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

[Interpreted] Good morning. This is Chorus Call. Welcome to the presentation of the Industrial Plan 2024-2027 of Ascopiave. [Operator Instructions] Now the Chairman and CEO of Ascopiave, Dr. Nicola Cecconato will give you his address.

Good morning, everyone. [Audio Gap] the strategic plan 2024-2027 will be illustrated to you now. I'm going to start with the slide on Page 4. Our group listed on the STAR segment of [indiscernible] is a solid, reliable and transparent counterparty for its stakeholders. This is mainly active in the regulatory sector of Gas Distribution and in the product of energy renewable resources, hold shares in companies active in gas and electric sales, energy services and integrated water services. Slide on Page 5. The plan will configure the development path for the group that will allow to increase corporate profitability, exploiting the opportunities for growth and improvement offered by the dynamics of the sectors of interest while retaining a balanced financial structure and remunerative dividend distribution. Growth will take place within a framework of sustainability, combined with the interest of our main stakeholders and leveraging the group's current positioning and the enhancement of its resources and skills. In the plan, economic and financial objectives are integrated with social, environmental and governance objectives in order to pursue sustainable success. Strategic pillars, slide on Page 6. The company strategy is built on 4 fundamental pillars. Growth in the core businesses of Gas Distribution, Renewable Energy, diversification into synergistic sector, economic, operational efficiency and innovation. The strategic directions we intend to follow are closely connected and mutually reinforced each other by supporting the overall corporate development with a view to sustainability. Slide on Page 7, sustainability targets. The plan provides for integration within objectives of economic, financial [indiscernible] and objectives of social and environmental nature, where the group is focused on, in particular, has identified sustainable development goals as basic elements. Before describing in more detail the concept of the strategy and its impact on the forward-looking economic and financial figures, I will make 2 remarks of the group's current activities. Company structure. Ascopiave holds the balanced portfolio of assets characterized by the low risk profile. Again, 2023 net invested capital amounted to more than EUR 1.2 billion, of which about 75% related to assets currently controlled by the group and as such, consolidated on a line-by-line basis. The remainder consists of minority interests. The most [indiscernible] strategic and value terms that has impact energy. The leading operator in the gas and electricity sales sector is in the 3 Veneto region. Page 10, Gas Distribution, positioning and operational data. Ascopiave has been one of the key players in the consolidation of the Gas Distribution sector and has achieved a size and positioning capable of fostering further growth in this business. Thanks also to intense M&A activity conducted over the years. Today, the group is approximately 870,000 users, 14,700 kilometers. It's largest operating sector nationwide [indiscernible] 2% in the Veneto region as well as the leader in the Northeast. Ascopiave has significant presences in other regions of Northern Italy. Page 11, Gas Distribution, economic and financial data. Distribution is a regulated business with a low level of risk and mostly stable at predictable economic results. While EBITDA increased significantly driven by the growth in size and economic influences achieved, EBITDA user ratio remained substantially stable over time. Moreover, thanks to efficient management policies. The group recorded a return capital of 8%, above the benchmark defined in the tariff regulation. Slide, Page 12, shareholding in EstEnergy, retail gas and power, another important aspect of the group with its minority shareholding in EstEnergy. The company controlled by Hera group is active in the sale of gas and electricity, with a new territorial focus in the Veneto region. [indiscernible] 1 million supply contract, which is an important regional player. The current contribution of the EstEnergy is the result of a complex extraordinary transaction, finalized by Ascopiave and Hera. In 2019, Ascopiave has implemented a commercial strategy program [indiscernible] Gas Distribution to the transition of the management of several plants in the regions of Veneto and [indiscernible]. The transaction of sale allowed the group to reduce its tourist exposure on its business activities, with the possibility of exercise and the put option on its stake in the company. Page 13. EstEnergy, Hera Comm sales options. In fact, Ascopiave holds a put option on its current shareholdings in EstEnergy and Hera Comm. EstEnergy's option has a very flexible time conditions of exercise with a maximum maturity in December 2026. The strike price is characterized by flow and the pursuit of further upside related to depreciation of the initial invested value of EUR 395 million. The group holds a put option in Hera Comm also exerciseable by the end of 2026. The exercise price corresponds to the value of the initial investment equal to EUR 54 million, increased by 5% per year and decreased by the value of dividends distributed. In 2022-2023, Ascopiave has partially exercised its put option in the shareholding of EstEnergy, transferring 23% to the company and collecting over EUR 216 million. The plan for its part assumes a full exercise of the put by 2026 in order to finance the major investment plan. We're exporting the electricity generation from renewable sources in the full year 2021-2023 [indiscernible] renewable energy sector through a number of business acquisitions and the sum-up of some new generation planned project. The hydroelectric plants acquired allocating the regions of Veneto, Lombardy and Piedmont. In [ December ] 2023, the group completed the construction of a new wind farm in Calabria, which went into operation in January 2024, in addition to the one advised in Campania. The Group is also [indiscernible] the implementation of new projects, some of which have already been authorized in advance. [indiscernible] Cogeide water service [indiscernible] Ascopiave acquired a [indiscernible] shareholders and [indiscernible] active in the safeguarding management of integrating water service for more than 100,000 users in town in the [indiscernible]. Acquisition was [indiscernible] of the Group's interest in managing the water service, which has significant synergy potential with that of managing the Gas Distribution network given the group's current presence in the same territory. Indebtedness and financial structure [indiscernible] the investment opportunities and [indiscernible] to possible leverage. The debt level of EUR 389 million at the end of 2023 is fully compatible with the current risk profile of [indiscernible] to benefit from favorable interest rates. Medium and long-term debt [indiscernible] fixed rate amounts to EUR 378 million and has an average life of 3.2 years. Pricoa bond loan, Page 17. In October 2021, after the assigned USD 200 million private placement shelf program with Pricoa Capital including the new financing channel for the investment plan. As part of the shelf, Ascopiave has already made 2 successful issues of ordinary unsecured bonds with a 10-year maturity for a total of approximately EUR 95 million. The bonds issued are unrated and will not be visited on regulated markets. The proceeds will be used by Ascopiave for various corporate purposes, including refinancing back debt, giving the group sufficient margin of other capital expenditures or M&A opportunities. Ascopiave sustainability, Page 18. Ascopiave initiatives aim to contribute environmental, social and government sustainability with industrial growth in order to generate long-term value for the benefits for shareholders while also taking into account the interest of other relevant shareholders. Despite environmental aspects are concerned, Ascopiave is committed to combating climate change and intends to contribute to the decarbonization of objectives defined at national and European level. Under the social profile, the group's foremost improvement of social quality standards in its business activities with initiatives and polices that promote social value within its organization and in favor of local community. Finally, as far as governance aspects are concerned, Ascopiave is aligned with industry best practices not only in the composition of its corporate bodies, but also in the context of its code of ethics, remuneration policy, bylaws management, coordination guideline, sustainable success as a key principle. Environmental sustainability, Page 19. The group's potential and commitment on environmental issues are related to various initiatives all aimed at minimizing the impact of its activities. [indiscernible] range from the construction and management of energy production plants, powered by renewable resources, wind [indiscernible] hydroelectric with implementation of