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Italgas: the Board of Directors approves the renewal of the EMTN programme. Maximum nominal amount increased

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Milan, October 24, 2024 – Italgas’ Board of Directors, chaired by Benedetta Navarra, met today and approved the renewal of the EMTN Programme (Euro Medium Term Notes) with a maximum nominal amount of 10 billion euros.

As of today, under the previous EMTN Programme, which had a maximum nominal amount of 6.5 billion euros, the notes outstanding are equal to 5.6 billion euros in nominal amount.

The Board of Directors has also approved the issue of one or more bonds to be placed only with institutional investors within one year by the date of the renewal of the Programme. The total amount of the bonds issued may not in any case exceed the abovementioned maximum amount. The new bonds issued may be listed on the regulated markets.

Italgas: consolidated results for the first nine months and third quarter of 2024 approved

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Milan, 24 October 2024 – The Italgas’ Board of Directors, which met today chaired by Benedetta Navarra, approved the consolidated results of the first nine months and third quarter of 2024 (unaudited).

 

Highlights1

  • Adjusted gas distribution regulated revenues: 1,211.6 million euros (+11.5%)
  • Adjusted total revenues: 1,309.3 million euros 2
  • EBITDA adjusted: 1,009.3 million euros (+10.9%)
  • EBIT adjusted: 605.6 million euros (+12.8%)
  • Adjusted net profit attributable to the Group: 361.7 million euros (+14.2%)
  • Technical investments: 549.7 million euros
  • Cash flow from operating activities: 712.9 million euros
  • Net financial debt (excluding the effects pursuant to IFRS 16): 6,813.5 million euros
  • Net financial debt: 6,904.7 million euros
  • Scope 1 and 2 emissions: 95.8 103 tCO2 eq (-10.0%)
  • Net energy consumption: 285.1 TJ (-10.9%)
  • Km of network investigated: 110,483 km (+35.0%)

 

The economic and financial results for the first nine months of 2024 reflect Italgas’ excellence in infrastructure development and asset digitisation and follow the 2024-2030 Strategic Plan presented at the beginning of October.

The recent confirmation by the rating agencies Moody’s and Fitch of Italgas’ long-term credit rating (Baa2 and BBB+ with Stable Outlook) also following the acquisition of 2i Rete Gas, as well as the prospect of an improvement of the S&P’s rating of 2i Rete Gas, in the context of the integration with Italgas, are in line with the declared objective of keeping the credit rating unchanged.

In the first nine months of the year, total adjusted revenues amounted to 1,309.3 million euros, driven by the increase in gas distribution regulated revenues (+11.5% compared with the same period in 2023) and by the contribution of Acqua Campania, both offsetting the anticipated drop in revenues from energy efficiency activities (end of the so-called “Superbonus” programme).

In the gas distribution sector, in Italy, the activities aimed at repurposing and completing the digitisation of the network under the control of the DANA system continue; in Greece, the development of the network continues successfully towards the areas of the country not yet reached by methane, thus also contributing to achieving the objectives of decarbonising consumption.

In the water sector, activities continue on the integration of recently acquired companies into the Group and on sharing technical and technological know-how aimed at fostering the development of a more efficient service, reducing losses, and creating value for communities.

During the first nine months of 2024, 549.7 million euros of technical investments were made, also enabling 521 kilometers of gas distribution pipelines to be laid.

Adjusted EBITDA for the first nine months of 2024 amounted to 1,009.3 million euros, up +10.9% compared to 30 September 2023, thanks also to continued actions to contain operating costs, in the context of an improved regulatory framework. Cash flow from operating activities amounted to 712.9 million euros – an increase of 314.8 million euros compared with the previous year – and enabled investments to be fully financed, generating a free cash flow, before M&A transactions, of 103.6 million euros.

The Group’s commitment to improving its environmental performance continues. In the first nine months of 2024, net energy consumption was down -10.9%, and Scope 1 and 2 emissions were down -10.0%, reflecting the energy efficiency initiatives implemented and, at the same time, the focus on reducing leakages. Against an increase of 35.0% of kilometres of network investigated, compared with the same period of the previous year, the rate of atmospheric leaks, measured as the ratio between the volume of leaked gas and kilometres of network investigated, fell by 36.7%.

