Italgas acquires from CPL Concordia control of the company European Gas Network (‘EGN’)

Milan, 22 June 2018 – Italgas has signed today a binding agreement for the purchase from CPL Concordia of:

  • a 60% controlling stake in EGN (“European Gas Network”), which directly and indirectly[1] manages approximately 60,000 users and 37 concessions for the distribution of natural gas in Sicily, Calabria and Campania.
  • 100% of Naturgas S.r.l., operator of the natural gas distribution service in San Giuseppe Vesuviano (NA), with approximately 2,700 users served;
  • 100% of Fontenergia S.r.l., the gas service operator in the pools 22 of the Sardinia region, with over 7,000 users temporarily served by LPG.

 

The total valuation (enterprise value) of the companies involved in the agreement has been set at €116 million. At the closing of the transaction, the amount will be paid in full in cash, net of net financial debt, as at 30 June 2018.

The agreements for the acquisition of EGN provide a put and call option on the remaining 40% stake held by the seller, exercisable from the 6th month from the closing date of the transaction and at the same price per share set at the closing for the 60%, net of the the amount of dividends distributed by the company.

The transaction is expected to be completed by the end of 2018 and is subject to the fulfilment of certain conditions precedent.

Paolo Gallo, Chief Executive Officer of Italgas, commented as follows:

“As illustrated in the last few days during the presentation of the 2018-2024 Strategic Plan, M&A operations are one of Italgas’ areas of growth and consolidation in the sector: the 70,000 redelivery points acquired today demonstrate Italgas’ ability to achieve its objectives (110,000 new points in 2018). In one year, Italgas has acquired approximately 140,000 new active redelivery points and a portfolio of concessions with a high development potential. We continue to invest in areas of the country, such as Sardinia and Southern Italy, that need modern and technological infrastructure, thus creating the conditions to create value for all citizens, for our shareholders and for the Italian gas distribution system as a whole”.

[1] EGN in its turn controls 100% of the companies CPL Distribuzione S.r.l., Ischia Gas S.r.l. and Marigliano Gas S.r.l.

CEOs of EU leading gas distributors met Violeta Bulc, Commissioner in charge of Transports

Brussels, June 21st 2018 – Edouard Sauvage, CEO of GRDF (France), Dan Pantilie, CEO of Distrigaz Sud Retele (Romania), Gabriel Sousa, CEO of Galp Gás Natural Distribuição (Portugal), Nuria Rodriguez Peinado, CEO of Nedgia (Spain), Antoni Peris, Managing Director of Regulated Business of Gas Natural (Spain) and Paolo Gallo, CEO of Italgas (Italy) met today Violeta Bulc to present the benefits of natural and renewable gas for the decarbonisation of transport in Europe.

One day after a workshop organized by the GD4S coalition on the contribution from natural and renewable gas for the decarbonization of transports, CEOs seized this opportunity to present to Commissioner Violeta Bulc success stories of local authorities which choose gas solutions for their urban mobility. Gas solutions are already available all over Europe and represent a credible solution to decarbonize transports.

They urge the Commissioner to unleash the potential of natural and renewable gas to accelerate transport decarbonization and allow the EU to reach its climate targets. They present key requests:

  • The application in all policies of a technology neutrality approach to ensure an effective decarbonization of the transport sector: the whole fuel supply chain should be taken into account and all technologies should be treated on equal foot to ensure a more realistic comparison of the environmental impacts of the different fuels
  • The development of a well-to-wheel approach instead of a tailpipe emissions approach for the heavy-duty vehicles segment: it is fundamental to consider the entire fuel and vehicle supply chain – not to mention battery production and disposal – to address the full benefits of renewable fuels such as biomethane
  • A consistent approach between Energy and Mobility European legislations for the light-duty vehicles segment: ensuring a real consistency between clean mobility legislations and the Alternative Fuels Infrastructure Directive (Dafi) will strengthen the current framework and allow investments

The GD4S coalition believes in the potential of renewable gas as a credible solution for the future of clean mobility in the EU. Achieving the European climate targets for transport sector will not require a single solution but a pool of different and efficient tools which could integrate, e-mobility and gas solutions.

The Gas Distributors for Sustainability (GD4S coalition), brings together the five largest gas distribution system operators (DSOs) in France, Italy, Spain, Romania and Portugal. Together we have 86% of gas vehicles in the EU and our companies represent 25 million customers in Europe. Together, we are committed to participate in the EU clean energy and clean mobility and we aim at raising awareness on the potential of natural gas and biogas.

Strategic Plan 2018 – 2024 Presentation

Italgas Top Management presents the Strategic Plan 2018-2024.
The event will take place on June 13th at 3:00 p.m. CEST at the CDP, via San Marco 21/A, Milan.

WATCH THE PRESENTATION LIVE 

Italgas – implementation of the co-investment plan

Milan, 13 June 2018 – The Board of Directors of Italgas S.p.A. met yesterday under the chairmanship of Lorenzo Bini Smaghi, after having consulted with the Appointments and Compensation Committee and the Board of Statutory Auditors. During the meeting the Board of Directors identified the beneficiaries of the 2018- 2021 co-investment plan, which were established by resolution at the shareholders’ meeting on 19 April 2018, and attributed to them their rights for the financial year 2018 by the regulations of the Plan.

