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

Good morning on behalf of FNM and its management, I would like to thank everyone who is here with us today at Palazzo Mezzanotte and those who are connected online for the presentation of the Strategic Plan 2024-2029 of FNM Group. We have here at the table Mr. Andrea Gibelli, President and CEO of FNM. Mr. Marco Piuri, Director General; and Eugenio Giavatto, CFO of the Group. Mr. Gibelli will open the works with an introduction and remarks on the mission of the Group. Then Mr. Piuri will explain the strategic guidelines, the ESG goals and main assumptions related to road systems. And then Mr. Giavatto will give an overview of the development on renewable energies, the other segment of sustainable mobility as well as the consolidated economic production and the sustainability of the project. Then we will discuss the dividend policies and with a recap of the financial goals. Then we will have a Q&A session to answer any question you might have. Of course those present here and those online can also ask a question. I would now like to leave the floor to Mr. Gibelli.

Thank you. Good morning, everybody. First of all, I would like to share preliminary information. We are here at the Stock Exchange to celebrate the presence of FNM Group. We've been listed on the stock market for 100 years now, so we wanted to underline one of the main point of reference for us as FNM Group. We have been listed for a very long time and this allowed us in the recent past, to have a huge investment capacity. And this will be confirmed by a vision that is focused on mobility. Mobility is connected with local communities and local territories, so we go way beyond services as such. So investments in infrastructures and mobility, represent something that will bring us to 2029, with a vision that is strictly connected with innovative mobility, explained through an integration between traditional forms of mobility. As you know, we own 100% of Serravalle, and we participate with 50% shares in Trenord. We serve a huge metropolitan area, and the whole region of Lombardy, and we think of this as one big city. So every traveler matters. Looking at urbanistic and territorial standpoint, all these stations are not only places people go to, to move, but they are real hubs, creating new environmental conditions that make us think of mobility as something that's cutting edge. Looking at our challenges as a group, we would like to continue to invest. I'm very proud to say that this plan, has an overall CapEx, gross CapEx EUR 1 billion. Looking at the financial aspect, the overall value is EUR 1.8 million for us, ecologic transition, which was borne as a side note, has now become a pillar for the development of the group. It is really strategic. We've already presented some very important projects, which are part of our plans now. I'm very proud to remind you of them. In January 2025, in Rovato, we'll present the first hydrogen fuel train in Italy, one of the first in the whole of Europe. And next week, on November 27, we will present the Fili project, which is one of the biggest project for urban regeneration in Europe. So aside from the numbers supporting our presentation, we have many projects in the pipeline and they meet the challenges we are presented. In Italy, we are the promoter of a great model. Of course in Lombardy, we are focused on Mac, so not moving per service, but our mobility is connected to the demand. The plan will meet the mobility needs corresponding to the traveler's demands. So redesigning the territory, is not something that motorways or railways have to do per se. But we believe that sustainability can have a new interpretation. So to transform transportation as a journey that, is positively contaminated for the world around us. And we want our stations and hubs and places, we offer our services in to be a place that meets, the demands of the territory and of our passengers. A plan that is consistent with what we've done already. We have a new important segment added to sustainability and we have energy now added to it, this will be explained in great detail today. It is absolutely complementary to the development of the group. We look at the reasons why about 2 years ago we started researching, and before acquiring Viridis. And this acquisition really completes the framework of the companies working in mobility. The element of energy related to mobility means securing a very important asset for our group. And it also means being more secular, when this will be allowed by the regulation. One last thing, looking at the companies that are well, startup, but they're not really startups anymore. They allow us to cover the last mile in services. So this ranges from moving highly motivated passengers, such as Busforfun, which was thought as an initiative to bring people to a sport event, concerts, et cetera. And mobility, which is a small company, which has low motivation. So between these 2 different aspects, we have all of our traditional heritage supporting our initiatives with significant investments. And we'd like to reach this idea, of consistent and appropriate mobility. So helping them in work, leisure, or in case of disabilities or disadvantages, which are part of our societies -- society as well. I hope we will be able to meet your expectations. We like to hear your questions, because the Board believes this plan is highly challenging. We are at the beginning of this Board, so in the next 3 years we'll need to really implement the goals that we're going to detail to you now. Thank you very much.

