Expression of interest for the acquisition of the gas sales business unit of Sidigas.com
In January 2020 SI.DI.GAS – Società Irpina DIstribuzione GAS S.p.A. accepted the binding manifestation of interest presented by Iren regarding the acquisition of a business unit of its subsidiary Sidigas.com S.r.l. related to natural gas sales, with a portfolio of approximately 55 thousand customers (mainly in retail), distributed over 78 Municipalities mainly in the Province of Avellino. The transaction is subject to the occurrence of certain conditions precedent.
Completion of the disposal of the stake in OLT Offshore LNG Toscana
To complete the transaction in the previous financial year, and following receipt of the authorisations from the competent authorities, on 26 February 2020 the Group transferred to SNAM 49.07% of OLT Offshore LNG Toscana. The selling price of the equity investment, and the remaining portion of the shareholders’ loan, amounted to a total of 332 million euro, excluding any future upward adjustments on fulfilment of certain conditions.
Agreement for the expansion of the Turbigo power plant
On 3 March 2020 Iren signed with Ansaldo Energia a contract worth 180 million euro for the final design, supply and construction of a new, gas‐powered combined‐cycle electricity generation plant, and of the related auxiliary works, which will make it possible to increase the total installed capacity of the Turbigo site from the current 850 MW to approximately 1,280 MW.
In the Capacity Market auction, the expansion of the power station enabled recognition of the contribution for fifteen years starting from 2022, the year in which the start of the production stage is planned, for a total of 117 million euro. The expansion of Turbigo will make the plant one of those which, operating at high flexibility and in a way complementary to renewable sources, are essential for sustaining the adequacy of the Italian electricity production system.
Purchases of treasury shares
On 29 April, the Shareholders' Meeting authorized the Board of Directors to purchase and dispose of treasury shares for eighteen months from that date, at the same time revoking, for the unexecuted portion, the previous authorization to purchase deliberated on 5 April 2019. The Board of Directors may purchase and dispose of a maximum of 65,000,000 shares, equal to 5% of the share capital, in accordance with the applicable regulations.
On 12 May, the Board of Directors, authorizing the CEO to carry out the purchase program, set the limit at 26,000,000 shares, taking into account the shares already in the portfolio. As at 31 December 2020, Iren S.p.A. held on the whole 15,868,004 treasury shares, equal to 1.22% of the share capital.
Acquisition of the district heating business unit from SEI Energia
On 23 April 2020, Iren Energia and Fineurop Investment Opportunities S.p.A., as the assumptor relative to the SEI Energia arrangement procedure, signed the contract to acquire the district heating business unit from SEI, already managed through a lease by Iren Energia since September 2018.
The branch includes the network and the heat distribution plants in the municipalities of Rivoli and Collegno in the Turin metropolitan belt and 49% of the company NOVE, which manages the service in the municipality of Grugliasco, for a total connected volume of 5.2 million cubic metres. Total thermal energy distributed is around 150 GWht/year. The consideration paid by Iren for the acquisition of the business was € 24.4 million.
Acquisition of the SEI Energia district heating business is done with the prospect of integrating with the existing grid in the metropolitan area of the municipality of Turin, taking advantage of heat produced by Group cogeneration and waste to energy plants.
Acquisition of seven property complexes
At the end of April, Iren S.p.A. bought back from REAM SGR S.p.A. seven real estate complexes for management and operational support use located in Turin, Genoa, Parma and Reggio Emilia, which were already the subject of lease contracts falling within the scope of application of the international accounting standard IFRS 16 - Leases. The total value of the transaction was 97 million Euro, with zero impact on net financial debt.
Shareholders’ Meeting
On 29 May 2020, the Ordinary Shareholders' Meeting approved the Company's Financial Statements for 2019 and the Report on Operations, and resolved to distribute a dividend of € 0.0925 per share, confirming what had been proposed by the Board of Directors. The dividend was paid starting from 24 June 2020 (coupon detachment 22 June 2020 and record date 23 June 2020).
