Italgas: Fitch confirms rating BBB+, Outlook Stable, despite Sovereign downgrade

Milan, 30 April 2020 – Italgas announces that Fitch Ratings has affirmed the Company’s Long-Term Issuer Default Rating (IDR) at ‘BBB+’ with Stable Outlook, despite the downgrading on April 28 of the sovereign rating of Italy (BBB-/Stable), reflecting Company’s ring-fencing from the macro-economic shock.

The assessment by Fitch is based on the “negligible volume and price risk, good regulatory visibility (the current regulatory period covers the period 2020-2025)” as well as on the Company’s solid business profile: Fitch expects “Italgas to confirm its strategic and financial targets” and highlights that, as a consequence of a low counterparty risk and Company’s insulation from gas demand volumes volatility, it does not foresee any negative impact on working capital.

The Stable Outlook also reflects Italgas’s importance for the Italian gas sector and wider economy thanks to its large infrastructure investment plans.

Italgas: Consolidated results as at 31 March 2020 approved

Milan, 29 April 2020 – The Italgas Board of Directors, which met today, chaired by Alberto Dell’Acqua, has approved the consolidated results as at 31 March 2020 (unaudited).

 

Key figures

Consolidated economic and financial highlights[1]:

  • Total revenues: 327.1 million euros (+5.2%)
  • Gross operating margin (EBITDA): 227.3 million euros (+3.7%)
  • Net profit[2]: 74.9 million euros (-13.2%)
  • Technical investments: 206.0 million euros (+35.2%)
  • Cash flow from operating activities: 174.2 million euros
  • Net financial debt[3]: 4,450.5 million euros

Operating highlights including affiliates:

  • Municipalities in gas distribution concessions: 1,839
  • Number of active meters: 7.7 million
  • Gas distribution network: around 72,000 Km

Performances in the first quarter of 2020 – despite the significant impacts of Resolution no. 570/2019/R/gas – demonstrate the ability of our company to keep sound economic – financial results thanks to the actions taken in the last three years.

The 206.0 million euros invested over the period (up +35.2% compared to the first quarter of 2019) were devoted to digital transformation, development and modernisation of the networks. Such an effort is confirmed by the related physical data: around 310 km of new pipelines laid versus around 170 km in 2019. Construction of the distribution networks continued in Sardinia, with the laying down of around 165 km of new networks, for a total of more than 630 km on a total of about 1.100 km to build.

Also considering affiliates, the replacement of traditional meters continued, with 0.28 million smart meters installed, bringing the total number of smart meters installed as at the end of the first quarter of 2020 to around 7 million[4].

The smart meter installation plan, which is expected to be concluded in 2020, is part of the wider project for the digital transformation of the entire network managed. To date, this project has already upgraded the technology of over 400 distribution networks.

The financing requirements related to net investments for the first quarter of 2020 were partially covered by the positive cash flow from operating activities, equal to 174.2 million euros, with a negative Free Cash Flow – before M&A activities – of 33.6 million euros.

The net financial position as at 31 March 2020 was 4,450.5 million euros (4,410.6 million euros at 31 December 2019), net of financial liabilities pursuant to IFRS 16 of 76.3 million euros (74.7 million euros at 31 December 2019).

The EBITDA of the first quarter of 2020 amounted to 227.3 million euros (up 3.7% compared to 31 March 2019) and net profit was 74.9 million euros (down 13.2% compared to the same period of the previous year).

The so-called “Coronavirus Emergency” unfolded in Italy in February in relation to the spread of infection across the whole of Italy and the necessary emergency measures taken by the Health and Government Authorities to contain the spread.

The Company set up a Crisis Committee in the hours immediately following the onset of the first cases. In the light of the measures and indications of the competent authorities, this committee continually monitors the developments of the crisis and takes appropriate measures while ensuring the continuity and efficiency of essential and necessary services, focusing in particular on emergency intervention services.

To protect the health and safety of its people, the Company has adopted a series of initiatives aimed at limiting the mobility of personnel and contractors to the company’s premises, heavily adopting smart working and suspending travel of personnel around the country. In compliance with the emergency measures issued by the Authorities, only work considered to be essential is covered, and all worksite activities have been suspended. Technical staff assigned the task of carrying out work off the company premises, where provided for under current provisions, have been equipped with the necessary personal protection equipment required in order to ensure their safety.