the best technologies for the constant monitoring of consumption and implementation of the sustainable behavior. As an entry to operating in Gas Distribution, we also called upon to contributing production with energy efficiency obligations to the mechanism [indiscernible]. Economic and social sustainability, Page 19. Involvement of people also in the achievement of economic and social sustainability objectives promoted in Ascopiave as a group in the context of mutual trust and cooperation, particular attention is paid to personnel training, the enhancement of diversity work/life balance and [indiscernible]. With regard to the supply chain, the group gives preference to suppliers in possession of environmental, quality, health and safety certifications. Company continued its approach of communicating its social and environmental performance through the [indiscernible] and publication of the nonfinancial statement, in addition to the sustainability report, responding to the starting objective of developing and maintaining relations with the stakeholder community over time. Content 3, market context and trends, Page 22, the macroeconomic environment. For the Italian macroeconomic context, the past 2 years have been increase in inflation rate and a deceleration of GDP, which is the erosion of purchasing power [indiscernible] caused by the war in Ukraine, the stagnation of the European economy. Forecast for the next 2 years, 2024-2025, according to 2023 Update Note to the Economic and Financial Document are more reassuring. Inflation rate is expected to decrease by around 2% related to the development of energy commodities prices and the easing volatility levels in energy goods. Investment spending on the other hand sees an increase of 2.8% in 2024 with smaller growth trend in 2025 and 2026. The European and Italian decarbonization targets, in order to settle the challenge of weather change, European Union has initiated European Green Deal, which aims to achieve carbon neutrality by 2050 while [indiscernible] targets to be reached as early as 2030. In this context, there are also the resources from that [indiscernible] EUR 235 billion, of which more than 29% is in the area of energy transition. During 2022, the Russia and Ukraine conflict exacerbated the energy market prices, leading to a high increase in volatility and energy -- increase in volatility and energy commodity prices. In this situation, the European Union presented the RePowerEU plan, which aims to reduce the EU's energy dependency on Russian gas supplies. Ukraine envisages, among other things, 2 times more biomethane and 4 times more green hydrogen production than the initial target as by the FIT package -- for 55 package. Role of the gas sector in the energy transition, Page 24. As part of the energy transition, gas represents a key source for achieving sustainability goal including the potential integration with renewable energy sources. In spite of the fact that there's a significant reduction in natural gas consumption and a growth in energy distribution -- consumption, it was expected [indiscernible] is predicting increasing penetration of the so-called green gases [indiscernible] support provided by PNRR. Contribution of green gas estimated to 0.3 cubic meters 2022, which is 0.2% in total gas consumption in Italy is in fact expected to grow strongly. According to [indiscernible] total volume of 7.6 cubic meters in 2030, plus 4,650% versus 2022 volumes and total volume of 22.3 cubic meters, which is plus 193%. In this perspective, the rating of the existing infrastructure from green [indiscernible] and storage of green gas with existing infrastructure and increasing integration with a renewable gas due to the surge of non-programmable renewables, which represents 2 key drivers for the growth of the sector and the necessary response to the risk of [ shrinking ] gas consumption and [indiscernible] existing infrastructure. The new infrastructure network grid and gas, biomethane and hydrogen in particular will be the main alternatives for natural gas in the medium, long term. In particular, they [indiscernible] for about 36% of gas demand by 2040. The hydrogen is expected to contribute more than 20% than biomethane, which is 16% [indiscernible] decarbonization can enable other significant benefits, such as [indiscernible] dependence, wide availability of production sources, [indiscernible] transport to existing transport networks, [indiscernible] uses, transport industry uses power generation and energy [indiscernible] with electricity grid. New demand scenarios for 2040. According to latest forecast in the Snam documents, reference scenarios, there are 4 possible scenarios from gas demand in 2040. The 2 PNIEC scenarios represented scenarios in line with current policies and the implementation of new measures to support the energy transition. On the other hand, the most challenging scenarios are GA-IT and DE-IT, with the reduction in demand financial [indiscernible] of around 25% compared to PNIEC reference. Industrial scenario [indiscernible]. Hydrogen incentives within [indiscernible], EUR 3.7 billion higher marked for hydrogen and development projects. There are 6 types of interventions all included with innovation on ecological transition. The creation of Italian hydrogen [indiscernible] which to support the local production and use of green hydrogen produced by [indiscernible] area, use of hydrogen in hard-to-abate sectors, use of hydrogen in transport sector, both on the road through 40 fueling stations for transport vehicle and on the railway, [indiscernible] 6 railway line, investment in research and development to improve knowledge of the hydrogen-related technologies in production, storing and distribution, the creation of an all-Italian hydrogen supply chain with plants producing electrolyzers and associated components. The new infrastructure network, Page 28. In future, gas infrastructure network will definitely have to be adopted [indiscernible] new types of green gas, such as biomethane, hydrogen and synthetic gas, which in the near future also [indiscernible] integration with electricity system will bring the same role as natural gas today with the same users and [indiscernible]. Technological and infrastructure adjustments in the current network with [indiscernible] necessary to facilitate the penetration of new gases and support the decarbonization of the energy system. Dynamics of the Gas Distribution sector in Italy, Page 29. Natural gas distribution in Italy is a substantially mature and consolidated sector. In fact, the service is widespread and has a significant share for the managed infrastructure needs to be renewed, also in order to enable the challenges arising from the evolution of the energy system. But also [indiscernible] minimum territorial areas and the significant economies of scale [indiscernible] management will drive a further concentration of supply with significant reduction in the number of operators. Sector regulation, against the backdrop as to the stability and transparency of the legal and regulatory framework, distribution activities will continue to pick [indiscernible] by low operational risk. It is assumed that the [indiscernible] regulation despite some element of discontinuity that may be introduced in year-to-year. We continue to guarantee stability in the economic results and cash flows of the operators with however and increased focus on cost management, which, at the same time, will offer the most efficient and innovative companies the opportunity to improve their profitability. And outside the element of stability and [indiscernible] operational risk associated with regulation [indiscernible] also sees the need to segment with innovative solutions, [indiscernible] elements such as optimization, network management, digitalization, convergence between the gas and electricity sectors, energy efficiency and decarbonization. The regulation of ATEM tenders over the past 2 decades, the natural gas sector has undergone profound changes, which have also affected the methodologies and objectives of tariff regulation as well as the way in which the entities operating natural gas distribution facilities are identified. It is well known that legislative decree 164/2000, the so-called Letta Decree established the principle that the service should be entrusted by public tender, a series of subsequent interventions define the liberalization process, given [indiscernible] identifying the 177 territorial [indiscernible]. In the aftermath of the issuance of ministerial decrees, the organization of tenders encountered numerous implementation obstacles, which delayed the start of the tenders. By the end of 2023, procedures for the [indiscernible] 8 areas that have been concluded and only 4 concessions has actually been started. Today, 7 tenders are ongoing, 24 have been suspended or canceled, 12 tenders have been sent to ARERA for its evaluation before publication. The regulation of ATEM tenders. A number of measures have recently been adopted, or are in the process of being adopted to simplify and expedite the process of publishing the revaluation of bids. In a particular law of 118 of 5th August 2022 introduced