Italgas S.p.A. (IG) Earnings Call Transcript & Summary

Good afternoon. This is the Chorus Call conference operator. Welcome, and thank you for joining the Italgas First Half 2022 Results Conference Call. [Operator Instructions] At this time, I would like to turn the conference over to Ms. Anna Maria Scaglia, Head of IR of Italgas. Please go ahead, madam.

Hi. Good afternoon, ladies and gentlemen. Today, we will walk you through our first half results. I'm Anna Maria Scaglia, Head of IR at Italgas, joined by our CEO, Paolo Gallo; and our CFO, Gianfranco Amoroso. We will address any questions you might have at the end of the presentation. I leave now the floor to our CEO, Mr. Paolo Gallo.

Good afternoon, everybody and welcome to this presentation. I will ask the operator to move on to Slide #2, when there is a summary of our first 6 months results. The performance reported in the chart is in line with the guidance that we just provided recently during our presentation of the strategic plan 2022 to 2028. Let me start from the revenues. Revenues are going up, thanks to a very ongoing strong RAB growth, thanks to the investment we carried out in 2021. And the second strong contribution is coming from our ESCO activities. Thanks to these 2 points, we have been able to compensate even more the negative impacts of the regulator, driven by the lower WACC and X-Factor. The 2 elements, the lower WACC X-factor correspond to an amount of EUR 31.4 million in 6 months. Regarding the cost, our focus remains extremely stronger while OpEx on a yearly basis went up, that is mainly driven by the ESCO activity because I can show and I will show you later that the -- on a like-for-like basis, we have seen a reduction in our cost. Overall, considering our cost of debt, we were able to achieve an adjusted net income growth of 6.9% in respect to the first half of 2021. If we move to the page and if we go to Page 3 of our presentation, there is a presentation of the other element. Regarding the investment. Investment, we spent in the first 6 months around EUR 375 million. That was down around 11% in respect of 2021, fully in line with our guidance. Differently from last year, similar to what we have already discussed in the first quarter of 2022, we had a lower working capital contribution that explain the drop in operating cash flow, Gianfranco will tell you in details later when he will discuss the cash flow operation. As a result of the cash flow evolution and the payment of the dividends that we did in May, our net debt increased seasonally just above EUR 5 billion excluding the impact of IFRS 16. If we go to Slide #4, I will give you more flavor about our investment. As I said, we have invested EUR 375 million. And as you can see, there has been a decrease in some of the items, except one, the digital transformation or the digital transformation of our asset that on the opposite increase in absolute number in respect of last year -- with an increase of 6.5% and this is even more important because the growth was achieved despite the fact that we had a drop in the spending for the meter replacement because there are only few that's still to be replaced and so the contribution is very limited. Development on a purposing of the network still attract the majority of our investment. Sardinia, you see a decrease in that. It's absolutely expected. The reason is because we have nearly completed the methanization plan that we started in 2018. What is new in this second quarter of 2022 is that we have installed 11 additional small-scale LNG storage and the overall regasification plants in the region have reached 64 as a number. 230 kilometers of new pipeline have been installed in the period, 275,000 of smart meters have been also installed, including the replacement of the faulty ones. After giving you a flavor on the investment, let me talk about the result in particularly the CO2 emissions. If we move to Chart #5, that is what we usually report on the mission and the net energy consumption. Regarding the emissions of Scope 1 and Scope 2, in the first 6 months, we have reported a decrease of more than 21% in terms of overall emissions. And the decrease is mostly the result of the strategy that we have implemented in the first 6 months. First of all, from a gas leakage point of view, we have decided in 2022 to prior authorize in our search the area that were characterized in the past year by greater expected leakages. In doing so, we have also set the new times needed to find the leakages that even more important to solve the leakage, so to interrupt the leakages. And that has resulted in a decreased time we needed to fix. If we look at the numbers of kilometer that we had expected in the first 6 months, there is an incredible increase in terms of kilometers. We expected 26% more kilometers in respect of last year. We have already reached 47,700 kilometers. And another important result that we have also achieved, thanks to the strategy that we put in place is that the amount of natural gas lost per kilometer surveyed is nearly decreased by 50%, in reality by 43.7%. And if we look at the end of the day, the amount of volume -- in respect to the volume inject, the number is extremely low, 0.047%. That is minus 22% in respect of last year. That is the major contribution of our reducing CO2 emission and the other 2 contributions that are not so big in terms of number but are extremely relevant in terms effort are the reduction of the natural gas consumed for pre-heating, thanks to all initiatives replacing the heating system or making the heating system more efficient and reduce number of kilometers traveled by our vehicle, thanks to all the digital application that we put in place. All those actions have contributed to the reduction of the CO2 emission in the first