Core business development, digital transformation, new opportunities, shareholders’ returns and sustainability. These are the key elements of our new 2020-2026 Strategic Plan.
The plan’s aim is to enable a more sustainable path for gas and to promote active growth of our Group and our Country.
Further strengthening the Group's leadership at an Italian and European level, our new 2020-2026 Strategic Plan is based on four pillars: the continuous development of our core business, innovation and digital transformation, investments in new business opportunities and a solid and efficient financial structure to ensure an appropriate return to our shareholders.
The Plan embeds environmental, social and governance factors to strengthen the strategic role of the gas distribution sector in the energy transition process towards a decarbonized economy.
Our new 2020-26 plan provides for total investments of 7.5 billion euros, with an increase of 1.1 billion euros compared to the previous one. Of the 7.5 billions, 2.0 billions are targeted for tenders, while the remaining portion of 5.5 billion euros is up 22% compared to the previous Plan and refers mostly to the existing distribution infrastructure, methanisation of Sardinia and digitisation.
Sustainability is also at the heart of our new Strategic Plan, with our targets further supporting the objectives set in our sustainability plan. With this solid basis, our plan will contribute to enable a more sustainable path for gas, ensuring we play our part in reaching the decarbonization goals set by the EU’s energy transition policies.
Four strategic pillars guide our new strategy
CEO Paolo Gallo presents our new strategic plan
The core of our Plan remains digital transformation. We wanted to invest more resources in innovation to generate further benefits and create the new generation of infrastructure that will enable our networks to play a key role in the energy transition process
Core business development
With regards to our core assets, we will increase our spending to 5.3 billion euros (including 1.1 billion in digitization). On top of this we plan to invest 2.0 billions for tenders.
3.1 billion euros will be allocated to the development, improvement and modernisation of our network. In particular, we will complete the replacement of our cast iron pipelines, work to continue to maintain high safety and quality standards of the network and further extending it. We also plan to convert to natural gas and connect to the main network the remaining isolated LPG grids. Completed concession tenders will also attract incremental investments.
We plan to allocate approximately 2 billion euros to new tenders. Of those, 1.2 billion euros will be dedicated to the acquisition of third-party networks in the areas in which we will be awarded tenders, while the other 0.8 billion euros will be allocated to investments in maintenance, upgrading and extension of the networks acquired, whose operating standards will be aligned with the Group's best practices. Through the tender process, which is expected to be completed by 2025, we estimate to increase our market share from the current 35% to about 45% in terms of active redelivery points.
Spotlight on Sardinia
Approximately 400 million euros, in continuity with the previous Plan and the investments already done, will be allocated to the completion of 1,100 kilometers of "native digital" networks for the city's natural gas distribution in Sardinia. We are the main operator on the island with a presence in about half of the concession areas (17 out of 38). We have already laid down more than 800 kilometers of new pipelines with the progressive commissioning of the first segments starting from last summer and the overall implementation of most of the relevant areas expected by the end of 2022. In 2023, the conversion to natural gas of the networks that currently distribute propane air to serve the cities of Cagliari, Sassari, Nuoro and Oristano is also planned. The island's commitment to methanization, with we have spearheaded since 2017, is enabling the country's most modern gas distribution infrastructure network to be built and will make it possible to replace the most polluting energy sources currently in use with natural gas. This will allow for, in addition to better environmental protection, significant savings for the island's customers, estimated at up to 30% compared to current fuels.
Around 1.1 billion euros will be used for technological innovation and digitization, the key elements of which are:
With the plan for the installation of the new generation smart meters almost completed, the most significant part of the investment will be dedicated to assets and processes. By the beginning of 2022 5,700 intermediate pressure regulation systems (GRF and IRI) will be replaced by the same number of digital devices and another 2,000 similar systems will be upgraded, according to our plan. The new remote-controlled sensors and valves will allow for the detection of the operating parameters of our network and its remote management.
Cooperation of all energy resources is the most immediate and cost effective way to reach decarbonization goals. In this contest the digital transformation of gas network will be a key enabler of the development, intake and diffusion of green gases, like biomethane and hydrogen. We also plan the development of pilot projects in the field of Power to Gas as early as 2021.
Spotlight on Picarro
Thanks to our partnership with Picarro and the use of Picarro Surveyor, currently the most advanced technology in the field of gas network emission deetection activities, we are playing our part in reaching decarbonization goals. We have committed to cut methane emissions by more than 20% by 2026.
Picarro will also allow us to materially reduce maintenance and management times for natural gas leaks (1/3 of ARERA standards) and complete annually the inspection of over 73,000 kilometres of network managed.
The Plan includes 240 million euros of investments aimed at taking advantage of new opportunities in sectors in which the company is already active in, such as water, energy efficiency and services.
We aim to leverage the excellence already developed in the management of gas networks by applying the same best practices and technologies to water networks. As such, we have allocated 120 million euros of new investments to this sector, with the intent of improving service quality and significantly reducing losses.
With regards to the energy efficiency and residential sector, our target is to integrate the two ESCos – Seaside and Toscana Energia green – in our portfolio in order to become one of the main players in both these sectors on the Italian market.
Financial structure and shareholders return
Financial efficiency and capital structure. The continuous attention to the optimization of the financial structure and the significant operating cash flow generated will allow us to support the investment plan and the shareholders' remuneration, guaranteeing appropriate financial flexibility. We will continue the actions aimed at optimizing our financial structure in order to preserve the company’s debt cost, today at about 1%. The ratio between net debt and RAB at the end of 2020, at about 61%, will be maintained throughout the entire period of the Plan at levels consistent with a solid investment grade area.
Guidance and predictable evolution of the business. The indications for 2020, announced on 12 June, were confirmed at the operational level in October 2020, when the guidance on investments was instead improved. In 2020 revenues has exceeded 1.3 billion euros, with EBITDA of 971 million euros and EBIT of 546 million euros. Investments exceeded 777 million euros (+5% compared to the previous year), bringing net debt to approximately 4.7 billion euros. For 2026, with the completion of the tenders, revenue of about 2.0 billion euros with an EBITDA margin at about 73% are estimated, with a return on investment (EBIT on Rab) between 8% and 8.5%.
Our promise to our shareholders. The dividend policy reflects our commitment to provide shareholders with attractive, growing and sustainable remuneration. On 30 October 2020, the Company has established a new four-year policy (2020-23) that provides for the distribution of a dividend equal to the greater of (i) the amount resulting from the FY2019 DPS (0.256 euros) increased by 4% per year and (ii) the DPS equal to 65% of adjusted EPS.
ultimo aggiornamento 14 April 2021 03:49 UTC