Hera S.p.A. (HER) Earnings Call Transcript & Summary

Good morning, everyone. Also on behalf of the CEO, and welcome back. As always, at the beginning of the year, we want to present the new business plan to you, outlining our path to 2025 and which was just approved by our Board of Directors. I will begin by talking to you about the preliminary results for the past year. And to give you an overview regarding the scenario and the targets that we have given ourselves on the group level. I will then leave the floor to the CEO, who will illustrate our strategies on all of the activities included in our portfolio and the group's financial results. I'd also like to underscore the fact that this year's business plan presentation coincides with the group's 20th anniversary, highlighting once again an important growth perspective. EBITDA in 2021 exceeded EUR 1.2 billion showing the highest organic growth in our history. This figure is consistent with the good performance on the interim figures we already shared with you highlighting a strong growth in the demand for value-added services geared towards energy efficiency and effective risk management strategy and the commercial value of our strong circular footprint in waste treatment and energy sales. And finally, the constant contribution of M&A. These are all key elements in our strategy, which have proven to be effective even in the current context. This growth is accompanied by a good balance sheet as shown by the net financial debt-to-EBITDA ratio, which is equal to 2.7x despite the presence of over EUR 650 million of investments during the year. This preliminary balance sheet confirms an average annual growth rate of 10%, with an EBITDA, which increased over 6x over the 20 years. And above all, it shows the constant growth path we've had. Now with these preliminary results, we have gone well above the 2021 targets of the 5-year plan we drafted 5 years ago. The EBITDA targets present in the group's 5-year plans have been constantly exceeded over the last 5 years. And the preliminary figures for 2021 show that we have an outperformance of around EUR 85 million compared to our target. These outperformances have also allowed us to increase the dividends distributed compared to what we planned every year. Our dividend policy, which we review each year based on the results achieved is a floor subject to be increased whenever we outperform our targets. The preliminary results and the good expectations regarding net profit will allow us to propose to the Board of Directors, which will approve the annual report in March, a dividend of EUR 0.12 per share, up 9% compared to the EUR 0.11 paid last July. In short, we are off to a good start. Given the fact that in the first year of the business plan, we had outperformed our expectations with over EUR 1.2 billion in EBITDA, we have confirmed our strong financial soundness, which leaves us room to increase the dividend again to be approved at the end of March. We are concluding one of the best years in our history. At the same time, we are starting the first year of the 5-year plan to 2025 with a strong momentum. Going to the specifics of the scenario, we're finally seeing that some long-awaited changes are becoming more tangible and operational. In our regulated businesses, the tenders have finally become a reality. In our local territories, Hera Group made a bid in a tender for gas distribution in Udine; a tender and water in Rimini; and 3 tenders in waste collection in the Emilia-Romagna region, namely Ravenna, Cesena, Bologna and Modena. To date, we have been awarded all of these tenders by converting over expired concessions into long-term concessions, which have a great value. Over the next 5 years, we will face other tenders. And our ambition is to renew another 4 concessions in waste collection and in gas distribution. Furthermore in the water sector, we have concessions that expire on average between 2027 and 2028, giving visibility to our investments also beyond the business plan period. In the sale of energy sector, the realization process for customers in the Maggior Tutela sector has finally begun. The first tender processes launched in 2021 on a small segment of customers, namely self-employed professionals, also start to test the liberalization method for the entire retail market. This first round of tenders saw Hera being awarded 1/3 of the customers by winning 3 out of 9 tenders. The next liberalization of the retail market will free up some 11 million customers on the national level, and it is scheduled for 2024. Last but not least, the greatest growth opportunity in Italy still lies in the excessive fragmentation of competition in all markets with a very high number of suboptimal, small- and medium-sized companies and the regulated businesses and in the liberalized energy sales, some 500 companies and in waste treatment. This is a very large number of companies that has allowed our group to constantly grow through M&A