Ascopiave S.p.A. (ASC) Earnings Call Transcript & Summary

Good afternoon. This is Chorus Call. Welcome to the financial results presentation of the financial results as of 31st December 2025. [Operator Instructions] And now the Chairman and Chief Executive Officer, Dr. Nicola Cecconato, is going to give his address.

Thank you. Welcome. I'll give you the consolidated results as of 31st December 2025 and the comparison with consolidated results as of 31st December 2024. The slide illustrates on Page 2, the group's corporate structure as of 31st December 2025. During 2025, the group completed a number of significant extraordinary transactions that changed the scope of its consolidated assets and equity investments held. On 9 May, 2025, Ascopiave acquired 9.8% of the share capital of Ascopiave becoming the sole shareholder. In December 2024, Ascopiave exercised put option on 25% of the share capital of Estenergy and the transfer of the shares took place on June 24, 2025. On July 2025, the transaction for the acquisition from the A2A Group of 100% of AP Reti Gas North S.r.l., a newly formed company, and the transfer of certain business units previously owned by Unareti S.p.A. and LD Reti S.r.l. became effective. The company is active in the gas distribution business in the provinces of Bergamo, Brescia, Cremona, Lodi, and Pavia. On October 2025, Ascopiave S.p.A. transferred to Hera S.p.A. 3% stake its held in Hera Comm S.p.A. On 22 November, 2025, the transaction for the acquisition from Sime Partecipazioni S.p.A. of 100% of the share capital of Societa Impianti Metano S.r.l. [indiscernible]. Active in the gas distribution business in 40 towns in Lombardy, Emilia-Romagna, Piedmont became effective. Changes in the consolidation perimeter and transfer of shareholdings. It should be noted that the company, AP RETI GAS has been consolidated on the 1st July 2025 and the consolidated economic results in 2025 refer to the second half of the year. On 24 June, 2025, the 25% stake in Estenergy was sold. In the financial year 2024, the company's results were consolidated using the equity method until 30 September, 2024, the date of the earliest accounting close prior to the exercise of the put option on the shareholding. In the income statement as at 31st December 2025, dividends received from the company were recognized as financial income and the gain from the sale of equity investments was recognized as well. On October 2025, the 3% stake in Hera Comm was sold. Consolidated income statement for the year 2025. In the 2025 financial year, the group realized revenues of EUR 244.3 million, achieving EBITDA of EUR 154.4 million and EBIT of EUR 92 million. The net balance of financial income and expenses was positive at EUR 11.3 million, an improvement of EUR 21.5 million compared to 2024. This change is mainly explained by higher dividends paid by investee companies in particular by the dividend amounting to EUR 22 million distributed by Estenergy S.p.A. prior to the sale of shares. The portion of the result of companies consolidated using the equity method is negative and equal to minus EUR 0.3 million and refers to the results achieved by the subsidiary, Cogeide S.p.A. in the year 2024 net of the write-down made to adjust the investment to its recoverable value. Compared to the previous year, the item shows a negative change of EUR 8.2 million in the 2024 income statement [indiscernible] realized by Estenergy Group with the recognized for the group share until 30 September, 2024. While there was no recognition in the 2025 financial year. Consolidated balance sheet as of 31 December, 2025 as compared to December 2024, the group has invested capital of EUR 1.247 billion invested in capital stock. EUR 184.2 million in tangible fixed assets, EUR 1.017 billion intangible assets, EUR 66.5 million from the value minority interest has [indiscernible] EUR 22.3 million. [indiscernible] EUR 26.5 million from other fixed assets. Then there was negative balance of working capital items and provisions EUR 87.8 million. The intangible fixed assets shown under asset equal EUR 1.317 billion, mainly consists of gas distribution networks and plants owned by the group, EUR 1.175.8 billion, of which EUR 247.8 million is attributable to AP Reti Gas North S.r.l. [indiscernible] Group and goodwill recognized following business combination. Property, plant and equipment consisting of real estate and the value of renewable energy productive plants. It should be noted that during the fourth quarter of the 2024 financial year, Ascopiave S.p.A. exercised the put option in the remaining shares of the associate Estenergy S.p.A. and consequently from the 1 October, 2024, the revenue of equity investments recognized as of 31 September, 2024 was reclassified [indiscernible]. The sales was completed on 24 June, 2025. Shareholders' equity as of 31 December, 2025 amounted to EUR 912.4 million, an increase of EUR 64.6 million compared to 31 December, 2024. The net financial position was EUR 614.2 million, an increase of EUR 226.6 million compared to the end of 2024. The debt-equity ratio is 0.67. Operating data, gas and renewable energies distribution, as of 31 December, 2025, the group's distribution company has managed approximately 1.468 billion users, an increase 68% compared to 31 December, 2024 of which approximately 599,000 related to the company AP Reti Gas North [indiscernible] during 2025. In 2025 financial [indiscernible] AP Reti Gas North into the scope of consolidation as of 1 July, 2025, we distributed 19 million cubic meters in the second half of 2025. The group has 29 hydro power, wind power plants with an installed capacity of 84.1 megawatts. In the 2025 financial year, electricity production amounted to 187.3 gigawatts, a decrease of 30.3 gigawatts, minus 14% compared to the same period of the previous financial year, the latter being characterized by significant rainfall. Evolution of distribution, veritable [indiscernible] revenues and current revenues. Revenues EUR 