an option for local authorities to dispose of the network during the tenders on the basis of an appraisal value. And [indiscernible] the process on an issue, which should change the criteria for evaluating these to make them more responsive to development in the sectoral technological framework. It is intended that the decree should provide for managers to mitigate information of asymmetries on the potential tenders, introduce coordination in the criteria of the [indiscernible] of intervention and the objective of optimization and rationalization in use of energy resources, as well as modify and update the criteria for technological innovation, which are currently [indiscernible]. Finally, ARERA intends to move further towards the [indiscernible] requirements both as regards the context of notices and the reimbursement of values of plants. Dynamics of gas and energy prices from 2021 onwards, especially due to [indiscernible] of energy demand following the pandemic [indiscernible] and even more significantly [indiscernible] Russia and Ukraine conflict. Energy price [indiscernible] high level of volatility, which led to record price [indiscernible], which at the same time into a high degree of uncertainty to the market. In 2023, Ascopiave experienced a downward trend, mainly due to an overall reduction in demand, high [indiscernible] and the availability of liquified gas. Dynamics of the renewable energy sector in Italy. European decarbonization for the European green deal 2019 and the RePowerEU 2022 have introduced increasing challenging decarbonization target. National energy policies [indiscernible], PNRR, long-term strategy plan technological transition have followed impacts from EU initiatives, setting ambitious targets for Italy. In this context, variable energy [indiscernible] assume a central role in the decarbonization process. And [indiscernible] declining trend of renewables in Italy shows a significant level of growth over the past 10 years with a CAGR of 3%. We achieved a total installed capacity of 70 gigawatt by the end of 2023. However, to meet national decarbonization target, an additional 60, 65 gigawatt will need to be installed by 2030, exactly less than the total installed capacity to date. A [indiscernible] of the renewable energy sector, the spread of renewable is also [indiscernible] possible to recent years to increase the degree of coverage of the [indiscernible] expense of fossil fuel. [indiscernible] renewable production in 2022 to be around 100 TWh, terawatt, [indiscernible] in 2021. We are talking however, about an important contribution to just under 40% of the entire production of the year. At the same time, traditional thermal sources have from a coverage of 80% in 2005 to 64% in 2022. Dynamics of the renewal sector in Italy. In terms of forecast value, [indiscernible] renewable capacity to reach de-carbonization targets. We expect to reach high levels of installed capacity in the short and medium term with a level of 122 gigawatts in 2030, 177 gigawatts for 2040. Photovoltaic is the technology [indiscernible] development, reaching an estimated 65% share of the total renewable installed base in 2040. In this context, [indiscernible] valid resources, such as green gases, hydrogen, biomethane [indiscernible] make it possible to [indiscernible] production for future use will be exceedingly emerging [indiscernible]. Now we go to Page 40, growth strategy, Gas Distribution. The positioning and expertise can [indiscernible] group in natural gas distribution, provides a [indiscernible] to support the expansion of the scope of activities managed. The consolidation process in the sector represents a growth opportunity that as for the other [indiscernible], thanks to a solid technical and industrial capability, its economic management efficiency and availability of adequatefinancial resources. In particular, financial capacity crucial to cope with a huge need due to the settlement of investment [indiscernible] in the context of the tenders of the award of the service and the investment was offered for the development and renewal of [indiscernible] award of a significant number of minimal area tenders [indiscernible] of companies already operating in the sector, establishment of partnerships for joint participation in scope [indiscernible]. Strategy of growth in Gas Distribution, Ascopiave intends to commit substantial resources over the time period and the [indiscernible] investments of EUR 303 million, EUR 215 million for our contenders are mainly due to the payment of the reimbursement value of the plant to the previous operation [indiscernible] service, but also subsequent development and maintenance of the network. These investments estimated to generate EBITDA of approximately EUR 21 million by 2027, EUR 87 million relative [indiscernible] initiatives that mainly consists of the price band for the acquisition of the target company. Secondarily the cost of the subsequent development as mentioned [indiscernible] network. These investments estimated to generate an incremental EBITDA of approximately EUR 9 million by [indiscernible], also defining their level of [indiscernible] the minimum target areas have been selected. With the portfolio launches, exploiting the economies of synergies resulting from the point management and defined the advantages, especially possessed by the group towards potential competitors taking into account the expected profitability of operations, taking into account the risk of [indiscernible] investments of realizable to the portfolio exits in [indiscernible] management. [indiscernible] made it possible to define a [indiscernible] strategy to identify [indiscernible] focus. [indiscernible] group is significantly present and other areas completed contestable. Having said this, in general terms, it should be pointed out that the process of implementing the strategy described depends on the timing of the publication of costs or tenders. This is a decision for local authorities and contracting stations despite the [indiscernible] law provided in the light of tax has been completely disregarded [indiscernible] issue to date and most of the procedures initiated a sale in progress. Moreover, a few [indiscernible] available for test. There is a time frame for the final [indiscernible] the service, may be rather long, also due to the legal dispute [indiscernible] company in their work [indiscernible]. Growth through M&A, partnerships and RTIs. As compared also [indiscernible] growth in the sector through business acquisitions, establishment of partnerships, contemporary groupings of companies for participation in [indiscernible] in particular [indiscernible] competitive share [indiscernible] financial operational risk [indiscernible] the results of a rider portfolio transactions. The industrial bank is for potential partners, the [indiscernible] particularly significant and adequate generating win-win opportunities for all involved. Growth strategy, renewable energy, Page 44. Renewable energy sources [indiscernible] in the context of the energy transition and the sector as mentioned above has important development prospect in the favorable context. After [indiscernible] portfolio through M&A transaction and the construction of new greenfield plant [indiscernible] its expertise also to partnership and specialized operators. Page 45, growth strategy in renewable energy. Over the last period, Ascopiave [indiscernible] investment in renewable energy sector of EUR 1.321 million, EUR 99 million is related to the greenfield development of new plants or sites that have already been identified. Some of the interventions are related to [indiscernible] and the one is being authorized in the construction stage, but others in the authorization of start-up stage. The management of the greenfield plant with the [indiscernible] operations within the plant's horizon will generate by 2027 an estimated incremental EBITDA of [ EUR 4.7 million ]. It should be noted that a significant portion of the plant's investment is around EUR 215 million, [indiscernible] to slowly be able to start operating beyond the plant's horizon. [indiscernible] is due to the acquisition of [indiscernible] for operations to M&A transactions with an expected incremental EBITDA of [ EUR 20.7 million ]. The plant's growth should be able to manage generation part, upgrading by more than [indiscernible] MW, more than doubling the current capacity. Strategic fiber for diversification in the current [indiscernible] context in which the transition process is underway. The group will continue its [indiscernible] strategy in sustainable investments, focused on infrastructure activities that will make it possible to spot synergies with activities currently managed in the gas distribution network business. The target investment activities of EUR 48 million will be allocated excluding gas, hydrogen, biomethane [indiscernible] to role in the [indiscernible], the water service already covered today and energy efficiency. Overall, the contribution to EBITDA of diversification activities of about EUR 5 million in the year 2027. The diversification strategy, which was 7-paged details to the impact and commitments and the