Good afternoon, everybody. Thank you for being here today with us. As the President already mentioned quite briefly, we'll look at the plan in more details. We wanted to show you the highlights of the plan. So identifying the focal point of our strategic plan. Of course, our goal is the same. So from being an integrated group managing different services, mobility services wants to confirm its presence, to reinforce and strengthen its role, while giving a significant contribution to Lombardy Region. Well, as a whole, developing and creating sustainable solutions where sustainability has to be considered in its all 3 dimensions. So our group, our business is growing, so we see it aligned with the trends of the past years. And so, we have EUR 1.3 billion investments driven by motorway EFP so, with also a significant contribution in terms of energy, Viridis et cetera. Renewable energy production and then RoSCo activity of course. Aside from this, we have significant growth in terms of volume, so we have financial data supporting our growth. Then, our second pillar motorway concession, what does it entail? The recognition of a takeover value for Milano Serravalle. Its value is estimated between EUR 400 and EUR 450 million. The concession expires in 2028. Our plan spans from 2025 to 2029. We wanted to make an assumption on this concept concession. Also because the parliament is currently restructuring the motorway sector. And with this new law, we will understand the future of it and the future of concession, how they'll work. So in this framework, we hope to have -- a technical extension of the concession. You might know that it never happened, that at the end of the concession, the new -- the person, the company taking over starts the following day. So, we hope to be able to follow on our activity. So our assumption is technical extension. We'll detail that later on. And we are in the motorway sector to stay. So should we need to take part to a tender, we will bid in a tender for the concession. For the acquisition of Milano Serravalle. The group has a bond expiring in 2026, so there is a matter of refinancing of the bond. And we also need to support the EUR 1.3 billion investments drafted in the plan. So for us it is very important and positive, to announce that we acquired the formal support of important credit institutions, banking institutions. So this plan involves the support from a leading credit institution. So the plan and its development, are made to maintain the investment grade rating. Another important aspect is related to this. So before the acquisition of Viridis, we realized that the portfolio of our participation was diversified, allocating risk better, because we are in several regulated sectors. Of course, energy works differently than motorway, or railway concessions. But the business as a whole has very low volatility on the one hand, and on the other a continued capacity of cash flow generation. So these are 2 relevant stability aspects. And we've seen this in the past 5 years, as you all remember. And it was a challenging period worldwide. So the growth and the diversification of the portfolio, makes us see that we had a CapEx shift from rolling stock to motorway, with a higher IRR. So we not only have diversification and low volatility, good ability to produce cash flow, but the fact that we are now shifting with to -- areas with a higher IRR. The positive aspect is that our leverage, so net finance position and EBITDA has an average 3.5%. So we were able, to have the higher value in 2021, with the acquisition of Milano Serravalle. And then within the plan, this is the ratio between NFP and EBITDA. And we also have a dividend yield. So our plan provides for this, within a range from 2.3 up to 3.2. So that would be above 5% up to 7%. It is very attractive and it is comparable with investment alternatives. Last pillar is sustainability. This is an integrated plan. So, we have integrated sustainability goals and elements, just to mention a few. We have CO2 emissions. So looking at buses and corporate consumption, our goal, is to achieve a reduction by 35% compared to 2023. Looking at the acquisition of Viridis, we will -- we know that this group will change our portfolio with the production of 650 gigawatt hour coming from our renewable sources by 2029. And we have a significant portion of our investments allocated to security and safety in motorway and railway infrastructure. Sorry, I took a bit of time here, but this shows the highlights of the plan. So slightly more quickly. And I think you all know what this structure is. So we said that the Lombardy Region is a shareholder for 57.57%. And then we have free float 27.69% and Ferrovie dello Stato, the National Railways 14.74%. You all know that and you have other pieces of data here. There's a technical problem here, but final go ahead. As for the metrics are concerned, if we take a look at the business segments, does the historical part that the CEO was talking about, which is railway infrastructure and mobility services. You know that FNM holds 98 trains that were leased to Trenord, a railway infrastructure, which is Trenord. And in linear meters of tracks the distance point-to-point in infrastructures is 130 kilometers. But then when we measure linear tracks we have 540 tracks, 27 million bus kilometer for local public transport service. If we take a look at the motorway component, which is 185 kilometers for Milano Serravalle and then as for Viridis is concerned, the starting point is 63 megawatts. And then we have 2 more slides, which are quite important in order to express visually what the group is, and what the group represents and may potentially represent at the local level. This is not a map of the administrative boundaries of Lombardy. It is a little bit deformed, because here we have the infrastructure network of the group. In yellow, we have the motorway pod. And then in [ Brescia ], we have the Ferrovienord railway network. And then a set of networks, which are not directly managed by the group, but the group offers rail and road services. And here we can see a little bit the nervous system of a region in terms of mobility. And in those areas, as you can see, they're of different colors. They are not the Lombardy region provinces, they are the mobility corridors. Mobility is structured along corridors Railways and motorways and then proximity areas in the range of 10, 15 kilometers. What you see here is corridors, those areas, so where there is a prevalence of connections related to mobility. And then you have the areas, which have a higher mobility density. And you can see here a certain sort of banana, starting from the province of Varese, and then Milan and then Bergamo and Brescia. These are the corridors where most of the mobility flows are focused. We are at the very heart of this territory and its mobility. Then we have the Viridis map, here on the left you can see the 63 megawatts. You can see the 63 megawatts of capacity installed in September 2024. And then you have the passage to 118 by 2025, because some facilities are being built and some are ready to be -- for the kickoff. And so, we have another interesting piece of data, which is the colors that can be added mutually. If you add the blue part to the light blue part, you can see that progress is expected. There is an increase in capacity, which is expected. Only 10 is still in the market. And let's go on the next slide, is historical data from 2019 to 2024. What is the take home message here? As I was saying before, in these years, which have been quite turbulent, both due to external reasons and to the specific features of our country's economy, you can see that in these turbulent years the group has been very, very efficiently performing. It's solid, it's stable and it is able to develop a business. So you can see the adjusted values and the total values. Of course in 2021, we