With reference to the impacts, including potential ones, on revenues, costs, investments and cash flows expected as a result of the limitations imposed by the Coronavirus Emergency, the Company has not found any evidence to date to suggest significant negative effects on the 2020 results.

The company is currently unable to estimate the potential material negative effects on the economic, financial and equity outlook of the years to follow, should the situation last significantly longer.

Paolo Gallo, CEO of Italgas, commented:

The global emergency Covid-19 that has hit us in recent weeks has seen all the people of Italgas react with great determination to ensure the country’s continuity of service. Thanks to the digital transformation already achieved, we have been able to use all those innovative technologies such as “gas leakage detection”, “shareview”, “work on site”, to manage our network remotely, enhancing controls on the territory. And thanks to the cloud and the availability of digital tools to all the staff, remote work has met no problems. All the digital technologies developed by us will allow us to resume our daily activities in absolute safety in Phase 2, giving priority to remote management.

I am particularly proud of the response we have given as individuals and as a Company to the emergency collecting and devolving significant economic resources in support of hospitals and Civil Protection: in a particularly difficult time for the country everyone has to do their part.

 

The investments, in the first quarter of the 2020, have exceeded 200 million euros, with an increase of 35.2% compared to last year. A commitment that today translates into a further impulse and stimulus in view of “Phase 2″ for the revival of Italy.

Until the lockdown, our plans have allowed us to lay over 300 kilometers of new networks, of which 165 “digital native” in Sardinia. We have now built more than 600 kilometres of new networks on this island and we are ready to feed with natural gas the first networks at the service of some municipalities, with a significant economic benefit to the economy and the local population.

 

Despite a tariff regulation in force from 1 January, particularly disadvantageous, Italgas has shown to be able to achieve solid results thanks to all the initiatives launched in recent years: the operating profit, of 122.9 million euros, is consistent with the figure achieved in the same period of last year, net profit amounted to around 75 million, with a drop compared to the corresponding period of the previous year.

 

We are even more determined to leverage the digital transformation of our networks, business processes, so that our people with the most innovative tools can face the challenges that lie ahead in the coming months.

[1] This press release uses alternative performance indicators, including EBITDA (gross operating margin, calculated by subtracting operating costs from earnings), EBIT (operating income before taxes, calculated by subtracting  operating costs, depreciation and amortisation and write-downs from earnings) and Net financial debt (calculated as the sum of short- and long-term financial debt, net of cash and cash equivalents and financial liabilities for leases pursuant to IFRS 16). The NON-GAAP financial statement must be considered complementary and does not replace the information prepared in accordance with the IAS-IFRS.

[2] Net Profit means net profit attributable to the Italgas Group net of the portion pertaining to third parties.

[3]The net financial debt as of 31 March 2020 does not consider financial liabilities for leases pursuant to IFRS 16 for 76.3 (74.7 million euros as at 31 December 2019).

[4] Excluding affiliates, as at 31 March 2020, Italgas has installed 0.27 million new meters, of which 0.22 million to replace traditional ones, bringing the current total of smart meters to 6.96 million, corresponding to 82% of the entire stock.

Conference Call: 2020 First Quarter Results

Italgas Top Management presents 2020 First Quarter Results.

Conference Call for the presentation of results to the community will be on Wednesday, April 29th, 2020 at 04:00 pm CEST.

Click on the following link to watch the presentation live:

 WATCH LIVE

Italgas and the Coronavirus: the road travelled from the beginning of the emergency until today

Security and efficiency of the service have guaranteed normality in the homes of end users. The company’s commitment has, however, also extended to solidarity

Normality and safety. These are the two objectives that, almost two months after the beginning of the Coronavirus emergency, have pushed Italgas to make even more efforts to ensure the regular distribution of gas to all users, ensuring that life at home is normal. A necessary factor at such a complex time, during which many of our daily habits have been revolutionized. All this without neglecting the health of their own people and the end users themselves. Priorities and points of reference confirmed by the immediate establishment of an internal crisis committee, the re-articulation of Italgas teams on the national territory and all the arrangements that the company has put in place since the beginning of the emergency to date. The Italgas Crisis Committee, in particular, has a multifunctional composition and approach. The representatives meet daily and, monitoring day after day the evolution of the emergency in Italy, make the necessary arrangements to ensure the efficiency and safety of the service.

