Italgas Spa · MIL:IG
Italgas Spa — Investor Presentation (October 2024)
61 slides from Italgas Spa's investor presentation, Oct 7, 2024
Slide 1: The European Gas Distribution Champion
The European Gas Distribution Champion 2i Rete Gas acquisition and Strategic Plan to 2030 Milan, 7 October 2024
Slide 2: Disclaimer
Disclaimer This presentation contains forward-looking statements regarding future events and the future results of Italgas that are based on current expectations, estimates, forecasts, and projections about the industries in which Italgas operates and the beliefs and assumptions of the management of
Slide 3: Index
Index 1 2i Rete Gas acquisition 2 Gas networks are core for energy transition AI to mark a new untapped performance 3 improvement potential Italian gas distribution business at the centre 4 of Group’s transformation Development of Greece, Water and Esco 5 continues ESG targets extended to the combin
Slide 4: 2i Rete Gas acquisition
TG itaigas 2i Rete Gas acquisition
Slide 5: Italgas to acquire 2i Rete Gas
Italgas to acquire 2i Rete Gas “Italgas Group marks a historic milestone in its long and prestigious history. The acquisition of 2i Rete Gas allows us to become the leading operator in Europe in the gas distribution sector, after being recognized as a global benchmark in terms of innovation and digi
Slide 6: Shareholding structure
2i Rete Gas Key financial and physical data Historical Financial Data Shareholding structure and group overview 2019 2020 2021 2022 2023 Shareholding structure Adj. 736 718 749 730 815 APG Ardian Revenues ~62% ~38% €mn 517 546 497 488 500 Adj. EBITDA F2i Finavias S.à.r.l. Other €mn 64% 36% <0.1% Adj
Slide 7: Transaction fully aligned with core strategic pillars
Transaction fully aligned with core strategic pillars A transformational deal that will lead to the creation of the European champion in regulated gas distribution, with a unique investing and innovation capability, while unlocking significant value- creation opportunities for all stakeholders. Euro
Slide 8: Creating the new European champion of gas distribution
Creating the new European champion of gas distribution…. The deal paves the way for the creation of the largest European operator1 in gas distribution The resulting market share in Italy will continue to be lower than most of the other national 1 champions Country Greece Italy France UK Spain Portug
Slide 9: … while accelerating sector consolidation in Italy
… while accelerating sector consolidation in Italy While waiting for tenders to take place, selected M&A was a way for operators to consolidate. Nevertheless, the sector is still highly fragmented and diverse 1 Thanks to the deal, needed investments will accelerate while enabling uniform sector deve
Slide 10: Energy transition requires best in class operators, with scale and investment capacity
Energy transition requires best in class operators, with scale and investment capacity Creation of the #1 distribution operator in Europe resulting in the ability to lead the ecological transition 2 The energy trilemma Scale is a key competitive advantage for gas distribution Increased recognition o
Slide 11: Strong value creation potential from synergies and efficiencies
Strong value creation potential from synergies and efficiencies… The integration with 2i Rete Gas will lead to €200mn additional EBITDA by 2030, resulting from new areas of efficiency and synergies identified in the two Groups, also made possible 3 by AI €200mn Italgas’ track record in achieving Cos
Slide 12: Unlocking opportunities for additional investments
… unlocking opportunities for additional investments, benefitting from Italgas’ digitization expertise Digitization is core for green gases dispatching, smart maintenance, operational efficiency and uniform sector development. 3 ~€0.8bn 2i Rete Gas1 vs Italgas2 incremental investments driving Higher
Slide 13: Price implies attractive multiples and strong EPS accretion
Price implies attractive multiples and strong EPS accretion Implied deal multiple pre-synergies at discount versus peers and previous transactions 3 Highly attractive transaction terms1 EPS accretion2 ~15% EPS accretion by EV/RAB 2025 multiple of 1.04x 2029 EV/EBITDA 2025 pre-synergies of 8.9x Cost
Slide 14: Mandatory approvals define expected timeline
Mandatory approvals define expected timeline A clear path ahead – Antitrust, Golden Power and customary regulatory clearances as key condition precedents TRANSACTION TRANSACTION ANNOUNCEMENT CLOSING Oct-24 Jun-25 Regulatory filings Regulatory review Regulatory review processes approvals EGM for capi
Slide 15: Gas networks are core for energy transition
2 Gas networks are core for energy transition 15