semester of 2022. If we move on the energy that is on Page 6. You can see, again, another big effort, minus 14% in respect of last year. That is in terms of electricity is mainly driven by the consumption of electricity in our water distribution system. If we look at the civil industrial gas consumption that is in terms of value, the majority -- the major contribution. And that is, again, thanks to what -- to our effort to reduce the consumption of natural gas, the consumption of electricity, even as an industrial user, also as a civil use. That is the result of the monthly review and report that we do in order to keep under control, CO2 emitted and energy consumed and all the action that, thanks to this review, are taken by the management, by the company to further reduce energy consumed and CO2 emitted. Now, let me -- now getting to the numbers of our profit and loss account. So let's move to Page 7. First of all, in 2022, we don't have any adjustment while you remember that in 2021, first semester, we adjusted our number to exclude the cost of the bond buyback transaction that we carried out in February 2021. When we compare the same number of 2022 first semester with the same period of last year, I underline again what I have already said, despite the negative impact from regulation, lower WACC and X-factor, we recorded higher revenues, thanks to the RAB, to the increase of RAB, thanks to the higher contribution from ESCO -- from our ESCO activity. The higher contribution value around EUR 40 million in respect of last year. Overall expenses increased by EUR 18 million, driven by our again, energy efficiency activity. Regarding depreciation and amortization, was up almost EUR 8 million. Gianfranco will explain you later as well as the tax rate that reached the level of 27.5%. All this result -- all this resulted in a very robust increase of 6.9% in adjusted net profit in terms of adjusted number. Excluding the adjustment, the growth was up 10%. So if we try to have a little bit more details about revenues and costs, let's start with revenues. We are on Page 8. You can see that we have divided the contributor of the increase of the revenue among the different categories. So the growth in the RAB and other tariff components contribute for EUR 25 million in respect of last year. And then we have already pointed out the contribution -- the negative contribution of the regulator regarding the WACC and the X-factor, EUR 31.4 million. EUR 45 million is other revenue out of which, as I said, EUR 40 million is coming from the ESCO businesses. And when I say ESCO business, I'm referring to sea-side, but also to the new company that we recently acquired named Ceresa. Incremental contribution of the ESCO business is absolutely in line with the trend that we have seen already last -- at the end of last year and in the first quarter, of our -- of 2022, this is in line with the guidance we provided. Let me also remind that Gaxa, we stopped consolidating Gaxa since the beginning of May, following the sales of the company, the majority of the sale of the shares to Edison. Another consideration that is quite relevant is that inside the other regulated revenues, we have accounted additional EUR 6 million for incentive for emission reduction in respect of last year. It is another clear demonstration that the strategy that we have adopted, not only brought last year to a muted less gas consumption, but also increase our incentive, thanks to our ability to find leakages and to fix the leakages in a short period -- in a shorter period of time. Regarding the final comment is that the contribution coming from the smart meter replacement dropped by EUR 5 million in respect of last year, and that is because we don't have -- we have only few to be -- still to be replaced. We have completed the replacement of all traditional meters with the smart one. If you look at Page 9, you have only a different view of the revenues divided by distribution, meter replacement other distribution revenue and other revenues. So you can find again the comments that I make it just now on the different lines. Let's talk about now the cost, and we are on Page 10. As I said to you before, if we compare on a like-for-like basis, the cost of the first semester of 2022 with the cost that we incurred in the first semester of 2021. The reduction is significant minus EUR 13.2 million or 7.5%. It was more than offset by higher ESCO cost for EUR 32 million. That includes, of course, both personnel and external costs. And this number is consistent with the revenue increase, I mentioned a revenue increase of EUR 40 million. So this is not surprising. We have already announced that in the first quarter of this year of 2022, and we have seen that this growth is continuing, of course, mainly driven by the -- what we call super bonus or ecobonus scheme. If we look at the level of marginality that our energy efficiency company was able to achieve, our margin is in the range of 18%. So we still keep the same level of marginality as it was in the previous year. Finally, we had lower cost for the white certificate for about EUR 1.7 million. The following page in Page 11, you have the same -- a different picture of the same numbers divided between what is relevant to the distribution cost, so to our let's say, core activity. And then we have all the other activity, mainly energy efficiency and you have the details of the labor costs and the external costs and then other costs and concession fee. As you can see, concession fees are decreasing and that is driven by the reduction of the WACC that drives down the overall revenue base on which is calculate are -- the concession fee are calculated. I will now leave the floor to Gianfranco for the remaining part of the presentation. Gianfranco, please?