by generating almost half of the growth achieved so far through it. Other M&A opportunities are opportunities we expect in the future, and they will be focused on by looking at our core businesses with a selective approach to creating value. This is a broad set of opportunities to further develop our positioning in our target markets as we have proven to be able to do in the past with each of these drivers. Now in light of these perspectives, we have launched an ambitious investment plan worth EUR 3.8 billion, up from the previous 5-year plan with EUR 641 million in further investments. We'll have to build the new projects and facilities averaging around EUR 768 million per year until 2025. This is a much higher pace, up 59% roughly compared to what we achieved on average over the last 5 years. This increase reflects the greater opportunities offered by the current scenario. It also reflects the greater financial resources allocated by our group, roughly EUR 1.8 billion in fact, are allocated to growth; to the organic development of infrastructure for EUR 1.3 billion; and M&A transactions for over EUR 300 million; and to tenders for roughly EUR 160 million. Investments dedicated to organic development is especially significant, up by 75% compared to the previous plan. The investment plan was launched in compliance with the allocation criteria, which is focused on the returns offered by the projects that were previously selected on the basis of ESG criteria, allowing us to select the most interesting investment opportunities. The improved scenario and the increase in investments allow us, therefore, to review all of our 5-year targets upwards. The EBITDA to 2025 is expected to be EUR 1.4 billion with a cumulative growth equal to EUR 277 million over the 5-year period, a growth perspective about 30% higher than that of the previous 5-year plan, which implies an average annual growth rate of 4.5%, significantly higher than the 3.7% of the old plan. This target has already expressed net of the review of the WACC by ARERA and also the end of some incentives on renewables. Growth will be supported by all types of opportunities, be they organic or M&A opportunities. Organic growth will contribute with EUR 192 million. The main items are, in fact, the expansion of market shares and energy sales with an increase in energy customers by EUR 1.1 million so that we can achieve 4.5 million customers in total and in waste treatment with an increase in 600,000 tons treated per year. The increase in demand for value-added services and energy efficiency projects up at around EUR 25 million. And finally, the increase in turnover resulting from the expansion of our assets promoted by the investment plan. The efficiencies we expect to achieve is also important, EUR 100 million over the 5-year period. And this shows our focus on extracting synergies, which is something we have constantly been working on. The M&A transactions, which were partly implemented in 2021, will support our growth by feeding the development of all of our portfolio's core activities, beginning with the liberalized market, where M&A opportunities have also proven to be faster in terms of their execution compared to those with local public entities as counterparts. We expect over EUR 100 million to stem from M&A, which is in line with what we achieved over the past 5 years. For this forecast, we also have to add the value of the synergies we can extract, which will be on top of the targets set for our business plan. This growth has been transferred directly down to EBIT much more so compared to the past, thanks to the significant improvement of our results stemming from sales and waste treatment activities. EBIT growth is expected to average 5% per year on average until 2025. This plan is more ambitious compared to the previous one, although it continues to be based on very visible growth drivers, as already seen in the 2021 results. We will be able to take advantage of all growth opportunities by strengthening our platform, which is efficient and scalable, and able to accommodate further margins without increases in the cost base. This will translate into an increase in the EBITDA per employee indicator. And throughout the business plan years, we expect to have further efficiency gains up to 16.5% compared to 2020. In the Networks business, the optimization will contribute with the supply points managed per employee, which will grow on average by 11.3%, also thanks to the consolidation offered by gas tenders. In the waste treatment, the volumes handled per employee will see an average increase of 16.3%, leveraging on the asset base and on recent acquisitions, whereas in the sale of energy, customers handled per employee will grow by 31.5%. And after the consolidation of the 700,000 customers acquired by Ascopiave in 2019, is ready to welcome the customers, put the tender with the liberalization of the Maggior Tutela market. I'll now give the floor to our CEO. Thank you.