The Shareholders’ Meeting also:
- approved the first section (“2020 remuneration policy”) of the Report on the 2020 remuneration policy and on fees paid for financial year 2019;
- made a favourable consultation vote on the second section (“Fees paid for financial year 2019”) of the same Report.
Execution of an 80 million Euro loan for sustainable investments in the water sector
On 6 May 2020, Iren S.p.A. signed, with the Council of Europe Development Bank (CEB) a Public Finance Facility (PPF) in the amount of 80 million euro, usable in multiple tranches and with a duration of 16 years, intended to finance a significant part of the investment plan for the water infrastructure in the provinces of Genoa and Parma, in particular with regards to the expansion and improvement of the aqueduct and sewer network and water treatment systems.
Agreement with Engie to extend district heating in Turin
On 15 May 2020, Iren Energia signed an agreement with Engie to develop district heating in the north-east of Turin. This collaboration sees Engie producing thermal energy from its cogeneration plant in Leinì (north of the metropolitan area), transported through a feeder (to be built by Engie) to the Turin border and from there to the area covered by Iren Energia’s heat distribution network.
Through this agreement, Iren Energia will extend the district heating network in the north-east of the city to serve potential connected volumes of 17 million cubic meters by 2024. The investments planned by Iren to extend the network (pipes, accumulators and substations) amount to 90 million euro.
The significant increase in the number of users served by the district heating service will thus be achieved without having to build new production sites in the metropolitan area.
500 million euro bond issued
At the end of June 2020, Iren S.p.A. completed the issuance of a ten-year Bond, reserved for institutional investors, for a total of € 500 million, under the € 4 billion Euro Medium Term Notes (EMTN) Programme.
The Notes, which have a minimum unit denomination of 100,000 euro and mature on 1 July 2030, pay a gross yearly interest of 1% and were placed at an issue price of 98.144. The effective rate of return at maturity is 1.198%, corresponding to a yield of 135 basis points above the 10-year mid-swap rate.
Settlement took place on 1 July, the date on which the Bond was listed on the regulated market of the Irish Stock Exchange (Euronext Dublin).
Acquisition of control of Nord Ovest Servizi and Asti Energia e Calore
On 21 July 2020, the Group acquired from ASTA S.p.A. (a Gavio Group company), through IRETI and AMIAT, 50% of the shares of Nord Ovest Servizi S.p.A. (NOS) thus increasing to 75% and, through Iren Energia, 28% of Asti Energia e Calore S.p.A. (AEC), standing at 62%. The total outlay amounts to 6.5 million euro.
In particular, NOS holds 45% of the share capital of Asti Servizi Pubblici S.p.A. (ASP), a company controlled by the Municipality of Asti that operates in the integrated water cycle, in the waste management and transport sectors in the province, which in turn owns the remaining 38% of AEC.
The transaction is part of the territorial development strategy of the Group, which is already present in the area with its subsidiary GAIA, with particular reference to the water and environmental sectors and the promotion of energy streamlining and e-mobility projects.
Acquisition of I.Blu and partnership with Idealservice in environmental services.
Following the preliminary agreement signed at the end of January and considering that all the suspensive conditions were met, on 12 August 2020, Iren Ambiente completed the purchase of 80% of the share capital of I.Blu from Idealservice for € 16 million. I.Blu operates:
- in the selection of plastic waste to be sent for recovery and recycling, for the most part in the Corepla Consortium circuit, in two plants with a total capacity of 200 Kton/year, and
- In the processing of plastic waste for the production of Blupolymer (a polymer for civil uses) and Bluair (“reducing agent” for steel‐making plants).
The company plans to increase the capacity of the current plants and build a new plant to treat the so-called plasmix, heterogeneous plastics which, at the moment, have no outlet in the downstream recycling market.
An agreement has also been signed between Iren Ambiente and Idealservice concerning the subcontracting of any selection activities and services on multi-material plants and the definition of a partnership between Idealservice and San Germano for the management of urban solid waste collection services in some areas of Northern Italy.
The operation allows Iren to become a national leader in the selection of Corepla plastics and, in perspective, in plasmix management.
