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

Good morning, and welcome to Italgas' Strategic Plan Presentation 2026-2032. This is going to be quite a long presentation. We are going to have our President, Paolo Ciocca; our CEO, Paolo Gallo; our Head of Italgas Reti and Distribution Business, Pier Lorenzo Dell'Orco; and our CFO, Pierre La Tour, presenting the plan to you all today. We are very, very pleased to have such a big audience, and it's a very important day for all of us. So welcome, and thank you. [Presentation]

Italgas, built on networks, driven by intelligence. Is it a program? No, well, it's a reality. So good morning, ladies and gentlemen, and welcome to the presentation of Italgas 2026-2032 Strategic Plan. A warm welcome to all of you, analysts, investors and journalists who are here today. Joined by the many Italgas colleagues who have traveled from different parts of Italy and Greece. This presentation bears witness of the cohesion of a group already geared towards the full delivery of the actions that we will present here today. We meet again only 7 months after our last strategic update. This close interval is only incidental and in view to recover the ordinary rhythm of our updates, altered by the 2i Rete Gas acquisition. This short time will allow us to share with you the pace at which the group is advancing. What we are presenting today is continuity and acceleration, continuity and acceleration, continuity in vision, acceleration in targets. Paolo Gallo and the management will introduce you to the concrete results that the integration of 2i Rete Gas and the delivery of synergies have produced over these months. We are living through a phase in which the European energy system is under a pressure, which in the persistence and intensity have no recent precedent. Geopolitical instability has made it crystal clear in the good and in the bad. What was already evident to those who look at infrastructure with a long-term perspective. Energy security is an enabling condition for the competitiveness of countries and therefore, for the well-being of all communities, networks, digital widespread and punctual, resilient are the most concrete response to or better response that the industrial system can offer to this challenge. Italgas has known this almost for 190 years. And today, in its position as Europe's leading gas distributor, it is best placed to take on this role with full responsibility. This has not been a position that's been won by [ inertia. ] In 2017, when the digital transformation of energy networks was still a frontier topic, Italgas made a decision that trend against the tide, yet provided [indiscernible] to invest with conviction in the digitalization of its own infrastructure. That's choice set in motion, the progressive construction of our technology platform that today beyond being a competitive asset is an international benchmark and which has proved to be the indispensable prerequisite for responding to the fluctuations and pressure to which the energy system is subject today. Anticipate rather than chase, this is the hallmark that always has distinguished the group's path. Italgas changes, grows and expands, yet remains faithful to what has defined it for many years, an industrial force that builds real progress, generates lasting value in the service of the communities, territories, countries in which it operates. Of this, we need to be grateful to all women and men of Italgas who have embraced with confidence this bet of organizational and corporate change. Let me now hand over to Paolo Gallo. Thank you, and best wishes for you all today.