Thank you, Paolo. Let's move to Slide 12. Our EBIT amounted to EUR 296 million in the period, marking an increase of 5.9%. This is the result of an increase in the EBITDA of about EUR 24 million as a result of the variance of revenues and OpEx already explained by Power reform. Almost EUR 8 million were higher D&A, mainly related to the network and driven by the CapEx executed in the last 12 months. Moving to Slide 13. Adjusted net profit after minorities reached EUR 188 million, up almost 7%. Net adjusted financial expenses were EUR 26 million, only EUR 1 million higher than last year despite higher average gross debt in the period, balanced by a lower average cost of debt, as we will see later more in details. On the positive side, the contribution from associates increased by EUR 2 million, driven by Gaxa capital gain. Finally, we accounted for EUR 75 million of income taxes, marking an increase of EUR 5 million due to a higher taxable income with a tax rate of 27.5%, broadly in line with last cash flow from operation was close to EUR 460 million and was able to fully cover the CapEx executed in the first 6 months. In addition to the net profit, depreciation and other noncash items for EUR 186 million, net working capital brought a positive contribution of EUR 75 million which is driven by the positive generation of billing seasonality of EUR 188 million, higher tax payable for EUR 14 million, reduced by lower payables higher inventories and for the first time, higher super bonus and the ecobonus receivables for EUR 26 million. As far as the net working capital evolution, you might have noticed a reduction compared to the number reported last year in the same period. This was driven by the billing seasonality that this year has a lower positive impact compared to the first half of 2021. The difference of about EUR 80 million is explained by several temporary effects linked to pass-through elements in the tariffs that were already reported in the first quarter, and that will be almost reabsorbed by year-end. Net CapEx reduced in line with our guidance, brought a cash outflow of EUR 348 million, resulting in a free cash flow at the end of the quarter of EUR 111 million. Financial investments include the net impact of the cash outflow to acquire the stake in Picarro and the positive contribution of the deconsolidation of Gaxa debt, in line with the first quarter. Taking into account the dividends that we paid in May, all this resulted in a net debt increase of only EUR 114 million in the quarter. Let me now make an update of our debt structure at the end of this second quarter. We are on Slide 15. In these 6 months, we have reimbursed our bond expired last January for EUR 112 million, and we have executed a new term loan of EUR 250 million tenured 3 years. This explains the current split of our debt in fixed 89% and floating 11%. The liquidity position at the end of June exceeded EUR 1.3 billion, available on bank accounts with leading financial institutions. And as you can see, our debt maturity profile will allow us to cover the financial need for '22 and '23. Next bond repayment is due in March 2024. Despite the current volatile financial market, we continue to rely on one of the lowest average cost of debt of the sector that now is less than 0.9%, a very limited exposure to interest rate volatility and a very limited refinancing risk. Moving on the balance sheet on Slide 17. Net invested capital reached almost EUR 7.2 billion with an increase of almost EUR 93 million compared to end of 2021. Fixed capital dropped by EUR 100 million, mainly as a result of the reclassification among assets held for sale of Naples. On the liability side, consolidated net debt was EUR 5.94 billion including the IFRS 16 impact of EUR 61 million with an increase of EUR 114 million compared to year-end to 2021. I leave now the floor back to Paolo.

