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Changes to Italgas’ calendar of corporate events

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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.

Fitch Ratings (“Fitch”) affirms Italgas at ‘BBB+’, Outlook Stable

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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

Italgas: approved results as at 30 june 2018

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Milan, 31 July 2018 – Italgas’s Board of Directors met yesterday under the chairmanship of Lorenzo Bini Smaghi and approved the Consolidated Half-Year Report as at 30 June 2018[1].

Key figures

Consolidated economic and financial highlights:

  • Total revenue: €591.3 million (+4.7%)
  • EBITDA: €424.2 million (+8.7%)
  • EBIT: €223 million (+9.3%)
  • Net profit: €150.7 million (+8%)
  • Technical investments: €227.9 million
  • Net cash flow from operating activities before M&A transactions: €393.4 million
  • Net financial debt[2]: €3,591.3 million

Operating highlights including unconsolidated investee companies:

  • Gas concessions: no. 1,709
  • Number of active meters: 7.5 million
  • Gas distribution network: 67.7 thousand Km

Italgas’s economic and financial results for the first half-year of 2018 confirm the positive performance achieved in 2017, with further improvement in terms of margins; investment programs and the closing of further acquisitions are in line with the target set in the 2018-2024 Business Plan.

A significant portion of investments concerned the plan to installation of smart meters replacing the traditional ones. In the first half of 2018, also considering the non-consolidated affiliates, just under 1 million were installed, 915 thousand of which replaced traditional meters, bringing the total to approximately 3.98 million, equal to 49.1% 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 more than 40 pilot projects have been launched throughout the country.

In the first six months of the year the objective of the consolidation of Italgas in gas distribution was pursued by completing several corporate transactions, some of which had already been announced during 2017. In particular, the following acquisitions were finalised: i) the entire social capital of the Ichnusa Gas S.p.A., ii) the entire social capital of the company Medea S.r.l., iii) a company branch of Amalfitana Gas, iv) 98% of the share capital of a series of companies holding 16 natural gas distribution concessions in Campania, Calabria and Siciliy[4], v) the distribution network of the Municipality of Portopalo di Capopassero from AEnergia Reti S.r.l.

Furthermore, during the first half of the year has been completed the acquisition of Seaside, one of Italy’s leading Energy Service Companies, at the forefront of energy efficiency services and enables the Group to be present in a sector that offers multiple synergies with the activities of gas distribution.

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%[5], and third largest operator in Europe in terms of number of managed RDPs.

The requirements related to the net investments of the first half of 2018 were fully covered by the positive net cash flow from operating activities, equal to €632.3 million, with a Free Cash Flow – before M&A activities – equal to €393.4 million.

The net financial position as at 30 June 2018 was 3,591.3 million euro, an improvement compared to 31 December 2017 (€ 3,720.3 million).

As regards to the economic results, operating profit for the first half of 2018 amounted to 223 million euro (+9.3% compared to 30 June 2017) and net profit was 150.7 million euro (+8% compared to the same period of the previous year).

Paolo Gallo, CEO of Italgas, commented:

“The performance for the first six months of the year confirms Italgas’ strong commitment to investments in the network, digitization processes and acquisitions, in line with the targets set in the 2018-2024 Strategic Plan.

At June 30, we reached six months in advance the target set by the Authority for the replacement of traditional meters with the latest generation ones: 50% of the meters managed by Italgas and its subsidiaries are intelligent meters. This represents the enabling factor for the wider project of digitizing the network.

The economic and financial results achieved in the first half of 2018 show a significant improvement compared to the already robust 2017 results; among others an 8% increase in net profit, thanks also to the efficiency measures and the improvement in service quality that are still in progress”.

[1] Subject to a limited audit.

[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 Debts for leases of €37.2 million.

[3]Excluding non-consolidated investee companies, in the first half of 2018 Italgas installed approximately 850 thousand new meters, 770 thousand of which replaced traditional meters, bringing the current total of meters installed to approximately 3.55 million, equal to approximately 48.9% of all meters.

[4] Baranogas Reti S.r.l., Ischia Reti Gas S.r.l., Progas Metano S.r.l., Grecanica Gas S.r.l., Favaragas Reti S.r.l. e Siculianagas Reti S.r.l.

[5] Operating data also including non-consolidated subsidiaries.

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

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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.

Italgas – implementation of the co-investment plan

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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 resolution Type of financial instruments (12) Number of financial instruments assigned Date of allocation (10) Possible purchase price of the instruments Market price at allocation Vesting period (14)
Paolo Gallo Chief Executive Officer and General Manager 19/04/2018 Entitlement to free Italgas shares 69.770 BoD

12 June 2018

 n/a 4,7280 Three-year
Executives with Strategic Responsibilities 19/04/2018 Entitlement to free Italgas shares 104.340 BoD

12 June 2018

 n/a 4,7280 Three-year

Italgas presents its 2018-2024 strategic plan

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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”.

Italgas: completed the acquisition from CPL Concordia of 6 companies active in South of Italy

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Milan, 31 May 2018 – Italgas has executed today the acquisition from CPL Concordia of a 98% stake in the capital of 6 companies operating in Southern Italy, which as a whole hold the concessions for the construction and management of the gas network in 16 municipalities.

The companies involved are Baranogas Reti, Ischia Reti Gas, Progas Metano, Grecanica Gas, Favaragas Reti and Siculianagas Reti. Concessions are already in operation in 4 municipalities, some of which are under construction, others to be built.

The overall value (Enterprise Value) of the assets involved in the transaction concluded today has been set at 16.7 million euros. Net of the debt, the amount paid to CPL Concordia for 98% of the share capital of the companies was 4.6 million euros.