have an increase due to the excess of Milano Serravalle into the group. And in percentage terms the margin in these deals has increased. And from the point of view of CapEx, you can see a difference in this graph, because the CapEx depends on the intensity of investments and other sectors. But to recap, in the last 5 years the group has invested EUR 100 million. And this is like an average over these years, but it's quite a significant figure. And then we have the adjusted financial position of the group, which is quite healthy. You can see 2021 duration between the net financial position and EBITDA 4.3%. And then you can see that it became more stable over time. And we have a value between 3.5 and 4. But let's go back to the strategic dimension of this plan. We have our vision. We are the most developed group in terms of mobility. We manage mobility infrastructures, but also energy generating infrastructures, which relies on renewable energies. And the group wants to strengthen its presence, position and the sustainability in this area, which, from the financial and economic point of view, is one of the most significant areas at the European level. So, we would like to state once again that, we want to be a driving force for the development of metropolitan and regional areas, with the goal of enhancing the quality of life for people, cities and businesses, and local communities in general. And in order to do that, we want to create connections in an accessible and inclusive way. By developing infrastructures and structures, we create connections and we ensure the right to citizenship. We ensure everybody access to opportunities and services. And so, our mission is to develop and manage infrastructures and services, which allow us to be among the protagonists of an energy transition process. By managing business according to the principles of innovation, as we will see safety, and economic, social and environmental sustainability, we will be able to achieve our goal. We translated this assumption into this way. You can see the trends that characterize the global dimension, and national dimension we operate in from -- on the one hand, there is a progressive urbanization processes in metropolitan areas, which is going on in Italy. We do not have megacities as in other parts of the world, but the process is basically the same. These areas continue to grow, and the most significant part of the GDP of the country and the wealth of the country is generated in these areas. We also have another topic to tackle, aging. Like Japan, Italy has a very low -- a very high aging score. And this will impact mobility, the way we move and the way we manage mobility services. And then we have a continuous development of sustainable mobility, which is promoted and supported by all instruments, digital instruments and AI. And so business models are becoming increasingly supported by digital solutions and make mobility more accessible and sustainable. And we want to be protagonists also of the energy transition processes. All which is happening on the global and European level must be our daily bread. These are the pillars of our activity. And if we take a look at our business, we can see that a sustainable mobility can be split into infrastructure and mobility services and energy. These are 2 segments of what we do. And we would like to be protagonists in both segments in both areas. Here we have summarized our ambition, which is not only to confirm, but also threaten and increase as much as possible local public transport, both on rail and on road, and remain the protagonists of the motorway sector. And to supplement our traditional business models, with innovative models such as ecosystems and startups as the CEO was saying before. As for sustainable mobility is concerned, we are really making an effort to transform our infrastructure to increase safety and within the group the presence of subjects such as Ferrovie Nord plays and will continue playing a vital role. As for the investments financed by the Lombardy region -- are concerned. As for energy is concerned, being the protagonist of energy transition means that the production of energy, and we're referring to the megawatts of production that we mentioned before, means that we are the first subject to use a hydrogen as a vector for heavy vehicles, and for railway systems with the IseO project and -- in the motorway sector. So let's take a look at the metrics of the projects that we were speaking about before. As for sustainable mobility is concerned and renewable energy is concerned. So we have 185 kilometers in the Milano Serravalle. This is the metrics of the concessionaire. And over 2023, we would like to keep our presence in the local public transport. And we use the bus kilometer metrics, which is over 27 million. As for the rolling stock is concerned, we're talking about a goal of 111 trains. This means further investments in the train fleet, which is vital for the Trenord service. And as for railways are concerned -- the linear kilometers of tracks will become 565 kilometers of tracks, that's plus 25 kilometers, not much, but they are extremely strategic for the Lombardy region, because they regard the Bovisa hub, where the rate of trains is one train every 70 seconds. It's one of the most congested hubs of the Lombardy region railway network. We saw it yesterday, there was a little bit of confusion there. And it's so congested that when there is a problem with the hub, the integral system is affected. And the Bovisa development is also connected to the project Goccia by the Technical University of Milan. And at the international level we also have a very important connection with the Malpensa airport. So that means that we have a wide coverage on the territory. So 25 kilometers, which are extremely important for ensuring regular service, punctuality, et cetera, et cetera. Now, regarding energy, we have multiplication by 5.5 of the megawatts versus today, both as for sun and wind energy are concerned. And then we have another piece of data, 830k tons per year of hydrogen. This is the generation of hydrogen, which is required for the trains that will circulate on that stretch of the railway system. And they will replace diesel generated trains, which today consume 1.5 million liters of fuel. And this will significantly decrease pollution. And now let's spend a few words about the structure and identity of our business, which is a low volatility business, which historically has not seen itself as a portfolio. And let's talk about the cash flow, generation capacity. Here, we have several areas. When we talk about infrastructures, the first area we're talking about mobility, which is the physical motorways and the railways. And then we have the trains and the individual wagons. We're talking about a low volatility business, a very resilient business. The railway concession will expire in 2060, and this will provide stability to our business. And as for the motorway concession is concerned, it will expire in 2028. But do you remember what we said about the [ Zago ] terminal. Well, this also means that our business is quite stable, quite well established, and we have the possibility of a postponement, technical postponement. On another point of view, if we take a look at the motorway concession, consider the entire lifespan of the conception. If we consider the fact that in 2018, 2019, there was a reform, we can see that the WACC is more or less 15%. As for the rolling stock is concerned, we have a low volatility. There's a contract between Trenord and FNM, which covers a span of 10 years. And the stability of this business is also ensured that there is -- by the fact that there is an obligation to take over leasing contracts, including leasing trains. This means that we're in a very stable condition. We are talking about very long lifespans. And in terms of internal rate of return, the