Good morning. Before I begin to illustrate the results of each business area, allow me to give you an overview for a moment, also because this will help us understand some of the types of actions I will be describing. From a helicopter view, we can understand that 2021 and early 2022 are marked by a continuity in the approach to a number of fundamental issues, first of all, due to the EU, but also due to a series of new references in Italy. Naturally, I'm referring to the Green Deal introduced by President von der Leyen. But above all, I'm thinking of the Green Deals implementation policies, including Fit for 55, the circular economy package, the Green Gas directive, which was leaked in late December. For this framework, we have to consider our recovery fund, addressing a set of issues in reference to which, allow me to say that we believe we have a competitive advantage or at least an important positioning due to a simple reason. The directives and the targets set within the EU and Italy's frameworks have been a part of our strategy for quite some time. In this context, we made a few choices years ago, and that is the direction we've been heading in for quite some time. And therefore, this is an advantage also vis-a-vis the nature itself of possible opportunities. Secondly, consider the nature of our portfolio. We are a multi-business company. And some of the fundamental answers when facing the challenges ahead are also born from the cooperation of the synergies between different business areas. This, of course, applies to green gases and hydrogen specifically, but a number of other contracts too in which infrastructure and activities are born and create synergies with one another. Up to some time ago, the portfolio's multi-utility nature was characterized by the fact that we had more businesses. And therefore, we could offset over time, any downturns in certain activities by boosting development in others. And over the years, as seen in the graph that Chairman showed us earlier, we were able to guarantee a constant growth in our group's margins. And therefore, intrinsically, the idea of balancing things was and continues to be valuable. And as we look to the future and to the challenges we face, I think this multi-utility setup also has another intrinsic value. Many of the solutions we have to deal with and that we have to implement aren't anything ordinary. They aren't limited to 1 single area of activity. In fact, they are the optimal cooperation and the blending of certain specificities. I'm referring to the development of green gases, for example, in hydrogen, especially in which an important role is played not just by our infrastructure activities in gas distribution or even the water cycle, as I'll be mentioning later, but also by the entire energy sector or by the waste sector. The presence of these elements within the portfolio represent opportunities for solutions for a streamlined way of identifying solutions. The third is linked to some of these initiatives. Not just the ones I mentioned a moment ago, but others too that fall naturally within the recovery funds' different missions. In particular, if we look at the calls that have been published regarding the circular economy, we have already identified some EUR 250 million in new projects, roughly half of which equal to EUR 220 million are also part of our business plan. So regardless of whether or not we get financing from the NRRP and how much or how little we get, we will fulfill them, others yet, we may realize as these resources become available. This positioning and these reflections moreover have led us to reiterate our belief in the strategic framework we introduced last year, which is inspired by the 3 major guiding principles, we have equipped ourselves with in the creation of shared value: The pursuit of carbon neutrality on the one hand; followed by regeneration and closing the loop when it comes to the use of materials and circular economy; and thirdly, resilience and innovation. That's where the growth acronym comes in as a way of summarizing the 6 areas we work in and intend to continue working in because what we expect to achieve from the development of these guiding principles is in line with the goals we have given ourselves for 2030 in which, in turn, are part of the more general goals we have set as a nation and as Europe. This goes back to the green themes, including further energy efficiency initiatives, so are the development of green energy in line with the TCFD guidelines. We have been inspired by them for quite some time now. Topics such as resilience, regeneration, technology. I'm not going to illustrate each of every one of them. I imagine you remember them from last year, but you will also find that they are well represented. So that's when we started designing the asset allocation of our investments. As the Chairman mentioned earlier, EUR 3.8 billion is our investment target for the next 5 years. which is divided into our 3 major areas: Networks, of course, cover the largest part with some EUR 2.1 billion; followed by the waste sector with over EUR 1 billion; and last but not least, the energy sector with roughly EUR 0.5 billion. Now the breakdown of these investments is roughly 62% in regulated activities and about 38% in liberalized activities. Naturally, this breakdown is also reflected in the development we expect in terms of profitability where the EUR 1.4 billion target is achieved through growth in the network sector, equal to EUR 73 million, with the reabsorption of the negative effect equal to EUR 22 million linked to the review of the remuneration on capital. We became aware of at the end of 2021, EUR 76 million is the growth in energy. And in this case, the largest growth is the one expected in the waste sector equal to EUR 122 million. So in 2025, we will have these EBITDA figures with 43% determined by regulated activities and 57% by liberalized activities as we have been starting to see in the last couple of years. Let me give you some details regarding the nature of these investments. If we consider this EUR 3.8 billion according to the different growth I mentioned -- I referred to