Good morning. Good morning to everyone, and welcome here. Let me start with the presentation. I will be joined in a moment by Pier Lorenzo Dell'Orco and Pierre La Tour that will help me to present our plan. But before we move, just a very quick list of the things that we are going to touch today. We are going to look at the market environment. It was mentioned by our Chairman before, we are in a very peculiar and particular time regarding energy. Then we will update you about the progress that we are making about the integration and the synergies we are delivering relevant to 2i Rete Gas acquisition. Then Pier Lorenzo Dell'Orco will present to you the investment plan and Pierre La Tour will give you the numbers of this strategic plan. But before jumping into the presentation. Let me start with what happened in the last 10 years. In November, we are going to celebrate our 10 years of demerging from Snam and back to the stock exchange. I think this slide and this page tell you the story of the several promises kept, the promise to deliver a long-term growth mainly through innovation, the promise to create value for all our shareholders, to our people and the community that we serve, the promise to become an [ undisputed ] leader in our industry. In '17, we launched something that none of the other competitor has never thought, digitization of our network. In 2018, we started the journey in the energy efficiency. In 2021, we decided to participate and won the international tender in Greece, acquiring the DEPA Infrastructure. And later in '23, we scaled up in the water business. And finally, last year, we had the big acquisition of 2i Rete Gas. I think the number speaks speak for themselves. Adjusted EBITDA nearly tripled, adjusted net profit more than tripled and we delivered to our shareholders in this year EUR 2.5 billion of dividends with an outstanding total shareholder return of 360% since 2016 listing. If you want to look from a different perspective, in 2016, we were 100% domestic gas DSO with strong heritage and also with a lot of conservatives. We were probably the most traditional, the most conservative company in the industry you have ever seen. Today, we stand as an [ undisputed ] leader in the gas distribution business in Europe, both in terms of size, but what matters more is in terms of innovation capacity with business portfolio that has been enlarged to energy, efficiency and water service as well as an international footprint in Greece. All these numbers prove a successful transformation driven by a clear vision and innovation culture that is today our DNA, a disciplined execution, and I would say thanks to all our people, men and women, that has believed in Italgas and the vision that Italgas has developed over the years. What is next now, which is the next chapter? So transformation is done. Platform is available, is built, and now it's time to deliver. And we have a clear 3 engines. The first engine that is going to be the core of this plan as well as the coming years is the AI transformation. This is where Italgas leads the industry by far, I would say, not only the gas industry. We are deploying agentic AI at scale, not as a pilot, not as a slogan, not as a [ POC, ] but a real lever for operational efficiency across the entire business. Smarter networks, smarter processes, smarter decisions, AI has become the backbone of our operation. Consolidation is the engine #2. Italgas gas distribution market, the tenders finally are moving. Tenders are accelerating, and we have already seen clear evidence in the past months. Furthermore, M&A opportunities are opening up, and we are ready financially, operationally, strategically to capture them and expand our leadership. Last but not least, synergies. We are not waiting. You will see the numbers are phenomenal. And only -- it is only less than 2 years from the acquisition. Our vision, our vision is very clear. We want to expand our leadership through network innovation and value creation for all our shareholders. This vision is built around our ability to drive innovation, AI transformation and energy transition, combined with our capability to allocate our CapEx and our continuously operational efficiency. This is the way that we run the businesses across the 3 segments in which we operate. Gas distribution remain our course, remain our foundation for the future. Water services, where we think that our digital capability are bringing major improvement to reduce water loss and to increase efficiency. And the first results are already coming. Energy efficiency where that is across all our business, where we operate to support decarbonization of the system as well as reducing energy consumption. And the vision translates into the goal, the 4 goals that you see here. Reinforcing our leadership in gas distribution throughout -- through innovation. Accelerating the digitization even more important, accelerating the AI application in our day-by-day operation. Provide -- deliver a sustainable growth through the returns that are -- that make our shareholders happy. And support the energy transition because our networks are at the core, are fundamental to provide an energy at cost competitive with security supply and with decarbonization movement. Let me take a look for a moment about -- give you a general overview of what is going on, on the market. First of all, let me start from the bigger picture about global energy demand. Energy demand is on the rise. And the drivers are structural, are not cyclical. World economy keeps expanding, the global population is growing, more people from developing country wants to use more energy. And on top of that, we have an entirely new source of consumption, data centers. The estimation is that by 2025, data centers will require an additional 800 terawatt hours per year. It's a huge number. If you think about, this is more than 2x the consumption of Italy of energy. This is something that we cannot forget about. And in this context, gases, and I've used not gas, but gases as a term. We remain essential combining efficient -- efficiency, affordability, flexibility and reliability. For years, we have talked about the energy trilemma. And let me say that I first talked about this term years ago during an interview in London with Bloomberg. But I think that now, energy trilemma is probably too -- it's a too simple representation of what's going on. We are talking about security supply. Of course, we are talking about environmental sustainability, sure, we are talking about even more important, the cost of energy. But now on top of these 3 dimensions, there is a fourth one that is what I just explained to you, the increased demand that is structure of energy. And that reshapes the energy trilemma significantly. We are no longer balancing 3 forces. There is a fourth one that put under pressure the other 3, and the complexity multiplies. And I think we should abandon the term energy transition. We should talk about energy evolution. Why? Because transition implies that you move from one [ system ] to another through a period of time. That is not going to happen anymore. Now there is going to be an evolution where multiple molecules, multiple technologies, multiple pathways are working together to meet growing demand while continuing to reduce carbon emissions and assuring security of supply and more important, keep the cost affordable for industry and for citizens. That is the reason why, as we always said, gas DSOs are not a legacy anymore. It is going to be a fundamental infrastructure that we help to manage this trilemma that has been -- has become a quadrilemma by the increased demand of energy. And let me just talk a little bit about the electrification. Electrification is the headline that everyone loves. But let me give some facts, some reality behind that. I mean the demand of electricity is growing. There's no doubt about that. Drivers are there, and we are not here in denial. But the electrification is not coming for free. If you look at the numbers, numbers show very clearly where we stand. The recent energy crisis, the rigidity of renewable energy production and the technical and infrastructure constraints are showing how this process of electrify everything is not going to happen. It's just a fantasy. And it will never happen as somebody are imagining. You cannot and we cannot decarbonize our economy just using ideological position because we need to think, first of all, that we need to give to our economy energy that is cost competitive. And in order to do that, you need to be sure that security supply is guaranteed. And in the next slide, in the next page, we show you how our gas network and the molecules can do part of this job. The first driver is modulation. As electricity is essential, but storing electrons is a large scale, is expensive, it's not real, it's not going to happen. Molecule, on the other hand, can be stored easily. We have already several storage and gas infrastructure is a natural storage, too, and released when demand peaks, helping the system manage volatility. We can and we should push the decarbonization of the molecules. Biomethane today, hydrogen, synthetic and natural gas tomorrow, allow existing gas users to progressively reduce emission without forcing every customer or industrial process to switch technology at once. The third driver is infrastructure. Italgas as Italy as well as other European countries have an expensive gas network connected to own businesses, industrial district, upgrading and repurposing this network is more efficient than duplicate with a massive expansion of electricity infrastructure that will not meet the targets. So the message is balanced. Green gases do not replace renewable electricity. They make the transition more affordable. They make the targets more achievable. By combining electrons, decarbonized molecule and the existing infrastructure, Italy and the European Union can move toward the goal set by 2030 and 2050, which is the lesson that we can take from the recent crisis. How secure is the gas supply in -- for Europe especially. And honestly, Europe is still exposed, it's still exposable by, let me say, by the natural situation. Europe has not a lot of energy resources, it depends for energy importation. But you can face that situation, you can reduce the risk of this situation if you don't rely on one single supplier route, if you don't rely on a single area for supply. And I think Italy has proven as since 2022 that we can afford energy crisis if we are able to improve our infrastructure, and Italy has done a lot since then. And we have seen the result of that situation in the recent crisis. Just look at the level of storage today in Italy that has a clear demonstration. So which is the lesson learned that infrastructure are fundamental, investing in infrastructure, make the infrastructure redundant is the way in which we are preparing ourselves for any kind of future crisis. So in other words, the resilience is fundamental and the resilience comes from different solutions. It comes from optionality, and that's what the diversification delivers. Let me just spend a couple of minutes about the RePowerEU. If you remember after the invasion of Ukraine, Europe, the European mission issue are RePowerEU, it's a way to get rid of the dependence from Russian gas. And the vision at the time was very clear, to develop alternative sources, biomethane, hydrogen, energy efficiency. I think Europe should take care again of this vision that should put into action something that has remained just on paper. If you think about, for example, energy efficiency, I think that is the best way to reduce our dependence, the best way and the cheapest way in terms of reduce our energy consumption. I think that European Union should step forward, should put into an action plan the objective that we're containing the RePowerEU that are very -- still very active even if it was developed back in 2022. If we take a look about the market outlook for Italy, and then we will look at about Greece. What we've seen is that we -- the gas demand is recovering from 2023 bottom especially the civil segment is leading the way. If we look further, and that is based on several scenarios, we see that the overall amount of gas demand remains stable, same line, same level of today, with a growing penetration of green gases, biomethane and hydrogen, reshaping the energy mix and driving decarbonization from within. So it's clear that gases is and will still represent Italy's energy backbone for a long period. The molecule is growing through the network, of course, we see our greener over time, but the gas infrastructure itself stays central. Looking at Greece, that is our second country where we are managing gas distribution. Here, we see growth and momentum. Greek domestic gas demand has expanded sharply in the recent year with a double-digit annual growth over the last 3 years. This is a market still early in this journey with a significant room to run. And the engine, let me say, is the civil segment again, and this is projected to outpace the other segment. Two main drivers are powering this. First of all, us. We are expanding the network. We are bringing the grid into a region that didn't have access in the past of the gas. And second, there is the second driver is the conversion of the residential use of coal and oil into gas that is cheaper, that is safer, that is more reliable and brings also lower emission. Now I'm going to touch the second chapter of this presentation that is relevant to what we have been achieved so far about synergies and what we expect to achieve in the years of the plan. We are not just on track. We are raising the bar. That is a clear bottom line. In particular, we have identified since last October fresh upside from AI-driven cost efficiency. That takes our target to EUR 280 million of synergies by 2032 compared with the baseline of 2023. That is a 12% upgrade in respect of our previous plan. And if we compare -- I mean if we compare the initial estimation that we made in October '24 when we announced the acquisition of 2i Rete Gas, the estimation was EUR 200 million. So that is 40% above that initial estimation that I remind you was just top-down estimation. This demonstration once again that Italgas works continuously in identifying new opportunity, new area for synergies. And if we look at the delivery curve of the synergy, we reached EUR 35 million in '25. In the first quarter, we are already at EUR 90 million, and we confirm that by year-end, we will reach EUR 130 million of the overall synergies with already some AI savings coming into the picture. But if you look at the curve, you will see that the new curve is in every single year higher than the one that we showed to you last year in the strategic plan. Also on the revenue side, the work that we have performed since last October has identified as new area of investment in order to bring the 2i Rete Gas legacy network at our same level. And we identified roughly around EUR 300 million more of investment that will bring the overall revenues, additional revenues to EUR 120 million. And this activity to identify new potential investment has been carried out in these months while we are deploying the digital transformation of the 2i Rete Gas, we identified others, and that is the result throughout 2032. But let me just remind you the journey that in which we are. If you remember, in 2017, we started with what I would call [indiscernible] work. Between these the '17 and 24, we digitized and automated the network by developing more than 50 digital solution and addressing more than 300 processes in our company using our digital factory. We were the first gas DSO to do data scale, not as a proof of concept, not as a pilot, but at scale. And we put all our key assets under remote monitoring and control. We created a strong backbone of data, a strong backbone of processes, and now we stand on that. In the last 2 years, last year and this year, we are moving from automation to intelligence. And today, we have more than 55 AI model in production, over 120 agents we built ourselves in our digital AI room and more than 2,000 people trained to work with these AI agents. AI is not any longer a pilot in the corner. It's already a transforming force in how we run the business. Our ambition is another step-up, hybrid intelligence, human expertise, combined with autonomous agents working as one orchestrating workforce using our trusted data because that is a fundamental prerequisite, the data that you are using for AI should be of a good quality and a knowledge foundation. Let me say in one word, our ontology. Let me show what the future is going to look like in our exciting journey. Starting in the field, the control rooms that we have, the 2 control rooms that we have, one in Turin and one in Florence, will become AI automated. AI will alarm, look at the event, analyze the event, recommend the action and dispatch the crew. A live digital twin of the network will remain -- will be available to our people to simulate and plan scenarios before we intervene on the asset itself. Our people are not going to be replaced. Their ability will just be augmented by the use of AI and will make their intervention even more effective than before. If we look at the office on the other side, every person will have personal secure AI tools for drafting, research analysis, drawing to do the day-by-day job more efficient. Autonomous agents take what is repetitive with no value back office work with human supervising and validating and is creating new roles, people dedicated to governing our knowledge, our model, our processes, our data, as I said before, in a more comprehensive world, our ontology. AI does the heavy lifting, human stay in connection, in command. That is how we are going to build tomorrow, network, and we have already started. Let me give you some example what, and the least what we have already implemented, what's ongoing in the future. What we have already implemented, you can see it, it's producing the majority of the synergy in 2026. What's ongoing? We are scaling up, extending agentic system into claims, contact center, procurement, network optimization, engineering, the future. The future is rollout even a larger approach. Agentic system reaching every relevant corporate and operational process with additional target of in-sourcing and engineering and specialized technical task. The outcome is that we have confirmed the EUR 180 million pool from synergies, efficiency and resourcing. And on the other hand, we have projected EUR 100 million of AI productivity and efficiency that has been upgraded about 40% in respect of our previous plan. But I want to show because I'm sure that there's going to be a question about that some specific case that are already in operation and for which we started to measure the results. Two cases, field intervention scheduling was released in January '26. What does AI doing on that, it's an optimizing algorithm that pull every key pieces of operational data into each technician daily schedule. It put together appointments, maintenance, emergency construction works in one plan, it accounts, it considers technicians' skill, shift, operational constraints, [ material, ] live geolocation, and it may optimize routes, and we do it every 30 minutes. After 5 months, of using the impact is significant, 10% increase in workforce utilization, 95% reduction in staff time spent in manual scheduling. I said 95% just not to say 100% because we cannot -- we don't need any more manual scheduling. And this is just the beginning. Second example, end-to-end customer request and complaint management. We receive 1,000 every year, 100,000 of these kind of requests. And this is a multi-agentic AI. So there are multiple agentic AI working in an orchestrated manner. What they do? They read incoming e-mails, text, attachment and writing images. And then within that queries, the inquiries, they enter our enterprise system and they look at all the data available in our system. So metering, building and CRM. From that, they reply directly to our end customers or eventually if it cannot be replied, they dispatch a technician. For this initial rollout because we just started this month, we deliberately kept a human in the loop. But in this initial test phase of 1 month, the results are phenomenal, 60% reduction in end-to-end handling time. Customers get receive faster response, the communication are more structured and we redirect our people toward high-value work. I wanted to give these 2 specific examples because they are in operation. So we are not talking about any more pilot, [ POC. ] Those are -- this is real life. But now let me introduce Pier Lorenzo Dell'Orco on the stage and Pierre La Tour, too, on the stage. They will present to you, Pier Lorenzo Dell'Orco, the investment plan; and Pierre La Tour, the financial data. The floor is yours. Thank you.