244.3 million recording an increase of EUR 39.4 million determined by enlargement of the consolidation perimeter by EUR 48.9 million, increased of EUR 10.9 million in gas distribution tariff revenues, the decrease of EUR 5.5 million in revenues from the sale of electricity generated from renewable sources, the decrease of EUR 11.7 million in revenues from energy efficient certificate. The decrease in other revenues of EUR 3.2 million. Gas distribution tariff revenues amounted to EUR 189.8 million and further increase of EUR 50.3 million compared to the previous year. [indiscernible] EUR 39.5 million with expansion of the consolidation perimeter on a like-for-like basis and EUR 10.9 million of which 8.6 million due to the revision of 2020-2024 tariff operating costs envisaged by ARERA Resolution 87/2025. Revenues from the products of energy from renewable sources amounted to EUR 22.6 million, decreased by EUR 5.5 million. Decrease is mainly explained by the lower volume of energy produced. Operating profit, other operating expenses. Operating income amounted to EUR 92 million, showed an increase of EUR 40.3 million due to the enlargement of the scope of consolidation, EUR 13.9 million; increase of EUR 10.9 million in gas distribution tariff revenues, decrease in revenue from the sale of electricity generated from renewable sources, EUR 5.5 million. The decrease in amortization and depreciation, EUR 0.2 million, capital gains of EUR 26.4 million related to the sale of 25% stake in Estenergy, an increase in net operating expenses of EUR 5.5 million. Net operating expenses EUR 84.6 million increased by EUR 20.5 million due to the change in falling revenue and cost items. Enlargement of the scope of consolidation EUR 15 million. Low concession fees two towns, EUR 1.4 million. Higher personnel costs, EUR 1.7 million; higher consulting costs, EUR 3.8 million, of which total EUR 2 million related to the acquisition of AP Reti Gas North. Low compensation to directors and statutory auditors, EUR 0.4 million. Lower gas meter reading costs, EUR 0.5 million. Higher non-recurring cist EUR 2.1 million. Other changes with a negative impact, EUR 0.2 million. Number of Employes and personnel cost. As of 31 December, 2025, the group had 733 employees on the payroll, an increase of 238 compared to 31 December, 2024. This increase is mainly explained by the consolidation of AP Reti Gas North, which have 230 employees as of 31 December, 2025 and AP Reti Gas Next Grids with 17 employees. The overall EUR 23.9 personnel cost increased by EUR 5.8 million driven by enlargement of consolidation perimeter of EUR 4.1 million, EUR 0.4 million increase in capitalized labor cost, EUR 2.1 million increase in current personnel cost mainly due to higher cost of incentive plans and ordinary salary increases during March, the contractual increases provided by national labor contracts and in part individual recognition. Captain Expenditures. Investments in tangible and intangible assets realized during the year amounted to EUR 93.7 million increased by EUR 12.6 million. Investments made by the company in AP Reti Gas North consolidated 1 July, 2025 amount to EUR 4.3 million. Most of the technical investments on the like-for-like basis related to the [indiscernible] and modernization of gas distribution network and plants amounted to EUR 41.9 million, of which EUR 16.3 million in connections, EUR 22.5 million in network expansions [indiscernible] and EUR 2.1 million in reduction plans. Investments in metering equipment amounted to EUR 11.9 million. Investment in the renewable energy sector amounted to EUR 21.1 million, mainly related to costs incurred for the maintenance and expansion of hydroelectric plant EUR 3.5 million, for the construction of photovoltaic plants EUR 7.2 million, and for the construction of other green energy plant EUR 10 million. Other investments amounted to EUR 6.5 million, related investments in land and buildings EUR 2.3 million; hardware and software EUR 2.7 million; company vehicles, EUR 0.9 million; and infrastructure, EUR 0.5 million. Net financial position and cash flow. The net financial position, effective 31 December, 2025 EUR 614.2 million, an increase of EUR 226 million compared to 31 December, 2024. During the year, cash flow generated financial resources of EUR 97.9 million. Net investment in tangible and intangible assets resulted in cash outflows of EUR 93.8 million. Net working capital management generated resources of EUR 9.5 million. The group collected dividends of EUR 27.4 million from subsidiaries, not consolidated on a line-by-line basis. Shareholders' equity resulted in cash outflows of EUR 32.5 million and the distribution of dividends to shareholders. Acquisition of [indiscernible] resulted in cash outflows of EUR 518.2 million of which EUR 456.8 million for the acquisition of the AP Reti Gas North and EUR 46 million for AP Reti Gas Next Grids. The sale of equity investment generated [indiscernible] of which EUR 204.1 million from the sale of equity investments in Estenergy and EUR 54.8 million from the sale Hera Comm. The purchase of equity investments resulted in cash outflows of EUR 472.2 million. The realization of equity investments generated resources of EUR 234.1 million. Financial debt as of 31 December, 2025 amounted to EUR 577.1 million [indiscernible] 49% variable rate and the weighted average cost of debt in the year 3.11%. Before [indiscernible] the Board of Directors of Ascopiave in consideration of the results of the year and the solidity of the group's equity and financial structure will propose at the Shareholders' Meeting, the distribution of a dividend of EUR 0.16 per share, for a total of EUR 34.6 million, an amount calculated on the basis of the shares in circulation and the closing date of the financial year. If approved at the shareholders' Meeting, the dividend will be paid in May 2026 with ex-dividend date on 08 May 2026. I have finished the presentation, now the Q&A session is going to start. Thank you.