Business Plan to 2025
On 29 September, the Board of Directors approved the 2020-2025 Business Plan which presents, compared to the previous year, an increase in investments and margins that continue the growth recorded in recent years, through commercial expansion at national level and bringing the results achieved in the historical areas in the field of waste and energy efficiency to new areas.
On this subject, the Group is aiming for:
- EBITDA of 1,160 million euro by 2025, through organic growth, the contribution from expanding the company’s scope, and the synergies that can be achieved;
- total investments over the plan period of 3.7 billion euro, 400 million euro more than the previous business plan. 40% of these are oriented towards the regulated and semi-regulated sectors (improvement of network services and urban waste collection), a similar proportion concerns development (mainly in the environmental sector, district heating and smart solution and digitalisation projects), and the remaining portion is for maintenance investments;
- a Net Financial Position/EBITDA ratio of 2.5x by 2025, despite the fact that in the short-medium term, the company could position itself in the 3.0-3.5x range in finalising any further strategic options and due to the significant amount of investments in the first two years;
- group net profit of around 350 million euro by 2025;
- a planned dividend of € 0.095/ share for the 2020 result, up 2.7% compared to the last one distributed. Increasing unit distributions are expected particularly in the last three years of the Plan, with a dividend of € 0.146 per share in 2025.
Confirming growth as a priority, the Group also identified certain additional strategic options not included in the data of the Plan, but which can be considered on the basis of future developments:
- growth options for internal lines focused on bidding for gas tenders, developing district heating in new geographic areas, repowering some hydroelectric plants, projects to make electric power generation facilities more flexible, and further waste treatment plants;
- external growth options (M&A), both small, focusing on a more selective choice aimed at consolidating minority interests, and large, to be carried out whilst maintaining the current investment grade.
Confirmation of Iren's rating
On 20 October 2020, Fitch confirmed the Group's BBB rating with a stable outlook. The judgment is mainly based on the update of the industrial plan to 2025 which, in continuity with previous years, confirms the prevalence of regulated and quasi-regulated activities (over 70% of EBITDA), with the consequent limited impact of the negative effects of market resulting from the Coronavirus emergency. In addition, Fitch assesses positively the Group's liquidity profile.
“Green Energy Loan”
At the end of October, Iren S.p.A. and the European Investment Bank (EIB) signed a 16-year loan, which can be used in several tranches, of € 100 million to finance projects for the development and efficiency of the district heating network in the Turin area (for total investments of € 197 million in the 2021-2025 period).
Acquisition of Unieco's Environment Division
On 17 November 2020, Iren Ambiente completed the purchase of the so-called "Unieco Environment Division", a cooperative company under administrative compulsory liquidation.
The Environment Division’s business, distributed in Piedmont, Emilia Romagna, Marche, Tuscany and Puglia, is run through a set of subsidiaries and associated companies which oversee the main operational sectors of the waste chain:
- brokering, treatment, sending for disposal and disposal of hazardous and non-hazardous special waste;
- collection and management of mechanical-biological treatment plants, composting, energy recovery and disposal of urban waste.
The consideration paid by Iren Ambiente for the acquisition of all the equity investments concerned was € 121.1 million, subject to adjustment.
The transaction will allow Iren Ambiente to consolidate its position among the national operators in the environmental sector, expanding the territorial basin served and acquiring a strategic position in waste collection in the Tuscany region.
Issue of the fourth Green Bond, for a total of € 300 million
As part of the Euro Medium Term Notes (EMTN) Programme of € 4 billion, on 10 December Iren S.p.A. successfully concluded, for the fourth consecutive year, the issue and listing of a Green Bond reserved for institutional investors, for an amount of € 300 million, maturing in January 2031, intended to finance projects relating to the recovery of plastic materials, the development of district heating and the improvement of purification processes, as defined in the 2025 Business Plan.
The Notes, which have a minimum unit denomination of 100,000 euro, pay a gross yearly interest of 0.25% and were placed at an issue price of 99.030. The effective rate of return at maturity is 0.348%, corresponding to a yield of 64 basis points above the mid-swap rate.