost of sales of the volumes sold calculated using the weighted average cost method of inventory accounting as required by IFRS, except in those business segments where inventories are utilized as a lever to optimize margins.

Finally, the same special charges/gains are excluded from the Eni’s share of results at JVs and other equity accounted entities, including any profit/loss on inventory holding.

Management is disclosing Non-GAAP measures of performance to facilitate a comparison of base business performance across periods, and to allow financial analysts to evaluate Eni’s trading performance on the basis of their forecasting models.

Non-GAAP financial measures should be read together with information determined by applying IFRS and do not stand in for them. Other companies may adopt different methodologies to determine Non-GAAP measures.

Follows the description of the main alternative performance measures adopted by Eni. The measures reported below refer to the performance of the reporting periods disclosed in this press release:

Adjusted operating and net profit

Adjusted operating and net profit are determined by excluding inventory holding gains or losses, special items and, in determining the business segments’ adjusted results, finance charges on finance debt and interest income. The adjusted operating profit of each business segment reports gains and losses on derivative financial instruments entered into to manage exposure to movements in foreign currency exchange rates, which impact industrial margins and translation of commercial payables and receivables. Accordingly, also currency translation effects recorded through profit and loss are reported within business segments’ adjusted operating profit. The taxation effect of the items excluded from adjusted operating or net profit is determined based on the specific rate of taxes applicable to each of them. Finance charges or income related to net borrowings excluded from the adjusted net profit of business segments are comprised of interest charges on finance debt and interest income earned on cash and cash equivalents not related to operations. Therefore, the adjusted net profit of business segments includes finance charges or income deriving from certain segment operated assets, i.e., interest income on certain receivable financing and securities related to operations and finance charge pertaining to the accretion of certain provisions recorded on a discounted basis (as in the case of the asset retirement obligations in the Exploration & Production segment).

Inventory holding gain or loss

This is the difference between the cost of sales of the volumes sold in the period based on the cost of supplies of the same period and the cost of sales of the volumes sold calculated using the weighted average cost method of inventory accounting as required by IFRS.

Special items

These include certain significant income or charges pertaining to either: (i) infrequent or unusual events and transactions, being identified as non-recurring items under such circumstances; (ii) certain events or transactions which are not considered to be representative of the ordinary course of business, as in the case of environmental provisions, restructuring charges, asset impairments or write ups and gains or losses on divestments even though they occurred in past periods or are likely to occur in future ones. Exchange rate differences and derivatives relating to industrial activities and commercial payables and receivables, particularly exchange rate derivatives to manage commodity pricing formulas which are quoted in a currency other than the functional currency are reclassified in operating profit with a corresponding adjustment to net finance charges, notwithstanding the handling of foreign currency exchange risks is made centrally by netting off naturally-occurring opposite positions and then dealing with any residual risk exposure in the derivative market. Finally, special items include the accounting effects of fair-valued commodity derivatives relating to commercial exposures, in addition to those which lack the criteria to be designed as hedges, also those which are not eligible for the own use exemption, including the ineffective portion of cash flow hedges, as well as the accounting effects of commodity and exchange rates derivatives whenever it is deemed that the underlying transaction is expected to occur in future reporting periods.

Correspondently, special charges/gains also include the evaluation effects relating to assets/liabilities utilized in a natural hedge relation to offset a market risk, as in the case of accrued currency differences at finance debt denominated in a currency other than the reporting currency, where the cash outflows for the reimbursement are matched by highly probable cash inflows in the same currency. The deferral of both the unrealized portion of fair-valued commodity and other derivatives and evaluation effects are reversed to future reporting periods when the underlying transaction occurs.

As provided for in Decision No. 15519 of July 27, 2006 of the Italian market regulator (CONSOB), non-recurring material income or charges are to be clearly reported in the management’s discussion and financial tables.

Leverage

Leverage is a Non-GAAP measure of the Company’s financial condition, calculated as the ratio between net borrowings and shareholders’ equity, including non-controlling interest. Leverage is the reference ratio to assess the solidity and efficiency of the Group balance sheet in terms of incidence of funding sources including third-party funding and equity as well as to carry out benchmark analysis with industry standards.

Gearing

Gearing is calculated as the ratio between net borrowings and capital employed net and measures how much of capital employed net is financed recurring to third-party funding.

Adjusted net cash before changes in working capital at replacement cost

Adjusted net cash is defined as net cash provided from operating activities before changes in working capital at replacement cost and excluding certain non-recurring charges.

Free cash flow

Free cash flow represents the link existing between changes in cash and cash equivalents (deriving from the statutory cash flows statement) and in net borrowings (deriving from the summarized cash flow statement) that occurred from the beginning of the period to the end of period. Free cash flow is the cash in excess of capital expenditure needs. Starting from free cash flow it is possible to determine either: (i) changes in cash and cash equivalents for the period by adding/deducting cash flows relating to financing debts/receivables (issuance/repayment of debt and receivables related to financing activities), shareholders’ equity (dividends paid, net repurchase of own shares, capital issuance) and the effect of changes in consolidation and of exchange rate differences; (ii) changes in net borrowings for the period by adding/deducting cash flows relating to shareholders’ equity and the effect of changes in consolidation and of exchange rate differences.

Net borrowings

Net borrowings is calculated as total finance debt less cash, cash equivalents and certain very liquid investments not related to operations, including among others non-operating financing receivables and securities not related to operations. Financial activities are qualified as “not related to operations” when these are not strictly related to the business operations.

Coverage

Financial discipline ratio, calculated as the ratio between operating profit and net finance charges.

Current ratio

Measures the capability of the company to repay short-term debt, calculated as the ratio between current assets and current liabilities.

Debt coverage

Rating companies use the debt coverage ratio to evaluate debt sustainability. It is calculated as the ratio between net cash provided by operating activities and net borrowings, less cash and cash-equivalents, securities held for non-operating purposes and financing receivables for non-operating purposes.