Slide 16: Decarbonization and competitiveness
Decarbonization and competitiveness European energy costs remain high vs history. To manage long-term security of supply and meet European decarbonization targets, in a fast and efficient way, a pragmatic technology- neutral approach is needed. For Italgas, sector coupling remains the solution. Key
Slide 17: Gas networks are core for energy transition
Gas networks are core for energy transition In Italian PNIEC 20241 gas infrastructure maintains a core role in energy transition, ensuring system security and flexibility if coupled with renewables development. EU CO2 emissions cut EU Biomethane production PNIEC main objectives relevant for DSOs Vs
Slide 18: Biomethane capacity growth gaining momentum
Biomethane capacity growth gaining momentum Italy is among the top-3 countries in Europe in terms of planned biomethane investments to 2030, according to EBA. Italy biomethane Planned investments EU biomethane production production1 in Europe2 targets Mcm 2,300 €4bn 35 512 €3bn GR Steep acceleration
Slide 19: Hydrogen is the energy for the future
Hydrogen is the energy for the future Hydrogen momentum continues to accelerate, Out of $570bn investment announced, $310bn are in a Europe is the largest region in terms more advanced phase (between feasibility study and of announced supply (~14 Mt) operational) ~1,000 projects with full or partial
Slide 20: Our strategy to 2030
Our strategy to 2030 Innovation lead approach is the trademark of our strategy in support of the energy transition and for shareholders’ value maximisation. Now factoring 2i Rete Gas acquisition and the potentials of a new wave of AI-driven transformation across all businesses Low-risk profile, prof
Slide 21: AI to mark new, untapped performance improvement potential
3 AI to mark new, untapped performance improvement potential 21
Slide 22: With gas network digitization almost completed we are already looking at the next step
With gas network digitization almost completed we are already looking at the next step AI will create several opportunities to unlock further improvements in operational excellence and profitability enhancement for all Italgas business areas Key opportunities AI to unlock further return potential In
Slide 23: The innovation lead approach is the trademark of Italgas strategy
The innovation lead approach is the trademark of Italgas strategy By 2030, we anticipate €80m of potential positive impact on EBITDA from AI 1st wave 2017-23 2nd wave 2024-2030 Digital Transformation AI Transformation ECONOMIC IMPACT digitization investments opex efficiencies €0.3bn investments €80m
Slide 24: How we are framing the AI opportunity
How we are framing the AI opportunity We have already identified 100+ potential AI applications across all Italgas’ operations TODAY Smart maintenance models based on Work on Site Machine Learning, to identify critical Remote control of construction portions of the network to be replaced site activi
Slide 25: Italian gas distribution business at the centre of Group's transformation
4 Italian gas distribution business at the centre of Group’s transformation 25
Slide 26: Italian gas distribution business at the centre of Group's transformation
Italian gas distribution business at the centre of Group’s transformation Successful integration with 2i Rete Gas will allow to fully exploit the potentials of the foreseen new AI-driven Group’s transformation while progressing on a new digitization wave 13.9 13.9 1.1 1.1 TENDERS NET OF DISPOSALS Mo
Slide 27: Plan targeted distribution capex spending confirms technology driven approach
Plan targeted distribution capex spending confirms technology driven approach Expect to replicate Italgas’ approach on 2i Rete Gas network, with unitary KPIs to converge over a few years period. Fostering biomethane connections and H2 readiness. Acquisition impact Digitization New digitization wave
Slide 28: Digitization next wave of AI-driven development already in sight
Digitization next wave of AI-driven development already in sight Targeting large-scale installation of Nimbus, our H2-ready Smart Meter, also on 2i Rete Gas network. Already working on DANA 2.0 AI-enabled Automation upgrade Nimbus – data DANA 2.0: AI-enabled Automation On going pre-series field test
Slide 29: Plan designed to support green gases and their injection in the gas network
Plan designed to support green gases and their injection in the gas network Fostering new biomethane connections also via partnering with local players Strategy applied both in Italy and Greece – including 2i Rete Gas network. H2 readiness work progressing Biomethane support strategy fully integrate
Slide 30: Updated tenders time schedule
