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

Good morning. This is the call operators. Welcome to the presentation of the consolidated results as of 30 September 2020 Ascopiave. [Operator Instructions]. Now Nicola Cecconato is going to deliver the presentation.

Thank you. Good morning, everyone. Let me start with the summary of economic and financial results slide on Page 4, [indiscernible] as at 30 September 2023. the cycle to group's corporate structure as at 30 September 2023, there's been some changes because of extraordinary transactions finalizing [ 9 ] months as a result of [indiscernible] 2022. The group stake in the company was reduced from 48% to 40%. In January 2022 as part of an overall creditor rationalization of concessions, certain [indiscernible] were sold within the group in the sphere of the operations of concession in [ near of mine ] that have acquired the resale part of 19.7% of [ premiere dock ]. In March 2023, [indiscernible] despite a majority stake in our company operating in [indiscernible] technology sector. In June 2023, the company's Board of Directors approved the product or merger and acquisition in [indiscernible]. The project was subsequently approved by the shareholders meeting of the company is done from the first of 2023 for this region, income statement and the balance sheet of our [ plc ] have been have been presented asset for sale. In April 2023, [indiscernible] shareholder[indiscernible], company active in the renewable energy sector. Slide Page 5 of an statement for the full plan of 2023. In the first 9 months, [indiscernible] regulatory, the group realized revenue to EUR [ 125 million ] with an EBITDA of EUR [ 5.6 ] million and an EBIT of EUR 19.8 million. The balance of financial income and expenses sold a negative value of EUR 4 million, in particular, financial income of EUR 5.9 million, increased by EUR 1.4 million for the first 9 months of 2022. The change was mainly due to the recognition of the decline in the acquisition of tax service of [ 110 ] , which led to the recognition of financial income going EUR 1.3. Financial expenses, on the other hand, amounted to EUR 9.9 million, an increase of EUR 6.2 million compared to the same period in 2022 change due to both the increase in potential debt and interest rates payable. Income from companies consolidated using the equity method amounting to EUR 0.9 million respect to the fore results of [ Ascott ] holdings, invested Energy Group and [indiscernible]. After the way on the economic statement by EUR 2.4 million at actual calculated by normalizing the pretax result of the effective competition of companies also relating to equity method received some industry companies, the capital gain on the rationalization of debt distribution concession and related tax effect, which went from [ 3.4% ] with a [ 8.7% ] September 2021 year later. Slide on Page [ 6 ] on contributing balance sheet as of in September 2023. As of 30 September 2023, the group had an invested at EUR 1.3 billion investment of [ pretax ] compared of EUR [ 173 ] million from [indiscernible], [ 759 ] million in an developed EUR [ 207 ] million from the value of minority treated [ energies ] EUR [ 328 ] million [indiscernible] EUR 54 million and EUR [ 24.3 ] million or EUR z8 million. EUR [ 3.] 6 million from other fixed cases, EUR 8.9 million from the negative balance of working capital items in provision, EUR [ 7.4 ] million from the net invested [indiscernible] plc that we demerged into [ Tapado SPR ]. The tangible assets shown strong assets equal to EUR [ 79.5 ] million mainly consists of gas distribution network and [indiscernible] owned by the EUR 82.3 million and [indiscernible] recognized following business combination, EUR 61.7 million. Tangible assets consist mainly of [ real estate ] and value of renewable energy production facilities. Capital [ expected ] September 2023 amount at EUR [ 2.] 1 million, which showed of EUR [ 22.5 ] million to better basis. Net financial position at EUR 5.9 million, increased by EUR [ 1.4 ] million as of 31 December 2022. The debt net equity ratio is 0.62. Some consolidated in the line byline meter, [indiscernible]. September 2023, the group distribution companies managed approximately 373,000 customers decrease of 2% compared to 31 December 2022. The change was mainly driven by the sale of some subtractions in [ Piemonte airmen ] [indiscernible] with approximately [indiscernible] with about 4,200 users. The first 9 months of 2023 [indiscernible] 2 million [indiscernible] debt market of consolidation [indiscernible] with about [indiscernible] we take it from first April 2022. Page 9 operational data, [ table ] energy, 30 September 2020 at 0.8x for the product on the [ actionable ] sources with an installed capacity of 2.5 megawatts. In the first 9 months, electricity production amount we wanted [ kilowatt ] although the volume generate was higher than the same period of the previous year, plus [ 7% ], but still lower than the historical average deposit in recent years. Slide Page 10, revenue development. Revenues of EUR [ 110 ] million showed an increase of EUR 5.1 million determined by the expansion of the scope of consolidation to the newly company in the amount of EUR 0.5 million increase in [ partition ] tariff revenues, EUR 2.6 million the growth in revenue from the sale of [indiscernible] generated from enable [indiscernible] EUR 4.2 million of EUR 2.1 million in revenue from energy efficiency, decrease in other revenues of [indiscernible] EUR 