contribution to EBITDA of [indiscernible] hydrogen of projected plant production will enter production maturity phase after the last year of the plan. Page 48, expected investments for the development of dissemination of green gases demand of approximately over [ EUR 27 million ], in particular, the [indiscernible] sector, we have a laid collaboration with agricultural companies, which represent any project development potential. Diversification strategic [green] hydrogen with reference to hydrogen, which is planned to implement an integrated project from the production to [indiscernible], also seizing the opportunity in deriving from any purport provided by [PNRR]. The disposal [indiscernible] intends to contribute to the spread of green hydrogen in the Veneto region. The main target for the sale of hydrogen [indiscernible] for transport -- in progressive transport in the same, it will be public transport as well as private cars for the service and energy efficiency. Page [ 18 ]. The management of the indicator [indiscernible] has a very important synergy potential with the current [indiscernible] business. The [indiscernible] of certain processes in the infrastructure, water, energy infrastructure, we'll get -- we'll be focused on the sharing of the process and [indiscernible] economies of sale and a better use of the company's production capacity. I hope you all end up priority interest in the business, as it is a calculated activity managed under concession that were [openly] compatible with the risk profile sold by the group. Other reason for interest with the sector's high investment needs necessary to reduce infrastructure efficiencies and current water losses. Unfortunately, the sector [indiscernible] represents significant barriers to entry. It is first and foremost by the regulatory framework and political environment up to [indiscernible] like to see [indiscernible] opening of market and not just [indiscernible] investment, and now the revenue operations, which experiences the management of infrastructure services. Lastly, as for the other's interest, we valued opportunities in the [indiscernible] efficiency ratio, including the industrial and topical administration segment. They are possible [indiscernible] interventions with the larger average investment size that will allow it to pay incentives in the form of [indiscernible], which would mitigate the effect of obligations in gas distribution. Efficiency [indiscernible] a key to [achievable] result on a management's [initiatives in France], implementing organizational technological solutions to improve for the policy level of the service and to help contain [costs]. [indiscernible] the investment but not that [indiscernible] service. Efficiency target achieved, Page 52, [indiscernible] of on the management [indiscernible] at the brand, implementing organizational technological solutions, including both the quality and reliability of the service and to contain costs. Starting [indiscernible], an acceptable reorganization process of the co-activities was initiated, which affected our group companies. This process entails a renewal, the reengineering of systems and procedures, the rationalization of logistical at operational locations across the territory, the introduction of centralized and integrated management of all made to operational processes. And finally, the adoption of new information systems for the management of the distribution work load and commercial services. This is a major cause for the optimizing of resources, making it possible to internalize many activities contracted out to third parties and thus reduced operating costs and increase the [indiscernible] internal resources, trade [indiscernible] activities. As a result of maintenance, unit operating cost 2023 for interest by 21% compared to 2017. We don't have [indiscernible] has solid experience in integrating companies post acquisition. Again, achieving management improvements and cost reductions. The decision of the [indiscernible] required by [ A to A ], the group's distribution companies [were] completed in [ 2023 ] it was not rationalized by a number of distribution companies with the aim of further streamlining processes and the possibility of synergies in the management of the territory. [indiscernible] strategy, [page 63] improving economic efficiencies is in the heart of our [indiscernible] of the other management policies, which aim to building on the excellent results became to in recent years. In the fact, corporate policies [indiscernible] vessels purpose, which is the continuous monitoring of further efficiency to the view of operational system, dedicated on the national resources and the staff incentive regulation system will be confirmed and [indiscernible]. Efficiency margins will be based on the adoption of digital innovative technological solutions, telcos of console, staff training and careful management of obligation with external supplies with [indiscernible] making a lean and flexible cost structure. Efficiency initiatives. [Whatever] plans to increase its operational and economic efficiencies to the digitization of network and processes. We [indiscernible] has a significant commitment to efficiency initiative planned to [indiscernible] of smart meters and [indiscernible] network currency operators, [indiscernible] on the comprehensive reality projects or [ RPA ] solutions, [indiscernible] as network with installation of [sensors] capable of efficiency, utilizing network data. Moving to enhancements, I expected to bring multiple benefits to various operations, which has increased network balancing, more effective consumption profiling, reducing operating costs, [indiscernible] of management's work and the [indiscernible] losses. Innovation strategy [indiscernible] the fourth but not less important bill of corporate strategy. Innovation Management is a crucial activity to Ascopiave, targeting both short and medium- to- long term objectives. The short- and medium-term innovation makes it possible to improving the levels of economic efficiency and quality of the services, providing the [indiscernible] which in respect to company profitability, maintaining an adequate competitive capacity towards the other operators in the sector. Also view of the competitive confrontations [indiscernible] for the awarding of concessions. In a long term perspective, technological and business model innovation is the step fundamental to responding positively in an economical, sustainable way for the transformation process as it's reduced by both the Europe and external environmental and energy possibilities. In the next year, Ascopiave is implementing an organic growth of innovative intervention, the index involving an infrastructure for the safety and functional efficiency. This intervention will focus in particular the energy efficiency of the [indiscernible], and the preparation of [indiscernible] and installations for the future production of Green gas. Sustainability comes to Ascopiave intends to implement several initiatives with an increasing revenue for [indiscernible] sustainability starting with people. We also intend to increase the training target employee to [ 29 ] hours per year by reaching the training offer. Project [indiscernible], diverse services available on the platform and the [indiscernible] activities, proclaim gender equality specification. It is also planned to remove the company's fleet according to the highest industrial standards. And to renew with the domestic meter [fleet] by choosing [indiscernible] is capable of receiving the new gas [indiscernible] recyclable material. It was also planned to carry out energy efficiency and [indiscernible] work on the network. I think it's compatible with gases other than Methane, as well as the implementation of efficiency managers for [indiscernible], the launch of innovative method for [indiscernible] leakage in the network, which will allow a deduction in emissions. [indiscernible] economic and financial objectives, percentage development hypothesis will depend [indiscernible] economic and productivity effects over the curve like period, the projection that [indiscernible] if I take into account but the main [indiscernible] typical at the reference section, and the group [indiscernible] to a faster relation with applying actions. That [indiscernible] [start] of tenders and the awarding of concession, I'd like to deliver the [indiscernible] analysis based on two different assumptions. As a scenario, which we're [indiscernible] and utilities during the time period, no [indiscernible] tender will be able to complete disposal until it is awarded. And then therefore, the group, we can redo [indiscernible] activity and [indiscernible] distribution apart from [indiscernible] M&A operations. In the second scenario. On the other hand, it is assumed that by 2027, the group will be awarded [ 4 ] [indiscernible] concessions in Northern Italy, identified among those of interest on the basis of the assessment of the progress of the tender [indiscernible] services. [indiscernible] assumptions for the two scenarios, growth by several lines in the distribution sector was resumed with the acquisition of companies, totaling