The total investment for the construction of the networks amounts to approximately 95 million euros, partly financed by public subsidies. To date, works already carried out amount to approximately 32.5 million euros, gross of subsidies.

With today’s acquisition, 7 M&A operations have been completed between 2017 and 2018 – including the purchase of Seaside, one of the largest Italian Energy Service Companies – for a total of 138 new municipalities under concession, in line with the growth strategy announced to the market with the Strategic Plan 2017-2023 which, pending the launch of the tenders, provides for the development of the Group through the acquisition of small and medium-sized operators.

Italgas announces Moody’s decision to put rating under review

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Milan, May 31, 2018 – Italgas announces that, following the decision announced by Moody’s Investor Services to “review for downgrade” the Italian government bonds, a corresponding action has also been taken on the Company’s long-term rating, currently at Baa1 level, in consideration of the connection attributed with respect to the sovereign credit rating.

Italgas: approved results as at 31 March 2018

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Milan , 8 May 2018 – Italgas’ Board of Directors, chaired by Lorenzo Bini Smaghi, met yesterday and approved the consolidated (unaudited) results for 2018 first quarter.

Key figures

Consolidated economic and financial highlights:

  • Total revenue: €281.0 million (+1.0%)
  • EBITDA: €198.4 million (+2.7%)
  • EBIT: €112.4 million (+8.4%)
  • Net profit: €74.7 million (+4.5%)
  • Technical investments: €106.1 million
  • Net cash flow from operating activities: €241.2 million
  • Net financial debt : €3,656.2 million

Operating highlights including affiliates data:

  • Gas concessions: no. 1,695
  • Number of active meters: 7.5 million
  • Gas distribution network: more than 67 thousand Km

Italgas’ economic and financial results in the first three months of 2018 confirm the positive performance achieved in 2017, with further improvement in terms of margin; the investment programs and the closing of further acquisitions are in line with the targets announced with the Business Plan for 2017-2023.

Over 67 thousand kilometres of network managed, 7.5 million redelivery points served in 1,695 concessions, reaffirm the ltalgas’ leadership in Italy, with a market share that exceeds 34% and the third position in Europe.

Italgas – with €106.1 million deployed in organic investments in the first quarter – confirms the timing set in the Business Plan, with investments exceeding € 3 billion by 2023 on the current managed network. A significant portion of investments concerned the installation of smart meters replacing the traditional ones.

Having the target of completing the entire replacement programme in the first months of 2020, in the first quarter of 2018, about 470,000 new meters have been installed, bringing the total meters installed to approximately 3.6 million, equal to 44% of the entire meter fleet . The installation of the smart meters is part of the digitalisation project of the network for which over 40 pilot projects have been launched throughout the country, covering approximately 190 kilometers of distribution network and 20,000 smart meters.

The objective of consolidation of the sector, was efficiently pursued completing several corporate operations out of the six announced in 2017: acquisition of the business unit of Amalfitana Gas, of the distribution network of the municipality of Portopalo di Capopassero, of Ichunsa Gas, as well as of Enerco Distribuzione closed in December; at the beginning of April, the acquisition of Medea, the Sassari gas distribution company, was completed.

Furthermore, the completion of the acquisition of Seaside, one of the largest Italian Energy Service Companies, at the forefront in the offer of digital services, allows the Group to become a major player in the field of energy efficiency, a sector that offers multiple synergies with the activities of gas distribution.

The financial requirements related to the net investments in 1Q 2018 were fully covered by the positive cash flow from operating activities, amounting to €241.2 million, with a Free Cash Flow – before the M&A transactions -, of € 119.6 million.

Net financial position as of 31 March 2018 is equal to € 3,656.2 million, improving in comparison to 31 December 2017 (€3,720.3 million ).

With regards to the economic results, operating profits in the first quarter of 2018 reached €112.4 million (+ 8.4% compared to 31 March 2017) and net profit reached €74.7 million (+ 4.5% compared to the corresponding period of  the previous year).

Paolo Gallo, CEO of Italgas, commented:

“The results for the first quarter of 2018 show a positive performance of all the main economic indicators compared to the same period of last year, continuing the trend  of the results achieved in 2017. This is the proof of the Group’s great level of vitality which, while waiting for tenders, continues to strengthen its own competitiveness and pursue growth objectives through mergers and acquisitions. The investments made, in line with the business plan, were, for almost half of the amount, aimed at the installation of smart meters, which reached 44% of the total managed meters and which represent the first step in the process of digitalization of the networks launched in the 2017. In this scenario, the adoption of Cloud Azure, the result of the partnership agreement with Microsoft, represents the key factor for the digitalization of business processes and places the Italgas Group at the forefront of the European landscape of gas distributors also creating a model of reference even in the field of innovation”.

Italgas: appointment of the Officer responsible and verification of requirements of a Director

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Milan, 8 May 2018 – The Board of Directors of Italgas, which met yesterday chaired by Lorenzo Bini Smaghi, having heard the favourable opinion of the Board of Statutory Auditors, resolved to appoint Giovanni Mercante as the Officer responsible for the preparation of financial reports pursuant to art. 154-bis of Legislative Decree 59/98, to replace Claudio Ottaviano, who resigned to pursue a new professional path.

The Board of Directors also ascertained whether Federica Lolli, appointed as a Director by the Shareholders’ Meeting on 19 April 2018, meets the legal and independence requirements set forth in the Corporate Governance Code for Listed Companies. The Board of Statutory Auditors has confirmed that the criteria and the ascertainment procedures adopted to assess the independence requirements have been correctly applied.