A2A S.p.A. (A2A) Earnings Call Transcript & Summary

Good afternoon, and welcome to Q1 2023 A2A key highlight results conference. I am Zach, I will be with here during the presentation. [Operator Instructions] Let me just hand over to Marco Patuano to open the meeting.

Good afternoon, everyone. Welcome. Thank you very much indeed for taking part in our call presenting our results. We will be talking and commenting results with our CEO, Renato Mazzoncini; and CFO, Luca Moroni. Without any further ado, I hand over to Dr. Renato Mazzoncini.

Welcome, everyone. We are very happy with the results in Q1. You have received the slides. I will try to follow them as much as possible. In this quarter, we have recorded very good results, confirming the soundness of the strategic decisions we have taken starting in 2022 with our business plan in 2022. There could have been challenges. On the contrary. We have a successful performance, even better performance in 2023 year. You see the first slide with the positive elements we wanted to highlight. We have had a very effective hedging, which has allowed to counteract a downturn energy scenario. Second item, the contribution from new acquisitions in the sale of renewable energy sources, most notably wind installations done in 2022 so that we have expanded the installed capacity of the renewable energy sources by 12%. So the item, we have expanded the mass market customer base, recovering margins, most of all in retail. And last but not least, there is our financial discipline, which has allowed to have a very good performance also in managing the net working capital. The negative notes. Again, there has been a shrinkage in hydro power production, which has been dragging since 2022. There has been a drought effect. We have produced about 550-megawatt hour as opposed to 660 in Q1 2022, and lower margins in district heating this. We have had mild winter, which has been useful to some regard, considering the geopolitical scenario we had to face, but this has had a negative impact on the quantity of sold heat. Next slide, you see the main achievements recorded in this quarter. I would like to draw your attention to the fact that we have designed and launched onto the market of the first innovative PPA offering in retail. As you know, the target is to have a natural energy hedging between customer base and renewable energy. Better to walk the talk. You need to find the right tools, considering the relationship with the large customers. You have the classical PPA tool. In Italy, we still have to develop them. There are some cultural barriers, but there was no such tool allowing to do the same operation in retail. We have developed Noi2, a new offering, a VIP Virtual Innovative Panel, enabling to undersign contracts over 10 years for a fixed price for 70% of the production at a very interesting cost for customers, ensuring good return on the invested capital in our plans. Among the positive notes in this quarter, we have also received authorization to build an important infrastructure, the new plant, the CCGT plant at Monfalcone to replace the older coal plant. You will remember Monfalcone is a strategic location for the country is along the line for blackout emergency revamping in an area of Italy, which has a high energy absorption close to the city of Trieste with energy demand increasing in the next few years. Another innovation that we would like to remind you related to e-mobility, we now have designed a new object, City Plug slow charging stations, so the car-making sector is now focused on low volt, just 7, 11-kilowatt power and 100 kilowatts. These are the volumes that are typically demanded. So the idea of continuing to develop urban facilities with this -- with quick charging station with 22 kilowatts involving some issues and barriers for our customers. So you have to leave the recharging station after 2 hours with your e-car. That's why we have introduce this new City Plug designed by Fabrizio Giugiaro with a target of strongly reducing the committed CapEx for each charging station and have a more capital redistribution of these infrastructures in Italian cities. We have completed the first phase of completion of AGP for the power plant of Piacenza to become even more flexible. We have acquired the 35,000 new digital customers using digital channels, a significant increase. Starting from April 1, in our customer base, we will also include the customers that we have gained through tenders for the safeguard market. Last but not least, thanks to our skills in the field of waste collection, we have won in a tender for waste collection outside our territory in the region of Liguria. We are talking about the region where we have a Portofino, Rapallo and Santa Margherita. After being awarded the order, we now have to undersign the legal agreement, which will hopefully take place very soon. We are also very happy with that initiatives in the field of ESG. We have increased the installed capacity by 12%, and the capacity of the power grid by 378 MVA. We have reduced water loss by 3%. Emissions are on the rise because maximizing exploitation of coal as recommended by the regulator means acting on gas storage with an increase in CO2 emissions that will probably start to decrease in the next few weeks. Next slide, Slide #4. You can see the key results. As I said during the introduction, we are very proud of these results. Revenues are shrinking, of course. Luckily enough, I would say for our economy. I'm talking about the European, the Italian economy overall. The EBITDA, the reported EBITDA has marked an increase by 30%, reaching, for the first time, EUR 500 million. Even without including special items, we record EUR 492 million with an increase by 28%. And then we have the ordinary net income increasing by 63% to record EUR 173 million versus EUR 106 million in the same period last year. Of course, last year, the net income was benefiting from property gains. And therefore, they decreased by 14% that we see in net income related to this extraordinary nonrecurring item. Another very important element, we still have very strict financial discipline, and we have managed to further reduce the EBITDA debt ratio, reaching 2.7x on rolling base. In the first quarter, we have completed an important acquisition. We have entered with a stake into the capital of a company to build a large photovoltaic plant in Friuli-Venezia Giulia, 60-megawatt capacity, the largest one in northern Italy consider that local prices are very attractive because the grid allows to have a little input from outside. So there are some restrictions on renewable energy sources dispatched from Sicily to Friuli-Venezia Giulia even if the sunlight hours are, of course, more reduced than in Sicily. So the market is very attractive in this Northern Italian regions. You have a good local price and you don't need any storage essentially because of the energy which is produced is immediately consumed by energy absorbing operators that are very numerous in the area. Let me just hand over to Luca Moroni, our CFO, who will add some details on the business units and on the breakdown of EBITDA.