Paolo Gallo, CEO of Italgas, commented:

 

Italgas continues on its growth path, which in the first nine months of 2024 produced solid performances thanks also to our vision on the future of energy that the Group is rapidly transforming into reality. Gas networks – smart, digital, and flexible – are and will be one of the main drivers of the ecological transition, as they allow for the acceptance of incremental quotas of renewable gas.

 

The nine months ended with the main economic indicators showing double-digit growth. Adjusted EBITDA increased by 11% to over 1 billion euros, and Group Adjusted Net Profit amounted to around 362 million euros, up 14% compared with the same period last year.

The Strategic Plan 2024-2030, which includes the integration of 2i Rete Gas and the widespread use of artificial intelligence in all the Group’s activities, sets further and more ambitious goals in terms of investments, achievement of green transition targets, and value creation for all our stakeholders.

1 The consolidated balance sheet and income statement of the Italgas Group at 30 September 2024 reflect the effects of the first consolidation, starting 30 January 2024, of Acqua Campania, while these are not included in the Scope 1 and 2 emissions and net energy consumption data.

2 Down by 60.5 million euros, mainly due to the reduction in revenue from the “Superbonus”.

Italgas and the Ministry of Foreign Affairs: Memorandum of Understanding to Strengthen the Safety of Employees Traveling Abroad

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Rome, October 16th, 2024 – Italgas strengthens its commitment to protecting employees on business trips abroad thanks to a Memorandum of Understanding signed today at the Ministry of Foreign Affairs and International Cooperation between Italgas CEO, Paolo Gallo, and the Head of the Crisis Unit, Nicola Minasi, under the initiative of Foreign Minister Antonio Tajani.

The agreement marks the beginning of a collaboration aimed at further raising international safety standards by mitigating potential risks associated with business trips.

The Memorandum of Understanding is intended to reinforce Italgas’ commitment to the safety of its employees traveling or working abroad, in line with the principles of “Duty of Care” and international standards for travel risk management.

The collaboration with the Italian Ministry of Foreign Affairs, supported by the availability of dedicated digital applications, offers multiple benefits to the Group’s employees. In addition to the information already available through the “Viaggiare Sicuri” app and the “DoveSiamoNelMondo” portal, the Group’s employees can access IG DOME at any time. This innovative application, developed by Italgas, provides real-time data on traffic, weather, public transport, natural events, and security issues related to the countries they are visiting. In case of need, employees can use IG DOME to request support from the company’s Security Unit to be located, ensuring maximum coordination with the Crisis Unit.

The Protocol includes joint training programs and informational activities to continue promoting a culture of safety during business trips, protecting Italgas Group employees, and optimizing the security measures implemented by the Company.​

“The safety of our nationals abroad is a priority for the Government and my Ministry—as demonstrated by this agreement—and it requires collaboration between the Farnesina, our diplomatic network, and companies like Italgas,” stated the Deputy Prime Minister and Minister of Foreign Affairs and International Cooperation, Hon. Antonio Tajani, highlighting the importance of teamwork among all parties involved, both public and private, especially in high-risk contexts.​

“The safeguarding of the health and safety of our Group members — stated Paolo Gallo, CEO of Italgas — has always been the primary objective of our daily actions. Thanks to continuously evolving technological innovation, we are able to improve and make our services dedicated to employees increasingly efficient. This closer collaboration with the Crisis Unit of the Farnesina allows us to be even more effective in preventing the risks our colleagues may face while traveling for work.”​

Italgas: Moody’s Ratings (Moody’s) affirms rating and outlook

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Milan, October 10, 2024 – The rating agency Moody’s affirmed today Italgas S.p.A’s Long-term Issuer rating at ‘Baa2’, Stable Outlook.

The rating affirmation follows Italgas’ announcement on the agreement reached for the acquisition of 2i Rete Gas S.p.A., highlighting that, following the transaction, Italgas will continue to be supported by the low business risk profile of its activities, underpinned by the high share of revenues generated under the Italian regulatory framework, assessed as stable and predictable.