Thank you, Gianfranco, I wanted just to -- be before opening the floor for question, I would like just to remark some elements that according to me are extremely important. The first one is that the numbers in the first semester are fully in line with our guidance. The numbers that we gave during the strategic plan in June for the year-end are, of course, confirmed. I would like to underline that we were able to report very strong top line growth, led by RAB increased by the energy efficiency activity despite the regulatory impacts, any negative regulatory impacts on our profit and loss account. The cost efficiency every quarter are surprising even ourselves. They are mainly driven by our digital transformation. Cost reduction are coming from many, many elements. Some of them we could not even think about when we started this long journey. And finally, we should have -- now I can imagine that it's going to happen probably early September, the closing of DEPA Infrastructure should come very soon. We are at the last miles, let me say, where we are still discussing some points with the seller, but we should resolve everything by early September. Now I would like to open -- I will give the floor back to Anna Maria. So she can open the questions. Anna Maria?

Mr. Gallo, yes, thank you. We -- operator, we are ready for the Q&A session.

[Operator Instructions] The first question is from Javier Suarez of Mediobanca.

Thank you for the presentation. 3 questions. One is on the big picture and to are on the company numbers. On the big picture, I know that this is beyond the company management control, but I'm still very interested to get your view on the likelihood for the competition degree to be approved before the year-end and the likelihood that this competition decree is going to take -- is going to include measures to accelerate the gas distribution auctions. I know that it's a very complicated political environment, but any light you can share with us would be appreciated. Then the second question is on the cost-cutting that is -- the company is doing a phenomenal performance reducing costs. So can you help us to understand which are the next managerial action to continue delivering that cost-cutting, so I was asking for examples on what the company management is spending effort to try to reduce even further the cost structure of the company because the performance is really impressive. And then the third question is on the contribution from the ESCOs that the evolution in the marginality for this activity that you are experiencing, I'm mentioning this because obviously, there is a high inflation environment, and I was questioning how does that -- this may impact in this activity?

Okay. On the -- Thanks Javier for your question. On the competition, well, I'm guessing, I'm not fine to -- I don't have -- saw in detail information about it, but I'm guessing that this -- the -- this regulates on the competition will be brought forward. Maybe I have heard they are taking out some of the most debating, and let me say, topics like the one relevant to some like the tax or things like that. So if the competition law will be then approved that is important for the recovery fund -- release of the funds themselves. To me, again, it's important because inside, that is -- the famous beer -- instead of RAB for the municipality that should help the tenders to be -- to move forward. As a matter of fact, we did not mention that I'm sure you have read about the tenders that we won the one in La Spezia with significantly -- significant amount of margin in respect to the second and to the third competitor that are very important competitor. On the cost-cutting, as I told you, Javier, I mentioned also last time is difficult to find, let me say, example because I need to find many of them because you don't have one single contribution to explain this cost reduction. I will make just a couple of titles. You have seen in the sustainability report that we were able to reduce automation, but also the energy consumption, thanks to the digital transformation we brought into our gas heating. That has not been completed yet. Some of them has been already upgraded. And therefore, we are getting many results out of them. So from the digital transformation of this gas heating -- pre-heating, we were able to reduce the energy consumption, that means less cost, not only reducing CO2 emission. I don't know if you have noticed that the number of kilometers traveled by our fleet was reduced by 10% that represent last year, in the first 6 months, we traveled 22 million kilometers. This year, we reduced to less than 20 million. So more than 2 million kilometers saved. That is thanks to many innovation that we have introduced. Thanks to the digital stuff we provided to our technician. They don't have to go to the office anymore. They have to leave from their own residents and to go to the point where they are needed. The application that provide remote estimation of the cost, for example, to install a new smart meters now is completely done online. So does not need any more by our technician to go except it is a situation complicated to go at the customer site to evaluate the intervention. I mean that is some of the examples that we can bring in order to explain the difference costs. Another one that is much more recent. You know that we have launched our automated system, remote system called DANA, that we oversee the operations remotely. That is going to reduce the number of inspection, annual inspection that we do on our station for -- to reduce the pressure. We have just started. So it's not implemented yet this kind of reduction in terms of the number of inspection that is going to come. So the more that we introduced the digital stuff in our day-by-day life, the more we are getting savings for which we are also surprised every quarter to see the numbers. Related to the last question about energy efficiency activity. If I well understood, you were discussing about inflation that was -- that could impact the result and the margin of our activities. Let me say that because the -- all the activities should be -- should see an end by, let's say, in the next 12 to 18 months. I will probably say that 95% of the contracts have been already signed. And so those contracts have already included, if any, and I'm sure some of them have included the impact of the inflation. So what we are describing today as a margin is the reality. So we do not expect that the inflation will impact our margin because, we are already dealing with the inflation in our day-by-day contract. So I don't see a change in the months to come about the marginality that I mentioned to you of our energy efficiency activity around 18%.

