Italgas Spa · MIL:IG
Italgas Spa — H1 2020 Earnings Presentation
36 slides from Italgas Spa's earnings presentation, Jul 27, 2020
Slide 1: 1H 2020 consolidated results
1H 2020 consolidated results Milan 27.07.2020
Slide 2: 1H 2020 Results: Key highlights
1H 2020 RESULTS 2Q saw at operating level an acceleration of the trends of 1Q Key highlights The negative impacts of resolution 570 and Covid-19 were mitigated 646.8 462.7 609.4 433.9 1H 2020 1H 2020 Revenues +6.1% EBITDA +6.6% 1H 2019 1H 2019 € mn € mn 241.6 252.8 166.2 153.4 1H 2020 1H 2020 Net EB
Slide 3: 1H 2020 Results: Key highlights
1H 2020 RESULTS Key highlights 369.5 507.7 388.8 317.7 1H 2020 1H 2020 Operating Capex +16% -23% 1H 2019 1H 2019 Cash Flow € mn € mn 4,410.6 4,625.8 Capex was up 16%, despite Covid-19 Operating Cashflow declined due to 1H 2020 differences in working capital (TEE, Net + 215 FY 2019 regulation & taxes
Slide 4: Capex
CAPEX 1H 2020 marks a new high 1H capex 369.5 317.7 +16% yoy of which c90mn in digitization* €mn 1H 2019 1H 2020 Investment activity: we confirm our target Network construction supported by effort on 2Q capex almost digitization in line with 2Q 2019 206.0 despite Covid-19 152.4 165.3 163.5 related l
Slide 5: Capex 1H 2020
CAPEX Some changes in mix 1H 2020 486km new networks pipes built of which 216km in Sardinia 555k* new smart meters installed 14.7k** net increase in active PDR connected since January Metering 14% Sardinia 17% Distribution 76% Development, maintenance 49% Other 10% Digitization 10% (*) of which 411k
Slide 6: Major construction sites
MAJOR CONSTRUCTION SITES including Sardinia % of sites 11% 13% 86% 100% 100% Number of sites, end of the month* Full takeout of WorkOnSite App in enabled sites This is positive for costs, 145 144 104 quality and safety 21 25 Jan Feb Mar April May June 15-July Sardinia Other # of sites with WorkOnSit
Slide 7: Smart meters replacement
SMART METERS REPLACEMENT June remained challenging Lockdown Non-essential Non-essential starts activities activities suspended restart Access to private sites was slower than expected in June Number of meters We expect a pick-up in the coming weeks now that the operating procedures have been agreed
Slide 8: Regulated services back to pre-lockdown levels
REGULATED SERVICES back to pre-lockdown levels Lockdown Non-essential activities Non-essential activities starts suspended restart We see a clear pick up Number of interventions in requests for regulated services from gas sale companies We expect a further acceleration Week beginning 8 (*) Week of 1
Slide 9: Incoming calls
INCOMING CALLS significant reduction vs 2019 % drop in number of -5% -1% -32% -43% -35% -16% calls yoy The number of incoming calls* is recovering but remains below last year Number of calls levels as expected Jan Feb Mar Apr May June 2019 2020 9 (*) to the integrated supervision centre
Slide 10: Results
RESULTS 1H 2020 1H 2019 1H 2020 Change €mn Revenues 609.4 646.8 37.4 Operating expenses - 175.5 - 184.1 - 8.6 EBITDA 433.9 462.7 28.8 + 6.6% Depreciation & amortisation - 192.3 - 209.9 - 17.6 EBIT 241.6 252.8 11.2 + 4.6% Net interest income (expenses) - 24.1 - 26.4 - 2.3 Net income from associates 1
Slide 11: Revenues +6.1% vs 1H 2019
RESULTS Revenues +6.1% vs 1H 2019 1H 2020 €mn 7.7 (21.5) 68.0* (10.9) (20.3) 14.4 RAB growth limits negative impact of 646.8** 609.4 resolution 570 1H 2019 570 Other Toscana M&A Other Capital Gain 1H 2020 revenues resolution regulated Energia Carryover 1H 2019 revenues impact tariff components (RAB
Slide 12: Results: revenues breakdown
RESULTS 1H 2020 1H 2019 1H 2020 Change €mn Regulated revenues 576.4 626.0 49.6 Distribution 524.2 590.1 65.9 Tariff contribution for meters replacement 15.5 5.2 - 10.3 Other distribution revenues 36.7 30.7 - 6.0 Other revenues 33.0 20.8 - 12.2 TOTAL REVENUES * 609.4 646.8 37.4 12 (*) does not includ
Slide 13: Operating expenses +4.9% vs 1H 2019
RESULTS Operating expenses +4.9% vs 1H 2019 1H 2020 €mn 3.7 (1.8) (10.8) 17.6 Steep acceleration in efficiencies -6.2% vs previous year 175.5 184.1 (like for like basis) 1H 2019 Toscana M&A TEE, Net Efficiencies 1H 2020 Operating Energia Carryover others Operating expenses expenses 13
Slide 14: Results: costs breakdown
RESULTS 1H 2020 1H 2019 1H 2020 Change €mn Distribution fixed costs 125.5 127.3 1.8 Net labour cost 69.0 73.3 4.3 Net external cost 56.5 54.0 - 2.5 Other activities 10.8 13.4 2.6 Net labour cost 0.9 1.8 0.9 Net external cost 9.9 11.6 1.7 Other costs 1.0 4.0 3.0 Tee 7.8 4.9 - 2.9 Concessions fees 30.