Furthermore, rating affirmation takes into consideration Italgas’ efficiencies in operating spending, low average cost of debt and limited exposure to volume risk.

Moody’s highlights that Italgas’ rating remains constrained by the company’s exposure to the country risks associated with Italy (Baa3 stable).

Italgas: Fitch Ratings (Fitch) affirms rating and outlook

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Milan, October 9, 2024 – The rating agency Fitch affirmed today Italgas S.p.A’s Long-term Issuer rating at ‘BBB+’, Stable Outlook.

The ‘BBB+’ rating affirmation “follows the agreement reached for the acquisition of 2i Rete Gas S.p.A. and reflects the improved business risk profile of the combined entity, expected funds from operations (FFO) net leverage consistent with the current rating (also thanks to the expected equity increase)” and the commitments made by management towards deleveraging.

Furthermore, the rating reflects Italgas’s positive track record in executing acquisitions and enhancing operating profitability, recognizing its ability to anticipate gas sector trends with the aim of effectively handling and managing renewable gases.

Italgas presents the 2024-2030 Strategic Plan

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€15.6 billion of investment providing the country the European champion capable of building the gas industry of the future. These include the acquisition of 2i Rete Gas and the widespread application of AI – across gas, water, energy efficiency and information technology – which is expected to drive double-digit net income growth throughout the Plan period. The floor of the dividend policy to 2026 has also been improved. 

Milan, October 7, 2024 – The CEO of Italgas, Paolo Gallo, today presents the Group’s Strategic Plan for the period 2024-2030 to analysts and investors, approved by the Company’s Board of Directors chaired by Benedetta Navarra.

€15.6 billion are the expected investments over the plan period, with an increase of €7.5 billion (+92% compared to the previous plan) and aimed at the acquisition of 2i Rete Gas, interventions for the development of gas distribution in Italy and Greece, strengthening the presence in the water sector, and accelerating the growth in energy efficiency, with a strong commitment to achieving EU climate targets.

Italgas emphasizes its commitment to consolidating the gas distribution sector in Italy with the aim of multiplying synergies to ensure significant benefits for families and businesses in terms of safety, efficiency, service quality, decarbonization of end uses, and costs. The use of artificial intelligence across all Group activities will also enable a new phase of digital transformation, accelerating the ecological transition.

The Group will continue to benefit from a solid and efficient financial structure, with a commitment to maintaining the current credit rating. The expected synergies and operational efficiencies allow for a forecast of double-digit net income growth over the plan period1. Therefore, it has been possible to raise the floor of the dividend policy until 2026, ensuring a growth rate of 5% annually starting from the dividend 2023 of €0.352 per share2, while also confirming the 65% payout.

Highlights

  • Italgas is the European leader in gas distribution, with unique capabilities of innovation, digitalization and investment.
  • Acquisition of 2i Rete Gas for €5.3 billion of enterprise value, with a 4% premium on the 2025 expected RAB and closing expected within the 1H 2025.
  • Financing of the transaction through debt and a €1 billion capital increase, aimed at preserving the credit rating.
  • €15.6 billion of total investments for the acquisition of 2i Rete Gas, and for the development, digitalization, and repurposing of infrastructures in Italy and Greece.
  • €200 million in synergies from efficiencies, cost reductions, and AI, in addition to €80 million revenues from incremental investments in digitization on 2i Rete Gas network by 2030.
  • EPS accretion starting from 2026, including the expected capital increase, reaching approximately 15% in 2029.
  • Double-digit net income growth anticipated by 2030.
  • Dividend policy: confirmed the 65% payout and increased floor to 5% annual growth, now based on the 2023 DPS.
  • Confirmation of ESG targets also including the new perimeter and Net Zero goal by 2050.
  • Strong focus on people and the integration of resources from 2i Rete Gas, emphasizing training and promoting diversity, equal opportunities, and inclusion.

Italgas CEO Paolo Gallo stated:

“The Strategic Plan 2024-2030 will go down in Italgas’ history as the blueprint for creating the European champion in gas distribution, further reinforcing our commitment to the digital transformation of infrastructure, benefiting the entire country.