Updated tenders time schedule Tenders will continue allowing incremental growth Assumed investments profile reflects estimated tenders’ calendar Plan Scenario ~€1.1bn total investments for tenders net of disposals in 2017-23 2024-30 Plan scenario 2024-30 6 tenders 171 tenders 2019 2020 2021 2022 202
Slide 31: Development of Greece, Water and Esco continues
5 Development of Greece, Water and Esco continues 31
Slide 32: Greece core contributor to our growth effort
Greece core contributor to our growth effort Focus on infrastructure development in support of the Country’s long-term ecological targets while corporate transformation progresses DIGITIZATION BIOMETHANE Development of green gas-ready infrastructure to Traditional meters replacement with Significant
Slide 33: Corporate transformation continues to fully align ENAON to Italgas' standards
Corporate transformation continues to fully align ENAON to Italgas’ standards First achievements have been positive Now working on further initiatives that will allow Enaon to perform in a more effective, efficient, and uniform way across the Country and the Italgas Group Key objectives Reorganizati
Slide 34: Investments revised upwards to €1bn
Investments revised upwards to €1bn Expansion-driven investment plan, supported by strong market demand for the substitution of less competitive residential oil and coal consumption. Digitalization effort leverages on Italian experience ~€1.0bn Total investments 2024-30 Total investments Redelivery
Slide 35: Water networks performance improvement is the priority
Water networks performance improvement is the priority Transform network operations transferring technology and expertise matured in gas distribution. Deep involvement in all companies' planning and operations ~€0.45bn Total investments Key Initiatives DANA 2.0 for Water Plan Targets1 2024-30 Digiti
Slide 36: Full involvement in the management of all assets with well-defined initiatives
Full involvement in the management of all assets with well-defined initiatives Water transport Water distribution 96 km of network 300 km of network 4 mln people served 0.1 mln people served 247 Mcm/year of water delivered 17 Mcm/year of water delivered Investments in digitalization to harmonize ICT
Slide 37: Full involvement in the management of all assets with well-defined initiatives
Full involvement in the management of all assets with well-defined initiatives 75% STAKE 49% STAKE Water transport Water transport, distribution, and swage 1,734 km of network 6,580 km of network 1.6 mln people served 0.6 mln people served 73 Mcm/year of water delivered 35 Mcm/year of water delivere
Slide 38: Expect water to reach c€90mn EBITDA by 2030
Expect water to reach c€90mn EBITDA by 2030 Strategic plan assumes Siciliacque and Acqualatina full consolidation over plan horizon and further M&A by 2030. In 2023 only Nepta was consolidated RAB Revenues EBITDA €mn €mn €mn >300 >200 >90 +xxx 2023 2028 2030 2023 2028 2030 2023 2028 2030 38
Slide 39: ESCo new goals set after the Superbonus era
ESCo new goals set after the Superbonus era Market is resetting after the booming Superbonus impact in 2023 Now building the new foundations for growth confirming focus on profitability ~€0.3bn Total investments Digitalizing all services offered to customers Revenues 2024-30 Use AI to improve operat
Slide 40: Energy management: Italgas' case
Energy management: Italgas’ case Geoside has significantly contributed to improve Italgas energy performance, allowing for a in industrial consumption by 15 percent and civil by 30-50 percent The Journey Achievements 2021-2023 1 Data Collection Gas consumption for preheating at Data Driven digital p
Slide 41: ESG targets extended to the combined group
1 6 ESG targets extended to the combined group 41
Slide 42: Italgas – for the future of PEOPLE
Italgas – for the future of PEOPLE The successful integration of 2i Rete Gas will require the collaboration of all the People of the two groups and the ability to valorise their diversity for a successful inclusion. Our enhanced targets reflect this effort Training hours1 Women in responsibility rol
Slide 43: Italgas – for the future of the PLANET
Italgas – for the future of the PLANET Reduction commitments to 2030 and 2050 reiterated for the enlarged perimeter Net Energy Consumption1,2, GHG Emissions Scope 1&22,3,4 -33% -42% 103t CO2 eq 2050 Net Zero TJ 2i Rete Gas Carbon 2020 2030 Italgas 2020 2030 Efficiency measures for industrial consump
Slide 44: Italgas – for the future of the PLANET
Italgas – for the future of the PLANET Reduction commitments to 2030 and 2050 reiterated for the enlarged perimeter GHG Emissions Scope 31,2, -33% 2050 Net Zero Carbon TJ 2020 2030 2i Rete Gas Italgas To 2030 To 2050 Supply chain engagement initiatives: Also carbon removal and supply chain initiativ