Thank you, Paolo. I'm really excited to present you with the investment plan of Italgas Group. Last year, with the plan of last year, we set a historical record in terms of investment plan for Italgas. And this year, we're even increasing our ambition. You see here a general overview of the CapEx plan of this plan. We have designed a cohesive capital deployment framework, which touches all the business lines managed by the group for supporting growth. The left-hand pie shows the breakdown of CapEx by business, and you see that gas distribution covers more than 70% of the total CapEx, EUR 13 billion over the time horizon, 2026-2032. The 70% is made up of 64% for Italy, 7% for Greece. And then you will notice a piece of news, a significant increase in the share of CapEx dedicated to tenders backed up by, as Paolo anticipated, the acceleration of tender calendar that we are facing in the last 18 months. Then we confirm our ambition in investment in water and ESCo, and we have retained some financial flexibility for M&A opportunities, which covers 4% of the entire pie. On the right-hand pie, you see the same CapEx broken down by area. And you see that network development and maintenance stays at the core of our investment plan covering 44%, and we have a significant increase in digitization and AI up to 27%. Let's notice that devoting more than 1/4 of the entire pie of CapEx to digitization is the best evidence of our ambition to become a real AI-driven technical network company. So this is to say that all these investments translate into tangible and measurable operational benefits. We will invest in asset digitization and the AI transformation to increase our service level and to reduce the cost, the efficiency. We will invest in the development of network basically by replacing older assets with new fully digital assets. And we will invest also in water again for operational excellence and in energy efficiency. All this translates into -- all in all, an increase in operational efficiency, enhancement of system resilience, leaks reduction, which is what was important for the impact environment, increase in safety and enabling green gas dispatching, as I will tell you later. And on top of that, a reduction in energy consumption, which is, of course, what was important, both for economic reasons and for environmental impact reasons. Let's look at the same amount of investment compared to the plan of last year. As I said, we are increasing our ambition. You see here EUR 13 billion, which marks an increase compared to last year of plus 14.6%, of course, excluding the expenditure needed for the acquisition of 2i Rete Gas last year. Let's look at the compare by business line. We see that there is an increase on gas distribution, net of the cash incoming from the mandatory disposals ordered by antitrust body. This proves our capability of sustaining organic investments in Italy. Same for Greece, EUR 1 billion is confirmed. So we have 1 year more compared to last year. But again, we confirm EUR 1 billion of investment. The significant increase in gas tenders, plus EUR 0.9 billion compared to last year, up to EUR 2.4 billion all in all. And I said, we have earmarked EUR 0.5 billion for M&A. And we confirm with a slight increase our ambition of investment in water and energy efficiency. Let's now look at the Italian gas distribution investments. That's the area where most of the acceleration in CapEx is coming from compared to last year. Digitization, EUR 3.2 billion, marks an increase of 14% compared to last year. And this is basically because as we operate former 2i Rete Gas assets, we have fully integrated and now we have a full control over these assets. We have identified new opportunities of digitalization together with AI development that Paolo has already mentioned. Then we confirm the amount dedicated to network plus centralized investment. These investments are fully driven now by digitization with our predictive maintenance tool. So we are in a position of better allocating resources. So we maintain the same amount of investment, but we better identify opportunities for replacement of assets and upgrading of the network. And then on top of that, tenders, which marks a significant increase of plus 59% compared to last year, up to EUR 2.4 billion, driven by new tenders that will be awarded in the next years. Let's focus on gas distribution in Italy. I said EUR 3.2 billion dedicated to network -- sorry, for the digitization. And this marks an increase compared to last year. The chapter of these investments are basically the same that we have already identified, but more and more initiatives under these chapters are coming out. So we will basically complete the digitization of the networks acquired from 2i Rete Gas by 2027. This is a confirmation of a target that we have already announced last year. We are quite satisfied with the extraordinary performances of our patented Nimbus smart meter. And so we confirm our intention of deploying massively Nimbus in Italy, and we will see also in Greece, and we have increased the number of meters to be deployed over the time horizon of the plan up to 6.5 million. Digitization under this EUR 3.2 billion, 2 main chapters are digitization of the assets and smart metering deployment. Concerning digitization of the asset, we have conceived a 2-stage program leading by 2027 to 100% of the City Gates remotely controlled by DANA from our control rooms in Turin and Florence. The second step, we are already working on that, will come later. By 2031, we will have completed the full digitization of the smaller plant, District Governors, and the smaller pieces of equipment across the network. Let's recall that with the acquisition of 2i Rete Gas, we have acquired a massive amount of plants, 12,000 District Governors and 1,200 City Gate. So we are saying that we are going to digitize these massive amount of plants in a very shorter time compared to what we have done on Italgas legacy plant portfolio. On the right-hand side of the slide, you see the smart metering program. As I said, we are excited about the performances that we are collecting from the field with new Nimbus smart meters. We have now more than 220,000 meters in place, even more than that because every day, we are adding up new meters. So it's not a pilot or a test anymore. This is a commercial product, which is proved to be superior compared to all the other smart meters on the market. You see that the performance is in terms of capability of transmitting remotely, the readings of consumption are exceptional. Nearly 100% compared to an average of 94% for GPRS or [ 2.G ] technology and 97% for the most modern NB-IoT technology. And again, remote management performances, which is the capability of remotely disconnecting the gas when needed, the performances are even better compared to the average of the market, 95% compared to an average of 70%. This, all in all, of course, translate into a higher level in service quality, but also lower costs for what we can do remotely. Now let's move to network. Network, we confirm more than EUR 5 billion dedicated to this chapter of investment. We will progress in repurposing and upgrading our network, which basically translate into replacing older assets with new fully digitized assets. On top of that, we are going to expand the network, especially driven by the tenders that have already been awarded that are included in this organic CapEx plan. And on top of that, some more opportunities in Sardinia, we have to complete the methanization project. And the new entry in Cilento, in the South of Italy, new methanization, an area in Campania, which has been brought to Italgas along with the acquisition of 2i Rete Gas. All in all, we plan to work on more than 4,000 kilometers of network over the time horizon of the plan, putting together replacement of older pipes and extension of new pipes. And we are going to increase dramatically the rate of inspection for gas leak detection through the cutting-edge technology of Picarro that we have already fully adopted, and we plan to achieve 200% of inspection, which means, all in all, 300,000 kilometers per year to be inspected with Picarro fleet. The important part of this CapEx plan dedicated to network is driven by the tenders that have already been awarded and that included in the organic CapEx plan. Last year, when we presented the plan, we had 8 awarded items. Today, they have increased to 11. We have 3 more. As I said, we've seen an acceleration in the tender calendar, and we will talk about later. But this increase in the tenders that have been awarded in the last 12 months has led to an increase in the CapEx dedicated to these tenders, EUR 1.3 billion, which marks an increase of plus 30% compared to the previous plan. This CapEx will allow us to work to invest in more than 2,000 kilometers of network, including extension and repurposing of existing networks. We will increase the delivery points by 100,000. And what's more, we expect to have 2 more awarding by the end of this year. These 2 awarding are not included in this EUR 1.3 billion CapEx. We are waiting for the formal award by the committing authority. So let's move to the tender CapEx plan, which is one of the piece of news of this CapEx plan. As I said, we are experiencing a dramatic acceleration of the tender calendar over the last 18 months, an acceleration. So we have reviewed, as usual, our CapEx plan related to tenders, taking into account this acceleration in the near term. And in the long term, we have confirmed our expectations with no delay. So all in all, we plan over the horizon of this plan to be awarded with more than 100 items and to invest EUR 2.4 billion, which marks an increase of plus 59% compared to the previous plan. And the addition in terms of redelivery points resulting from the awarding of these new tenders is equal to 2.5 million redelivery points at the end of the plan with an increase of plus 20% compared to last year. Our investments are not only dedicated to the network itself, but in general, enables the unlocking of green gas potential in Italy because through digitization and through the installation of new biomethane connection, new reverse flow plants and whatsoever, we are in position of fostering the development of green gases. Two chapters here. Biomethane development, we confirm our expectation of increase in terms of new connection up to 1.2 billion cubic meter per year of biomethane injection into our grids by 2030. Consider that only 3 years ago, we had only 1 connection to our grids. Today, we have 15 and we plan to reach 50, by the end of this year, considering all the connections that are under construction today. We have, meantime, started the operation of new reverse flow plants, innovative plants that allows us to debottleneck the grid in order to receive the full amount of biomethane produced by the producers. And looking at hydrogen projects, we have, as you know, inaugurated the first power to gas plant that we had announced last year in October in Sardinia. The plant is operating exceptionally well. And around this plant, we are building extremely a line of work stream of R&D projects. First of all, blending the hydrogen together with natural gas both in Sardinia, and we have initiated a second project in the center of Italy. Right today, we are increasing the blend percentage up to 5%, so above the law -- above the threshold set by Italian law, of course, an agreement with the Board is entitled to control, the Minister of Energy, the [indiscernible] because we are using this plant as a platform to test the increase in terms of blending and hydrogen injection. And we plan to reach 20% by the end of this year, which will make this plant a unique site all over Europe. And on top of that, we are designing new R&D projects around the plant concerning the installation of fuel cell, which will use the surplus of hydrogen produced when there is no demand from the users. And the installation of a Methanator pilot plant, which is basically a plant which produces synthetic methane by the combination of hydrogen produced by our power to gas plant together with carbon dioxide. Let's move to Greece. In Greece, we are confirming EUR 1 billion of total investments in this plan, and 60% of this amount will be dedicated to the network and more than a quarter again to digitization. Looking at the network, we plan to lay down more than 2,700 kilometers of pipes, landing at the end of this plan to 11,400 kilometers of network, which marks an increase of 200 kilometers compared to the previous plan. In parallel, we plan to increase the number of redelivery points connected to this network by 56% and until 2032, reaching more than 1 million redelivery points at the end of the plan. And again, this figure is increased compared to the previous plan. We are going to fetch new opportunities of development, especially in Western Greece and Epirus, which will sustain this CapEx plan. And again, in Greece, we are supporting the technologies that we have successfully experienced in Italy with our assets, both in digitization, smart metering and biomethane and green gases. Concerning digitization, we plan to digitize 100% of the plants of [indiscernible] by the end of this year. We have already reached 94%. So the target is we will, for sure, catch this target. We plan to replace all the traditional meters in Greece with new Nimbus, and we have developed a specific Greek version of our Nimbus for this purpose. We have already installed more than 5,000 Nimbus there, and we will plan to replace completely the traditional meters with Nimbus meters by 2030. And looking at biomethane, although Greece is a step behind in Italy in terms of legislation incentive schemes, in Greece, a new law have been recently enhanced, which sets clear rules for biomethane development. So we are pretty confident that there will be a very good opportunity for biomethane development also in Greece. That is why we are working in order to promote connections to the grid, we have none as of today, but we plan to reach 59 new connections by 2032. Then let's touch a little bit M&A. As I said, we have earmarked EUR 0.5 billion for M&A opportunities in Italy and abroad. We start from the fact that we have proven to be fully capable of creating value through M&A, both in Italy and abroad. And with the recent 2i Rete Gas acquisition, we have demonstrated to be able to fully integrate the merged, the acquired entity in a very short period of time to streamline the operation, to create synergies, to fully digitize the assets with a shorter time track. So we will leverage on these capabilities in order to evaluate any new opportunities in M&A in Italy and foreign countries. We're not announcing any deal today, but we are ready to evaluate any opportunity, which meets a very stringent set of criteria. That is why we say disciplined M&A strategy for selected options. Basically, we will look at stable macro environment, which supports long-term infrastructure investment, a place where the regulation is fair enough and predictable. And deals where Italgas can play an industrial role in order to create value through our best practices. We are not really interested in being a pure financial stakeholder. Let's move to water. In this sector, our priority is basically to enhance system resilience and operational performance. We plan to do that by continuing the investments that are already in place under basically 2 chapters. You see here on the left-hand side, interventions on infrastructures. We plan to intervene on more than 1,000 kilometers of connection and pipelines both by replacing older pieces of assets and extending the existing assets. And we plan to upgrade some infrastructures that are dedicated to, for example, wastewater treatment or the network itself, for example, in Sicily. Right-hand side, the second chapter concerning digitization and energy efficiency. And here, we are deeply leveraging on the capabilities of Italgas in the gas sector and Geoside for energy efficiency services. So we plan to digitize 100% of assets in water industry by 2027 to enable remote control like we do in the gas, introduce AI agent automation to increase the efficiency of our operations and to complete smart metering. And on top of that, we are deploying some energy savings initiatives in order to reduce energy consumptions on this grid. On top of that, we are assuming that within the time horizon of the plan, we will consolidate Siciliacque and Acqualatina. So the combination of our investments together with the consolidation will lead us in a sharp increase of the results of the water business over the time horizon of the plan. We plan to double the revenues. We plan to triple the EBITDA. We plan to increase the RAB by 8x up to EUR 350 million. We will reach an EBITDA margin higher than 55%, and we will slightly increase the CapEx dedicated to water by EUR 50 million, reaching about EUR 0.5 billion. total investments. Now let's be...