earlier, we'll notice that roughly EUR 1.2 billion out of the total EUR 3.8 billion will be dedicated to resilience activities, which account for about 31%. Roughly EUR 1 billion will be invested in innovation equal to about 25%. We have about EUR 0.5 billion dedicated to the development of green gas solutions. Therefore, also in this case, it is equal to around 15%. By combining these figures, you'll see that they cover a predominant part of the EUR 3.8 billion. This is also underscored by the measurement of compliance with respect to taxonomy. And here, I added a bit of an explanation, and I apologize if I go into the details. When we consider our EUR 3.8 billion, the amount that can be measurable or comparable with the taxonomy guidelines is only equal to EUR 3 billion because we have to exclude financial investments and investments in so-called central structures. So within this amount, roughly EUR 3 billion, there is a part, which is neutral with respect to taxonomy policies covering about 41%; 58% are taxonomy compliant; and only 1% of our investments are not, which means that if we were to analyze the investments we expect to make in the coming years, about 98% are perfectly taxonomy compliant. And there is a final dimension, which is related to taxonomy, namely shared value. And here, we can see that 2/3 of our investments are perfectly consistent with shared value. Consequently, the percentage of our shared value margin is destined to grow significantly over the next 5 years. We expect it to increase from 41% to 55% with a growth roughly equal to EUR 310 million compared to the overall growth we have planned. And therefore, it is more than proportional. As I was saying, the outlook to 2025 is just one step in the path to 2030 that we designed for ourselves last year already and that we haven't refrained from updating. You may recall that we identified 4 parameters in the area of carbon neutrality, which we want to monitor year-after-year with respect to which we have given ourselves a clear target. One such target is the reduction of climate alternative gases, which has been certified by science-based target initiative, has been perfectly compliant with the path to remain well below 2 degrees as set in Paris at the COP meeting. Part of this has already been achieved. We have given ourselves the goal of reducing emissions by 37%. The intermediate step to 2025 sets the expected reduction of 26%, and this will be achieved by other components, including the further penetration of the sale of renewable energy to our customers, which is already 100% for all residential customers. Here is about working more with industrial customers or one of our preferred topics, which is energy efficiency. Already since 2013, we've started to pursue this systematically. Now we want to bring it to a 10% reduction by 2030. Similarly in the world of circular economy, the second axis in the share value, we have some very ambitious goals, the first of which is, of course, plastic recycling. Plastic is a deeply debated issue with respect to which we have made very specific commitments similar to those certified by science-based target initiatives or towards the Ellen MacArthur Foundation in the European Union. And here, we will make a big leap forward in the next 5 years, bringing us very close to the goal set for 2030, so much so that if we will be able to achieve that goal by 2025, we will have to increase the goal to 2030. And therefore, we want to increase the amount of plastic we recycle by about 125%. We also have to add a series of targets further improving the recycled packaging, which is already above EU targets, except for 2030, maybe wanted to raise above 80% and so on. All of this leads us to an ambitious target with respect to shared value, which we want to increase to 70% by 2030, 15 points higher than the 55% we have given ourselves as a target for 2025. Let's move on to the 3 major areas, and let me briefly illustrate the strategic guidelines that we have in terms of concrete actions and in terms of the composition of the levers and components that will allow us to achieve the target we've set. Let's begin with the waste. We decided to name this chart building the end-to-end leadership. In this area, as you know, we have been expanding our presence in the value chain for quite some time now going beyond the simple treatment and disposal of waste and entering into the circular economy, not only with plastic recycling, but also with the development of green gases and with the global waste management. We want to strengthen our presence both in the recycling sector, not just by expanding our ability to transform the plastics we already manage, which are PET and low-density polyethylene, but also by entering the so-called rigid plastics segment. But we are not content with that. We have started exploring other niche areas for the future, including carbon fiber, which is obviously interesting for us since we are located in the Motor Valley and which we believe can offer important expansion opportunities given the progressive increase in the use of this material as well as systematically improving the quality of the selected products we collect to improve the recycling percentage, which already stands between recycling and recovery at around 94% of our territories. We aren't satisfied. We want to do more. And we want to do more in bio meetings by doubling our production capacity. Currently, our production stands at around EUR 8 million. We want to reach EUR 17 million. We have 2 concrete projects already, one of which is authorized and under construction. The second of which is in the final stage of authorization. Third is to work with industrial clients more and more closely through the global waste management approach that we have developed over the last 3 to 4 years and that we recently strengthened in 2021 on the geographical level by acquiring Recycla, Vallortigara and SEA, but that we want to further expand on the industrial supply chains level. Each industrial supply chain requires specific solutions. And the development of specific solutions in a given supply chain opens up the market within