Thanks very much. Good afternoon also on my side. As already underlined by Renato, this has been a very good quarter, EUR 492 million EBITDA, ordinary income, thanks to the very good performance of Generation and Trading business unit and by Market. Good performance, weight will see the breakdown and the details of the various business segments within waste. There has been a slight downturn in Smart Infrastructures. Most of all, as we will see due to the mild winter temperatures, which have had an impact on volumes in district heating. Slide 6. Let's look at the detail. Trading, we have confirmed the our portfolio diversification in terms of power generation sources, so there has been a decrease in produced volumes in hydro due to the water scarcity to the lower rainfalls in the last few months. But we have managed to counteract this with a positive impact from other energy sources, most notably coal. But I would like to remind you it's important at Monfalcone, we have a plant that is also working because of energy market stabilization imposed by the regulator. The contribution has been positive, about EUR 30 million positive contribution. On the top of which, we have the positive effect arising on the hedging strategy that has been very effective. We have deployed this strategy before the beginning of Q1. Photovoltaic and wind energy contribute for about [ EUR 18 million]. There has been a decrease in MSD contribution, also because of the greater stability of the system of the better planning by Terna. The other changes have had a minor impact. Let me just hold your attention to the fact that also, Trading continues to give a positive contribution even if we affect it will stabilize in the course of the year. Market, Slide 7. The Market was the area where we were actually expecting a rebound effect and a positive contribution after the first negative quarter of last year because of the commodity price scenario, where we were suffering the most of all in 2-year contracts. And we have the expected effect. Also, we have had an offset in terms of margins. And we have recovered the margins most of all with customers who, last year, were closing some difficulty to this business segment because of a higher consumption as opposed to average customer profiling and most of all, in the business customer segment. There is a contribution of about EUR 20 million arising from the new business after the tenders on the safeguarded market, and there is a contribution on the customer base of about EUR 8 million. We have also deployed the retention activities among the customer base, thinking of customers, to those customers to still have a fixed price contract. Also, because of the rules imposed by the Italian government and by the Italian antitrust authority, we haven't been able to amend the terms and conditions to -- also to the benefit of customers. We have adjusted the prices. In the last part of the year at the beginning of 2023, when the scenario has started a downturn in terms of commodity prices, so they might switch. And there, we step in, and we launched retention activities, investing in our customer base. Slide 8. Treatment Waste business. We have recovered in terms of waste collection, we have recorded plus EUR 3 million, and there has been a slight decrease in the waste treatment and disposal because there have been some extraordinary stops of some plants, most of all at Parona, but we believe we will close this gap in the second quarter and in the following quarters. Smart Infrastructures, Slide 9. The grids give a positive contribution of EUR 5 million in power and EUR 2 million in gas, thanks to the increase in the RAB investments that we have done in the grids, which is counteracted by the negative results district heating, which, as I said earlier, has suffered from mild temperatures in winter and by the downturn energy scenario. This has been partly offset by the good performance. Through