more than 50,000 customers. And the [indiscernible] of an investment plan in the [indiscernible] entity sector and in diversified activities. Group investments in the full year period, 2024, [indiscernible] the group experts realized a significant [indiscernible] of investments, totaling EUR 617 million, which [indiscernible] EUR 832 million [indiscernible] awarded. The plan assumes that the needs generated by the investment value to implementing the growth and diversification strategy will be partly financed using the process from the full divestment of equity investments and in our controlled companies. The sources of this process is totaling EUR 294 million, consists mainly of the price realized for the [indiscernible] on EstEnergy and Hera Comm, brings to many investments in the distribution, which is now; a, investment in the distribution side came up to EUR 346 million over the time period, of which [indiscernible] million is due to acquired assets [indiscernible] to 8 million for the current scope of operations. Reference to the latter, investments of approximately [indiscernible] in Europe applying for renewable and extraordinary mental work on growing age of 4 kms of pipeline, [indiscernible] reduction [indiscernible]. Development investments consisting of the labor report 73 kilometers of new pipeline and the construction of new connections estimated at about EUR 26 million. In addition, some 288 electronic meters are to be installed mostly by the renewable intermedia fleet and to complete the replacement of traditional leases as required by regulation. [Early] investments in natural digital intention efficiency and innovation and market product stability EUR 10 million. This would mean that [indiscernible], assuming that [indiscernible] by volume, the investment volumes could increase by an additional EUR 250 million due partly to the payment of the past reimbursement values with outgoing operations, [ EUR 199 million ] partial implementation from the investments that's offered in the tenders. Investments in renewable energy. [indiscernible] fleet of management plans involve investments of the [ EUR 231 million ], over [indiscernible] [ EUR 122 million ] in M&A transactions, and [ EUR 9 million ] for the greenfield development of new plants and maintenance of existing work. With regards to the latter provision is made EUR 41 million for the development of 28.6 megawatts of [indiscernible] power at sites that have already been identified which necessary administrative authorization for [quality been obtained], this part is expected to come into operation partly in 2025 and not substantially in 2023. EUR [indiscernible] million for the development of the 36-megawatt wind farm capacity at site, which they have already been identified. [indiscernible] purchasing procedures are expected to begin in 2024. We assume that is not, given the length of authorization procedures, we'll only be able to start operating in 2028. And therefore until the end of the last horizon. We will be launching the [indiscernible] in February 2024. In perfect to the [indiscernible] strategic plan approved last year, investments were completed for a new 21.6 megawatts wind farm at Calabria. The plasma operation in January of this year, 2024. [indiscernible] margins. EBITDA is expected to grow compared to the initial 2023 [indiscernible], reaching EUR 139 million scenario A, and EUR 150 million this scenario B for 2027. Scenario A, increase of EBITDA to 2027 is attributable to EUR 25.3 million to [renewable energy activities] and EUR 4.8 million to diversified activities. Increase in contribution to results from the distribution of activities in [indiscernible] to the [indiscernible] of [indiscernible] activities, while the growth in margins are visible, very much [indiscernible] for the bulk increase in the level of watts and expected the normalization of production levels of [indiscernible] plant and LGC practices. It should be noted that the [segment] results in the financial year 2023, so [indiscernible] by transitional national regulation in [indiscernible] of energy produced from renewable sources. Finally, the assumption that ATEM tenders would be awarded, scenario B would lead to a further euro, [EUR 20.9 million] increase in EBITDA. The prospective data debt distribution, the developer realized both externally and internally, we just got further consolidation of the group in the gas distribution sector with an estimated growth in [indiscernible], networks managed, volumes distributed and targets [indiscernible] capital. In particular to scenario B, the number of users served would exceed 1 million in the [indiscernible] approximately EUR 1,180 billion. Key prospective data, renewable energy, capital employed in 2027, the renewable energy segment is approximately [indiscernible], of the project, the percent of the group's total net invested capital. Phenomenal in-store capacity of renewable energy product surplus with estimated [indiscernible] megawatts in 2027, with an analog [port of 307] gigawatt hours. Sustainability -- environmental sustainability. Over the plan, horizon plan improvement activities, initiatives expected to release several general carbon dioxide [indiscernible] emissions generated by the group's activities by approximately 2%. Renewable energy installation by 2027 also expected to contribute to the carbon dioxide reduction of 117,000 tonnes in climate changing gas emissions. However, despite this, do not take it to account the positive impact of energy efficiency progress and green gas production. Finally, energy recovery from network gas and compression to the use of innovative or generative [turbo expansion] process, we expected to reduce the amount of CO2 initiatives into the atmosphere to approximately [ 533 tonnes ] equivalent compared to traditional decompression systems. Overall economic results. In both scenarios economic results, expenses to grow, work in terms of net operating margin and operating net profit projections for 2027 is scenario increased EUR 42 million and EUR 45 million scenario B. The results generated after 2027 derive all the [indiscernible] from activities controlled by the group, which we'll be able to fully offset the income to date from minority interests and company, acting in the marketing of gas and electricity. That capital and financial debt, Page 16, resume of investment divestment plan, with [indiscernible] capital into the invested capital, and used to be balancing to a fully consolidated assets. Scenario A, invested capital as of 2027 stands at approximately 1,348 billion, up 8% from 2023. Approaching '27, [68% of the investment] [indiscernible] distribution business, and 33% in the renewable energy business. Scenario B, the invested capital stands at EUR 1,547 billion, marking the growth of 24%. In this scenario, considering the [indiscernible] of new ATEM tenders, that distribution with the amount of about 72% of total investments. Both scenarios financial debt increases, which is the leverage ratio -- was level [indiscernible] with the risk profile of the asset sales to the benefits of [indiscernible]. Distribution on the economic value generated. [indiscernible] activities [indiscernible] contributes to the economic and social growth of the context and reach and operate economic value generated over the planned period. This estimate is [indiscernible] billion of which 72% or EUR [508 million] is distributed to the main shareholders. In particular, most of the added value distributed over the plan period is to the benefit of shareholders, by 10% group employees [indiscernible] the gas distribution, 20%. Financial management objectives. Ascopiave aims to create value for shareholders for balanced and effective financial structure and an efficient cost of capital. Cash management remains continuing interest costs, stabilizing the [indiscernible] to the convenient hedging for [indiscernible]. Shareholder remuneration, [indiscernible] Ascopiave group distributed on [indiscernible] difference of approximately EUR 214 million, the cash generation prospects of operating activities and the balance of the financial structure make it possible to indicate over the next 5 years, the distribution of dividend per share increasing from 0.14 per share in 2023, to 0.18 in 2027. Accelerations [indiscernible], Ascopiave is an established company with a balanced portfolio and a track record of growth. A strategy that will guide the group sections in the coming years is based on the growth in core businesses, diversification, new synergy activities, economic efficiency and innovation. Investment plan has approximately [indiscernible] in the most conservative context, and totally allocated to the current quote and the expansion of the company's activities. The plan will be financed with the tune of more than [ EUR 280 million ] for the resources stemming from the exercise of [indiscernible] options on the state in [indiscernible]. Expected results for [indiscernible], sustainable growth, capital operating value for key stakeholders and the distribution of remuneration dividends to shareholders. So I have finished here the illustration of the plan. So now there's a Q&A session.