2 million or EUR 6.5 million due to the [indiscernible] finance [ net debt energy ] and area for the early termination of service contracts annual EUR 3.2 million for the termination of certain [indiscernible]. Slide Page 11, development of operating profit, operating profit of EUR 98 million increased by EUR [ 0.1 ] million due to the effect of expansion of the consolidation newly companies, the amount of EUR [ 0.1 ] million increase in gas distribution tariff revenues, EUR 2.6 million growth in revenues on the favor of electricity generated from [ ratable ] versus EUR 4.2 million [ containerization ] EUR 1.1 million growth in net operating costs EUR 6.1 million. The revenues from the sustainable energy that [indiscernible] revenue amounts EUR 90.5 million, showed an increase of EUR 16 million compared to the first 9 months of the previous year due to there consolidation be EUR 3.5 million, increased EUR 0.6 million in [indiscernible] revenue on a like-for-like basis. [indiscernible] amounted to EUR [ 2.2 ] million decreased mainly to the increase in production. Revenues generated in this segment affected by the government's fund containment measures, which leads to take effect as of the third quarter of this year. Other net operating costs slide 13, net operating expenses were EUR 72 million increased by EUR 3.2 million due to the change in the following revenue and cost items. Function consolidation to include the acquired company, EUR 2.1 million, which is licensed in an accrued by EUR 1.2 million lower margin on energy efficiency bond, EUR 0.3 million, higher personnel costs, EUR 1 million lower consulting costs, EUR [ 2.6 ] million [indiscernible] million. Total revenue, EUR 6.5 million, [indiscernible] net debt in group [indiscernible] first half of 2023 for the determination of some service contracts. Lower revenues were EUR 3.2 million due to the [indiscernible] contracts, the [indiscernible] a lower [ EUR 1.3 million ] [indiscernible] EUR 4 million higher than nonrecurring costs [indiscernible] million. Other changes with a positive impact [indiscernible] EUR 1.4 million. As by Page 14, number of employees. As of end of September 2020, we had [ 496 ] employees, a decrease of 17% from September 2023. That 15 personnel costs totaled EUR [ 15.2 ] million, increased by only EUR 1.5 million, driven by a central the scope of consolidation to new lead companies in the amount of EUR 0.3 million, lower capitalized labor costs, EUR 0.2 million, higher caring personnel costs is EUR ] 2.8 ] million and due to higher salaries related to short-term and long-term incentive plans. Slide Page 16, investment. Capital investment, expenditure and for intangible assets in the first 9 months of the financial year amounted to EUR 55.3 million, increase of EUR 13.9 million. Expansion on the [indiscernible] concertination led to investments of EUR 0.7 million in the debt distribution sector. On like-for-like level, most technical investors concern the development, maintenance and organization of the distribution network and last EUR [ 291 ] million with EUR 11.6 million in connection [indiscernible] in network funds [indiscernible] in reduction plan. Investment [ inviting ] equipment amounted to EUR [ 9.9 ] million for investments in the renewable energy sector, mainly related to the development of new bank in Colombia with such of [indiscernible] the land by company [ drilling ] [indiscernible] EUR 14.4 million by [indiscernible] net financial position and tax sale. The net financial position as of 30 September 2023, [indiscernible] EUR [ 1.9 ] million, an increase of EUR [ 14 ] million compared to December 2022. During the first 9 month of the financial year, generated financial resources of EUR [ 40.7 ] million. Net investments in tangible, tangible results in that outflow of EUR 50.5 million and looking capital management [indiscernible] EUR [ 88.2 ] million. We receive dividends of [indiscernible] from investor companies, stock consolidated. [indiscernible] outflows for the share of dividend to shareholders of EUR 29.1 million. The [indiscernible] distribution [ protection ] resulting the realization in January 2023 was a revenue of EUR 21 million, the reason of some execution for the [indiscernible] acquired plan EUR 9.4 million. The execution made in the first 9 months of the year led to financial outlays of EUR 8.5 million at a relation of EUR [ 26 ] million. Probably, the [ now played ] with further position of 1.7% [indiscernible] of the year-end group and 55% stake in our plc. Slide Page 18, net financial position and cash outflow. Financial debt as of September 2023 amounted to EUR [ 5.1 ] million, a variable rate at the rate average for the first 9 months of 2.49%. [indiscernible] in 2022 into balance sheet data. The slide shows income statement for the first 9 months of 2023 balance sheet with September 2023 update on slide 17 where there are balance sheet comparisons with last year. As of 31 December 2022, first 9 months of financial year has connected realized revenues of EUR [ 33 ] million, achieving of EUR 1.1 million and an EBIT of EUR 10.7 million. September 2023, energy has an invested capital of EUR [ 49 ] million. This [indiscernible] intangible assets [indiscernible] participations, [indiscernible] in other [ CapEx ] [indiscernible] in the negative balance of working capital items and provisions. The net financial position was positive in cash by EUR 80.9 million. So I have finished the presentation. Now the Q&A session came out.