the acquisition, we have made of the heat management company for the airports in Milan. We have completed the operation in the last part of 2022. Slide 10, you see the profit and loss account. We have EUR 500 million EBITDA, EUR 190 million our depreciations made in the period. EUR 22 million, the risk provision decreasing by about EUR 10 million versus last year; by EUR 6 million in terms of credit depreciation, EUR 4 million reduction the risk fund. More financial charges because of interest rate curves. Most of all, the 2 bonds we have issued, one in January and the second in September last year, have produced this effect, which was actually expected when defining the targets. And considering the plant scenario, we have been able to get more efficiency to streamline the cost of coupons and the overall return on bonds. Then we have EUR 76 million tax. Tax rate, about 30%, which is in line with the closing tax rate last year. Hence, a net result of EUR 173 million. Slide 11, I hand over to you. CapEx, you see Slide 11 with a detail of CapEx. There are a central element. As you know, the business plan '21, 2030, ] Had, was focusing on the increasing CapEx to support our development. Development CapEx are still on the rise, EUR 126 million, and all-in-all in this period CapEx have recorded EUR 219 million, an increase by 18% versus last year, which, as you remember, was a record period for our company. That's very important to us. It shows again what kind of execution ability A2A has ahead in developing infrastructures. Looking at the results, we have EUR 126 million plus 11% versus the same period in 2022, aiming at photovoltaic and wind plants at Matarocco, Marsala. And on vineyards, north of Marsala in Sicily or to recover energy and matter. And to improve the distribution grid, we have traveled investments in power grids. Power RAB is still on the rise, and that's fundamental to guarantee decarbonization of Italian cities and attainment of decarbonization goals that we have set for ourselves. Then the cash flow, next slide, Slide 12. Cash flow evolution is in line with our expectations, and this allows us to respect the strict financial discipline. We have 2.7 NFP EBITDA. Cash flow is affected in the first quarter, also by a seasonal effect. These are the active management of the working capital. So considering the downturn energy scenarios, there has been a reduction in debt towards suppliers, which is proportional to the decrease in credits towards customers. And this has induced an increase in the working capital by EUR 360 million, which is actually in line with our expectations. Operating cash flow, EUR 116 million, as already mentioned. Investments of EUR 219 million before acquisitions of EUR 103 million, we had a negative cash flow. We have on the plant at Santo Stefano for about EUR 12 million. So on the base of these figures, we have considered to review the guidance we had given you upwards, and we have there the EBITDA guidance is in the range between EUR 1.64 billion, EUR 1.68 billion with an assumption to close with a net ordinary income between EUR 390 million and EUR 410 million. Takeaways. Little to add. The guidance has been reviewed upward because of the performance in this quarter has gone beyond our expectations. We are investing significantly to support infrastructural growth in Italy and the decarbonization path that we had already started in January '21. So after the pandemic, after the European energy crisis, wind direction has proved to be the right one. And last but not least, the fact of having maintained a strong focus on financial discipline has enabled us to present our results to financial markets with much discipline, which was not to be taken for granted, considering the high levels of volatility for commodities and the high level of investments that we have performed so far. So now we start the Q&A, and we will be glad to take all of your questions.