Slide 15: EBIT +4.6% vs 1H 2019
RESULTS EBIT +4.6% vs 1H 2019 1H 2020 €mn 28.8 (17.6) + Bigger asset base + Toscana Energia - Lower smart meters acc. D&A 241.6 252.8 1H 2019 EBITDA D&A 1H 2020 EBIT EBIT 15
Slide 16: Net Profit after minorities -7.7% vs 1H 2019
RESULTS Net Profit after minorities -7.7% vs 1H 2019 1H 2020 €mn Tax rate 28.4% 11.2 (2.3) (10.8) (1.5) (9.4) Lower cost of debt but higher average gross debt due also to Toscana Energia consolidation* 166.2 162.8 153.4 1H 2019 EBIT Net Net Income 1H 2020 Minorities 1H 2020 Net Financial Income from
Slide 17: Cashflow from operations covers capex
RESULTS Cashflow from operations covers capex 1H 2020 €mn 40.3 185.7 388.8 (387.3) 162.8 1.5 (10.7) (206.0) (215.2) Net Depreciation Change in Cash flow Net capex Free Cash Financial Dividends Change profit & other working from flow before investments in Net items capital operation M&A Debt 17
Slide 18: Debt structure
DEBT STRUCTURE solid 900 Debt structure EIB Bond 600 300 0 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 beyond 2031 • New €500m bond, maturity 2025, coupon 0.25% • No refinancing Floating Banking lines needs until 2022 8% 5% 18% • Cost of debt 1.1% best in Institutional 77% Bond class
Slide 19: Results: net invested capital and net debt
RESULTS 1H 2020 FY 2019 1H 2020 Change €mn Net invested capital 6,280.2 6,432.9 152.7 Fixed capital 6,335.0 6,526.5 191.5 Tangible fixed assets 350.0 357.2 7.2 Net intangible fixed assets 6,176.1 6,326.1 150.0 Net payables investments - 225.0 - 190.9 34.1 Equity-accounted and other investments 33.9
Slide 20: Closing remarks
CLOSING REMARKS 1H 2020 Innovation and digitization have proven to be an invaluable asset 1H 2020 performance proves the resiliency of our business and the goodness of our choices Efficiencies and capex delivery are key priorities New 5-years bond confirms our sound financial profile We confirm
Slide 21: Sustainability
SUSTAINABILITY WG itaigas
Slide 22: Sustainability plan main achievements
SUSTAINABILITY PLAN main achievements MAIN ACHIVEMENTS DEVELOPING A • Inclusion in main sustainability indexes I SUSTAINABILITY • Suppliers rating system with sustainability CULTURE topics included • Adoption of a Diversity Policy • 21 h training hours / person PUT PEOPLE AT • 81% of new joiners wer
Slide 23: Sustainability plan main achievements
SUSTAINABILITY PLAN main achievements MAIN ACHIVEMENTS CREATE VALUE • 95% of gas sales companies involved in training IV FOR CUSTOMERS and webinars AND THE MARKET • More than €700 mn spent for the innovation and digitization of the network • -5% energy intensity CONTRIBUTE TO (vs 2017) V THE EFFICIE
Slide 24: Focus: developing a sustainability culture
FOCUS Of total share ITALGAS SRI developing a 11.5% capital as of sustainability culture SHAREHOLDERS June 2020 Our effort to integrate sustainability in the corporate culture and industrial process is getting recognised by the market 24
Slide 25: Appendix
APPENDIX 25
Slide 26: Guidance
GUIDANCE 2020 expected Trend 2020 vs 2019 performance €mn Revenues ~1.3bn EBITDA 960-980 EBIT 530-550 Capex >700 Net Debt* ~4.5bn Leverage** ~60% 26 (*) ex IFRS 16, expected in line with 2019, (**) including IFRS 16, TFR and work in progress