Next question is from Manuel Palomo of BNP.

First question is about the tenders, about the tender process and how the political crisis in Italy these elections could impact this process, if any point? And also wanted to ask you about whether the increase in interest rates could also have any impact on this process? Or maybe could even accelerate them? And second question is about the invention of the EU that has suggested a 15% reduction in the gas consumption to the different EU numbers. And I was just -- well, I would really appreciate your thoughts about were they feasible or not? Whether you would be -- you would agree with this measure or not? And if at any point, this could have any impact on Italgas earnings were the 16% reduction to be implemented, whether you envisage any type of change in the regulation results?

On the first question, I didn't get the second part. Okay. interest -- higher interest rate, okay. How can I say? We did not see in the past any influence, unfortunately, by the government on accelerating or decelerating the tenders, and then it's going to happen the same during this situation. The only difference is the competition law that I -- that was asked before by Javier. If the competition law will be approved, then we should expect some activity from those municipalities who still own a portion of the network and are willing to sell those networks. Regarding higher interest rate, I don't see the impact in other terms, -- the only impact that I can foresee is, again, going back to those municipalities, who are willing to sell and that competition law was approved with -- we recognize also to them, then it's going to be a catalyst for some of the tenders. So I don't see the interest higher interest rate that can help or can block the tenders. Regarding the 50% reduction proposed by EU, I think the answer is more political. If I'm just looking at the -- from a technical point of view, from a numbers point of view, as we have already said in the past and has already been confirmed by all the activities performed by the government and by Eni and by Snam, we don't see the need for Italy. I mean next winter should be -- hopefully should be not so critical as somebody may see. So that kind of measure should to be discussed on political level. But from a technical point of view, there is no need in Italy to such a reduction. The impact and therefore, the impact on Italgas. We don't see any impact on Italgas.

The next question is from James Brand of Deutsche Bank.

I had 2 questions. The first was just on the funding for DEPA. If you could just remind us whether you've locked in the funding cost for that or not, just given that obviously, borrowing costs have risen quite a bit in recent months? And then secondly, on the digitization CapEx in H1, think you spent EUR 112 million. Could you give us a rough split? Just help us understand a bit better what that's actually been spent on.

On the first, I think on the funding for DEPA, please Gianfranco, can you take the questions?

Yes, we can confirm that for the funding of the acquisition of the shares, we have already funded it through a prefunding exercise that we performed last year. As I was commenting before, we have liquidity in excess of EUR 1.3 billion, of which almost EUR 1 billion will be for the acquisition. Then we have already discussed with a pool of local banks in Greece, the funding for the -- funding of the CapEx plan and the working capital needs of the company itself that we have preferred to maintain at local level with already fixed terms and condition to be confirmed, of course, at the time of the closing.

On the second question, the EUR 112 million, you have around EUR 20 million are still the metering side. Around EUR 80 million are all the other assets, meaning the station to reduce the pressure, valves reading system. I mean all the other equipment that needs to be upgraded to digital. So -- in the past, the majority was the metering, now is the minority. And then we have another EUR 10 million that is relevant to processes. So it's a soft spending, if you want, but is what we are spending in developing new applications in the digital factory, the DANA system or the system that we put in place to managing the -- managing the network remotely. So that is -- if you want 20 meters, 80 the other asset, then by the processes.

