Comunicati: Press release price sensitive

Milan, 3 December 2018 –  Italgas completes the M&A transaction announced on last June 22nd, in line with the objectives of market consolidation through targeted acquisitions as indicated in the 2018-2024 Strategic Plan.

The transaction finalized consists in the acquisition from CPL Concordia of the following shareholdings:

• a 60% controlling stake in EGN (“European Gas Network”), which holds, directly and indirectly, 37 concessions for the natural gas distribution in Sicily, Calabria and Campania for a total of approximately 60,000 users;

• 100% of Fontenergia S.r.l., the gas operator in the Area 22 of the Sardinia region, with more than 7,000 users temporarily served by LPG;

• 100% of Naturgas S.r.l., operator of the natural gas distribution service in San Giuseppe Vesuviano (NA), with approximately 2,700 users served.

The valuation of the companies (enterprise value) has been established at €100 million for 100% of EGN and €16 million for 100% of Fontenergia and Naturgas. Therefore, in proportion to the acquired share and net of indebtedness, the price paid to CPL Concordia is equal to €43.5 million for 60% of the share capital of EGN and €2.5 million for 100% of the share capital of Fontenergia S.r.l. and Naturgas S.r.l.

The agreement for the acquisition of EGN also provides for put-and-call options on CPL Concordia’s remaining 40% stake in EGN, exercisable starting from the sixth month after the closing date at a pre-determined price equal to 40% of EGN’s valuation, less any dividends paid and/or losses not covered by the shareholders.

Milan, 5 November 2018 – Italgas’ Board of Directors, chaired by Lorenzo Bini Smaghi, met today and approved the renewal of the EMTN Programme launched in 2016 and renewed in 2017 for a maximum total amount confirmed at 3,500 million euro.

The Board of Directors has also approved the issue, by 4 November 2019, of one or more bonds to be placed with institutional investors. The total amount of the bonds issued may not in any case exceed the abovementioned maximum amount. The newly bonds issued may be listed on one or more regulated markets.

As of today, 2,900 million euro of bonds have been issued under the EMTN Programme.

The EMTN Programme is an effective tool for Italgas to continue to access debt capital markets and secure funding at competitive costs in order to support the Company’s growth.

Milan, 5 November 2018 – Italgas’s Board of Directors met today under the chairmanship of Lorenzo Bini Smaghi and approved the consolidated results for the first nine months and the third quarter of 2018[1].

Key figures

Consolidated economic and financial highlights:

• Total revenue: €880.7 million (+5.5%)
• EBITDA: €629.2 milion (+8.9%)
• EBIT: €333.9 million (+8.9%)
• Net profit: €226.4 million (+6.1%)
• Technical investments: €349.1 million
• Net cash flow from operating activities: €590 million
• Net financial debt^[2]: €3,734.2 million

Operating highlights including unconsolidated investee companies:

• Gas concessions: no. 1,709
• Number of active meters: 7.5 million
• Gas distribution network: 67.9 thousand Km

Italgas’s economic and financial results for the first nine months of 2018 confirm the positive performance achieved in the first six months and the improvement compared to the 2017 results.

The growth of the business is in line with the target set in the 2018-2024 Business Plan. Investment programs continue, including the initiatives related to the digitisation of the network, as well as the M&A transactions with the goal of a further consolidation of the Company market position.

A significant portion of investments concerned the plan to install smart meters replacing the traditional ones. In the first nine months of 2018, also considering the non-consolidated affiliates, 1.386 milion were installed, 1.258 milion of which replaced traditional meters, bringing the total to 4.283 milion, equal to 53.2% of the entire meter fleet^[3]. The target is to complete the substitution plan by early 2020. The installation of smart meters is part of the overall project to digitize the network, for which approximately 50 pilot projects have been launched throughout the country during 2018.

With over 67 thousand kilometres of managed network and 7.5 million redelivery points served in 1,709 concessions, Italgas confirms its position as leader in the sector in Italy, with a market share of over 34%[4], and of third largest operator in Europe in terms of number of managed delivery points.

The requirements related to the net investments of the first nine months of 2018 were fully covered by the positive net cash flow from operating activities, equal to €590 milion, with a Free Cash Flow – before M&A activities – equal to €250.4 milion.

The net financial position as at 30 september 2018 was €3,734.2 milion, substantially in line with the position at 31 december 2017 (€3,720.3 milion).

