A2A Spa Ord

Welcome to A2A conference call. My name is Zach. I will be your moderator today. During the call, your lines will be muted. However, at the end of the call, you can submit questions pressing star 1 on the keyboard of your device. If you need assistance during the call, you can select star 0 on the keyboard of your device and you will be contacted by an operator. I introduce Marco Porro, Head of Investor Relations, to start the call today. Good afternoon. Thanks for your participation. Today we are presenting the results with Renato Mazzoncini, our CEO, and Luca Meroni, our CFO. I hand over to Renato Mazzoncini to start the presentation. Thanks, Marc. Good afternoon. Thanks for being connected with us. the title of the first slide that you have already seen is lifeyards it's the first year after the presentation of the update to our business plan in november 2023 we had named lifeyards our plan update because we wanted to convey the idea that this was a business plan getting its shape through industrial CAPEX and of course this is confirmed this year. This first slide, which looks different from what you are used to see, Usually the first slide was a presentation of the positive and negative highlights. We deemed it interesting, as you all know, the main components to underline this flow. On the left-hand side, you see organic industrial growth, which is probably the most important figure for our company in these last years. which translates into many elements. Here we have selected the three most significant ones in 2024, the increase in customer base that we will see in detail, the increase in RAB for CAPEX in all network sectors. We have new plans in the waste cycle. At the opposite end, also ability to Profitably manage the up sites is very important and this year hydroelectric production as you know has been significant and it's very important to generate value from this high production which requires good energy management. and also an equally effective hedging strategy, which was another strength. You have already seen the results in the press release. We have exceeded 2.3 billion EBITDA and 800 million net income, ROE and ROE. for our compartment are very high, 11 and 15% respectively. This stems from cash flow generation, which has been significant, and also from an asset rotation that we have activated this year after acquisition of electricity grids from Enel. We have transferred a part of our gas networks to Ascopiave, and then our first hybrid bond has been issued to strengthen and diversify our equity structure in a more contemporary way with all the tools we had available. The result of all that has been important industrial transformation, 2.9 billion capex in total, so twenty twenty four for sure will remain a very important year confirming the industrial growth and the commitments we are complying with since january when our first 10-year business plan was communicated. And the network operations of this year are very transformative for this part of our company, as we will see later. We have been able to get 2.9 billion euros, slightly more than that in terms of total capex, maintaining... a level of 2.5, so the net financial position and EBITDA ratio is equal to 2.5 in a year when Standard & Poor's acknowledging the change in the structure of our EBITDA thanks to the important capex in networks and to the fact that the district heating is now becoming semi-regulated so that our threshold is revised from 25 to 24%. 2024 leads to a TSR of 21%. We have approved a dividend proposal of 10 cents per share today, with a growth compared to the previous year of 4.4%. Our remuneration policy envisages growth of at least 4% per year of our dividends. This year, we have registered 4.4%. Next slide, please. industrial operation of the networks has also allowed us to reorganize the group from an operating point of view. As you know, if you have been following us, we have two pillars, circular economy, energy transition that you see in this scheme. Circular economy was in part in the waste BU where we had cycle and in part in the smart infrastructures where we have water and distribution we have then a unified circular economy in a specific business unit we have waste We have waste collection of urban and industrial waste and waste treatment. Then we have material and energy recovery, so waste to energy plants. And there we also have district heating with cogeneration district heating and distribution and heat management where we also have our activities in terms of energy efficiency with the public administration and then we have the integrated water cycle we will look at the strategic rationale underpinning the growth of this new business unit later during the call the other two business units i.e energy which includes generation and trading and also market in a logic that we have been pursuing over the years of natural hedging between generation and customer base is in this energy pillar and we have in smart infrastructures the networks electricity networks. With the last transaction, we have an imbalance in favor of electricity. Anyway, maintaining the gas network in Milan, which is the largest item in Italy, where there have already been tenders. And then we have public lighting, e-mobility, and smart city services. Here you see the breakdown of CAPEX. about half billion euros for each of the three pillars, excluding M&A transactions. And, of course, the smart infrastructures part is completely regulated. The circular economy has low volatility because we have contract-based business as for waste collection and district heating. which is under RERA in a regulated logic, while energy, generation, trading and marketing is exposed to the market, even if also in generation with the capacity markets. And with the PPAs, as a matter of fact, allows to have edging between