This is Chorus Call. Now we will ask the Q&A session. [Operator Instructions] The first question is from Enrico Bartoli, Mediobanca.

Thank you for your presentation. My first question is the expansion in the renewables. You have a target of increasing 75 megawatts in the M&A. Can you highlight what sort of projects do you have in the renewables, on your additional capacity, and if you have negotiations underway, and if you can give us some highlights on solar projects that you think will be operational between 2025, 2026? On the what contribution it will have on EBITDA? EUR 25 million of EBITDA -- of additional EBITDA. Can you give us a flavor of how much we will recover to the normalization process on the existing plants? The second question on cash distribution. You have 7 million of investment M&A. Can you give us some indications on the state of negotiations with customers, if you have [ new ] assets? If you have some questions in the gas distribution motor [indiscernible] factor in 2026? What do you think can be the impact on Ascopiave of the new regulation?

Relating to the 5 megawatts in renewables, we have been [indiscernible] those approaching facilitation in some processes. There will surely be higher than the capacity that we have stated in the various tenders. There's a lot of interest above all in the wind power plants relating to the 38 megawatts. There are two projects, in particular. One is -- both are in the province of Veneto, one is in [indiscernible], a small photovoltage plant, 9.2 megawatts installed capacity where the construction site is already underway. And the authorization has been provided a couple of months ago. We then completed within the end of the year and can be operational at the start of 2025. The other is the release of two in the photovoltaic plant, integrated photovoltaic plant for the production of hydrogen for public transport, for local public transport, 28 megawatts of installed capacity. The authorization process of that has advanced to the stage, and we think we will conclude it within before the end of this year so that we can undertake the construction process before the end of the year and finish it in -- finish within the end of 2025, this plant. Other than producing energy [indiscernible] to proceed with the electric buses for companies operating in [indiscernible] and buses operating on hydrogen since there will be a [indiscernible] plant for the production of 400 [ tonnes ] of hydrogen [indiscernible]. We still haven't understood the question on what you say about the transactions about the market rates. Can you repeat the question, please?