[Operator Instructions] The first question is from the AB of Mediobanca.

I have a few questions actually. The first is about Generation and Trading as a business. In your presentation, you talked about the effects and the strategies of the company. Can you provide details on the strategies that the company is going to put in place? I'm interested in the hedging level for the various technologies and the expectation for 2023 and '24. I'm also interested in having an indication of the MSD market contribution for this year and for the coming few years. I used to had a question on the supply market. There's a visible remarkable improvement. To what extent is this the result of different commercial strategies and management actions? And how much is it due to a normalization of commodity prices? I'm interested in knowing how 2022 changed the strategies that you put in place. And what can we expect for 2023 and '24? Also, regarding your size, the FFO working capital absorption, I wanted to know EUR 360 million, how much? Is it due to this 3 key customers of EUs? To understand how much this capital is seasonal or how much, this is a structural element that will be part of the company, also due to a different type of contracting. As for the guidance, we've improved the EBITDA net ordinary income guidance upwards. Can you also confirm the targets also for the CapEx for this year?

I will answer last question and go backwards. Well, I would say, yes, we confirm the CapEx for the year, and we confirm also the financial position that we communicated in the guidance. So in this respect, we confirm. The second question I leave it to Luca to give an answer to that question.

In my opinion, the manager [indiscernible] it was strong on the Supply segment. So we have a part, if you remember that we declared immediately in balance between fixed price contracts between '22 and '23, which generated the automatic effect of lower EBITDA in 2022 to be recovered in '23. But this only partly accounts for such a positive results. The rest of the positive result is basically due to 2 elements. The first is totally related to the commercial ability that is recovery of margins from large customers. There has been a lot of work for key accounts. A lot of suppliers had to abandon them. Our policy was very cautious, but we were also very close to companies. So on one hand -- I mean, in the entire acquisition of new customers, we, we're willing to acquire them. A lot of competitors, we're not even willing to take on those customers, but we posed 2 conditions. First of all, they didn't have to worry the working capital. We did approve payment mechanisms as they were -- as compared to the historical methods. And on the other hand, the market spreads were larger, which basically remunerated the higher risk in which we were all working. However, the result is very positive in terms of overall margin. Finally, as I mentioned, we have new customers from the safeguarded area. This is due to a result of the managerial effect. So the margin that we expect on the supply in the full year 2023 is certainly interesting. Let me take a step back to say something about CapEx EBITDA with regard to the guidance. In the plan, in the 2023/'26, so we -- EUR 1.3 billion, EUR 1.4 billion which is confirmed. As to net debt to EBITDA ratio, we will not exceed 3 as a ratio. So that's our boundary for sustainable growth, also from a financial standpoint. As far as working capital is concerned, we have about EUR 250 million, EUR 280 million linked to the seasonality effect. We have about EUR 20 million linked to installment plans for customers. Customers are all paying regularly, including those who are subject to installments. They pay installments on time very punctually. So we have no credit deterioration. Here, the effect is the combination of various sectors, also resulting from an active management that we had already put in place in the last quarter of 2022, which we kept and managed and will continue to manage concerning this area. That's the first point. As to the contribution of MSD, we have a cautious view. As I said before, on different occasions as compared to results of 2022, the target was less than half is what was achieved in 2022, where we obtained a particularly high results. This is our style, our caution, so we do MSD and trading activity, we standardize the figures. Especially on MSD, the planning of the network management by the [indiscernible] needs to work correctly. Then, of course, if you have less waterfall or other situations such as the volatility of commodity prices that we had, last year that generates special situations. So one of the effects is MSD. Because otherwise, there would be no reason to things that MSD brings extra margins. As far as hedging is concerned, our hedging policy is unchanged basically, which means that on fixed price reduction, both hydro, renewable and waste to energy, we are about -- at about 70% with an average price of over about -- over 150-megawatt per hour. As to combined cycles, we are at about 44% with an average price of about EUR 31, which is slightly higher levels as compared to what we stated in the budget, but we are fairly unconcerned for the year. As in activities, still follows up in line to what was done also in the past years, which is aimed at hedging with some flexibility our requirements.

The next question is Emanuele Oggioni.

I will focus on a few questions on renewables and on hydro. First of all, I'd like to have an update on the long-standing issues on hydro concessions. Apparently, only Italy has to put tenders as the only European country. So the question is, do you think that the government may win a tug of war, and so no tenders are going to be applied? Or can you still, in any case, share your opinion on that? That's the first question. The second question is about the acquisition that you executed. You executed an acquisition for EUR 12 million, a part to be developed. I wanted to know the overall CapEx and the entry into operation of the plan? And can you also give us an update on your pipeline? You said in the past that it reached 1.5 gigawatt pipeline in renewable, so with different degrees of maturity. So can you give more details, updates on the pipeline and on the timing? And what is going to be considered to be as the most advanced stage and therefore, achievable and realizable in the measures?