The new scale of the Group, combined with innovation and digital transformation, is the decisive factor in ensuring we meet the targets of the energy transition, the security of supply and the sustainability of energy costs for individuals and businesses.

An investment of €15.6 billion will provide a strong boost to our growth trajectory, with the largest share once again allocated to the development, digitization, and repurposing of the gas distribution network in both Italy and Greece. Our commitment to the widespread use of Artificial Intelligence will enable us to enter a new phase of digital transformation.

Digital transformation remains the primary strategic lever also for strengthening our activities in the water sector and energy efficiency. With €750 million, we will continue to work towards enhancing our role as a key player in water — which has long suffered from a lack of adequate smart investments in networks — and to grow in energy efficiency as an essential tool for achieving energy transition goals.

The figures in this Plan, with an average annual growth of 13% in EBITDA and net profit by 2030, demonstrate how the extraordinary capabilities of the women and men of Italgas and 2i Rete Gas can create value for shareholders and all stakeholders, leveraging efficiency, innovation, and sustainability.”

1Excluding the impact of the Purchase Price Allocation (PPA).

2Compared to the previous floor of 4% annual increase of 2022 dividend.

Changes to Italgas’ calendar of corporate events 2024 Presentation of the 2024-2030 Strategic Plan set for 7 October

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Milan, 5 October 2024 – Italgas announces that the publication of the press release relating the 2024-2030 Strategic Plan, initially scheduled for 12 June 2024, is now set for 7 October 2024, before the opening of the financial markets.

Consequently, the conference call to present the Plan to investors and financial analysts will be held on 7 October 2024 at 3 pm CEST at Italgas headquarters via Carlo Bo 11 – Milan.

An invitation with details will follow.

Signed the sale and purchase agreement for the acquisition of 2i Rete Gas

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Milan, 5 October 2024 – Italgas announces that F2i SGR S.p.A. and Finavias S.à r.l. accepted the binding offer relating to the purchase of their shareholding in 2i Rete Gas S.p.A. and the related Share Purchase Agreement (SPA) has been signed. The positive outcome follows the negotiations disclosed to the market on May 13, 2024.

“With this transaction – commented Italgas CEO Paolo Gallo – 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 digitalization.

As the leading operator in Italy and Greece, Italgas — through this transaction — reinforces its commitment to achieving decarbonization goals, with resilient infrastructure and sustainable energy costs. Extending our digital applications across the entire network and adopting advanced technologies such as artificial intelligence will enable us to monitor and manage our infrastructure in real-time, improving operational efficiency while increasing safety and reliability. This will create value for our shareholders and all our stakeholders. We look forward with confidence to the next steps of the transaction to complete this significant project, in line with our strategic vision and the needs of the country within the framework of European goals.”

2i Rete Gas overview

2i Rete Gas is the second-largest gas distribution operator in Italy, present across most of the country, serving 4.9 million customers. In 2023 it recorded adjusted revenues of €815.0 million, an adjusted EBITDA of €546.3 million, an adjusted EBIT of €317.7 million, and an adjusted net profit of €181.3 million. In 2023 investments amounted to €372.2 million.

Terms of the Offer

The consideration (equity value) of the transaction is 2.060 billion euros. The net financial debt and other net liabilities as of December 31, 2023, amount to 3.246 billion euros.

The closing of the transaction is expected within the first half of 2025, subject to obtaining the necessary regulatory approvals.

Financing

Italgas will meet its financial needs through a “bridge” financing initially underwritten by J.P. Morgan and syndicated to a pool of lending banks including Banco BPM, BofA Securities, Citi, J.P. Morgan, Morgan Stanley, and Société Générale. This will also be refinanced through a rights issue amounting to 1 billion euros, aimed at maintaining the current credit rating profile. The terms and conditions of the capital increase will be defined later.

Advisors

J.P. Morgan acts as the financial advisor in the context of the transaction. Legance – Avvocati Associati serves as the legal advisor, and the firm Foglia & Partners is responsible for tax matters. J.P. Morgan, BofA Securities, and Jefferies have provided a fairness opinion to the Board of Directors of Italgas in relation to the transaction.