it to all companies, which, in our case, are made of the large ones. Obviously, this will also be accompanied by the expansion of partnerships we already have with other European operators because we are increasingly moving from national solutions to European solutions. And then we have asset management. There could be no industry or no business in this sector unless you can rely on an efficient, comprehensive and above all, climate-compliant asset base. And from this point of view, of course, our efforts in terms of the investments required to keep our asset base as efficient and effective as possible will be significant. What does this mean for us? It means a significant growth. We know this is a major challenge. Growth equal to EUR 122 million over a 5-year period. Bringing the profitability of this business from just under EUR 160 million to EUR 380 million is a significant challenge, especially if we then have to deal with a EUR 15 million contraction related to the expiration of some incentives. But we are confident that we can do it in the 3 major areas I was mentioning, namely: recycling, with a growth of about EUR 60 million in the sector Aliplast operates in; EUR 60-plus million in the treatment sector; and also with the contribution of waste collection equal to EUR 7 million, which will benefit from the renewal of concessions in most of its activities for another 15 years, as you know. All this means working on efficiencies for some EUR 30 million, but also on business expansion with an increase in volumes treated by around 600,000 tonnes. Moving on to the energy sector. We decided to use the 'Me, We' slogan here because as with many of the issues that relate to us and that interest us as we manage public utilities or essential services as some have labeled them, we feel that solutions and certain goals can be achieved by working together with our customers. To do this, of course, we started from the very backbone of a business enterprise, which is customer operations and customer management, the so-called customer experience, which we have invested significantly in. We are planning significant developments to improve effectiveness and to improve efficiency as a way of being constant in a key parameter, which is cost to serve over the years despite the systematic increase in the functions, the features and the instruments with which interaction with the company is guaranteed. Now having an effective machine, however, also requires an effective system of offering it to the market. And that is why we created our product factory. A product factory, which is becoming increasingly important since it is no longer just a matter of carving out an effective and attractive offer to the market. It's a matter of enriching that offer with an entire set of other elements we have been introducing over time ranging from value-added services to equipment to be installed in homes or in the businesses we work with. That includes the HVAC equipment, electric mobility or more recently, distributed generation through photovoltaic systems. Here, we have already achieved important results. In 2021, we closed the year with over 70,000 signed contracts, and we want to grow to over 110,000 contracts in 2025. This will happen not just through value-added services, but also for more than 8,000 installations throughout the business plan years in the HVAC sector plus 3,500 photovoltaic installations in homes and at industrial sites. All this, however, can be done by exploring new business models. And that's why we set up a research and development unit within our energy sector as a way of feeding and designing the evolution of the product factory, which, again, isn't just a matter of products but it also focuses on setting up the supply chain, enabling the delivery of these products. Since this is a sector made up of technology and not just of commodities, obviously, data strategy is of fundamental importance. And here, given the appearance of 2G systems and the increasingly wide presence of gas smart meters, we will develop a set of actions that we've already designed or that we are already implementing. What is the ultimate goal of all this? To achieve a growth worth EUR 76 million and reabsorbing some elements, which aren't negative, but which do mark a contraction compared to 2020's profitability since that is what we want to compare ourselves to. Our target is to reach EUR 444 million through efficiencies, worth a little under EUR 30 million, through organic development equal to EUR 20 million and as I was mentioning from value-added services and energy efficiency and public administration buildings, which is worth EUR 26 million. Let me focus on this for a moment. This EUR 26 million won't just be achieved through value-added services, but also through the opportunities we have -- we began having in 2021 linked to the so-called super eco-bonus, which, as you know, has been extended to 2022 and 2023, which means that targeting the EUR 444 million goal will happen faster within the 5-year period. And this clearly is a major contribution to cash flow as well. As far as the customer base is concerned, there will be another change, which we feel is important in our evolution. It will be the reversal in our customer base between the predominant presence of gas customers compared to electricity ones. And for the first time in our history, we will have more electricity customers and gas customers. As you can see compared to a 4.5 million customer target, 2.5 million will be electrical and the rest will be gas. Now what will bring about this change? On the one hand, the continuation of the customer base expansion policy we have been implementing in recent years, moving from 100,000 customers to over 1 million. But also especially the opportunities stemming from the liberalization in the Maggior Tutela market. And last July, we already had some quite satisfactory results. We acquired 60,000 customers of the 200,000 customers, which were tendered off. And that's where we expect to obtain compared to the larger customer base size, which will be auctioned, which should be above 15 million customers. Again, we