In the 25 million for renewables, you said that there was a plant of the fueling last year, what do you think can be of the profit margin in the hydrogen sector?

We think we have given the target -- [indiscernible] target, which is a [ EUR 16 ] of megawatt hour at [final price] these take into consideration that we have a [indiscernible] quarter of the incentive prices related to normalization of volumes. The production of hydroelectric has been taken to normal levels. The most dramatic was 2022, we had the impact of the normalization of volumes that can contribute to normalizing the volumes of the year 2022, we have managed to offset the losses that we had. The target relating, we're going to get to [indiscernible], we have indicated it as [indiscernible], the EUR 11 million that we did last year on the perimeter that we had saw last year, which we must -- when we must also include the Calabria plant. So it should help us to offset the losses that we had 2 years ago. We knew that the year 2023 will still be hit by the so called internal support for [ EUR 116 million ] of megawatt hour for the sale of energy prices and EUR 19 million as a growth contribution that the Chairman has spoken about and also M&A take us to a total of 17 million for a total of [ 36.6 ], the level of current production of 2023 has been operating profits. It has approached the level that we were hoping for, that we have budgeted. Year 2022 was really negative for us. So let's say mitigated this certain element of reference. So we think that we should improve from that. Relating to Project [indiscernible]. Capital distribution at the moment. We have ideas that we are not going to keep [indiscernible]. We are [indiscernible] out of [indiscernible] that we [indiscernible]. Can you repeat the last question?

We wanted to know about the impact of the [indiscernible] mechanism on your turnover?

We are still at the beginning of the regulation because the regulation is not at all clear in all details the key element that could lead to significant with valorization, investment valorization mechanism, where the authority has got to give us a lot of clarifications. The idea that we have is that substantially, this introduction of the [indiscernible] can have an effect on the efficiency of management. But this can [indiscernible] know if it will encourage or discourage the capitalization process of cost, especially the speed with which investments is -- the speed with which there can be a return on the investment to operate this. The total cost for the operations -- the total cost of operations, or other investments is yet to be had to be calculated for [indiscernible]. The law has just -- will be introduced, and it is not much clear what effect we can have. So we are still starting the outcome of all the provisions of this law. Over 100, let's say, that the cost, that the percentage of the cost of investments could be insignificant. But we don't think that it can affect the investment. [indiscernible] investments [indiscernible] with the tariff system, but still not heading towards the system where acknowledgment with recent investments we make, the higher the reward is that -- this is -- this system is not exactly in this way. So the operators, the comfort operators, the operators for transport gas and provide electricity up to the charging the outcome of this law. So this deal has got to be a tailor-made type system. On the [indiscernible], we are still standing the regulation, but we don't think that the impact can be significant. Maybe you have some indications, different indications from other operators. But this is what we think. These are notion which are very, very technical. But on the whole, we don't see significant changes.

Next question is from Roberto [indiscernible].

So can you speak about your India business target. What is your India business target, especially versus EBITDA? So related to dividend policy. So even if we are going towards the normalization of the micro scenario, the balance of payments -- so what I would like to ask you -- why are you -- why are you being so prudent on the India business EBITDA ratio? Why is this prudent? So what is the factor that drives you to be so prudent of the market which is not so regulated? So as far as pricing of 116-megawatt hour, what do you think? So the renewables -- will you anchor -- will you be interested in the tenders of [indiscernible] what the prices can be? What you think your remuneration can be in the renewable? Guidance for the year 2024 -- can you give us the guidance on 2024 on your performance?

Paggiaro speaking, the CFO. We are seeking targets based on prudence, [indiscernible]. We know that other operators have targets, other targets, but they are also bigger. So to the banking system considers [ comp ] prudence, it can be also is also actually well prudent -- trying to -- the net depreciation loss [indiscernible] level of prudence and it helps us a lot in [indiscernible] and [indiscernible] we see that the banks are also available in providing [indiscernible]. So you have got to play very prudent. So we have tried to develop a plan, which is consistent with our shareholders and therefore, it allow us to do relating to the opportunity of contribution. But we have in our portfolio, you have to understand profitability of having the loan to assets relating to future assets, relating to M&A and future development and greenfield. We can have access to create a stability and certainty also uncertainty of flow. In the plan, we used [indiscernible] offer specialized providers. It's obvious that in the trend is what we keep as a very prudent trend.

The next question is from Davide Candela. I think there is a third question from the [indiscernible]. As you know, [indiscernible] we believe [indiscernible] give any guidance [indiscernible] profit margins are right [indiscernible] renewal sector?

Yes, we have [indiscernible] already only in the month of March. The performance has been quite good in the future. [indiscernible] want to add something. You already give qualitative guidance based on our financial statements for this year in our press release, there is a section delegated to our performance for next year. We have signaled an increase -- about [indiscernible] update? So here, of course, you know the estimates, market estimates very well. Our RAB is EUR 800 million, doubling an increase of 0.9%. So there could be an increase in revenues. We had a revaluation of RAB because revaluation rate are quite important, but there are many elements that [ double out ] these factors and also the guidance. There's also growth in renewable energy. In the first few months, we would say that the production has been very good. We can say that in our generation plant -- there's has been a new plant, wind power plant in Calabria that has become operational. So here through our results can be very, very good [indiscernible] operation which doubled the contribution of this plant included in the 2023 financial statement. [indiscernible] other specific forecasts, we cannot give because we have never done it. Probably prefer not to give the guidance on the future.

The next question is from Davide Candela with Intesa Sanpaolo.

I have 2 questions. This is a follow-up from [indiscernible] about prices [indiscernible] about EUR 80, EUR 90 and the lending of EUR 116. So you said EUR 116. How come you have set a higher figure? Do you think that your cash performance can improve in relation to this? How can this be connected to M&A activities? the implicit multiples 10x of EBITDA. We think the multiples are quite low compared to what the market performance can be? What I want to just know, I think the question is about your investment in the associated company -- minority company where Comm, this energy -- do you have guiding tables relating to investments in these companies? What can be your contribution to your minority interests?

Just hold on please we're connecting to the Ascopiave conference room. Conference room is online. Thank you.

We could not hear the question. Can you repeat it, please?

Followed up on entity prices. Why have you put prices so high -- gas prices so high? And 10x prices, 10x EBITDA, how can you explain this? My second question is, what about investments in your minority subsidiaries like [indiscernible] Hera Comm, is it linked to M&A?