As to hydro concessions, what we can recognize is that formally, the regulatory framework has not changed. So in law decree on competition, you still have hydroelectric concessions. So nothing has changed in that regard. But the issue of energy independent of the country introduced out on the opportunity to have open tenders, so none of the regions have launched tenders. There is no difference in terms of tug-of-war with the central government, but the regions are trying to understand the way forward. In addition to energy independence, also the drought, that played a role, there is awareness that we needed to release investments as to maintain the performance of these plants as they were or similar to the levels that we had in the beginning. It doesn't mean that we need new dams, but maybe we should intervene with new solutions like pumping stations. The solution I see further down the road is the one in Piedmont represented the project finance. The project has been declared to be a public interest. And so you say, tender with a preemptive right on the plans as part on other parts of the proponent. That could be a way to put the 2 elements together. So the tender with the requirement of the Nordic on the competition. On the other hand, this -- the guarantee, the implementation of investment by operators to know the industry there well today. So there is no final solution at the moment. But if I analyze what is happening empirically, I think this is the way we're going. As to the acquisition of the plant of Santo Stefano and Friuli-Venezia Giulia, that was a plant of 59 megawatts to be precise. It's a plan with a overall CapEx of about EUR 70 million. So it's more or less the same level in which we think of the cost of megawatts for photovoltaic energy. I'm talking about the overall cost, including the cost of authorization. We just had the tender for the procurement of the panel. And we are now considering the detailed plans and projects to try and introduce additional efficiency in the development of the plant, which includes the compacting of the areas where the panel should be installed. So we want to have a compact area since the plant is going to be big. It's going to be the biggest in Northern Italy, we need the plant to be asymmetrical as possible, also to be able to use panel training systems efficiently. There are small rubbers that are traveling across the panels to clean them, and that's automatic, which increases performance incredibly, but they require a very good synergy of the plant. So we are now working on this level of detail on the project. However, we are very happy because it's an area where we have very high zone of prices and the quantity of energy that is consumed on the territory is not that -- we do not believe that we require a storage points. So the huge advantage of building a plant in Northern Italy as compared to Southern Italy, we have in Italy more sunny hours, but they consume less. And so we need to consider storage systems or hydrogen production. And so the zone at the local prices are affected by the competition strongly, whereas in those areas, as would be the case, with plants on those sites on Veneto or Lombardy, so you have situations where the return on investment is good because the local prices are high. As to the pipeline, we're working hard. We are in a situation in which the pipeline continues to evolve in January 2023 is still growing. At that time, it was 1.750 giga. The funnel has different stages of development in our business plan. As you certainly remember, the goal is to reach 0.5 giga per year. So we estimated a success rate of a pipeline of 30% is more than reasonable. And therefore, feed in the pipeline continuously where the size of this allows you to achieve 0.5 with no major issues. And that's the situation as at today. We confirm that the success rate is the one just mentioned.

Next question Stefano Gamberini from Equita.

The first is about power generation. What are the margins on CCGT. Congratulations to EUR 32 per megawatt hours. Do you have pressures on these margins? That's a question. Can you see maintain certain levels on the market? Or is there any recurring element and the market has changed of the prices last year? Again, on power generation, I'd like to know more about the prices of renewables. It's mid-May. They should expire in June. Do you have the feeling that the government is moving somewhere? Is it going to somewhere? Or what are the different scenarios that we can expect? The disappearance of a cap in June, the possibility to increase to EUR 180, which would be very high as compared to the current market or somewhere in between. As to sales safeguard EUR 20 million in the quarter means EUR 80 million over the year. It sounds like a big amount. And then what can we expect from April. But especially for January. In your plan, you see a strong growth in the results of this division. In April, you're going to have these new customers? In the -- from the liberalization of the market from small- and medium-sized customers. In January, there will be probably the tender, the actual tender. Do you have any new updates? Is the authority starting to regulators for the tenders.? So can you help us understand the whether January could be the turning point for you to achieve your target set out in the plan for this division? And then I have two more questions, if I may. One is about waste. We have a slight first quarter and the target is EUR 13 million over the year. Is this confirmed? And what can we expect in the next quarters? If I'm not wrong, last year, we had positive impacts of the prices from power generation also in this division. So can you outline the elements and how can they be compensated? And then M&A is the next topic. Do you no longer have the exclusive power exclusive contract, what happened? Why? Did you find it different from what you expected? Is it a blurred acquisition? Or are you still running for that? And what are the latest M&A options, the leverage is under control. The CapEx is about EUR 1.3 billion. So I'm thinking of ages but maybe that's further down the line. Is there any other deal in addition to [indiscernible] that may come to surface during the year?

Hi, Stefano. I will give some answers and Luca will give the others. As far as the cap is concerned, we are keeping the cap at EUR 58 for the second half of the year. If you're asking me how realistic I believe is going to remain, so I'm saying not really. We don't have a clear sentiments on that. I don't know what will happen to that provision. The work carried out by the European Union to reach a flat cap talking about the EUR 180 Europe that you mentioned, that's totally in contrast with the EUR 58. Today, we are much lower. Actually, and one of our forecasts indicates that the prices should increase above EUR 150 over the year. However, you're asking me whether this regulation can be replaced by something else? Well, the answer is I don't know. In the next few days, we are going to pay a significant amount of extra profit, and we hear the government talking about bank extra profits and so on. So we believe that being cautious with our accounts at the moment on renewable power generation still the way to go. So if we decide to use this provision, we can do it during the 6-month period during the presentation of the 6 months results. On CCGT margins, Luca, do you have any update?