The terms and conditions of the co-investment plan, as well as the characteristics of the rights attributed, are described in the information notice, made available to the public at the company’s registered offices, on the website (www.italgas.it) and on the authorised storage mechanism at the “eMarket STORAGE” authorised storage mechanism managed by Spafid Connect S.p.A. (www.emarketstorage.com) on 20 March 2018.

Information on the beneficiaries and the number of rights respectively attributed is provided in the annexed table, drawn up in compliance with Table 1, Sheet no. 7 of Annex 3A of the Issuers’ Regulations.

Name and surname or category

Role

(only indicate for named persons)

FRAMEWORK 1

Financial Instruments other than stock options

Section 2

Newly allocated instruments based on the BoD’s decision to implement the resolution of the shareholders’ meeting

Date of the related shareholders’ meeting resolutionType of financial instruments (12)Number of financial instruments assignedDate of allocation (10)Possible purchase price of the instrumentsMarket price at allocationVesting period (14)
Paolo GalloChief Executive Officer and General Manager19/04/2018Entitlement to free Italgas shares69.770BoD

12 June 2018

n/a4,7280Three-year
Executives with Strategic Responsibilities19/04/2018Entitlement to free Italgas shares104.340BoD

12 June 2018

n/a4,7280Three-year

Italgas presents its 2018-2024 strategic plan

Milan, 13 June 2018 – Chief Executive Officer Paolo Gallo is today presenting to analysts and investors the Italgas Group’s Strategic Plan for the 2018-2024 period, which was approved yesterday by the Board of Directors chaired by Lorenzo Bini Smaghi.

Italgas’ growth objectives are based mainly on a significant programme of investment, significantly increased compared to the previous Plan, in a market that is still fragmented and which offers various opportunities for business development, leadership consolidation and the creation of value for shareholders.

 

Highlight

 

  • Investment plan, including M&A, of EUR 4 billion
  • Additional investments of EUR 1.6 billion in the acquisition of third-party networks following gas tenders
  • Programme to digitise networks and processes and launch Digital Factory in 4thQ 2018
  • Dividends up to 4% per annum with upside potential to 60% of consolidated net income
  • Investment plan (without tenders) of EUR 4 billion

In the period 2018-2024 Italgas has an investment plan of €4 billion, an increase of more than 30% compared with the previous plan. This includes €2 billion for the development and improvement of the network, around €800 million for technological innovation and digitization (including the completion by 2020 of the installation plan for smart meters), approximately €450 million for the construction of gas networks in Sardinia and, finally, approximately €420 million in total for growth through M&A operations and the related technical investments to be made on the newly acquired networks. With the implementation of this Investment Plan, the number of meters managed will grow from approximately 6.6 million (at 31/12/17) to approximately 7.1 million at the end of the Plan (excluding affiliates).

 

In addition, a further growth option is represented by sector tenders with total investments estimated at approximately €1.6 billion, including both acquisitions of third-party networks and technical investments to be made in the areas awarded, with an increase in the number of meters that will reach 8.5 million (excluding affiliates) at the end of the Plan period.

 

  • Consolidated Rab: the implementation of the planned organic investments will increase the consolidated Rab by an average of 3.2% per annum over the period of the Plan and by an average of more than 5.3% per annum, considering the expected evolution of the tenders.
  • Operational efficiency: continuous focus on the optimisation of operating costs with the aim of improving the efficiency targets set by the Regulator.
  • Capital structure and financial efficiency: constant focus on optimisation of debt structure, with the objective of fully covering, thanks to the significant operating cash flow, both the investment plan and the return on risk capital guaranteeing also an appropriate financial flexibility to support development.
  • Dividend policy: for the years 2018-2019-2020 a dididend will be distributed equal to the higher of (i) the amount resulting from the 2017 DPS (€0.208) increased by 4% per annum and (ii) the DPS equivalent to 60% of the consolidated net income.

Paolo Gallo, CEO of Italgas, said:

“The priorities of the Industrial Plan are organic growth supported by a robust plan of investments, M&A operations, competitiveness improvement and quality of service provided to customers thanks to programmes of technological innovation. In this context, the plan to install smart meters, which represents the first step in the process of digitising networks and which we will complete in early 2020, is particularly important, as is the launch by the end of 2018 of the Digital Factory which will be the engine for the full digitization of business processes. The adoption of digital technologies will allow further improvements in operational efficiency and the improvement of services offered to commercial companies and end customers. The solid financial structure will allow us to take further opportunities to create value while maintaining financial conditions in line with our creditworthiness. The effect of these actions, which benefit the country and the entire Italian gas distribution system, also result in a strengthening of our dividend policy which, based on the 2017 dividend of €0.208, will see an increase of 4% for the next three years, but with a potential upside to a 60% of the consolidated net income”.

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