[indiscernible] related to -- and into prices? Do you refer to provide us [indiscernible]. It's clear that the estimates [indiscernible] you know that the providers give us a forecast based on a single [indiscernible] that they have made this forecast. We have applied a recalculation percentage. And we think that these are the prices that we can eventually achieve, which is 2.15%. This is the mechanism. These are forecast and trends for 2027. So they've been [indiscernible] they may appear to quite shy but they are not, also because there's a market of prices, where we can conclude that the prices could be lower. But over year, we are quite confident that the prices we have given of EUR 116 [indiscernible]. We are quite transparent. We are telling you how this target can be reached. Of course, if you have the other indications, other indications from other competitors, you can make a solution. So we have [indiscernible], our so this is what we expect. There's an integrated component [indiscernible] evaluation benchmarks the provider doesn't want to say that this is a cost of [indiscernible]. But yet the provider does not want to say that this is the [indiscernible] the provider has given us an estimates which are reasonable medium-, long-term estimates, which are reasonable based on our operations. Of course, you can also make your own simulation. We have been quite transparent and we have told you on what factors we have reached this total. So if you think you have -- you think this is too high, please let us know. The multiple [indiscernible], as the President was saying -- as the Chairman was saying, we have some [indiscernible] quite assumptions. So these are development assumptions that we have made -- we have developed plans with colleagues. So maybe if anybody wants to explain better, if you have a photovoltaic plant, the production of a photovoltaic plant, the wind power plant, the volumes, the equivalent volumes per year. So we can simulate [indiscernible] as we have. After this renewable energies we have indicated what we have -- so the residual value of the plant has been -- so based on these calculations, based on the simulations, we have made our forecast. So the price that we will pay in EUR 122 million on anomaly. So again, 75 megawatts of installed capacity. So we know the multiple. So we think, [ beside ] that is multiples, and we are reasonable. So creating, building up a new plant helps us also to have a very excellent performance and excellent profitability figures. So these are the drivers -- fundamental drivers that we have not included in the plan, other targets. So we have simulated the fundamental benchmarks. If you have other information, please let us know. So we have included what we think is reasonable. So this is what we have done. [indiscernible] factor which you think that you have something, you can please let us know. We are here for that. As for the timetable for production, we have a deadline, which is 2026, at this point, we are good [ out here ] till 2026, you can advertise the production. So we will do it if we actually need it as of 30 June 2026. We think that we'll have situations of reinvestments, where we will have to allocate these resources. The intention is to exercise the production and obtain the funds. The conditions, but we will exercise the options, not something not to get [indiscernible] the market.

The next question is from Emanuele Oggioni with Kepler Cheuvreux.

I have some [ bold ] statements to make [indiscernible] target in terms of organic terms. I calculated EUR 110 million of EBITDA. If you think of EUR 6 million, EUR 7 million of structuring cost -- if you -- I would like to know if there is approved for other synergies in the structure. The other question is about your organic RAB -- this [indiscernible] growth of RAB of EUR 204 million with acquisitions. So what is the EUR 95 million of organic RAB like-for-like 2027, what is your take? What are your reflections of this? Have you included it in the calculations of EUR 108 million for global EBITDA? And then the third question regarding distribution. You spoke of the press release of a very specific EUR 607 million, which has multiple targets which, which you can buy -- but it can be regulated asset, which means that the contribution of EBITDA that you expect EUR 5 million, EUR 6 million of EBITDA relating to the perimeter of the current perimeter. We have given some indications in the press release of the position of the parameters. So to the current perimeter of RAB is around EUR 940 million, when 7 million. The difference is linked to the diversification operation to the growth operations to M&A relating to actions of EBITDA, we gave indications 80 million EBITDA, complex overall...

[indiscernible] We have given some indications in the press release of the position of the parameters. So to the current perimeter of RAB is around EUR 940 million, 2027. The difference is linked to the diversification operation with the growth -- to the growth operations to M&A. Relating to assumptions of EBITDA, we gave indications -- EUR 700 million, EUR 800 million of EBITDA, complex overall -- expansion. The contribution of growth about EUR 1 million is EUR 30 million connected to the distribution, EUR 30 million for renewable energy, [indiscernible] EUR 7 million of contributions and EBITDA of electrification operations, so we speak of over EUR 50 million -- EBITDA of EUR 160 million, minus EUR 50 million is EUR 110 million, which is what we indicated in Europe. So if we don't achieve -- so if we don't achieve this, [indiscernible] EBITDA will rise from EUR 95 million to EUR 110 million -- relating to multiples, we have assumed that a normal scenario, I say, EUR 58 million -- EUR 58 million on a price of the acquired RAB of [ EUR 64 million ] at the price of RAB of 68%. This is to be verified because as you know, that these operations depends on a lot of parameters of the funds and plant [indiscernible] system, the contribution for the execution of [indiscernible] RAB is EUR 5 million. The forecast that we are paying a little bit higher than EUR 9.4 million. You can see this on Page 41 of the strategic plan presentation. On page 41 you can find all the details. The EBITDA target is 20.7%. So our -- the assumptions that we made is up to 2027 and not for the year running. So we have to compute, we are protecting all the factors that we will -- what we will spend. But over the next year, up to 31 December 2027. So Page 41 anyway gives you all the details. So actually, the indicator is plus EUR 87 million rather EUR 68 million. So 2027 is the benchmark.

The next question is Davide Candela from Intesa Sanpaolo.

About the M&A on the renewables. How -- what is your competitive scenario? So how is the competitive scenario on M&A?

Competitive scenario is very, very high for the plant especially the wind power stations. [indiscernible] renewable energy, we have already -- we have seen how this [indiscernible] we are in the interest [indiscernible] we have [indiscernible]. They're very, very low. So they've done [indiscernible] acquisitions on the part of big operators -- who will try [ eviction ] scenario to be our best to give the right value. And so this will depend on how the tenders unfold and the opportunity that we can have to win these assets, to win those tenders. SO the tenders must be remunerative for both the seller and the buyer.

[Operator Instructions] Dr. Cecconato, there are no further questions. Thank you. Thank you all for participating in the meeting. [indiscernible] for concluding remarks.

We hope we have been clear and thank you for your -- for participating. We wish you all the best.

This is Chorus Call operator. The conference is over. So you can disconnect your phones. [Statements in English on this transcript were spoken by an interpreter present on the live call.]