contracts between FNM and Trenor have an IRR of 5.5%. And then, we have the service area and we have a public service contract, which gives stability and low volatility to their business. Because the public service contractor must have its own balance between the profits, the compensation for public service, because we're offering a public service, and the profits earned from tickets. This is a public service, but it is regulated. And the ATR, the Transport Regulation Authority, has established the WACC of 8.5%. Last but not least, energy. The existing capacity, which has been installed for a share of 80% has been incentivized. And we showed before that development has been brought about by these incentives. And then we have expected profitability with an IRR, which exceeds 10%. Here you can see that we have 4 segments. This is something a little bit different from what we used to do before. If we group together road and railway infrastructures and you can see the several legal entities that you have. And you can see that we have Trenord, Distripark and other legal entities, which are our partners for the development of for example, the terminal and logistics activities. And then we have RoSCo, which is the main business branch of FNM. And we have associated Nordcom, which has been acquired by -- 100%. And we have other legal entities for the mobility and services. The ATV, the local public transport of Verona, E-Vai and FNMPay, which is one of the new initiatives launched some years ago by the group. It is a payment tool regulated by the bank of Italy, and ensures our presence in the framework of digital payments. Because we know that not only with regard to startups, but also to traditional business, being an integrated company means offering a wide range of services, including payments. And this makes us stronger and more credible for the energy sector we have Viridis Energia and FNM Power, which has just been created by the group in order to manage the hydrogen facilities of the H2IseO project. And you can see the percentage on the total EBITDA of the different segments. And you can see that the most significant part is still infrastructure. So 63% at 2029 for the adjusted EBITDA is generated by this segment of activity. Then we have 15% for the rolling stock services, mobility and services account for 6%. And there's an increase in the energy component. This takes us back to what we were saying before. A more diversified portfolio, an increase of businesses, a differentiation of risks and the progressive allocation of the CapEx and the capacity of generating cash flows. Briefly, if we look at the proper elements in terms of sustainability that are integrated in our plans here, we have the 3 dimensions of course, environment, social, governance. If we look at the environment and the ESRS would like to reach 35% of CO2 emissions thanks to the renewal of the buses fleet, then new production of gigawatt hour thanks to renewable sources. And then we have the other aspects. Looking at fight to climate change, we have the development of the Fili project. This affects a huge area, 2 million square meters and it has a linear and organic development. If we look at the social targets, so the S of the ESG targets, on the one hand, we see the adoption of diversity, equality and inclusion policy, especially with Europeans. So, we want to make this approach really at the core of our policy. Inclusivity is at the core of what we do. We've also developed another approach to welfare, changing the model, making it focused on people's strategy. The second element is the one related to the safety and security investments. So we have this for -- both the motorway and railway sector, we put EUR 1.5 million per kilometers for investments refer to the safety of the highway network and around EUR 270,000 per square kilometers for investment related to the safety of railway network. The social impact is an element that allow us to increase inclusivity and accessibility of our systems. So we'll we have this huge Fili project and we also have the additional 25 kilometers for the railway structure. And looking at governance, our commitment is to have 50%, of the orders assigned to suppliers with an ESG score. Of course we are talking about non-fungible suppliers since it is, a peculiar sector in, which some products are made by one to -- suppliers' tops. But we want to really extend to a supply chain, the compliance to the ESG goals. And then we would also like to -- develop a business impact analysis in business continuity management logic, because this is really crucial. I'm almost done with this introduction. A further element of the plan is this one. The President said that we've developed and evolved the concept of mobility, moving towards mobility as a community. The idea is this, if you look at the territory, there are several functions. So universities, stadiums, malls, service centers, big businesses, those generate mobility for those working there and those using those services. So we started looking at mobility from this standpoint and we created this ecosystem, acquiring shares in startups such as Busforfun, Sportit and Mbility. And this is our approach, because we believe it could be a successful one for corporate venture capital. So we are not only investing in innovation or we're not only looking at financial gains, only thinking about the exit. We do that in with a clear industrial logic, with a long-term approach. So we found some startups that were developing some operational models, some business models that, were supported by digital technologies and that could really complement our activities, as well as representing a point of innovation. How did we do this? As a group, we were within the CDP Venture Capital, CGR's corporate partners. So we invested EUR 10 million in this compartment, and then we also invested EUR 7.5 million in the aforementioned startups. These start-ups are experiencing significant trend and evolution. So for example in Busforfun has 36x the turnover it had in 2021. '21 we acquired or if we look at Sportit, we have 16x the revenue it had in 2021. So we were able to support them. And this startup will reach a positive EBITDA by next year. So if you look at the number of Italian startups, which is a word that is struggling in creating scalable project with successful exits, they represent a really successful example with an industrial logic. So we are able to develop innovative models we launched a brand, which is called FlexyMob, flexible mobility really is a digital platform for B2B clients and we give them the ability to reach their demand for them for their customers. We do that for 3 [ Darwin] projects which I think has been explained already in the past. So this Darwin project allows us to have a granular readability and to have predictability. So reading the demand we can integrate our offer, with custom services generated through this startup. We make this available on a digital platform, which can be branded so anyone can brand it and this system is closed one. So for example, employees or customers can access through QR code, and look at the different services. We have several contracts in place with different types of customers, and we believe this can really meet a very regular transportation demand that's very different from what we've been used to. So what are the main assumptions driving the economic and financial performance for 2024-2029? We've already mentioned them, but I'll go, I'll mention them again. So when it comes to mobility infrastructure, we have this assumption of a technical extension of the concession. In 2029, we will complete the intermodal terminal, because it is crucial for our logistics. As you know in Lombardy when you create logistic hub it is quickly filled up, because there's a huge demand. And then we'll continue managing railway infrastructure, having Ferrovie Nord as an