Italgas believes in innovation in all its dimensions. For this reason, Smart Workingwas already activein the company for some time, an agile and modern way of working which, with the arrival of the emergency, was immediately extended to the various sites in order to prevent any risk. About 2,500 employees already had all the tools needed for Smart Working (PC, smartphone, internet connection). The spread of the tools has been quickly extended to allow remote work even to those who do not have a stable connection or full equipment, such as new hires who have received the kit directly at home.

The results have been very positive: the number of users connected remotely has increased from an average of 70 to 1,800 and many of the many activities planned have been regularly carried out through a solid videoconferencing infrastructure, which in March supported about 1,600 hours of video connections, and innovative collaboration tools in the cloud that Italgas has long adopted.

The work of Italgas, however, is also and above all in the field. For this reason, the company has continued to guarantee to all end users the essential services for the gas distribution system, while at the same time ensuring the regular monitoring of First Aid activities (active 7 days a week, 24 hours a day) and maintenance activities on the network to ensure safety and continuity of service. In addition, all technicians in the field who continue to carry out essential operational activities (e.g. gas reactivations) in private homes, with commitment and responsibility, have been put in a position to carry out the work safely and equipped with the necessary personal protective equipment.

But not just operations. Italgas, in fact, has not stopped with solidarity. This is because, asItalgas CEO Paolo Gallo said in recent days,”in such a complex and critical moment for Italy we are all called to do our part, as individuals and as a company”. Precisely for this reason Italgas has decided from the beginning to stay close to those who are in the front line against the spread of Coronavirus and to offer its contribution to support the Civil Protection and important hospitals in the cities of Turin, Milan, Padua, Pavia, Piacenza, Rome and Naples. All through direct donations and internal fundraising supported by the Group’s own people. An initiative, the latter, which has just ended and which has seen Italgas personnel donate the economic equivalent of 7,000 hours of their work to the Civil Protection. A figure that has been doubled by an equal amount directly from the company.

A series of initiatives that confirm what, for over 180 years, has been Italgas’ commitment: to guarantee end users allover Italy normality, in safety and without “making noise”. Activities that are not only aimed at providing the service, but also at concretely supporting the country and the communities where Italgas is present. A way of acting that bears witness to the responsibility with which the Italgas Group has always operated towards its people, territories and end users.

Read more about how Italgas restared its services during the phase 2 >>

Italgas – Supplement to the call notice of the ordinary Shareholders’ meeting

Milan, April 16, 2020 – In accordance with Consob Communication no. 3 of April 10, 2020, in addition to the notice of call of the ordinary shareholders’ meeting of Italgas S.p.A. previously published on April 10, 2020, it should be noted that any individual proposals for resolutions on the items on the agenda pursuant to art. 126-bis, subsection 1, last sentence of the CLF, which must be submitted to the Company at least fifteen days before the Shareholders’ Meeting, i.e. by 27 April 2020, by certified e-mail to the address italgas.assemblea@pec.italgas.it, will be published by the Company on its website www.italgas.it (“Governance” – “Corporate Governance System” – “Shareholders’ Meeting 2020” section) in order to allow shareholders to vote by proxy through the Designated Representative on each resolution proposal published.”

Italgas Group employees donate the equivalent of about 7,000 working hours to the Civil Protection. The Company doubles the amount

 

Milan, April 14, 2020 – Italgas Group employees donated the economic equivalent of about 7,000 working hours to the Civil Protection by joining the solidarity campaign “Together for Italy, donate your day to the fight against the Coronavirus”, launched by the Group on March 27.

A gesture of solidarity to contribute directly to the fight against the spread of Covid-19, not only through the daily commitment during the lockdown to ensure continuity and efficiency of services, but also through a donation in support of Civil Protection activities.

Over the two weeks of the initiative, approximately 7,000 hours were collected, to which an equivalent amount was added by the Italgas Group.

The collection is in addition to the donations made in recent days by the Group for the Sacco di Milano, Amedeo di Savoia-Asl Città di Torino, Azienda Ospedaliera di Padova, Policlinico San Matteo di Pavia, Guglielmo da Saliceto di Piacenza, Spallanzani di Roma and Cotugno di Napoli hospitals, as well as for the Civil Defence itself.