I will just speak a little bit about one of my favorite subject that is the energy efficiency, Geoside. Why I'm saying my favorite subject is because I said before, energy efficiency is one of the big lever in order to achieve the energy transition target, the decarbonization and so forth. Unfortunately, it's the probably most tough job that we need to take, but it's extremely interesting and challenging. And the fact that Geoside, first of all, is working with all the group companies in order to test, to do pilots and then to deploy new energy efficiency solution is the proof that we strongly believe in the energy efficiency. And then Geoside after testing that is offering similar solution or same solution also to a third party. The focus here is exactly the same in the gas distribution, digitized solution to the customers and using all our experience in gas distribution as well as AI to improve operational efficiency of a third party. You know that the regulation has become stricter, less subsidies. But we still think that there is another way in which we can achieve the energy efficiency target, especially in the business-to-business. That is our first priority. And in the case, we are ready to invest also from our side in order to support industrial customer in achieving less -- in achieving energy efficiency because if you are able to reduce your energy consumption, you become also more competitive. And we are dealing with several different industry demonstrated that this is a path that they, with us, can follow. And we are using our tools, SaveMixer, and all AI application that Geoside is developing. But we are very focused on value. So creating value for our customers and for us, we are not focused just making volumes of that. That is going to be -- has always been our view. Nearly EUR 300 million of investment over the planned period, some small M&A in order to open up our offer. And you see our adjusted revenues by 2030 with an EBITDA of margin that is going to be around 20%. So that makes a completely different energy efficiency company from the other ESCo that are present into the market. Let me just conclude before giving the floor to Pierre La Tour about our environmental target. Last but not least, we have reviewed our targets for 2030. We have increased in the gas distribution the targets. I should remind you that last year, the level of emissions -- the reduction in terms of Scope 1 and 2 emissions was 55%. Now we moved the target to 68%. The net energy consumption was down last year, the target 35% now is 41%, keeping the same net zero target for 2050. And that's why the reason is that thanks to the digitization, but then AI solution, we view that the target can be achieved, and that's the reason why we raised in respect of last year plan. Regarding the water, I mean, still the target that we said last year are very ambitious, reducing by 1/3 the Scope 1 and 2 emission, energy emission as well as leakage rate on the distribution. It's really a very tough ambition, but we are fully confident to reach them backed by our digital solution and AI solution. And finally, we confirm the Scope 3 objective to reduce by 24% by 2030. Now it's time to reveal the numbers. Pierre La Tour will take the floor.