Slide 27: P&L quarterly
RESULTS P&L quartely 1Q 2020 2Q 2020 3Q 2020 4Q 2020 €mn Revenues 327.1 319.7 Operating expenses - 99.8 - 84.3 EBITDA 227.3 235.4 Depreciation & amortisation - 104.4 - 105.5 EBIT 122.9 129.9 Net interest income (expenses) - 13.4 - 13.0 Net income from associates 0.9 0.1 EBT 110.4 117.0 Income taxes
Slide 28: Results 2Q 2020
RESULTS 2Q 2020 2Q 2019 2Q 2020 Change €mn Revenues 298.6 319.7 21.1 Operating expenses - 83.9 - 84.3 - 0.4 EBITDA 214.7 235.4 20.7 Depreciation & amortisation - 96.7 - 105.5 - 8.8 EBIT 118.0 129.9 11.9 Net interest income (expenses) - 11.9 - 13.0 - 1.1 Net income from associates 6.0 0.1 - 5.9 EBT 1
Slide 29: Results 2016-2019
RESULTS Delta 2016 - 2019 € mln 2016 2017 2018 2019 2019 vs 2016 Revenues 1,077.9 1,124.2 1,178.1 1,257.9 +16.7% Operating Costs (416.3) (348.0) (338.6) (350.4) -15.8% EBITDA adjusted 684.4 781.2 842.0 907.5 +32.6% EBIT adjusted 358.8 422.9 456.0 516.0 +43.8% 29
Slide 30: Results 2016-2019: net income, cash flow, net debt
RESULTS 2016 - 2019 Variazione € mn 2016 2017 2018 2019 2019 vs 2016 Net Income (*) 221.1 296.4 315.5 345.2 +56.1% Operating Cash Flow 498.5 (*) 549.4 718.7 697.2 +39.9% Net debt(**) 3,617.4 3,720.3 3,814.3 4,410.6 +21.9% (*) Adjusted 30 (**) Excluding financial charges ex IFRS 16 in 2018 and 2019
Slide 31: Results 2016-2019: capex, RAB, leverage, dividends
RESULTS Variazione 2016 - 2019 € mln 2016 2017 2018 2019 2019 vs 2016 Capex 378.0 521.9 522.7 740,0 +95.8% RAB €6.0bn €6.1bn €6.4bn €7.4bn +23.0% Leverage (*) 59.0% 59.4% 58.7% 60.6% Total Dividends 161.8 168.3 189.3 207.1 +28.0% (*) including IFRS 16, TFR in debt and work in progress in RAB 31
Slide 32: Sardinia today tomorrow
SARDINIA TODAY TOMORROW a strategic role for Italgas # clients 45.000 ~200.000 Potential market Network ~1.100 ~2.000 Medea km Fully digitized 7 operating concessions 10 under construction Concessions in operation ~650 Km LPG / GNL/Natural gas LPG air completed Fuel as of June Under construction GNL
Slide 33: The leading gas distributor in Italy
THE LEADING GAS DISTRIBUTOR in ITALY OPERATING OF WHICH HIGHLIGHTS Consolidated companies AFFILIATES (TOTAL) Subsidiaries Network length 72,667 km 1.871 km Municipalities 1,886 61 Redelivery Points 7.740 mn 0.153 mn Market Share(1) 35% 0,1% 33
Slide 34: Group structure
GROUP STRUCTURE 1G Italgas COMPANY 50% VALUED USING G THE EQUITY Metano METHOD S.Angelo Lodigiano 457. CONSOLIDATION AREA 1G A 100% | 100% a 1G Italgas ( ) ( ) Italgas Reti ‘Acqua wang ©2088"! 120% 6) seosive 51.85% an?) Gaxa Medea toscana dil WG Medea. énergia ° a4 WG GFOBD, Soci none 51.857 100%
Slide 35: Disclaimer
Disclaimer Italgas’s Manager, Giovanni Mercante, in his position as manager responsible for the preparation of financial reports, certifies pursuant to paragraph 2, article 154-bis of the Legislative Decree n. 58/1998, that data and information disclosures herewith set forth correspond to the compan
Slide 36: IR contacts
IR contacts Anna Maria Scaglia Armando Iobbi Investor.relations@Italgas.it