As regards to the economic results, operating profit for the first nine months of 2018 amounted to €333.9 milion (+8.9% compared to 30 september 2017) and net profit was €226.4 milion (+6.1% compared to the same period of the previous year).

Following the downgrade announced on 23 October 2018 by Moody’s Investor Services of the rating for Italian sovereign bonds to Baa3, stable outlook, from Baa2, a corresponding action was taken by the agency on the long-term rating of the Company, reduced to Baa2, stable outlook, from the previous Baa1 rating, in consideration of the relationship with the government credit rating.

Paolo Gallo, CEO of Italgas, commented:

«At the end of the first nine months Italgas shows a significant growth in its main economic indicators: EBITDA and EBIT both increased by 8.9% and Net Profit by 6.1%.

The strong cash flow generation enabled the financing of investment programmes, the corporate acquisition plan and the dividend distribution, maintaining the financial debt substantially in line with the values as at  31 december 2017.

These results allow us to confirm the targets set for 2018 in the Industrial Plan thanks to our continuous focus on operational efficiency and our commitment to carry out the planned investments, investments that have already produced a significant development of the networks and of the number of managed customers.

The digitization of the network and of the processes progresses as planned, the completion of the transition to the cloud will be completed in the coming days and our Digital Factory will be ready to go in November.

Over these nine months, we have started important organizational, technological and cultural transformations that will produce significant improvements in terms of infrastructure management, efficiency and above all quality of service».

[1] Unaudited

[2] Excluding the debts for operating leases in accordance with IFRS 16. In fact, on 13 January 2016 IASB issued IFRS 16 – Leases accounting standard, already adopted by Italgas Group on 1 January 2018. The adoption of the principle determined the writing into financial liabilities of debt for leases of €43.1 million.

[3] Excluding non-consolidated affiliates, in the nine months of 2018 Italgas installed approximately 1.2 thousand new meters, 1.069 thousand of which replaced traditional meters, bringing the current total of meters installed to approximately 3.793 million, equal to approximately 52.7% of all meters.

[4] Operating data also including non-consolidated affiliates.

Milan, October 23, 2018 – Italgas announces that, following the downgrade announced by Moody’s Investor Services of the Government of Italy’s bond rating to Baa3 with stable outlook from Baa2, a corresponding action has also been taken on the Company’s long-term rating, downgraded to Baa2 with stable outlook from Baa1, in consideration of the connection attributed with respect to the sovereign credit rating.

The rating agency highlights Italgas’s strategic position, the leadership in the gas distribution sector in Italy and its fully regulated revenues, together with a solid liquidity position and a limited exposure to the volatility risk in the financial markets, that allow the Company’s ratings to be positioned one notch above the rating of the sovereign.

Milan, 12 October 2018 – Italgas announces a change to the 2018 calendar of corporate events communicated to the market on last 25 January. In particular, the press release relating to the 2018 Third Quarter Report, instead of 6 November 2018, will be issued on 5 November 2018, at the end of the meeting of the Board of Directors; on the same day, at 2:30 PM, the conference call will be held to present the results to investors and financial analysts.

Outdoor Investor Day – On the evening of the 5th and the morning of the following 6th November in Venice, investors and financial analysts will have the opportunity to meet the Company’s top management and visit some of the infrastructures of the Venice gas distribution network. Any informative material distributed to investors and analysts attending the event will be promptly available on www.italgas.it.

Milan, 1 August 2018 – Fitch has affirmed Italgas S.p.A Long-Term Issuer Default Rating (IDR) and senior unsecured rating at ‘BBB+’. The Outlook on the IDR is Stable.

The rating affirmation reflects Italgas updated 2018-2024 business plan, which confirms Italgas strategic and financial targets in the medium-term.

Fitch highlights that Italgas target of increasing its market share in the Italian gas distribution market, also thanks to M&A transactions, is supported by a stronger investment plan compared to the one presented last year, with a high focus on digitization of assets and processes. Moreover, Italgas can rely on a solid debt structure with a competitive cost of debt, composed by a high percentage of fixed-rate debt with a long-term average maturity, thus reducing both refinancing and interest rate risks and allowing the Company to preserve a solid liquidity provided by available committed credit lines.

For further information please visit https://www.fitchratings.com/site/pr/10039943