This is Pascal. We can start with the Q&A session. [Operator Instructions]. First question of the conference call is from [ Eric Barcelona ].

The first question, for the first question of the [ tender]. At what point you are on the competitive scenario with that item and synergies. So you can -- how you are managing it with your balance sheet about [ energy ] do you have any expectations about the profit margin or energy? And do we expect a normalization with regards to in 2024 compared to the performance of 2023. Third question is about the financial performance. And not be taken there -- has been a financial charge impact, a significant impact on financial charges compared to the contribution in the first 6 months and give us an illustration, can you shed light on this? And the last question is about the contribution in this quarter, EUR 1.5 million of minority interest, can you give us some details.

Good morning. Let's start with the first question. that relates [indiscernible]. We are -- we are now participating is the [ tender ] that is in the interested. And at the end, and we are evaluating the valuation is in full swing in order to be able to do obligation. We take that related business, it will be -- there will be the energy with our core business, which is [ just ] where there have been significant steps, which have been taken. We are waiting the incremental value of the [ profit ] which will be managed by the group. I would like to remind you that in the past [ 3 years ], [indiscernible] has grown significantly by 250,000 [indiscernible] which is an increase of almost 100% related to the previous sentiment. So it has double [ EBITDA ] in the stage is a regulated business is an important asset [indiscernible] for deposit with efficiencies [indiscernible] can be the core business should be -- if we should wait [ December ] it's a competitive scenario even though we don't know how the competition is, but I think you can imagine how it is. But we don't have any details about the competitors. Even though we know that there are players are very much seen in participating. As to your second question at Energy. As you have seen, the results have been, as we say, just enough in light of whatever has happened in the world of getting the last 9 months that the most modulation financial expenditures in the previous years is we're not registered. So this has brought [ salt ] which are pumping [indiscernible] so even though he has been a recovery of results, we think that maybe in the first 6 months of 2024 the [ inflation ] will begin to normalize. For the [ first ] question, [indiscernible] relating to the increase of [indiscernible] in the 6 months will be connected to the indebtedness that we prepared to the increase in interest rates, which have been in the market. We have been elected to have a part of our debt with fixed interest rate and cover. So the rate average -- interest rate of 2.5% is well below market average. So we are quite lucky to have this interest that we can manage. As for EUR 1.5 million for minority interest, which refers to the results. We do not relate to the book, which relates to minority interest, obviously, where we don't have an data. As to this last point, the [indiscernible] has not significantly changed compared to the second point. Like the minorities. So can you give me a blow-up of the evolution related to minorities. For [ STG ], which is the main company in renewable energy has started producing very good results in the last quarter where we do not have do have 100%. So our results are proportionate.

Next question is from [indiscernible].

Good afternoon, everyone. Thank you for the presentation. I would like to specify one thing. On energy contribution in the last conference call for the first 6 months, we spoke about a return to the normalization of profitability, which I thought would be in the new [ thermal ] season. So speaking of this period of the last 3 months of 2023. So what do you think will be to contribution. The potential contribution to first to the first quarter of 2023. just [ 1 million ] to 9 months. I would also like to note, I'd like to have an update in the hydroelectric business, hydroelectric generation. If you can give us kind of like some information of this fourth quarter and also 2023. Since now there is no fixed -- and hopefully, that til very interesting. The price is no longer, it's a [indiscernible]. And lastly, you may give us an update on the development port of renewables especially about the infield project in Colombia, we should be completed the wind farm. This should be completed within [ the forms ].

So relating to the contribution of the energy. The year has just started. I mean, the point is [ entry ] just started. So we think there has been an improvement, not a normalization, but an improvement as it has had in the past fiscal year since we will have this in the next 6 months of 2024. So we think that the contribution of energy, also for 4Q there'll be a contribution that unlimited contribution, relating to hydroelectric to, the fact that has been a recovery that's an extra rig fall there's been a significant increase in the production of hydroelectricity plus [ 6% ] compared to last year. So absolute value masked from [ 61 is 1.3 ]. So this also for the fourth quarter is intended operating with rainfall becomes normal [indiscernible] brining you will get results we will have significantly better results, not completely aligned at our expectations or very near our expectations relating to [indiscernible] that 2 weeks ago, the fixed [ wind farm ] the fixed fall on in the store of the wind farm. And so and the plant will be absolutely finalized within the end of this year. So it then the operational by the end of the year. I just -- a I would like to point out if you shed 1.6 megawatts of power into. [Audio Gap]