Slide 45: Strategic Plan financials
6 Strategic Plan financials 45
Slide 46: Investment plan - Italian distribution at the core
Investment plan - Italian distribution at the core Total capex exceeding €15.6bn in 2024-30, +€7.5bn vs 2023-29, almost doubled Visibility strongly improved with lower weight of tenders. Deep alignment with EU long-term objectives. 15.6bn 1.1 1.1 Significantly reduced weight of tenders - GAS DISTRIB
Slide 47: Total RAB to double by 2030
Total RAB to double by 2030 Strong growth in RAB led by 2i Rete Gas integration, organic capex, and tenders Gas distribution redelivery points growth linked to 2i Rete Gas and network development in Greece RAB gas distribution and water Gas distribution redelivery points +10.2% CAGR 2023-2030 with t
Slide 48: EBITDA growth to outpace RAB growth thanks to efficiencies, synergies and AI
EBITDA growth to outpace RAB growth thanks to efficiencies, synergies and AI… Significant reduction in distribution cost foreseen during plan period thanks to deal- related synergies and efficiencies and AI contribution EBITDA Opex evolution gas distribution +13% CAGR 2023–2030 Including 2i Rete Gas
Slide 49: Leading to double digit EPS growth, even assuming €1bn capital increase
... leading to double digit EPS growth1, even assuming €1bn capital increase EBITDA and anticipated financial actions to drive 13% CAGR Net Income growth to 2030 EPS considering capital increase1 EPS accretion2 +10% CAGR 2023–2030 ~15% EPS accretion 2023* 2028 2030 2026 2029 Note: (*) IAS 33; (1) pr
Slide 50: Well-balanced envisaged acquisition financing to ensure strong capital structure post deal
Well-balanced envisaged acquisition financing to ensure strong capital structure post deal… Acquisition to be financed with debt and €1.0bn of pre-underwritten equity right issue Target capital structure allows to preserve current rating Envisaged deal financial structure Credit metrics post deal1 N
Slide 51: As strong cashflow generation, driving equity RAB growth
… as strong cashflow generation, driving equity RAB growth Cashflow generation covers group needs post deal Equity RAB per share1 Excluding acquisition impact, cashflow generation covers almost entirely group financing needs ~1.8x 2023 2030 2i Rete Gas Cash Flow Technical Dividends M&A and acquisiti
Slide 52: Debt maturities remain well-spread also post-deal
Debt maturities remain well-spread also post-deal Existing gross debt Fixed 96% Variable 4% Bonds 82% Loans 18% 2.500 Financing strategy aimed at 2.000 maintaining an adequate liquidity 1.500 buffer and keeping the cost of debt below 3% over the plan 1.000 2i Rete Gas notes to be refinanced at 500 m
Slide 53: Guidance
Guidance € 2024 2028 2030 Revenues adj ~1.8bn Revenues ~3.2bn ~3.6bn EBITDA adj ~1.32/1.35bn EBITDA ~2.5bn ~2.8bn EBIT adj ~0,8bn EBIT ~1.6bn ~1.8bn Technical Capex ~0.9bn Consolidated RAB 17.7bn 19.2bn Net Debt ~6.6bn FFO/RAB >10% >10% excl. IFRS 16 Leverage1 63% Leverage1 65% 62% Note: (1) Regulat
Slide 54: Dividend policy to 2026 improved
Dividend policy to 2026 improved Investors to keep benefitting from underlying growth through 65% payout Floor support confirmed to 2026, now starting from 2023 and with 5% growth per annum Dividend policy Highest of 0.352 0.317 • 65% pay-out on Adjusted Net Income per share • DPS 2023 +5% per annum
Slide 55: The European Gas Distribution Champion
The European Gas Distribution Champion Transformational 2i Rete Gas acquisition fully integrated in strategy and objectives 15.6bn of investments at support of ecological transition, with all businesses contributing to the growth Already working to leverage on AI-opportunity to unlock further improv
Slide 56: IG taigas
IG taigas
Slide 57: Appendix
IG taigas Appendix
Slide 58: Overview of Accounting Principle (IAS 33) on EPS
Overview of Accounting Principle (IAS 33) on EPS The principle The adjustment • From an accounting perspective, a rights issue is treated as a “bonus issue” of shares, meaning that it consists in an issue of new shares with no increase in resources, mixed with an issuance at fair value Restated EPS
Slide 59: Regulated activities / Equity consolidation
Regulated activities Last update 24/04/2024 Equity consolidation 59
Slide 60: Vision and Purpose
Vision To be a leading figure in the world of energy, Purpose Pioneers by passion and builders by calling, driving its sustainable evolution and we bring all our energy to accelerate the innovating each day to improve people’s ecological transition. We do it for us. We do quality of life. it for eve
Slide 61: Investor Relations contacts
Investor.relations@italgas.it Anna Maria Scaglia Emanuele Isella