Thank you, Paolo. So good morning, everyone. Let's now move to the final part of the presentation and take a look at the financial targets. So we start with this overview. Now our strategic plan is designed to deliver superior earnings growth, maximizing on our key levers. What are these key levers? The first one is disciplined investment allocation. Second one is operational efficiency. And the third one is balance sheet strength. Now these levers are, of course, very much in line with the previous plan that was presented back in October. And if we now move on to the 3 graphs on the slide, we see on the bottom left, the first one, which represents the 15% increase in the investment plan versus the prior plan. And this will be achieved via a disciplined capital allocation, which is focused on our core gas distribution activities, including tenders. The second is a continued focus on our operational efficiency, which is supported by our technological leadership and optimized asset management on top of incremental synergies from investments. Now the third one, I want to underline this point because I think it's extremely important is our balance sheet strength. Now we have our operations, which include investments and dividend distribution, which are substantially covered by our operating cash flow. Why is this important? Because this allows us to have the necessary financial flexibility to pursue incremental growth opportunities. If we move to the next slide. Here, we have a view of our total RAB. So from EUR 15.7 billion, sorry, to EUR 21.7 billion in 2032, which implies a 4.7% CAGR. In other words, the 2032 RAB target is EUR 1.4 billion higher versus the prior plan. And this reflects additional investment opportunities in tenders and a higher level of organic CapEx. If we were to exclude tenders and M&A opportunities, our RAB is expected to reach approximately EUR 19.4 billion, which implies a CAGR of approximately 3.1%. Finally, on redelivery points, including tenders, the plan reaches EUR 16.1 million. So this is EUR 0.7 million above the previous plan in 2031, of course. Moving on to our EBITDA. Our EBITDA is set to grow strongly. So from EUR 1.88 billion reported in 2025 to around EUR 3.3 billion by 2032, delivering a CAGR of 8.4%. Now the key driver in this growth is, of course, organic. We're planning, we've seen it, significant RAB expansion, faster synergies, a higher level of efficiencies and AI with tenders providing additional contributions. And of course, all of this is managed through a disciplined capital allocation. Now this bridge shows the impact of efficiencies and AI synergies versus 2025. We've seen revenue synergies that are embedded in the overall growth trajectory, whereas, as Paolo pointed out in detail, our total cost synergies are EUR 30 million above the previous plan. Our 2032 EBITDA remains highly resilient. Approximately 88% is linked to our Italian distribution, including tenders, where tenders represent approximately 11% of that 88%. The remaining 12% is, of course, represented by Greece, water and ESCo. And the message here is, of course, that we want to increase diversification while keeping our portfolio firmly anchored to regulatory distribution. Moving from EBITDA to our bottom line. This slide shows that our growth converts directly into a superior net income and EPS trajectory. We're targeting yes, CAGR above 9% through to 2032. This is broadly in line with last year's guidance. Of course, taking into account the same starting point. Net income, you can see is expected to exceed EUR 1 billion as early as 2029. This is a significant milestone and confirms the quality of our growth profile and the operating leverage that is embedded in the plan. So in a nutshell, the message is simple. First, we're targeting EBITDA expansion. Secondly, we are targeting a disciplined financial management. And third, we are targeting synergy delivery. These are the 3 key enablers that will translate into sustained earnings growth and increasing value for our shareholders. Moving on to our credit profile. This remains very robust and resilient while supporting a materially higher investment plan. We're expecting our net debt to RAB to go back in line with our rating agencies' thresholds, and we're expecting to do so in the midterm. This, of course, is a confirmation of last year's plan. And then looking forward, towards the end of the plan, we're planning to reach approximately 61% by 2032. So a continuous deleveraging process. Regarding maturities, the profile is well spread and largely protected by our fixed rate debt. And our financing strategy remains disciplined. So we will maintain a robust liquidity buffer on the one hand, while on the other hand, we will keep fixed rate debt well above 70%. Let's take a look at our financial guidance. So for the current year 2026, we are confirming the guidance that we issued less than 2 months ago. So our adjusted EBITDA between EUR 2.1 billion and 2.15 billion. Our adjusted EBIT between EUR 1.34 billion and EUR 1.37 billion. Adjusted net income between EUR 0.74 billion and EUR 0.76 billion. Our technical CapEx at approximately EUR 1.5 billion. And our net debt in the range of EUR 10.8 billion. If we now move to 2032. Our revenues are set at approximately EUR 4 billion. Our EBITDA is at around EUR 3.3 billion. EBIT at approximately EUR 2.2 billion. Our consolidated RAB at approximately EUR 21.7 billion. And as we said, our leverage to come down to approximately 61%. On top of this, 2029 is already looking better than the guidance provided in the previous strategic plan, and you can see it highlighted in this -- on this page. I now leave the stage to Paolo for our dividend. Thank you.

Thank you, Pierre. So we are at the end of the presentation. Yesterday, during the Board of Directors, we discussed the dividend policy. As you know, it's our practice to review the policy annually. If you look back over the years, we have always supplied a 65% payout, never use the floor, meaning that we were able to always to create an attractive and visible return for our shareholder. And for this reason, the Board of Director yesterday decided to reaffirm the same dividend policy to 2028, 65% payout on adjusted EPS and floor mechanism, knowing that the floor mechanism, we're not going to use it in the future. So we confirm that we will be able to pass the floor mechanism every single year, as we have already demonstrated. Let me just summarize what we have seen. We are [ undisputed ] leader in our sector, in our industry for size and for capability to innovate and introduce new tools, AI first, to create value and to reduce our costs as well as to improve the quality of our services. The plan is built around committing EUR 13 billion of investment, accelerate digitization, expand the regulated asset base. And you heard what Pierre was talking about, the numbers. AI is going to be the core for the months to come. I'm not talking about the years to come because the AI evolution is so quick that we don't talk anymore about years. We talk about months. And it's going to be our backbone for our operation. We are pleased that there is a clear improved tender scenario. I wanted to use the terms, back to the future, remind some nice and famous movies. So finally, this is the first plan, strategic plan, that is the [ number 11, ] in which we are able to say that the tenders will accelerate. If you remember, every single plan before was that the tenders were delayed. And the numbers are proving it. So we are not just inventing, the numbers are proving it. Pier Lorenzo told you how much has been already incorporated in our organic growth and how much we are expecting again in 2026 and 2027. So based on all what I said, we think that we will be able, as always, to create value for our shareholders. This plan is ambitious, especially on the synergy side, but it's fully executable. I mean we have a clear track records of the promise that we made and the promise that we were able to deliver. Thank you very much for your attention, and I open the floor to the question. Thank you.

We have several people there. So I'm just going on order. Please ask -- say your name and company name as usual to register. And James. And then we go in order.

It's James Brand from Deutsche Bank. I have 3 questions, if that's okay. Firstly, on ROSS. Just wondering if you've got any more visibility on what to expect there? I think that's probably not, but I'll ask it anyway because obviously, quite an important topic and what have you incorporated into your plan for ROSS, if anything? And then secondly, just on the tenders, I was wondering whether you could explain a little bit more why they're accelerated. Is that because there's been any kind of change in the rules or the legal framework or there's just less legal challenges? It's just interesting as to why that's happening. And then thirdly, you mentioned that you were deleveraging over your plan initially in line with what the rating agencies required, and then it sounded like maybe further thereafter. Is there a reason for that? Is that because you are more comfortable ending up at a lower level of leverage? Or is it just because going out to 2032, you want to leave some optionality in the balance sheet if there are further investments?

Okay. I'm taking the first question, and the first question it says, no. I mean you responded to your question on visibility in a sense that we are waiting for the regulator, ARERA, to release the first consultation document. Of course, in our plan, we have taken into the consideration as we did in the past some amount of money that should be given back to the system based on our efficiencies. So it's included in the plan, but does not include the full ROSS because we don't know the details. We feel notwithstanding what I said, we feel that the ROSS obligation will be, and you have seen it in all the presentation, will increase our flexibility. And it will increase our ability to act as an industrial operator even more. And if you -- if I may, there is a very limited, very -- ROSS application already. So think about the centralized RAB. Centralized RAB works on the concept of, I will provide you a tariff that is a number of euro per delivery point for everything that is not in RAB. So think about buildings, car fleet, IT. And then you do what you want. And that is where we were able to extract more value because we decided without, let me say, having any constraint to be, oh, it's OpEx or CapEx. It's just receiving a certain amount of money that is a tariff and then the signing, which is the best way to use that money, investment, renting, leasing, IT, and that is what we did. So it's a small example of application in which our ability to use in the best way that money is already demonstrated. So I'm hoping that the ROSS will come into force very soon because then we can extend this approach also to the operation. I'm thinking also the third one, sorry, for Pierre for advancing, but I know that this question was coming. So I'm already -- you raise every time. I mean, first of all, we need to go back under 65%. That is the commitment that we took with rating agency, we want to keep the rating as it is. And then the fact that after we go below 65% means that we will have and we will probably find some other, as in the past, some other opportunity to invest. So I was thinking that you were asking about dividend policy or buyback. So I have anticipated eventually the answer. We are going to use all our financial flexibility to take opportunity. As of today, as you've seen, we have put a limited number on the M&A, but that does not mean that if there are opportunities coming up, we will use that financial flexibility to take this opportunity and to deliver superior return to our shareholders. Tenders, it's Pier Lorenzo Dell'Orco that is looking after every single day what's going on.