agent that develops and implements the investment funded by Regione Lombardia. Looking at RoSCo, we move from 98 to 111 trains. So we'll have new Caravaggio trains that are double decked. They're crucial for Trenord services and then we have corporate services. If we look at local public transport for a long time contracts have expired then we know that the pandemic happened than the war in Ukraine. So during our plan, we want our agencies to do what they're supposed to do in order to be able to allocate new services. We are very happy to participate in this journey and we are currently developing new payment solutions through FNMPay. Again, looking at energy, we are having this areas development benefiting from the incentivized tariffs, and then we have all this part related to hydrogen production. We as a group want to maintain our scope. Of course we foresee our debt refinancing of EUR 650 million bond expiring in October 2026. Of course this refinancing is not comparable with the cost of the bond, which was issued in a very positive moment. So we are looking at the market value. So it will probably by -- 5% up. We'll look at the rates as well. Will still be in the startup ecosystems developing these the models I mentioned. The plan foresees an inflation plan by 2% so an increase in costs, including an increase in the cost of personnel, and then head cutting increase -- related to our business evolution. Here we have some more of what we've said. So if you look on the left, the current EBITDA broke down by segment. You can see that mobility infrastructure. So motorway plus rail accounts for 76% and RoSCo accounting for 21% and then mobility services. By 2029, what will happen? The portfolio will have diversified reducing risk and allowing more interesting areas in terms of resistivity increase. So we'll have 17% for example allocated to energy. So we'll have this shift. This was my part. I would like to now look in more details at the MISE Concession Addendum in 2017. The original contract for Milano Serravalle has a terminal value as a concept, a terminal value was equal to 0. Because the assumption this is based on -- the evolution of the chart would completely cover the investments of the plan. Nothing to mention for the rest of the years. But then we have an issue -- starting in 2018, of course, we know what happened in 2020 and then we'll have the new regulation issued by Art. What happened then? The plan for 2018-2022 was not completed because in 2020 we had the pandemic and then Ukraine war. So we had this transition period spanning from 2018 to today. And the management of the concession was -- and only in November of this year we had this, the approval of the new concession addendum. What does it mean, this concession addendum? So if we look at this in more detail, you have this article in Italian, because the first item is that the addendum approved on November 5, explains very clearly the fact that there is a terminal value. So it states there is a right to receive a terminal value equal to non-amortized assets. It says what and how it is calculated, and the amount of the value -- is will be issued by the new concessionary. So this allows us to understand how the law has been drafted. We'll see if they will have to bid into a tender. How will the concession be defined? We don't know many details, but here it is explained that within the concession of Milano Serravalle there is a right to receive a terminal value. If we look at concession addendum number 2, this Article 8.3 does not take into account the recovery of the COVID-19 effect. As you know, this is a forecast that hasn't been really acknowledged, and so does not take into account the recovery of the COVID-19 effect and any inflationary effect. This means that the recovery from COVID and inflation will be included in the 2025, 2028 EFP. Moving on, this is what has already been mentioned. We also have another interesting Article here, 8.1 supporting our assumptions. What does it say? That when the concession expires there is no new concessionary. This new manager, the concessionary has to still provide ordinary management of the motorway with the current conditions under the same provisions. And it also states, and the concessionary is the owner of the toll tariffs. So basically things will continue as they are right now. Here we look at some graphs with interpretation of these 2 elements. So we're saying that concession of Serravalle has estimated EUR 438 million value by 2028. Of course there will be further investments that will probably related to the element of safety and security of the infrastructure. There will be terminal value at the end of the technical extension since we'll continue managing the motorway with the current condition, the cash flow will stay as it is so terminal value will be calculated at the end of the transitory period. This is just description at the concession addendum. So what happens here? Here, we have what we forecasted. So we have a development of traffic and tariffs that is not that big. We want to be cautious. You see there is a CAGR of plus 1.1%. And then looking at tariffs, we assume an increase by 2.8% in CAGR. So it is a very cautious approach. You see what happens at the EBITDA of the concessionaire. So we have our forecast for 2024 of an EBITDA between EUR 150 million to EUR 170 million, growth in 2028 to reach EUR 190 million. And it is maintained after the technical extensions. The rest has already been mentioned. My last 2 slides related to the motorway sector those. So during this time, we foresee an overall CapEx, gross CapEx of EUR 550 million. EUR 380 million of them are already committed, while the rest is not committed yet. So we can act on the uncommitted part of investments. But the thing I wanted to underline and you see it in the curve is that 49%, almost 50% of these investments are related to safety, which is just the number supporting what we've been saying in terms of our social commitment and we have a part related to upgrade. Then a part related to digitalization, looking at Smart road and then renewable energies, which really refer to hydrogen here. So even after the technical extension, the CapEx is the one deemed necessary to maintain safety and security values. What about terminal value? The concession addendum foresees this. So investments done before 2020 are the ones in dark green. Then we have and then post, so COVID-19 and inflation recovery costs. The tariff will increasingly absorb. Past investment they absorb other elements, poste figurative. And then, the tariff will be able to remunerate new investments. This is what defines terminal value. So the higher the investments, the higher the terminal value, but we need to find to strike the right balance for the group dynamics. Maybe I talked too much, but I'll leave the floor to Eugenio for the energy part.

