Italgas

Earnings Release • Oct 25, 2023

9M 2023 Results

Milan 25.10.2023

9M 2023 Results

key highlights Trends in line with previous quarters - Greece consolidation and ESCo drive growth In Italian distribution, incremental RAB mitigates impact of disposals

9M 2023 Results key highlights

Operating cashflow decline driven mainly by Superbonus receivables, explaining also Net Debt growth. Netting such impact, operating cashflow increased strongly, despite lower volumes. Capex led by Greece contribution.

Water, first major acquisition done

Closed acquisition of Veolia's Italian water concessions business unit Price partially linked to performance through earn out mechanism €115mn

EQUITY FOR the NEW ASSETS

~€140mn ASSIGNED FUNDS

Already assigned National Recovery and Resilience Plan funds to be spent by 2026

~€300mn Organic Gross CAPEX

100% of the 3 operating companies in 2024-29

~€55mn EBITDA Adj 22

100% of the 3 operating companies

Digital transformation for Water Business

Italgas to play an industrial role leveraging on its own expertise and project management capabilities. Primary focus level of leaks. Efficiencies to improve operating cashflow generation.

Targeted field operations DMAs and smart meters Data acquisition Reporting Network operational improvement Leak detection and repair Investments prioritization Network assets IoT-ization Monitoring & Analytics

STRATEGIC RATIONALE

• ü Similarities with Italgas core gas distribution business
• ü Underperforming assets with strong need of turnaround
• ü Best practice sharing and digital transformation opportunity
• ü Actionable operating synergies e.g. overlap of gas and water in Latina
• ü Support the National Recovery and Resilience Plan

6

Speaking notes page numbers da aggiornare da

Water, key financials

	100% of water assets	NEPTA
mln ì € mln GEOSIDE € , ,
Revenues 2022	329.5	202.6
Adj EBITDA 2022	53.4	36.2
Net Income 2022	15.2	8.1
RAB*+ tariff adj	412.0	273.9
Adjusted Net Debt 2022	120.6	69.0

Note: Reveneus, Adjusted EBITDA, Assets and Net Debt 100% of Siciliacque, Italgas existing water assets and pro-quota of Acqualatina e Acqua Campania; Net Income pro quota; (*) includes capex to 31/12/2022. Resolution 422/23 potential impacts not included

9M 2023 Results ESG GHG emissions

- 76,025 km inspected in Italy (+14.9%) and 5,799 km inspected in Greece

- Gas leaked / km surveyed: Italy 62.3 smc/km (-14.1%), Greece 94.8 smc/km

Operating expenses +52.3% vs 9M 2022

EBITDA +15.9% vs 9M 2022

€mn

Italy distribution

97% of the total

EBITDA

D&A

EBIT

EBIT

9M 2023 Results

9M 2023 Change 9M 2022 adjusted*

P&L, € mln

Total Revenues	1,087.0	1,369.8	282.8
Operating expenses	- 301.6	- 459.3	- 157.7
EBITDA	785.4	910.5	125.1	15 9% +
Depreciation & amortisation	- 330.5	- 373.8	- 43.3
EBIT	454.9	536.7	81.8	18 0% +
Net interest income (expenses)	- 41.1	- 72.0	- 30.9
Net income from associates*	0.7	- 0.6	- 1.3
EBT*	414.5	464.1	49.6
Income taxes	- 112.4	- 124.8	- 12.4
NET PROFIT before minorities*	302.1	339.3	37.2
Minorities	- 16.2	- 22.6	- 6.4
NET PROFIT after minorities*	285.9	316.7	30.8	10 8% +

9M 2023 Results

Geoside focus 9M 2022 9M 2023

Change

GEOSIDE, € mln GEOSIDE, € mln

Total Revenues	91.6	263.7	172.1
Operating expenses	- 74.8	- 209.3	- 134.5
EBITDA	16.8	54.4	37.6
Depreciation & amortisation	- 2.2	- 2.5	- 0.3
EBIT	14.6	51.9	37.3
EBITDA Margin	18%	21%

9M 2023 Results debt structure

Liquidity currently >0.4bn to cover short term outflows and to keep an adequate buffer going forward

Average cost of debt ~1.4% in 9M 2023

Net Debt €6,492mn with IFRS 16 at 9M

30/09/2023 Gross Debt Structure¹

9M 2023 Results final remarks

9M results confirm underlying trends of 1H - with an outstanding growth

Strong Italian distribution fundamentals, led by RAB growth, despite negative impact of Naples disposal

Greece and Geoside significant contributors

Solid distribution cashflow generation, despite lower volumes, offset by Geoside's cash absorption. Geoside to be cash positive from next year

Key strategic achievements - head of initial targets

Acquisition of Veolia's water business unit in October

Greek DSOs (1) completed re-organization DEPA Infra and DSOs, (2) three DSO into a single DSO at the end of September; (3) migrated to Cloud; (4) Athens' operations moved in a single building

Guidance and plan targets

Confirm the guidance for 20231

Gas distribution WACC in Italy to increase by 80-90bps next year, driving material earnings growth

In acceleration to reach mid-term Strategic Plan objectives ahead of schedule

9M 2023 Results

REVENUES, € mln

Regulated revenues Italy distribution	954.7	957.4	2.7
Distribution	885.4	898.2	12.8
Tariff contribution for meters replacement	1.4	3.4	2.0
Other distribution revenues	67.9	55.9	- 12.0
Other revenues	119.5	282.0	162.5
DEPA Infrastructure	12.9	130.4	117.5
TOTAL REVENUES	1,087.0	1,369.8	282.8