Yes. Well, there is not a single, I would say, single reason for this acceleration. I would rather talk about a wide variety of reasons on a case-by-case situation, I would say. First of all, let's start with the consideration that a lot of committing authorities in Italy, which are entitled to release call for tenders, they have been collecting the documents required for the call for tenders for years now. We have committing authorities that have required -- that requested to Italgas for 10 years in a row the documentation, which is needed for releasing a tender while postponing the issue of the tender. Now I mean they have realized that time is now and they have to release the tender after so many years. Then there are some other cases where municipalities are really interested in having a new operator, which is capable of investing, modernizing the grid, extending the grid, making the grid ready for renewable gases, things that are hard to comply if you have smaller operators with an uncertain horizon ahead of them. And so they're pushing to have this call -- these tenders in order to foster a new investment. And then there are also some municipality, which retains the ownership of part of the grids, and they are interested in selling the grid to a new operator, and they can do by law, they can do that in Italy only through a tender and not on a single or a one-on-one negotiation. So they're pushing to have these tenders in order to monetize their stakes in the grid. So it's a wide variety of situations.

Next question.

Bartek Kubicki, Bernstein. If you don't mind, I will also ask 3 questions or touch base on 3 topics. First of all, on M&As. Just going back to history, you had an M&A wave where I think you bought like EUR 200 million or EUR 300 million of assets, small premium to wrap good transactions. And then somehow it disappeared, probably, I don't know, there is no market for M&As. And now you are coming back to this topic. So I wonder whether something has changed, meaning are the smaller players somehow suffering and they are willing to be sold? And also, if you think about the other side, the buyer side, what are the latest reshufflings on the markets? I think about your disposals, I think about other players selling assets whether there is an appetite, you think there will be a higher competition for assets to be bought both in M&A and in tenders from other players? So whatever is the willingness for others to consolidate the market as well. Second of all, I would like to ask about the topic, which I think is quite widely discussed, which is the affordability because obviously, if you put more money into your network, you increase your revenues. And I guess we can all more or less all agree to a scenario, but it's quite difficult to imagine an increasing demand in gas consumption from households. So consequently, this should translate into higher tariffs. So I just wonder, in your mind, what is the outlook for gas distribution tariffs in your perimeter, given the CapEx or investments you would like to do? And the last point, very short on AI.

A lot of questions. Just -- you said 3 questions. Now you're on 4. No, that's okay. You can do it. No problem.

Okay. I mean just on AI very quickly because currently, we are seeing AI impact on OpEx, AI impact on revenues. But whether in the future, we can see AI impact on CapEx and consequently potential CapEx cuts because you will be able to deploy artificial intelligence better?

Okay. First one, something has changed. Let me say that if you remember, the period in which, I mean, you remind very well the grid in which we were able to deploy a number of significant, I think, 11 or 12 M&A transactions, small transactions. That was the time in which that we're debating about tenders. So we were still saying that the tenders were ready to come and so forth. Now the fact that the tenders are coming, numbers are proven, probably somebody sees some -- that is our perception, some small operator, we'll see the opportunity to -- not to wait until the tender, but just to sell the overall company. Remember that when you sell through the tender, you sell assets, you send the people that are working on the assets and you send some -- that's it, finally. So if you still have a company, maybe you think that is the right time to anticipate an EBITDA tender and to sell it before. That is our perception as of today. So the 2 things that tenders is moving and there are opportunities on the M&A, at least in Italy, I think that the 2 things are going together. That is my -- our perception. It's one explanation. It may not be the right one, but I'm just -- we are just bringing you facts. From the buyer side, I think that it depends on geographical. What we have seen when we made the disposal is that we were -- I mean what we dispose is assets that were located in specific geographical area of interest of the buyers. Some others did not attract any interest. So there may be some competition. Maybe yes, not everywhere. That is my answer. Affordability, well, first of all, we have -- let me say, we have shown that the gas demand that we remain stable over the plan period with an increase in civil demand, slight increase in civil demand. So we don't see what maybe you see somewhere else that there is a decrease in the gas demand. What about the tariff? It's true that our revenues are growing, but our perimeter is growing. So it's not that the increase of the revenues are linked to the increase of the perimeter and the increase of the RAB. But let me say on the other side that I have already responded on the previous question. In our plan, it's embedded the amount of cost that will be given back to the system. I just remind you that in the period 2017, 2025, so the end of the regulatory cycle, we gave back more than EUR 300 million that are coming just from cost efficiency. So my -- the point is very clear with our investment plan. First of all, the perimeter is enlarging for tender, for example, through M&A, and we are able to deliver to the system a benefit through better quality but also through less cost. And because of the regulatory system preview that -- and foresee that some of our efficiency should be given back, and we are very happy to give it back, demonstrating that with large operators like us, we are able also to bring benefit to the overall system, not only in terms of quality of the network, flexibility of the network, technology advance and everything else, but also through reducing the cost and giving back this efficiency, part of this efficiency back to the system. On the number 4. Yes, AI is impacting already CapEx when I mentioned, for example, engineering, engineering is CapEx. What does it mean that we are using and we are developing AI agent to start building our engineering activity, at least on the basis. So it will be more efficient, but I would probably say also more quick. So we are going to gain in terms of efficiency as well as we are going to gain in terms of time. So sure, AI, I mean you see impact directly on the cost but there are also activities that we are currently developing on the CapEx side. Engineering is the first area by far.

Julius Nickelsen here from Bank of America. Two questions from me. I mean, so you basically upgraded the synergies and cost efficiencies target and front-loaded some of the tender assumptions. I get the 2029 net income guidance is reaffirmed to above EUR 1 billion. So I'm just wondering if you could maybe quantify that a little bit like -- because I would assume that the number that you have in your budget is higher than the last plan, but just as higher than EUR 1 billion. And then my second question is on the tender chart that is in your presentation, just in terms of how to read it. I think you said previously that in 2026, you would expect around 12 tenders to come online, a few imminent, a few more later in the year. Are these 12 all here counted in 2026? And can we assume then that 2027 will be more? Or is the way the chart has shown that a few have slipped into 2027, and that's why 2027 is higher? Just trying to understand the phasing a little bit better.

Well, if you can just repeat, I lost your first question. I did not, honestly, I did not understand your question.

Yes. No worries. I was just curious why you only reiterated the 2029 net income guidance.

Because we don't want to give you the right number. Very simple, as simple as that. So it is the 2029, the net income is higher than the 2029 net income of last year or last -- but we didn't want to get into this number. So we just say, it's going to be above EUR 1 billion. Then it's up to your fantasy to guess how much is tenders, scheduling.

Yes, some figures, just to be clear on that. So as of today, we have been awarded from the very start of the tender process, 11 tenders. That is the figure that has been incorporated in our organic plan presented today.

In the organic growth. So it's not in the tenders part.

Organic growth. Yes, 11. It's 3 more compared to the previous plan. Last year, we said 8. Now this 8 has increased up to 11. Then concerning new tenders to come, we have increased our forecast on near term, which means that we have been facing new releases of tenders that were not public last year. So all in all, we plan around 2 tenders to be awarded to Italgas by the end of this year.

By probability, let's say.

Yes, very, very high. I would say it's formality, let's say. And on top of that, I would say, 9 to 10, maybe 10 tenders next year, which are tenders that have already been published, and we are working on that.

For which the date presentation, date is '26.

Yes, it's '26. Then we have some more expectation of tenders to be published in the second half of 2026 with offers to be presented in 2027, and then awarding to take place 6 to 12 months later in 2028, and this builds up the new plan. So there is an acceleration all in all.

It's Dominic Nash here from Barclays. And 3 questions, please. The first one is can you provide some color and some assumptions around regulatory returns underpinning your EPS and EBITDA growth targets, particularly post 2028? Like how sensitive is your EPS growth numbers if the returns were to be reduced? On that as well, your [ 13 billion ] CapEx program, how much flexibility would you have around that? If returns were too low, could you dial down the investment into your system? And what assumptions have you got for your sharing between customers and from your efficiency between shareholders and customers? And I know I said 3 questions, but final one. You piqued my interest at the start about the carbon pricing. I think Italy has been potentially at the forefront of maybe re-debating the carbon policy. What probability do you put on a material change in the carbon pricing going forward, please?