We're on track. Thank you for leaving the floor to me, Marco. Thank you, everyone, for being here. Thank you for your attention. So I'll try to be as brief and as quick as possible. Looking at the different segments, we look at energy, which is the new part entering the FNM Group. We've been asked over and over why we've done this investment. This slide tries to explain the rationale behind this our decisions. The first reason is the diversification of our portfolio. We wanted to expand the FNM Group portfolio with risk profile and return on investment that was higher. So we want to mitigate the risk, because we have incentivized tariffs. So in order to have a portfolio with an IRR value that is higher compared to the one we had with our core businesses. Then our cash flows are not related to other streams. And last but not least, this business is aligned with the sustainability drivers of the group. So they support the energetic transition of the group itself. We do this through Viridis, which is an extremely agile operational structure, which allows for a flexible approach. We bought a pre-existing portfolio. We acquired know-how and the ability to generate cash right from the start. So when we acquired Viridis, they also had a diversified pipeline with a growth base that was significant in terms of development. So within the group, we have a highly skilled team operating the selection of operations in order to have the highest return on investment possible with a very high rate of development. The third benefit would be the management team, which I already mentioned. Everyone has over 16 years of experience in the field of energy. And they've also demonstrated to be able to develop 150 megawatts, which they sold before we joined with a very profitable value. If we look at Viridis of today, we own Viridis 80% of Viridis. And we see a growing EBITDA from 2024 to 2029, so from 10 to 13 points over EUR 50 million by the end of 2029. In 2029, we will also have hydrogen part contributing. So the strategic goal is to expand the presence in the world of renewable energies, investing in photovoltaic and Eolic and wind. So the assumptions are quite accurate. We want to be able to operate around 350 megawatts of photovoltaic and wind plants by the end of 2029, accessing incentivized tariffs F1 and FX. The consequence of this assumption is that production volumes are sold to third parties, so there are no self-consumptions. We have 700 megawatts of existing pipeline. 100 of these megawatts are authorized and ordinarily authorized. If we look at the biogas facilities, we want to be cautious because the plan stops the energy production until incentives expire in 2028. We are currently assessing whether we can use these biogas facilities to produce biogas, not energy. So this would be an upside to the current plan. If we look at the bottom left, you can see our CapEx assumption. So we have a gross CapEx for investment of EUR 1.5 million per megawatt hour for wind power and EUR 700,000 for million per megawatts for a photovoltaic. In Viridis portfolio, we see very high percentages. In terms of plant availability, it's almost 99%. And we have an 81% performance ratio. So if we look in more detail at this element, so the activity of O&M developed by in-house asset management both internally and outsourcing this activity. We see that we have an availability that allows for 24/7 availability to avoid any emergency and any interruption in the provision of the service. If you look at the cost per megawatt hour, you see a reduction over time. Thanks to the increased number of plants. Then, we also have some fixed costs accounting for EUR 2 million to EUR 3 million per year. So this is part of an investment. Looking at the CapEx, we want to use our supply chain that is a very high value. And we want to use the latest technology, cutting-edge technologies for photovoltaic mono-PERC technology. And we also want to install new products with tracking that increase production capability. Now going ahead, what are the forecasts in terms of CapEx expenses? So we can see a gross value of approximately EUR 290 million. And you have a fluctuating trend, because this is functional to having continuous installation, which shows us the evolution from 2023 up to 2029. Viridis was not ours in 2023 and installed capacity was 38 megawatts. When we purchased Viridis in 2024, we have now expectations, forecasts of 72 megawatts. And we will install more than 280 megawatts in the next 5 years. And as for 2025, we already have forecasts. All facilities are under construction. And by 2025, we will have 180 megawatts. They are in the ready-to-build state and ready to begin their activity. And in 2028, sorry, in 2029, our energy will come, 80% of it will come from the photovoltaic and 20% from wind power. That's the forecast for 2029. Let's go now and have the assessment of product production maximization. And we have gap. And we have a progressive turning off of the incentives, which will get closer to the average PUN. And on the right, that was the energy scenario on the left. And then on the right, we have the RES production of gigawatts per hours. And we have an expectation of 650 gigawatts per hours at the end of 2029. And it's important to take a look at the dark part, which is the incentivized part. And then in light green, we have the market part, the market share. Actually, the light green part is also generated by incentives, because it will be incentivized at the end of the phase-in period. The FR1 provides for 18 months of phase-in. The company having access can only receive the market fees and not the incentives. And here, you can see for the periods 2024, 2025, the green share, a PPA part that is on average yearly annual duration of the PPA in order to ensure stability in the following year. And up to now, we've taken a look at the most relevant financial data and segments. And now, I would like to talk a little bit about the more traditional segments. Let's start from RoSCo, whose main goal is to continue supporting their local public transport with the allocation of trains. In terms of EBITDA growth, we can see that there was a decrease in 2024 over 2023 due to the new contract with Trenord. And if you take a look at 2024, you can see a growth, which is driven by remuneration, which is now at 5.5%. And to the introduction of 13 new trains with the management of the acquisition of hydrogen trains, which have recently become all financed by public funds that is the national recovery plan, the national plans, et cetera. And here, we can see a piece of data regarding 2026, which is due to the supply of the 13 trains that I described before. Now, let's talk a little bit about mobility infrastructure and railway. Here, you can see in light blue, the activity generated by railway. And in dark blue, you can see the activity generated by the terminals. And you can see that there are different assumptions linked to concessions and to the financing by the regional authorities. Now the main assumptions are completing the Sacconago hub, the Sacconago terminal. If you take a look at the data, you can see that 2024 sees a good share. Well, actually a doubling of the tracks serving Sacconago, the Sacconago terminal. And you can see a doubling in the management capacity of containers and the wagons, too. So we have approximately 800 container wagons per week, which will become 2,500. And the other 2 most significant moments are 2026 and 2027, with regards the real estate activities with the acquisition of more than 28,000 square meters of logistics hub, which will be linked to the Sacconago Logistics Hub. As for the rail is concerned, you can see that percentages are higher in 2024 and lower in 2029. This is because in the CapEx that we manage. And you can see it in the gray graph on the bottom right. In the CapEx that we manage, we have a EUR 1 billion volume, with regard only the strategic plan and the train plan. And it is unreasonable to think that this value will increase in the next year. And this will affect the EBITDA of infrastructure and management. But currently, the plan does not contemplate this hypothesis. And a few words about the third historical segment of the FNM activity that is mobility and services. We wanted to improve our role as a mobility player as for the mobility, which takes place both in Lombardy and Verona are concerned. And now our hypothesis is renewable for 2026 and 2029 with a WACC of 8.5% and then starting trolleybus operation from 2027, always regarding Verona. And the acquisition of contributions, investment grants of EUR 75 million to support the CapEx. With regard to Lombardy, we are expecting a concession extension. We have already been granted an extension. But we cannot see any offers on the horizon. So this is what can be reasonably expected and the activity of FNMPAY. The payment services will become with a plus sign starting in 2027. The current plan does