a generation and customer base so that we have reduced the volatility of that segment. The next slide shows the logic of the new business unit structure, as you can see here. In the central part of the slide, you see urban and industrial collection of waste, feeding waste to energy plants for energy recovery purposes. And the same goes for water treatment plants where we are continuing to invest. So we treat sludges that can no longer be used in farming. They are used to feed waste-to-energy plants. And then we have district heating. As you will remember, we have very ambitious targets until 2035 to exceed 60% of distributed energy from district heating generated, starting from WTE. In district heating, of course, we can also have, in a logic of cogeneration, biomethane. We have several operating plants or plants in conversion. We would like to reach 160 million cubic meters. The best way to use biomethane in full swings will be cogeneration plants. which have a high level of efficiency and can therefore make a good use of this fuel. It's a BU with a 600 million EBITDA and a set of KPIs that you see here in the lower part of the slide. They are significant, as you can see here. and they are increasing as well. In the next slide, you can see some important elements, some achievements or goals that we have attained in 2024. we have a capex agreed of 10 percent year on year in the grids which means having engineering capacity and a supply chain which follows the trend which is far from banal then the large transaction with anal that you already knew signing with ascopia where we are have committed to each closing and by end of july capacity markets where we have acquired capacity market volumes until 2027. Then we have the continuous growth of renewable energy sources, most of all acquisition of a permit for a photovoltaic part with 112 megawatt capacity in Friuli Venezia Giulia in Northern Italy. We are talking about an area where there's no need for storage because there is a strong energy demand. Recently other 22 megawatts have started operating in Sicily and we are still working on PPI contracts both on the buy and on the sell side in a platform logic which allows us to generate value. in both roles. There is also continuous growth of the customer base in the free market, plus 18% year-on-year, as I was telling earlier. Our PPA mass market offers the number of gigawatts per hour of mass market is exceeding potentially the PPAs for B2B, confirming the fact that our Intuition of PPA mass market was good, 70,000 new customers only this year. And then we have been awarded a concept tender with a 7.8 terawatt hour. hour of energy to be placed, confirming A2A as a very important player in terms of energy being sold. For waste, we have the WTE plant in Trezzo. We have been awarded a tender, as is often the case. A complaint has been filed. with a delay, but the process is starting. And then two important tenders we have been awarded for collection in Milan with AMSA. We had a very aggressive Spanish player in this tender, and the Acera tender for WT management, the old contractor, Dating back to 2008, the chair had expired. Region Campania has launched a tender. There have been several bidders and we have been awarded the order. Then we have district heating, another important acquisition in the context of our M&As related to Sesto San Giovanni plant in the city center of Milan from Edison. Very interesting, the cogeneration plant for district heating purposes. Here you also see that we have entered into two agreements in Milan and Brescia. to start plants to retrieve energy from data centers. Very interesting, most of all in Milan, we assume we can reach 150 flat equivalent in terms of recovered heat from data centers. And we have connected the Darmine and Bergamo plant to our Dalmine network. In the light blue box you see the financial part. This year we have several financial goals that have been attained. We have issued our first green hybrid bond. We have revised our sustainable finance framework and then And the most important element is that we have reached a 78% of a total debt in ESG format. Our target in business plan was to achieve a 75%. We have outperformed it. And we are the first Italian corporate to have an mtn approved plan in italy the first bond we have issued has been extremely successful that's confirming the good idea we have had here you see the figures you already know them you have seen them in our preview the net income ordinary net income reaches 100 816 million euro, a record figure, 864 in total. Therefore, the growth of the ordinary EBITDA by 20% of the net income by 29%. are actually confirming our well-working industrial strategy also because the revenues are reducing by 13 percent puns 2024 were 14.5 percent lower than in 2023 and also the gas price was 15 percent lower So, of course, the elements which have favored such a good result are hydraulicity and the marginality we have recovered on the market side, besides the overall growth of all sectors, as you will also see in the next few years. Before I hand over to Luca, Let's talk about CAPEX. We have managed to grow further year on year. We have exceeded 1.5 billion EU CAPEX, almost 70% of which are for development, which is very important. 72% are aligned to EU taxonomy. sustainable and this is the reason why we have a 78% ESG debt. In the breakdown, you see that smart infrastructure takes the lion's share as its logic. There are anyway significant capex also in generation with Montfalcone planned for capacity market with investments in renewable energy sources and other revamping activities and waste. where we are constructing the new WTE plant of Corte Olona after closing the third line of Parona last year in the province of Pavia. So we are happy with this 10% growth of our CAPEX. I hand over to Luca.