Italgas inaugurates the new Plant and Network Command and Control Center in Florence

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Florence, 3 October 2024 – Italgas today inaugurated the new Plant and Network Command and Control Center in Florence, an infrastructure based on a complex technological architecture that allows for the remote monitoring and management of the 74,000 kilometres of the Group’s gas distribution network, including the 8,000 kilometres of Toscana Energia networks.

The new Center, built in the building spaces of the associate Toscana Energia, operates in symbiosis with its “twin” in Turin and makes it possible to increase the availability of resources to remotely intervene on the network and plants, intensify monitoring activities, collect and analyse operating data, and refine predictive maintenance programs. Overall, the new Center will further increase the levels of security, service flexibility and timeliness of intervention – direct and remotely – 24 hours a day, every day of the year.

Present at the ribbon-cutting ceremony, together with Italgas CEO Paolo Gallo, were the Mayor of Florence, Sara Funaro, the President of the Region Eugenio Giani, the President of Toscana Energia Fabio Giorgetti, and the CEO of Toscana Energia, Bruno Burigana.

“With the ribbon-cutting ceremony of the new Command and Control Center in Florence, we are taking a big step forward in the technological innovation of the gas distribution service –
said Mayor Sara Funaro -. Remote monitoring and control will make it possible to put in place a service that is certainly increasingly efficient for citizens, allowing them to have a precise picture of how the network is working, but at the same time also sustainable: the use of the
most advanced technologies, in fact, is also decisive in environmental terms.Today we are reaching an important goal that puts our city even more in the vanguard”.

“Thanks to the new Control and Command Center for plants and networks – commented the President of the Tuscany Region, Eugenio Giani – Florence and Tuscany will become the heart, or more precisely the brain, of a digitalized national gas distribution network. The joint operation with the similar Center in Turin will bring significant innovation to the governance of this sector, better efficiency monitoring, and increased safety. The technological upgrades open up possibilities that were unthinkable just a few decades ago, enabling a more targeted service and increasingly comprehensive control of the network—improvements that benefit all of us and the environment.”

“The continuous pursuit of innovation – declared Paolo Gallo, Italgas CEO – has allowed Italgas and its subsidiaries to be recognised as industry benchmarks. The technological upgrade has triggered a Copernican revolution that has completely transformed our networks to the point of making them one of the driving forces behind the ecological transition to net zero and the sustainable development of our cities. With the new Center in Florence, we are also cutting another important milestone: we are getting closer and closer to the goal of a fully digitalised network, able to act like the nervous system of the human body, with the capacity to react at central and local level”.

The Piazza Mattei Center is located within an environment specially designed for the management of a state-of-the-art digital network.

The structure consists of two contiguous areas that operate in close connection: in one, the reports that reach the Emergency Service toll-free number converge – from the receipt of the request – to the indications to be put into practice immediately, to the service order to the technicians in the area for their direct intervention – in the other, the remote command and control takes place through the use of the proprietary software DANA (Digital Advanced Network Automation) which allows to act on sensors and actuators installed along the network. The environments are organised to facilitate sharing and collaboration on common topics as well as concentration on specific topics.

DANA is the proprietary application created in the Group’s Digital Factory and represents the heart of the technologies employed as it enables remote control and management, raising the efficiency levels of activities. In particular, the integrated mapping system makes it possible to intervene on the network, “interrogate” it and verify its status even in its individual segments, thus favouring an increasingly in-depth and comprehensive knowledge of the individual distribution systems.

Italgas: Moody’s Ratings (Moody’s) confirms rating and Outlook

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Milan, 01 October 2024 – The rating agency Moody’s confirmed today Italgas S.p.A Long-term Issuer rating at ‘Baa2’, Stable Outlook.

The Baa2 rating is supported by the Group’s focus on domestic low-risk gas distribution activities, which generate revenues under an established and supportive regulatory framework with a limited exposure to volume risk.

Furthermore, the rating reflects Italgas’ good operating efficiency, its solid cash flow generation, supported by efficiencies in operating spending and a low average cost of debt.

Moody’s highlights that Italgas’ rating remains constrained by the company’s exposure to macroeconomic, political, and regulatory risks in Italy (Baa3 stable).