not include significant growth in terms of passengers in the next years. The growth is practically flat. Now, let's take a look at the impact of these elements in terms of consolidated values. As for revenues are concerned, we have EUR 618 million in 2023. And then we have a forecast for 2024, which was presented last week for revenues, totaling EUR 625 million; EUR 650 million at the end of the year. And so, from the EBITDA point of view, we'll go from EUR 211 million to EUR 320 million at the end of 2029, so CAGR plus 7%. This is mainly due to an increase in the Mobility and Infrastructure and Energy segments. What does this -- what drives this EBITDA? Well, a gross CapEx amounting to EUR 1.3 billion, 47% generated by mobility and infrastructure, 22% by the rolling stock, 9% by mobility and service. And then we have this new data, 22% of energy, which is becoming a significant contribution. The CapEx is a gross EUR 1 billion. The net CapEx is EUR 1.1 billion. And in this gross CapEx, we have approximately EUR 580 million of un-commitment, which could fluctuate, let's say. And then we have the mobility segment, which is quite constant. We have a spike for RoSCo and mobility and service and the CapEx of energy are fluctuating. And they rely on the future installation of megawatts. In financial terms, you can see that here on the left, we have the sources. 46% is cash generation, 54% is additional debt. Our business is a business based on the model. Well, I'll generate the CapEx today and for several years, I'll generate cash flow. So today's CapEx generation will cover the debt that I made in order to generate this cash flow. And this will lead me to generate the flows. And I have said before that 650 gigawatts of energy will be generated at the end of 2029. Those investments have been made in the previous 4 years. PV and wind generation facility will continue producing cash flows for the next 15 years as for CapEx is concerned. This will also be used to pay the dividends. So on the right, with the accumulated cash flow; you can start from the net financial position, which is EUR 780 million. And then you can see accumulated cash flow for 2025 in light blue, which is absorbed by networking CapEx and dividends to be paid. And this leads us to a EUR 1 billion debt. Well, this debt, which is certainly higher than in 2023 from EUR 643 million to EUR 1 billion, allows us to maintain a net financial position EBITDA ratio range of 3.5% to 4.0%. And we have mentioned here the support of a leading financial institution. But actually, another support letter was issued by another leading financial institution. So we have 2 financial institutions supporting us. We need to understand what are the financial instruments which best fit our needs, consistent with the business profile and with our goals. As for this EUR 1 billion is concerned. Well, we can say that we have a EUR 1 billion debt. And we have a terminal value, which is EUR 430 million. We'll have more investments, more terminal values. If we have fewer investments, we'll have fewer terminal values and fewer CapEx expenses. And there's a large block, which I mentioned before, present value of the future cash flows derived from energy, the second block. And this graph includes 2 further elements which are hardly ever taken into consideration in the right way. The MISE has assets which are outside the concession. The participation in the 2 TAM Temporary Associations of Enterprises, TAM has been the object of a sale purchase agreement. And we have included the fair, the net value of that operation. And then the real estate, our headquarters in Cadorna and Assago are 2 valuable assets and an estimate of their value was estimated some years ago. We do not have an updated one. And if we, for example, sold all of these assets without the present value of the rolling stocks of the buses and Trenord, we'd have this 2029 residual. Some of the assets, which are not the concession in the MISE concession; represents more than 100% of today's capitalization of our stock. And this is up to you to think about this last piece of data. We now give the floor to Marco.

Thank you, Eugenio. Now very quickly, now in line with what Eugenio said, we can talk about this dividend policy. The plan includes a dividend policy, which is represented in this way in this slide as I was saying during the introduction. There is an evolution of dividends moving in a range, which goes from EUR 0.023 to EUR 0.032. This means in terms of yield, something in the region between 5.2% and 7.2%, as Eugenio was saying, with the mergers and acquisitions that we did. The plan provides a yield and a value, which is absolutely interesting for them and consistent with what the expectations of the market are and consistent with other solutions you can find in the market. And you can see the outlook of our strategic plan. These are consideration that we've already made. It is a summary that we've made. We started from 2023 and then the guidance in 2024 and the forecast for 2029. And we took a look at the development of our turnover. And so we saw that the adjusted EBITDA went from EUR 211.4 million to EUR 220.3 million in 2024. And it will total -- it is expected to total EUR 320 million in 2029. As for CapEx is concerned, we have a value of EUR 100 million, EUR 140 million value, which is in line with historical data of CapEx in our company. And the outlook for 2029 is in the region of EUR 70 million, EUR 90 million. We are confirming a regular trend in terms of invested CapEx. As for the net financial position with reference to what Eugenio was saying, from 2023 to 2029, we will go from EUR 642.8 million to approximately EUR 1 billion in 2029 with an increase of net financial position. This is a positive piece of data. And if we take a look at the ratio between the NFP and the EBITDA, you will see that our value range is in the region between 3.5% and 4%. And the outlook is on the lower part of this column. This is a healthy position, a well-manageable position and I think that's all. Okay. Very quickly, as for the energy transition is concerned, I would like to highlight the reduction of CO2, which is CO2 equivalent, sorry, in terms of estimated Scope 1 and 2. And the goal is basically connected to buses, the improvement of the ESG of the bus segment. And the underlying element is necessary, is absolutely vital for the goal of the SBTi. In terms of Scope 3, we will initiate a system for reporting emissions at the infrastructure level and identify the consumptions. And in terms of, ESG, again, we took a look at the Fili project, which has a standard E1 on climate change and biodiversity. And in terms of a standard S, that is the social element of this project and the participation of the community in these activities. And I would like to conclude with the hydrogen projects, which include basically 2 elements, a part more connected to trains and another one with regards to refueling stations. Now with regard to trains, we're talking about trains traveling on tracks, but also manufacturing facilities that supply the hydrogen production that's the hydrogen that we will use. This project is basically all financed by public funds, the recovery plan, et cetera, et cetera. So this project is managed by FNM, but it's basically all covered. This is the last slide. And I would like to open the Q&A session. We can start from questions here in this room.

Well, first of all, congratulations and thank you for this very thorough explanation. I have a couple of questions. The first on the possible extension of the motorway concessions. So besides what you've already explained, can you give us some more details on the length of the extension, the duration of the extension and whether you would like to bid in a possible tender? And second question on capital allocation, so moving from RoSCo to energy and its possible impact on hydrogen fuel train.