Italgas: Board of Directors calls the Shareholders’ Meeting on 12 May 2020

Milan, 10 April 2020 – Italgas’ Board of Directors, which met today chaired by Mr. Alberto Dell’Acqua, convened the Ordinary Shareholders’ Meeting on 12 May 2020, in a single call, to resolve on the 2019 Financial Statements, allocation of profits, the remuneration policy and compensation paid, the long-term monetary incentive plan 2020-2022, as well as the consensual termination of the statutory auditor’s assignment and the conferment of the new mandate for the period 2020-2028.

In particular, the Board of Directors resolved to propose to the Shareholders’ Meeting the distribution of a dividend of 0.256 euros for each of the shares entitled to receive. The dividend will be paid on 20 May 2020, with coupon payment date 18 May 2020 (record date 19 May 2020).

In consideration of the current health emergency, taking into account the regulations issued for the containment of contagion, the Company decided to apply the option provided for by Article 106, paragraph 4, of Decree Law no. 18 of 17 March 2020, establishing that participation to the Shareholders’ Meeting by those entitled may only take place through Georgeson S.r.l., with registered office in Rome, Via Emila 88, which has been confirmed as the representative appointed by the Company pursuant to Article 135-undecies of Legislative Decree no. 58 of 24 February 1998 (“TUF”).

The Board of Directors carried out its own control and evaluations in accordance with the Legislative Decree no. 58/1998 and the Corporate Governance Code. The Board of Statutory Auditors verified that all its members met the independence requirements specified in application of the Corporate Governance Code.

The 2019 Annual Financial Report, the 2020 Remuneration Report, the Corporate Governance and Share Ownership Report 2019, the non-financial statement 2019, the information document on the long-term monetary incentive plan 2020-2022, as well as the reports on the items on the agenda will be available for further reference according to law.

Italgas and the sales companies: a link that continues

The third stage of the “Training/Information Route” took place yesterday via webinar an opportunity to strengthen the relationship with sales companies for the benefit of end users

01 April 2020 – Inform, listen and improve. All for the benefit of end users. These are the objectives that Italgas places at the basis of its relationship with the sales companies. A continuous and profitable link that sees Italgas, the first gas distributor in Italy, confront itself with about 300 sales companies that in turn manage the supplies of about 7.6 million end users. Italgas has always paid attention to the relationship with all stakeholders and in particular to the sales companies, which are the direct interlocutor of end customers. For this reason it is essential to share tools and expertise to improve the efficiency and security of the service provided to users.

In this context the “Training/information path” provided in webinar modeis inserted .  A project of “virtual meetings” started in 2019 and arrived yesterday at the third appointment, designed to improve and strengthen the dialogue between Italgas and the sales companies. The main objective of these meetings is, in fact, to share new ways, new digital tools provided by Italgas that will play a decisive role in ensuring an increasingly efficient and cutting-edge service for end users. With this in mind, great attention during yesterday’s session was given to “Gasonline”, Italgas’ portal dedicated to sales companies. A decisive application in the exchange of information between operators in the gas distribution sector and which represents a great gateway for all sales companies that will be able to take advantage of innovative features, services, tools and content to support their daily work.

Innovation was one of the issues addressed during yesterday’s third meeting, a webinar event. “Even before the emergency we decided to organize this training and information path via webinar and we are happy that this decision has also met the current needs – explains Sandro Lacidogna, Italgas Sales Manager – an initiative that confirms our company vocation oriented towards digital innovation and that sees us as the first in the gas distribution sector to launch an event like this through an online platform”.

A modality that has brought, in fact, a series of benefits to all participants and that has overcome the problems that have arisen with the current health emergency. The webinar allowed everyone, first and foremost, to be present at the project despite the physical distance. It also facilitates those who, for personal or professional needs, could not be connected live but can comfortably attend the webinar at any later time. In addition to this, the webinar allowed Italgas to respond and dialogue in an interactive way both during and after the online session. All this made the webinar the one with the highest participation so far, given the more than 300 participants connected at the same time (representing the 110 related sales companies). Numbers that confirm the goodness of the path taken, both in terms of content and methods of use, and that push Italgas to continue the project with the new stages planned during the year. An initiative that, given the positive feedback received from the sales companies, will continue to represent an important opportunity to inform and compare notes.

In conclusion, the webinar allowed all participants to listen and communicate, representing an important moment of exchange and dialogue between Italgas and the sales companies. A step to continue to build together an increasingly efficient and innovative service for the benefit of end users: the real centre of the relationship between distributor and sales company.

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