[Operator Instructions] First question from Alessandro Di Vito, Mediobanca.

The first question is relating to the field. Other operators in the field have forecasted an acceleration of optimistic forecast for the year. Do you take part in any tender in the year? The second question is about the increase in revenues due to the positive optimistic forecast. The third and last question if can you give us some guidance on the trends that you expect for 2026.

I'm going to answer some of your questions. [indiscernible] answers to questions will be more specific. On the gas tenders, sure, we also have received, from the contracting stations we have received news that there could be gas tenders during the year. The premises are good. So what you say, what you have read is indeed true as in the past, it has been blocked, but the gas tenders, there will be this year, tenders have already been published. So since we are interested in taking part in some of the tenders, we cannot give you all the information, it is confidential. In the industrial plans, we have already stated that Ascopiave would take part in some of the tenders. We have indicated in [indiscernible] the plan as to what our policy is going to be in 2026. So once the tenders are officially published, then you will know as well the [indiscernible] and what our policies will be, what evaluations will be. For example, in the strategic plan, we have already stated what our policies will be in 2027-2028. So you know more or less are the perimeter of our [indiscernible]. We are ready to take part if they are officially opened. And if there are growth drivers that [indiscernible] the opportunities, relating to the impact on [indiscernible] I'm going to give you a very quick evaluation. [indiscernible] based on the results, the amount we expect to pay between EUR 1.6 million - EUR 1.8 million. Relating to the prospect 2026, we will publish -- we will give some guidance. We will give you some guidance, some tangible guidance, but for that, we need the official publication of tenders. So already in our press release, we have given -- in our strategic planned press release, we have already issued the policies of what our policy will be and the framework within which we will operate. So since we have acquired some new assets, so we also have to take that into consideration. So next year, there could be an increase surely in our turnover, in our revenues. Some of our assets that we have acquired from [indiscernible] will be perfected. We are going to work on it to enhance the performance of these assets. Obviously, we have also to consider what antitrust dictates to us. But what we need to do, our goal is only to increase our performance in the gas sector. That's for sure. This is one of the goals of the year 2026 that we have set for ourselves. Once we have - we will be [indiscernible] so the result of 2026 can surely be an improvement of what we have achieved, what we have accomplished in the year 2025. So EUR 8.6 million is the tariff balance that we have achieved, that we have also managed to get from Estenergy. And -- so the dividends have to be taken into considerations. The dividends have been extremely generous this year as you must have seen from EUR 22 million of dividends as you have seen from our press release. So these components [indiscernible] to be taken into consideration. So anyway, whatever we do, we do it bearing in mind the stability of the regulatory framework. This is the forecast, these are the numbers that we can provide you in order that you can make your own guess on our 2026 performance.

[Operator Instructions] The next question is a follow-up from Alessandro Di Vito, Mediobanca.

An additional question from me. So what do you expect for the year 2027 if France is excluded from the RAB basis?

We haven't made any simulation on this. There is a trend that tax rates are going to increase. So sincerely, we cannot give you any tangible guidance on this. But there is no constant figure that we can give you. There will surely be consequences from the cost level, dividend. Anyway, the regulatory framework is still standing. So we just hope there will be no adverse effect. So I hope [indiscernible] is going to take into consideration that there is a new situation that has emerged. But as of today, we don't know and we haven't made any simulation.

[Operator Instructions] Ladies and gentlemen, there are no further questions. So thank you very much for your participation and see you at the next call. Thanks a lot. This is a Chorus Call. The conference is over. Thank you. You can disconnect your phone.