If you have other questions, we can take them and then we'll answer all of them together.

As for terminal value, can you please help us understand Slide #30, 31. You mentioned and finished amortization. So my question was related to the OpEx-related inflation and COVID-19 effect recovery. Do you have an estimate for them? And in Slide #31, can you please explain us also how it works, how the mechanism works? So you mentioned refinancing, so can you please understand what is the financial need and how will the refunding work also considering the spread? And about debt as well, we've seen a slide related to the debt breakdown. Can you please give us an estimate and what is due? And do you have accumulated EBITDA estimate?

Anything else?

Davide Rimini, Intesa Sanpaolo. My first question was on the energy compartment. You underlined a significant investment plan, which will guarantee over the long-term cash flows you said for 20 years. So can you give us some indication on when Viridis will be cash flow positive? And looking at the dividend policy, you explained, you introduced a floor, if I stand correctly, minimum dividend, but you also flagged a potential for progressive growth. Can you please share the conditions for this to happen?

Okay. Let's start with this first round of answers. About the extension for MISE, that's a good question. We do not have full visibility on what will happen. We are sure that if there was to be a tender, we will bid. We will participate. We'll follow the rules and the modalities. We'll see. They're talking about European tender. There is ongoing reform of the motorway system. It is a law that is currently being approved. So we'll base our actions on that. But we are interested in participating and we want to really play strong. Well, we are restructuring. Well, there is a restructuring of the system. They're trying to solve issues related to the motorway system per se. In the text issued by the Council of Ministries, there is no extension, mentioned 2 extension. There is a mention of a bit of a tender. We'll see what happens. I mean there is an ongoing debate. We know that there are ice-cut. So there are representatives of the Board of Concessionaires trying to interact with the parliament and to present their interest. So in order to answer the question, we'll need to understand what's -- how will the law be designed. In terms of track record of the sector, there is no one taking over when concession expires. So we don't foresee somebody taking over when our concession expires in December. We expect to see a technical extension abiding by the concession addendum #2. Of course, if there will be a tender, we will bid in the tender, and we will aim to win it. Looking at the allocation of the capital, so the transformation of the group really. In terms of capital allocation, we focused -- decided to focus on energy. Looking at what we said earlier on. We asked ourselves what would happen if when rebidding for motorway, we lose the tender. We asked, well, the group asked this question before I joined. And we saw what was there on the market that could be aligned with our profile. And we thought energy was the best option. We are having positive results. So the rationale of the capital reallocation is due to the fact that energy has good returns on investments. I also mentioned a flexible approach, because our agreement with the counterpart says that we will invest only if projects foresee a double-digit return on investment. Otherwise, we won't invest our money. So the reallocation is also connected to the return on investment. We've indicated the expected ROI. We allocate capital in a very thorough and accurate way. Looking at Milo's questions. Do you want to say something? No, I just wanted to mention that we've identified a pipeline. The pipeline is dynamic with 350 megawatt hour. So we are committed with our minority shareholders and investing as long as there is a double-digit ROI. This is the scheme. And of course, we then drafted all the numbers you've seen in the plan. Milo, maybe the answer to your question, in Slide #34, I don't know if we're able to show it on the screen. This shows the combined interpretation of several laws, so art from 2019-2020. So the light blue there is the share of a notional item post -- that at the end of 2023 were defined through the system of 2020. This is due. We have a legal opinion. We've been said that terminal value is due. So we have a regulated invested capital that contains investment divided in before and post. And we also have the notional items. And these are part of the invested capital. And these are also absorbed before new investments. So we'll -- in 2029, we'll see this physical assets, so projects on guardrails will be physically there. Nobody will be able to say they're not there. There is nothing to argue. So I hope I answered your question. I think in Slide #31, if you can let me see, of course, it is illustrative only, but we wanted also to send a message. We assume that the terminal value will be absorbed by the cash flow of the technical extension. Also, Article 8.1, but this is a personal interpretation. But it sounds like they're trying to excuse themselves. So they're saying this is how the technical extension works. The concession is expiring. So we guess that the technical extension is more than likely. However, if sometimes terminal value was not absorbed, but nominal value was actually remunerated. And we decided to have this approach. So we considered the absorption of terminal value through the cash flow of technical extension. About the definition of refunding, we assumed a rate of 5.5%, depending on the elements that will be funded. My colleagues from the banks will be impressed. They will feel like scrooge Mc-Dog. Looking at dollars, but we're here, because these are the market rates. We'll see how this will evolve. About net working capital, this is simple. Net working capital comes from the gap between the strategic plan that doesn't account for circulating net working capital deriving from financed assets. Well, at the end of 2024, we have circulating capital coming from funding. So we have this delta in net working capital, but this is just more of a technical issue rather than a real issue. About accumulated EBITDA, we'll look at that. About the dividend policy, maybe Davide asked something on energy. So when energy becomes cash positive, that's a good question. I mean, we will see an EBITDA of EUR 59 million by the end of 2029. Maybe we'll be able to calculate this better. But we know that energy has a ROI after 7 to 8 years. So after 4 to 5 years, we expect it to be cash positive, but this is a speculation about the dividend policy. Currently, the plan includes cash out per dividend of 7.2% according to the progression; we've seen in Slide number this one. So from '26 onwards, we expect to do even better than this and be able to meet if these needs. Other questions? If there are no further questions, do we have questions from the phone, people connected online. And so there are no further questions. So we'll have this operative after. If you have any questions, we'll be happy to answer you in the following days. Okay. We'll have a drink together after this meeting. So thank you very much for your attention. [Statements in English on this transcript were spoken by an interpreter present on the live call.]