Okay. Maybe I will ask you to clarify some of the questions. What we have assumed, as always, we didn't take any position about changes in the WACC of the plan, as always. So that is our policy. We run internally sensitivities about if the WACC is going up or down. So we know exactly how the plan eventually will evolve in case the WACC is going up or down. So we know exactly which is the impact of changes in the WACC. But as usual, we don't take a position on that. We are in the middle of the observation period. So we don't know yet what is going to happen by the end of September. If you can rephrase for me the second question, it would be nice, so I can respond more.

Yes, the second question is one that if they reduce the returns going out, what flexibility have you got to reduce the investment in the system?

Well, I think there are -- there's always flexibility in the CapEx side in a sense that is the plan that we present to you is normally the base plan. The basic, the one -- the most -- the one that give the highest probability, but we have also flexibility to either to increase or to reduce the CapEx plan depending which is the situation. So honestly, I tell you, there are flexibility. So there's no doubt about that. But in both direction, if we need, we can grow it. We were talking about before the financial flexibility. If we need, we can grow it. If we feel that it's important to reduce, we will do it. So we will adjust our plan accordingly to the point. Regarding the -- if I'm correct, the sharing of the efficiency, right, that is what your question. Up to end of 2025, it was very clear. We had to give back all our efficiency and the EUR 300 million, the more -- the above EUR 300 million that we gave back to the system is the number. And that is coming through, if you remember, 50% given back in 2020, and then later on with the X-factor, we have embedded a sort of X-factor inside our plan to consider that there will be something after -- in the years to come. Of course, we expect to have the ROSS system in place. We will see how the efficiency sharing will be shaped. But in the meantime, just to be on the safe side, we have embedded such, let me say, so called X-factor inside our plan. That is consistent with the past. The last question, Pier Lorenzo also, considering he's being the President of Proxigas, can give you more flavor on that.

Well, first of all, let's consider that Italy is a member state of EU. So we are basically not in position of setting an autonomous scheme. The scheme we have is ETS, emission trading scheme, and soon to come, the so-called ETS2, the emission to the extension of the scheme also to end users like families, like vehicles, like industries. And on those 2 items, the Italian government has opened a discussion at the European level. They have issued recently a decree, which we call the Energy Decree, introducing new measures in order to reduce the -- basically, the bill, the bills paid by enterprises and families. And among these measures, they have conceived some measures in order to mitigate the effect of ETS on the price building of kilowatt hour, of the electric kilowatt hour, which basically translates it into stabilizing the impact of ETS on the cost of electricity in order to reduce the price of electricity, which in Italy is produced for more than 50% with natural gas. The decree has to be cleared by the European Commission. So there is an ongoing debate table open between the government, the Italian government on one side and Brussels on the other side in order to approve for final clearing of this decree, so we're waiting for that. And then they will have to approve the national law enhancing the ETS2 scheme. Again, some piece of news will be possible for that in order to mitigate the impact on families consuming natural gas, but no figures on that.

Javier?

Very difficult to make any question after my talented colleagues, but I will try. Three on my side as well. The first one is on the philosophy of the business plan. So my impression is that the company is maintaining all optionality within the business plan. So it's a long-dated business plan that goes until 2032. Dividend policy just goes up to 2028. And the impression that I get is that the company does see opportunities to deploy capital. So deploy capital in new tenders, maybe M&A. I was interested in one of your comments mentioning that there are opportunities maybe in other infrastructures in Italy and elsewhere. So on that philosophy, what Italgas has done with the gas solution network is replicable to plenty of other network. So can you set us with us your views on what could be next for Italgas, deploying your talent into different infrastructure, where and how? That would be the first question. The second question is on your extraction of synergies processed in the companies that you have bought. I guess that's one of the reasons why there is an acceleration on the tenders is that the system see the benefits stemming from the acquisition of 2i Rete Gas, more deployment of capital, more acceleration on the benefits for all the stakeholders and so on and so forth. So I think that it is pretty evident that, that benefit will continue. So the question for you is where we are in the business plan reaching the level of efficiency of the previous Italgas, 2i Rete Gas and then at the Greek activities? And the third question is, if you can, that is on the business plan granularity. If you can be a little bit more specific on assumptions related to the allowed return on RAB, I guess, is flat through the business plan. Presentation then on the deflator assumption that you have assumed. And also on that X-factor, the assumption that X-factor that you have embedded into your numbers.

If I may summarize the first question is that, well, the dividend policy ending in 2028 is because in 2028, there will be -- the Board is going to expire. So we don't want to commit for another -- for the Board. So that is just consistent with the period, the time frame in which the Board has been appointed. Generally, as an answer, we see this opportunity, and we have demonstrated that we can deploy capital in other infrastructure or in other geographical area, and we can bring the same approach that we are using in Italgas and we can bring value. Let me make just a very quick example. Greece, that is not close to Italy, it's a different language. We were able in a much shorter time to have the same journey that we had in Italy. And thanks to the fact that we are able to immediately learn from past experience and apply for the future. So Greece's tender was able to do it in 3 years' time, what we were able to do as the first time, it took us 7 years. So that is a way in which we learn from our mistakes and we adjust our behavior, our trajectory, our journey in order that we're much more effective. The water activities, another example. We are using all our gas capability to increase and to improve the result of the water activity, and we are start seeing the result, less leakages, more a portion of the network that is fully digitized. Through digitization, we are able to reduce the leak, or even the project capability. I mean in Sicily, we were able in 6 months -- 6, 8 months to build 3 new desalination plan that was never achieved before. So we put at disposal in that case of Siciliacque where our ability, our project management ability to fulfill and to tackle with the task. So as Pier Lorenzo was explaining to you, we are looking around also in Italy, also outside Italy with the 3 lines that we tell you. First of all, macroeconomic situation that is -- look nice. So European Union, generally speaking, is through everywhere, more or less, more important, a fair regulation, fair and stable regulation. The third one, if we can have a clear industrial role. As Pier Lorenzo was saying, we are not interested in financial position. We are interested in -- because I'm going back to the question because we are able to bring value, to bring expertise, to bring competence to any new acquisition. The second one is regarding synergies. We cannot tell you now that since July 1, 2i Rete Gas is completely merging with Italgas already. We cannot tell you which is the level. The 2 companies are not distinguish -- you cannot distinguish them anymore. What we can say is that based on the detailed work that we did at the beginning of the integration, that's the reason why we were able to progress forward in our efficiency because once that going through the activity one by one to be implemented in order to create value, to reduce our cost, we find other opportunity, mainly driven by AI. Greece, as I told you, is, if you remember, a couple of plan ago, we told you our Greek ambition that should be close to our result in terms of efficiency, even if it's smaller. I think we are there already. So we have already reached that level. But I think on the same time, the bar in Italgas has raised. So Greece has continued to have some gap to be filled, but that's normal because our ambition is going after. Then I lost the fourth question.

Yes, he was asking about the WACC, the X-factor.

Anna Maria, you can respond.

Yes. So as Paolo said before, for the WACC, we have maintained the same WACC across the plan period. On the deflator, as you see in the slide, we have around 2% on average. And the X-factor, you listen to his comment before, we don't -- it's something similar to the past, but we haven't provided the number.

We have experienced it, correct. So I didn't know the number of deflator, right? The average is 2%, yes.

So next question, Francesco from Akros.

Francesco Sala, Banca Akros. Just to complete the picture on the assumptions, if you can share with us your assumption on the cost of debt, both, let's say, in the next few years and throughout the entire plan. And secondly, as regards to the water business, the growth is exceptional. So I wonder whether you can share with us the main drivers behind this growth behind obviously the capital deployment? And secondly, also on the water business, it seems to me that based on previous calls that you would be happy to invest more or, let's say, grow externally in this area, but the opportunities are not so easy to catch. So I wonder whether the scenario has changed or it's remained the way it was a couple of years ago. And those are my 2 questions.

Okay. Thank you. So regarding our cost of debt. So what we are foreseeing is for it to gradually increase slightly and basically end up at approximately 3.1% -- just over 3% towards the end of the plan. Why? This is because we've projected, of course, an interest rate curve. And according to our projections and to discussions that we've been having with certain financial institutions, we're foreseeing an increase in reference interest rates and subsequently a gradual decrease starting in mid-2027. And so this brings our overall cost of debt to approximately just over 3%.