Okay. Sorry, can I just have a very quick -- just clarification on the answer to the first question. So on the DEPA funding to make the acquisition, you said you prefunded that last year. You prefunded it and locked in the rates as well? Or you just prefunded bridging kind of facility and you need to lock in the right after completion?

Yes. Just to be clear, we have prefunded all because we have the liquidity already in our accounts. So we did remember a liability management exercise and we issued the new bonds. And with the proceeds, we have kept this proceed free for -- in forecasting the possibility to have it used for the acquisition. So we have already everything, not only the rates, but also the cash.

The next question is from Stefano Gamberini of Equita.

Three questions from my side. The first regarding DEPA, you said that probably the beginning of September, you will sign the acquisition that's novelty because during the presentation of the business plan, your guidance was still without DEPA on 2022. So do you expect also the discussion with the regulator, Greece regulator for new CapEx could be start immediately up. So after -- by the year-end, we could know about the CapEx plan in the forthcoming years in Greece. The second question regarding the shippers. What is the situation? Could you elaborate a little bit if you see some risks on this point for Italgas that some shippers are in trouble. They do not find gas on the market and so also some risk that they could not pay the fee, the connection fees to you? And the last question regarding your full year guidance. It is not clear to me why you still have this range of EUR 1 billion to EUR 1.03 billion, excluding DEPA while in the first half, you improved by EUR 24 million EBITDA, and you are underlying that both on the regulated side, you are still experiencing improving in OpEx and on the unregulated business, the improvement is already there and will go ahead. So it seems to me that you have to record a negative EBITDA, a decline of more than EUR 30 million in the second part of the year to match the low end of this range. So could we expect that the guidance should be more in the upper range of your guidance?

I'm starting with the last one because it's easier. We tried to surprise you always. So I think that will see...

Okay.

Now then we can go back on that with the help of Gianfranco. I'm responding regarding the first question on DEPA. Well, the situation has become more clear in DEPA in respect of when we presented the strategic plan is because the certification from the regulator that was somehow an issue has been overcome by a law that was issued by the -- that was passed at the parliament in Greece were similar to all the others, European countries, the DSO are not certified anymore. So that created a simplification in the process. That's the reason why there has been, let me say, so acceleration from your perspective. When we presented the strategic plan and we gave the guidance of 2022, we intentionally took out the Greek contribution because we didn't know over time if it was September, October, November or whatever months. So we didn't want to put a number inside. It was linked to a process that was completely under our -- outside of our control, like the certification of the DSO by the regulator. Let me say, we have been happy and we have been lucky that the Greek government decided to align their regulation to the European -- to the other European member state. So with no certification required to get these. Yes, the answer to your second question, but is the same part of the first question. Yes, as soon as we will close, we will immediately start discussing the CapEx plan that has been already presented to the regulator, eventually to one that we review -- to review, to present, in order to align the CapEx plan of the DSO to our view, our strategic view about the development of the gas distribution in Greece. So with shipper, Gianfranco continue -- on the second question, Gianfranco can elaborate in terms of guarantee that we will see from the shipper, but also who are the shippers that are the majority of our customers.

Yes. In our portfolio, of course, the majority of the turnover is made as probably not by big players like Eni followed by Enel and Edison. So the -- for them, the question is not on the table. For the remaining, as you do not have a direct exposure towards the shippers, but we can rely on a system provided by the network code that requests a guarantee first-demand guarantee in case of nonpayment or delay -- even delay in the payment. So we do not see a material increase in the level of risk to answer your question. On the other side, also some protection for the shipper has been set in the past 6 months by the regulator with the possibility to apply for the bonus gas that was one of the temporary element that was in our net working capital in this period. Probably will be reabsorbed by the end of the year. On the guideline, if I may, Stefano. Yes, the -- we gave -- our first DEPA in terms of P&L is out of the guideline because we place the acquisition at the last day -- very end of this year without any impact from the P&L. Secondly, there is a solid robust performance by -- made by the ESCO -- ESCO business that will be probably carried over for the second half of the year. And also the cost-cutting and the operational efficiency that we achieved in the first period will be possible for the second period. Then we said that we are falling within the range that we gave of EUR 1.103 billion. Probably in the high range -- in the high end of the range. And that's it as you...