9M 2023 Results Balance sheet

€ mln

Net invested capital	8,390.7	8,974.0	583.3
Fixed capital	8,120.6	8,312.4	191.8
Tangible fixed assets	379.0	385.0	6.0
Net intangible fixed assets	7,975.5	8,128.3	152.8
Net payables investments	- 303.5	- 270.5	33.0
Equity-accounted and other investments	69.6	69.6	-
Net working capital	340.0	715.2	375.2
Provisions for employee benefits	- 69.9	- 67.7	2.2
Assets held for sale and directly related liabilities	-	14.1	14.1
Net financial debt	6,000.1	6,492.3	492.2
Financial debt for operating leases (IFRS 16)	72.0	80.5	8.5
Net financial debt ex operating leases	5,928.1	6,411.8	483.7
Shareholders' equity	2,390.6	2,481.7	91.1

3Q 2023 Results

Change 3Q 2022 3Q 2023

P&L, € mln

Total Revenues	379.6	438.0	58.4
Operating expenses	- 107.5	- 134.5	- 27.0
EBITDA	272.1	303.5	31.4
Depreciation & amortisation	- 113.2	- 125.6	- 12.4
EBIT	158.9	177.9	19.0
Net interest income (expenses)	- 14.8	- 27.4	- 12.6
Net income from associates	0.2	- 0.3	- 0.5
EBT	144.3	150.2	5.9
Income taxes	- 37.3	- 39.6	- 2.3
NET PROFIT before minorities	107.0	110.6	3.6
Minorities	- 6.8	- 7.1	- 0.3
NET PROFIT after minorities	100.2	103.5	3.3

9M 2023 Results quarters

3Q 2023 4Q 2023 1Q 2023 2Q 2023

P&L, € mln

Total Revenues	479.9	451.9	438.0
Operating expenses	- 182.7	- 142.1	- 134.5
EBITDA	297.2	309.8	303.5
Depreciation & amortisation	- 124.7	- 123.5	- 125.6
EBIT	172.5	186.3	177.9
Net interest income (expenses)	- 19.9	- 24.7	- 27.4
Net income from associates	0.4	- 0.7	- 0.3
EBT	153.0	160.9	150.2
Income taxes	- 41.1	- 44.1	- 39.6
NET PROFIT before minorities	111.9	116.8	110.6
Minorities	- 8.3	- 7.2	- 7.1
NET PROFIT after minorities	103.6	109.6	103.5

9M 2023 Results main physical data

	OPERATING HIGHLIGHTS (TOTAL)	OF WHICH ITALY OF WHICH GREECE with affiliates
Network length	81,760.5 km	73,991.5 km		7,769.0 km
Municipalities	2,050	1,905		145
Active Redelivery Points	7.96 mn	7.37 mn		0.59 mn

Vision, Purpose e Mission

To be a leading figure in the world of energy, driving its sustainable evolution and innovating each day to improve people's quality of life.

Pioneers by passion and builders by calling, we bring all our energy to accelerate the ecological transition. We do it for us. We do it for everyone.

We have guaranteed efficient, safe and excellent energy services to the community for over 180 years. We favour the energy transition, creating the networks of the future and promoting innovative, sustainable solutions. We take care of local communities. We fuel positive, productive relationships with all of our stakeholders: individuals, companies, suppliers and shareholders. We enter new markets where we can apply our distinctive expertise. We promote the growth of individuals and develop talent, creating inclusive, stimulating work environments

Disclaimer

Italgas's Manager, Gianfranco Maria Amoroso, in his position as manager responsible for the preparation of financial reports, certifies pursuant to paragraph 2, article 154-bis of the Legislative Decree n. 58/1998, that data and information disclosures herewith set forth correspond to the company's evidence and accounting books and entries. This presentation contains forward-looking statements regarding future events and the future results of Italgas that are based on current expectations, estimates, forecasts, and projections about the industries in which Italgas operates and the beliefs and assumptions of the management of Italgas. In particular, among other statements, certain statements with regard to management objectives, trends in results of operations, margins, costs, return on equity, risk management are forward-looking in nature. Words such as 'expects', 'anticipates', 'targets', 'goals', 'projects', 'intends', 'plans', 'believes', 'seeks', 'estimates', variations of such words, and similar expressions are intended to identiFY such forward-looking statements. These forward-looking statements are only predictions and are subject to risks, uncertainties, and assumptions that are difficult to predict because they relate to events and depend on circumstances that will occur in the future. Therefore, Italgas's actual results may differ materially and adversely from those expressed or implied in any forward-looking statements. Factors that might cause or contribute to such differences include, but are not limited to, economic conditions globally, political, economic and regulatory developments in Italy and internationally. Any forward-looking statements made by or on behalf of Italgas speak only as of the date they are made. Italgas does not undertake to update forwardlooking statements to reflect any changes in Italgas's expectations with regard thereto or any changes in events, conditions or circumstances on which any such statement is based. The reader should, however, consult any further disclosures Italgas may make in documents it files with the Italian Securities and Exchange Commission and with the Italian Stock Exchange.

Investor.relations@italgas.it

Anna Maria Scaglia