Remember that some of the bonds were issued when there was a different completely period in which we were looking yesterday, there is one bond that was issued with 0 interest rates. So it's difficult to lower the 0 interest rate. And there are many others that were issued, 1.6, 1.7. So that's -- I mean, the interest rate where we are today, it's clear that our interest expenses will slightly increase over the plan period as much as we are going to replace and re-issue new bonds. Regarding the water, I would not say it's -- thank you for the exceptional increase, but it's not -- I mean, we are not magicians. It's just that we are consolidating 2 of the companies that as of today are not consolidated, so equity. So that is the way. So when you consolidate, RABs come up, EBITDA comes up, then net income is always the same, except for the efficiency that we are able to bring. So thank you for the exceptional, but it's, again. M&A in water, you responded to yourself. There's no opportunity, unfortunately, because that infrastructure need -- the Italian water infrastructure needs a lot of investment and need a lot of innovation, especially, I would say. So they need 2 step forward, investment and innovation. But that is what we are applying to our current assets, that is the perimeter that we have. We didn't see any other opportunity as of today. Hopefully, the situation may change in the future.

Next question, Ella.

Ella Walker-Hunt here from Citi. I have 2 questions. My first question, you've spoken a bit about balance sheet flexibility and optionality you have there. Could you maybe rank the different levers that you have in terms of M&A, higher dividend, share buyback, how you would rank those different optionalities? And then my second question is to do with M&A. Is there any real sizable M&A that you can do that's feasible, whether that be in Italy or outside of Italy?

Well, I thought I had already responded on the first question, say, we don't have any plan to dividend increase of buyback. I think the best way to employ our flexibility is to find new investment for creating growth for the company as well as creating value for our shareholders. So the flexibility that we are creating in our balance sheet is to be able to capture opportunity in the market. Imagine that if that discussion would be done differently years ago, we would not be able -- we would not have been able to capture the 2i Rete Gas opportunity. Thanks to the flexibility that we created over time, now buyback, dividend, 65%, that is the right balance. We were able to capture the 2i Rete Gas. I mean that's the evidence and the answer that our policy is we want to invest in the company to grow, and that brings value to our shareholders. M&A, we, as I said before, we are looking around, not only in Italy, but also in Europe. And if anything will come out, we will look carefully. The 3 lens that I discussed before are still there. Are there any sizable opportunity? As of today, we don't know. If you have any idea, please bring any idea, please bring that idea to us. We will be very happy. But that is what it is. I mean we see that there are some -- maybe in the future, some movement about opportunity in Europe, but let's see where, when and if it makes sense for us.

Next question.

Aleksandra Arsova, Equita. Some follow-up questions vis-a-vis what's already asked. So again, maybe on financial flexibility, just to check, do you include in the current plan or would you consider hybrid instruments, hybrid bonds over the coming years? The second one, again on M&A and capital allocation, all right, the fact that you prefer to invest in M&A or RAB eligible CapEx. But let's say that you don't find an opportunity that ticks all the boxes for your stringent criteria, would you consider in that case giving back to shareholders at least this potential EUR 500 million in M&A you expect in the plan? And then one on concessions. Maybe an update if you have any update on the Rome concession. So if your current plan envisages that you are awarded or keep, let's say, their own concession. And a very final one on inflation, again, the things we have seen a reacceleration in inflation. So if you can see -- if you think that this could, in some way, put some pressure on your cost efficiencies targets? And on the other hand, if the current average 2% deflator you're including in your plan is [ above ] the floor. And if maybe we -- you expect to see ARERA coming up with a higher deflator as it was the case a couple of years ago?

First question, no, we don't, as of today, we don't have any plan to issue any hybrid bonds. Second question is, I mean, it would be easy for me to answer to say, yes, if we have the flexibility, we'll give it back to the shareholder. I think it's much more challenging for the management to find new industrial opportunity because that creates value for the company and for the shareholder. And we have demonstrated, and this question has been raised every single capital markets, every single meeting with the investors. And the answer has been always the same, and it's not just a matter of answer. Reality demonstrate that we were able to find different investment opportunity. I list them at the beginning of the presentation. At the beginning, the tenders were slowing down. It was reminded by one of your colleagues. We had like 11 or 12 M&A acquisition. Then we started to invest in the energy efficiency. Then we look at the world. Then Greece come up and we participate to the tender. Then there was the 2i Rete Gas opportunity. So I mean, being agile, flexible financially and operational, it's a great value in which you can take opportunity that come out. So my answer is always the same. I prefer to allocate the flexibility in order to grow the company. That will bring also value to the shareholder, as we demonstrated over the years. Regarding Roma concession, there is no news. I mean we provided to Roma, to community Roma all the information they needed to launch the tenders. Of course, we are ready to participate with our largest tender by far, largest concession by far. But there is no -- we don't know. We have, I think, planned for -- to open the tender in '27 and the award in '28 in our plan. Inflation may increase. I think our synergies plan is probably the best remedies to tackle the inflation because we demonstrated that we can -- reviewing our processes, our industrial processes, we are able to reduce the cost. So we are building in our body the best resilient antivirus, if you want to call it, if the virus is the inflation. So we are ready to tackle any inflation that may come. Of course, we'll say depending. We don't see -- we see the inflation has been increased by -- driven by energy costs mainly. So the energy costs will go down, we'll probably experience also inflation later to go down. Deflator is extremely linked. Remember that the step-up made by the regulator in the past is because they changed the preference or the indicator, the safety -- whatever it was before. Now it's a different one. It's fully linked to the inflation. So of course, if the inflation is going up, also the deflator is going up. They are strictly linked with only a time lag of difference. So we don't expect any further step up. If the inflation is going up, probably later on also the deflator will go up. But the 2 indexes are extremely linked.

Other questions? Yes.

Emanuele Oggioni, Kepler Cheuvreux. Thank you for the presentation. Basically, everything has been already asked so far. So just a consideration on your -- you are probably the most vocal management in the sector in Italy, at least on the AI application, the AI opportunity, et cetera. You are, for sure, the first mover, et cetera. So first of all, congratulations. But then the question and from investors is also why, what was the starting point, why you are building this basically competitive advantage compared with your peers in the [indiscernible] distribution, but also overall in the regulated networks? So what are the main drivers and the starting point, basically?

Very good question. Honestly, that is -- the reason goes back in the past. I think that in order to get the most of AI today, you need to have 2 things: a truly digital platform and a very good quality of data. If you don't have these 2, well, you can talk about AI. I've been in several conferences where everybody were talking AI, everybody were talking use of AI. But then when you dig a little bit from the surface, you find below, there is very little, I agree with you. The fact that we are where we are today, and we are able to leverage the AI in such a massive way is because go back what we have done. We went to cloud, public cloud in 2018. So we are talking about 8 years ago. Today, it's no brain to go to cloud. 8 years ago was vision. And since then, we build our IT, let me say, governance based on leveraging the cloud availability. The reason why we were able to merge with 2i Rete Gas in 90 days is thanks to our IT approach and the cloud availability and to the fact that we, since then, we clean our application map and more important, we clean the data every single year, right? I always use the imagination to say, we put the data several times, our data several times in a washing machine, and the data every time came more cleaner than before. And in the meantime, the digitization brought us billions of data. So now we have huge data lake. Data inside the data lake have very good quality, are clean, and we have a digital approach that this spread -- is a part of the culture, is spread throughout the company as part of the culture of the company. And that's the reason why we are ready to take advantage of AI because it's the natural frontier for us because we have already done all the digital part. So we are there and we are able to make the same effort. One clear example, Digital Factory. Digital Factory has been established back 8 years ago in 2018, and still working, going through improving the processes, making the processes simple, the application, digital and everything. Now we are using the same agile approach for developing AI application, AI agent. We are using, we call digital AI room. But instead of the discipline that we gave -- that we imposed to us on the digital room for months to deliver an application, it's the same discipline that we are using now to deliver agentic AI with a big difference that is not going to be 4 months anymore. It's going to be 4 weeks. So we are continuously disciplined in developing new technology. And that is the great advantage. That's the reason why AI is our other backbone. That is the reason why we are building AI on a strong foundation that is the digital platform that we developed as well as the data, the good quality of the data. Those are the 2 pillars. If you don't have them, you do some [ POC, ] some pilot, something, you do the showcase. But at the end of the day, you are not able to really change the operational behavior. AI will change, is changing our operational behavior on a day-by-day basis.

Is there other questions? Yes. No. Maybe operator, are there questions from the conference call? For those that are in the conference call who wants to register, star one.

At the moment, we don't have any questions from the conference call.

So everyone, a lot of questions. So I guess, thank you all.

Thank you very much for the participation.

For the analysts, of course, as IR team, we are available. And thank you, everyone, for participating.