expect to reach this 1 million. And this, of course, will speed up a process that we have been building over the years. And finally, the network sector, we've gone back to the concept of IoTility we introduced last year. The components underpinning development and growth in this area, ultimately are a perfect match with the concept of IoTility. This means working very much in the theme of resilience. And resilience has to be both adaptive and reactive when it comes to climate change. As I mentioned earlier, roughly EUR 1.1 billion will be devoted to this, and this implies working on network infrastructure and network digitization. The final element is the smart meter. As you know, we introduced an innovation patent for an electronic gas meter. That can also be certified for the measurement of blends with green gases, including hydrogen, which will be further developed with the rollout plan for the second-generation electronic meters. And this goes back to the concept of being a multi-utility company with solutions for the energy transition towards green gases. The power-to-gas project is now in the executive design phase. As you know, it is a project that integrates perfectly within the water system, and draws efficiency from this integration. We're also developing other solutions and asset readiness to manage green gases with our infrastructure. Finally, here too, technology and artificial intelligence come in allowing us to move increasingly towards the virtualization of our networks, and this will affect our operations model to be either implemented or adapted. This will be the number 1 enabling factor in achieving the EUR 40 million in efficiencies that we are targeting. That is an essential figure. It is practically more than half of the growth, also due to the fact that, as I was saying, we have to consider a reduction worth some EUR 22 million related to the review of the remuneration of capital. We expect this from the water and gas distribution sectors especially, which should contribute EUR 32 million and EUR 28 million, respectively. Finally, a summary regarding some financial elements. The growth of EBITDA and EBIT, especially, as summarized earlier by the Chairman should take us to over EUR 700 million by 2025, and which will lead to the further improvement of ROI, which should reach 8.7% in 2025 despite having reabsorbed the effect of the review of the remuneration of invested capital, which in our case, affects about 2/3 of the invested capital, which is regulated. Moving on to ROE, which we expect will improve to 10.6%, up from 10.2% in 2020. This is due not just to the expected tax rate stability but also especially to the benefits brought about by our financial management. You may recall that in 2020 and in 2021 especially, we worked on some important liability management transactions, allowing us to target a scenario like the one we are now facing to 2025 where only 17% of our debt will mature in the next 5 years. And in fact, we only have 1 maturity in 2024 or just under EUR 500 million. The remaining part of the debt, which now has an average maturity above 7 years will be distributed over the following decade with the yearly maturities never exceeding EUR 500 million to EUR 600 million. And this is a rather important element in risk management. This also takes into account the fact that our projection on the cost of debt at 2.3% in 2025 is especially solid since it isn't based so much on assumptions regarding refinancing costs but on real costs. One final word on the cash flow. As in the previous business plans, the approach is that even with a significant increase in investments, all of these investments, including the dividend policy has to be self-financed by the operating cash flow and in the case of the business plan we are presenting and expected to reach EUR 4.5 billion, thus, self-financing, the EUR 3.8 billion investments we're planning except for the part related to financial investments and M&A. That is because, as we know, we aspire to making them. We have focused on M&A in the past. We will continue to do this in the upcoming 5 years, although the entity is by no means accurate because it will depend on the opportunities that will arise over time. As a consequence of that, this is only -- the only component that modifies the level of indebtedness in our case, by around EUR 800 million. But this won't change another essential characteristic that we have always had over time, which identified us to a certain extent. I'm referring to the balance sheet flexibility guaranteed by debt-to-EBITDA ratio, which stands at around 2.8x compared to 2.9x in 2020. That is the level we expect to have throughout the business plan years. This will also give us the required flexibility for any M&A operations there may be, for opportunities which are even more significant to the ones we've imagined today. Thank you.

In conclusion, let me make 1 last promise as usual, the one regarding shareholder remuneration. And besides the increase in the dividend per share, which we saw at the beginning of the presentation, we have also been consistent in considering an upward change for all dividends throughout the business plan years compared to the promises we made in the previous business plan. The payment of higher dividends is sustainable from the financial point of view thanks to the increase in the expected cash generation and also because the increase with an average annual rate of 5.7%, which we forecast is in line with the dynamics forecasted for net earnings per share, which are also expected to increase by 5.7% on average per year until 2025. Finally, the business plan we illustrated doesn't include all of the potential for growth. We still have to consider on top, the synergies obtained from new M&A transactions and the potential returns on projects that are defined and financed with the recovery fund sphere. Thank you, and I'll leave you to the Q&A session. The Q&A session, we'll begin in a couple of minutes. We will be right back with you in audio mode with the conference call. [Statements in English on this transcript were spoken by an interpreter present on the live call.]