Yes. Actually, the margins of combined cycles, if you look at the medium term and the projection is for reducing margins compared to what we are seeing and what we have discussed so far, which is part of hedging. This is also the result of a tail of the extraordinary effects of 2022. On the market sometimes very high prices, but poor liquidity. As the months evolve, it is likely that the margins may decline but it's also indicated in our forecast, in our numerical forecast, it's in the figures. So looking at 2024, there should be a sort of normalization standardization, which is also part of our plans. As to waste, you asked whether the guidance for waste is confirmed or not. The answer is, absolutely yes. Last year, we had a positive effect due to the energy scenario. As we said before, the growth of this year is more linked to investments carried out. Last year, at the end of the year, we inaugurated new plants, new waste management plants [indiscernible]. Those were the new plants, which give a contribution to the management amounting to about EUR 20 million. And we also have another -- a new WTE line in Parona and the smoke line on Bresci WTE, which we give 2 major contributions over the year. This gives us a good peace of mind in terms of being able to reach the targets on waste. As to sales and M&A, the last 2 points, I would say the following. First of all, the impact that we expect on Safeguard is a bit lower, although it's significant because it's EUR 60 million approximately over the year. We expect the tender in January 2024. As you said and remember, our business plan in 2021 already factored in an increase in the customer base with an important step in 2024 linked to the acquisition of about 1 million clients -- customers from the tenders of the safeguard market. So we maintain this assumption. There's no signal for a further delay in the timing. We exercised our abilities with the previous tenders. So we are likely to win as compared to the share markets. So we're very happy. We did the sales plan by lowering the expectations as compared to the 5 million of clients that we originally expected, reduced them to 5 because somehow, the competitive scenario for 2021 seems to be very aggressive. We assume the 3% year on commodity margins and a reduction of our customer base as compared to the original expectation. Today, to be honest, that the scenario is slightly different because the tsunami of 2022, took a lot of operators out in the market, including resellers and the players that were not vertically integrated with generation. And so on the one hand, margins went the opposite way, it increase or not decrease. On the other hand, there is more competition. We see much lower churn rates as compared to what we expected. We had 2.9 churn rate in the first quarter. We expected worse, so we are more aligned to what we thought about the market. So the customer base, as a result, is growing more than expected. So we expect a lot of satisfaction on the sales side in the next few years. As far as M&A is concerned on [indiscernible], I cannot give you any information because we are part of the competitive procedure. It's true. We now have the exclusive rights as we transparently reported to the market, and we disclosed it. We didn't have time to conclude an in-depth due diligence in the past 2 weeks, so we don't have enough data to formulate a binding offer. We asked for an extension. Fair enough from their viewpoint. Ask to open the competitive process, we expect [indiscernible] to be present. Since they also communicated this on papers, on the newspapers, very clearly, there is a term until 12th of June. And so we will express our opinion after completing the due diligence. And we will consider whether or not a binding offer will be made. But today, I have, I cannot give any further details. As to M&A in general, I can say that in our plan, if you look at the update as of September 2022, we had not included any special M&A transaction. We focused all of our CapEx on industrial CapEx. So you see that a reduction of M&A, CapEx is coupled with an increase in industrial CapEx. What we are seeing now is that the excellent development of EBITDA and the excellent evolution of [indiscernible] may allow us to increase our ambition on general investment, overall investments. We will evaluate that as part of the update of the business plan that, of course, we have already started. So at that time, if we see enough opportunity to proceed with greenfield, we would prefer that because it means expecting the full value of the design and development and construction of the plant. If we have a shortage of short term grid projects and long term finance, we do not exclude to also carry out M&A targeted to the sectors that we are interested in. For sure, renewable energies, bioenergy or special opportunities if we see any on grids or water, there might be something interesting there. We will see. Just one explanation concerning the issue of supply. We're not to underline that the contribution of safeguard of EUR 60 million. As I said before, when I talked about the supply market, we also decided to make an investment, rather considerable investment of EUR 50 million approximately on the retention of our customer base, which we believe is a good investment for the future.