Let me add for the benefit of Stefano, another comment that we did not make is that there are, in the first 6 months, some elements that are not recurring that you will not find on the second semester like capital gain. We -- for example, we recorded for the sale of real estate and for the sale of Gaxa. We have, as always, some tariff adjustment coming from the previous year that we recorded in the -- that you normally recorded in the first 6 months, you don't have it in the second one. So there are some elements that are contributing to the result that are inside the revenues that are -- that have appeared during the first 6 months and may not appear in the second quarter of the year. But still, we want to surprise you always.

Just, could you give us a figure what is more or less the amount of this, we can say, one-off considering also the lease provision and so on that impacted in the first half and probably will be not repeated in the second more or less?

Gianfranco, will tell you too.

Around EUR 6 million. I mean the capital gain, the release of fund and well, EUR 6 million to EUR 8 million.

The next question is from Emanuele Oggioni of Kepler Cheuvreux.

Thank you for the presentation. Good afternoon, everybody. I have 2 questions left. And the first is on the general situation for the gas supply next winter. In your press release, you said that prolonged international of the natural gas supply in the distribution network could significantly impact in a negative way the operating opportunity of the group. So was that your business is fully regulated? I can't really ask if you can elaborate on this in terms of potential economic or financial impact. This is the first question. And the second one is related on your ESCO business or energy efficiency businesses as it's true that in the next few months or by year-end, we probably have a new government, but the previous one basically was against and dropped the ecobonus incentives on this intervention on buildings or energy efficiency or buildings. So what is your current outlook for 2023 for this business?

Okay. Let me go back to the first question. The situation that we say that we understand basal numbers that are public. So there's nothing -- I mean, you can run those scenarios with now this particularly difficulty because those are numbers that are common public. We don't see that risk during the next winter. That is the first comment. The second comment is that -- the market that we serve that are mainly residential and small businesses, restaurants, they should be the last to be affected by any cut in the gas supply. You know that it exists in Italy, what is called contract interim, we believe, that are contract based on which, based on the situation, the supply can be reduced or stopped for a certain period of time. So your vision is -- I do share your vision, let me say, as a general overview -- and therefore -- and for the other reasons that I explained to you, the market that we serve, we don't see any impact of us. Just to tell you, if we look at the first 6 months of 2021, even though we didn't have a very cold winter, the amount of gas that was distributed by our network was just reduced by 2% in respect of last year without considering the difference in temperature. We didn't want that calculation. You normally -- you know that you need to adapt the gas consumption based on the average degrees that you registered during the 6 months. If we did it, probably the consumption would have been probably the same or eventually higher. On the second question, if we look after 2023, and then I will go back to your question. If you look after 2023, if we want to reach all the energy efficiency targets set by the -- either the European Union and our Italian government, we need to proceed in the -- especially on the real estate activities to increase the efficiency of our real estate portfolio. So after 2023, we probably will not have any more 110 super bonus. We will have some other sort, or maybe I don't know, 70%, something we'd use in respect to 110, and I have no doubt about it but we will continue because that will guarantee us to reach the targets in term of energy efficiency that we have set to ourselves. Regarding this year and next year, well, we know -- all of you know that by the end of 2023, the super bonus will end. And in fact, all our contracts in this sector have an end by, let me say, the end of the third quarter of 2023, just to be on the safe side. So by the last couple of months of 2023, we should end all this activity, conclude this activity in order to be sure to -- not to go outside the period given by the government.

[Operator Instructions] Ms. Scaglia, there are no more questions registered at this time.

So with this, I think we can adhere this call closed. We really thank everyone that has been listening and participating into the call. And as IR, we are available for any follow-up you might have. Thank you very much.

Thank you to everybody. Have a nice afternoon.

Ladies and gentlemen, thank you for joining. The conference is now over. You may disconnect your telephones. Thank you.