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Italgas presents the new 2020-2026 Strategic Plan: innovation and sustainability as future fundamentals

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CEO Paolo Gallo: “The planned investments will make an important contribution to the country's economy.” “The cornerstone of our Strategic Plan is still digital transformation. In the three years since this process launched, it has already profoundly changed the Group’s DNA making it a reference model in Italy and Europe.” The presentation of the new 2020-2026 Strategic Plan opens with the words of the CEO, Paolo Gallo, finding continuity in digitisation: over time this process has allowed Italgas to construct digital and smart networks, becoming an example for other sectors. The digital infrastructures ensure an increasingly efficient service and will play a key role in the Italian and European energy transition. In addition to digitisation, the 2020-2026 Strategic Plan includes investments of 7.5 billion (+1.1 billion on the previous Plan) which, as confirmed by Paolo Gallo, “represent an important contribution to the country as it undergoes an economic restart. This commitment coincides with infrastructure investments that therefore get the national economy moving.” The set undertakings affect all areas of the company: from area tenders to new business opportunities, consolidation of the economic and financial structure and continuous value creation for the market and shareholders of the Group. All this comes under a single business model that incorporates the principles of sustainability, in all its forms, which, in the words of the CEO, “is the matrix that links the four pillars of our new Strategic Plan.” The new Plan, in fact, integrates the core ESG (environmental, social and governance) values in the same way, strengthening the role of gas distribution in the energy transition and ensuring an increasingly decarbonised economy. Development of the core business 3.1 billion of the total investments will be allocated to developing the core business of Italgas, by improving and modernising the existing infrastructure. This business is to be developed, also thanks to the area tenders which will pay an ever more central role in the company’s future. “The area tenders, continued Gallo, “will give strong impetus to Italgas’ growth path and will further improve the quality of our service, contributing to the economic and social development of the territories we operate in. The company will invest 2 billion to seize the opportunities offered by the area tenders. Of this amount, 1.2 billion euros will be allocated to the acquisition of new networks, while 0.8 billion will be allocated to the maintenance, modernisation and the extension of the networks already acquired. The deadline for the area tenders is set as 2025 and Italgas’ target is to increase its market share in Italy from the current 35% to 45% (in terms of active re-delivery points). All this is to ensure the country an increasingly efficient, sustainable, modern and secure service. Sardinia is one of the Italian regions that, under Italgas’ 2020-2026 Strategic Plan, will have one of the most modern gas distribution networks. In recent months, thanks to the work carried out by the Italgas Group, this region has seen 800 kilometres of pipes installed and, thanks to investments of 400 million envisaged in the Plan, will see the completion of 1,100 kilometres of “digital native” networks. The island has also been guaranteed the most modern and technological network in the country, which will allow it to replace the most polluting energy sources still in use today with natural gas. For greater environmental protection and for estimated savings of up to 30% in end user consumption (compared to the fuels currently used on the island). Digital TransformationAn entirely digital network,” continued Gallo, “is achieved when each device connected to the network is capable of transmitting and receiving information and can be controlled remotely and in real time.” Year after year, innovation is becoming the trademark and core of the Italgas Group to an increasing degree. Digitisation in the new 2020-2026 Strategic Plan translates into around 1.1 billion in investments and sees the Digital Factory as the place where the path embarked on will be pursued. The digital transformation programme involves the continuous improvement of processes and the constant release of innovative solutions in business management: technologies necessary to improve the service for end customers and to facilitate the work of Italgas staff onsite and remotely. This factor became decisive above all during the lockdown when Italgas continued to ensure safety and continuity of service and a prompt restart of the construction sites throughout Italy. In recent years, the programme to replace the old meters with modern Smart Meters has played a central role in the network digitisation programme and, now that the plan is reaching an early conclusion, the most important part of the investments will be allocated to assets, processes and people always with an eye on environmental sustainability and training for all Italgas personnel. A digital network is required for the release of new renewable gases such as biomethane and hydrogen. The change also includes support for the decarbonisation process, in which Italgas seeks to play a leading role within the scope of European energy policies. Italgas is the only European company that digitally and remotely measures and monitors methane emissions along the whole network. This process proves how integral sustainability is to Italgas’ business and represents a key value of the corporate culture. New opportunities One of Italgas’ objectives is to export and exploit all the best practices acquired in the gas distribution sector in other business area similar to the core one.  This undertaking translates into 240 million in investments, which will allow us to leverage the expertise and experience within the Italgas Group thanks to the companies Italgas Acqua and the ESCOs of the Group, Seaside and Toscana Energia Green. In this context too, Italgas’ contribution will be represented by the development of digital technologies, in particular for the water networks (which have been allocated 120 million euros), with the aim of improving their quality and efficiency. The energy efficiency sector will also play a key role in the new Strategic Plan. The two ESCOs of the Group will be further integrated into the corporate dynamics to seize on the business opportunities of the public and private sector and become one of the main operators on the Italian market, also in the residential sector. Italgas is always looking to the future. In 2021, the company will start to develop pilot projects in the Power to Gas area, a path pursued in collaboration with industrial partners, the Polytechnic University of Turin and the University of Cagliari. The programme involves the production of gas using excess renewable energy in order to play a leading role in decarbonisation and in the future of sustainable and renewable energy and to create an increasingly integrated system between production and the use of clean and “flexible” energy. Consolidated financial structure and return for shareholders Italgas wants to assure ongoing value creation for all its shareholders, supporting all opportunities for growth and guaranteeing them a solid return. For this reason, the new 2020-2026 Strategic Plan introduces a new dividend policy set to increase for the next four years. Remuneration will be based on a payout of 65% and with a minimum DPS (dividend per share) equal to that distributed in 2020 increased by 4% each year. Important undertakings and investments mean Italgas will be able to confirm, at operations level, the indications announced last June.  Based on the operations, a turnover higher than 1.3 billion euros and investments of over 750 million are forecast.