Thank you very much and good morning also from my side. Let's then go back and see the economic financial results for the business with a total EBITDA of 2,328,000,000 excluding non-recurring items of 3,017,000,000 that represents a growth by 20% compared to the previous one. We benefited from indeed an energy scenario with a positive hydraulicity especially in 2024, but we have brought forward, as Renato said, the growth as an effect of the capex plan of the group that has been making for a few years in a significant and consistent way, increasing capex up to one billion and a half as an average on an annual basis to guarantee a stable and visible growth also for the next few years. What else have we made with the opportunities coming from the scenario for hydrolicity? and also from energy scenario what we have done is that we have translated them into opportunities of capex again because in addition to the extraordinary operation with anal we have also finalized some few other extraordinary operations and not as big but as important for the growth of the various business units in addition to having acquired a certain financial flexibility in our, indeed, net circulating capital, networking capital. So several opportunities that have been exploited at best to continue growing with the financial flexibility, with the financial sustainability, which is quite significant. We go to page 9 to look at the various business units trend. You know the drivers that have led to the growth of the various BU's generation and trading with a growth of 23% with an ordinary ABDA. As a result of the development of renewables and also coming from the energy scenario, we have talked about 238M increase with a partly compensation of about 57, 60 million regarding flexibility. So less production from our thermoelectric plant, stabilisation of the margins coming from MSB compared to previous years. So more margins from MSD. So regarding six tetra-renewable energy was produced in a year where we are at even in the mix between energy coming from renewables sources and energy coming from thermal sources. Another very important element that indeed confirms the value of our pathway in rebalancing the two sources of energy in our plan. Regarding the hydroelectric energy production, we know that we've had a very positive year with 5.2 TWh production. with an average over the last five years of 4.1 which is also the target we have set for the next few years. Regarding the market BU they have expressed the value in the growth of the customer base especially in the free market with a growth of 13% but in general as a matter of In fact, it performed well in the various segments, with 154,000 more customers, plus 4%, and the growth of the three markets has compensated some declines in other segments related to production markets. you know that we have gained and acquired some places with positive margins compared to the outcome of the tender that so indeed the final battle on margins and an average national margin in a very negative area. So the growth in terms of customer buys has been switching to electric customers most of all that in the overall mix reach of 57% of the total customer buys and therefore once again This represents another important target in our pathway towards electrification of consumptions and therefore also the consistency in customers being managed in this direction. the 461 million EBITDA for this EBU, and then a plus 144 compared to the original EBR 2023, 45% increase. Very good indeed, the margins in the retail segment, but also in the business segment. And we actually catch up what we have lost after 2022 as a result of those contracts that had suffered indeed from greater volumes at higher prices that were indeed carried forward in 2023 and are recovered in 2024. Let's go to page 11. This is the waste BU. And there is a continuous solid performance in the waste treatment field, in the waste disposal field, through all of our plants, a very good performance of our plants, waste-to-energy plants, also with the entry of a Perona plant that allows us to increase the managed volumes, the electricity produced and sold. with indeed quite a big satisfaction both in terms of volumes managed and in terms of heat generated. A slight decrease in the segment of collection that sees a reduction of 3 million as a result of the activation of the tender in Milan after the tender that is As in all tenders, we have won the contract for the next seven to nine years with priority condition. Page 12. We have the smart infrastructures that have grown as a result of the CAPEX. Indeed, investments are made in the electricity part. Rub has a growth by over 14% to reach above 1 billion, 1 billion 100 of rub managed. And also, the rub of gas grows by 8%, and also a significant growth of rub in the world's recycle, 14% growth, reaching an amount of over €65 million, whereas for gas above €1.7 billion. So all the businesses with networks express a growth in terms of EBITDA compared to the previous year, allowing the BU to increase the overall EBITDA by 8% for 40 million. Page 13, very quickly our profit and loss statement, 2 billion 328 MDA and then we have had provisions and amortization increase by 83 million as an effect of amortization coming from CAPEX and we have 113 million that is a provision to risk and accredited evaluation so in particular the risk provisions had a greater provision due to the effect of certain releases that we had during the year. The most important one is the one after indeed the release for a tax litigation with a release of about 12 million that allowed us to optimize these indeed provisions and also net financial expenses performed very well 122 million with an improvement of 17 million compared to previous year and here you see that the most important item comes from indeed the hybrid bond coupon that indeed replaces the hypothetical coupon we could have had for the adapter replacement but since it is a hybrid bond for sure we We certainly have a part that can be recognised in the income statement. We will see the effect in the next year. Regarding taxes, the tax rate has reached 29%, so in line with what has been the tax rate in the previous year. we have had a volume effect deriving from a greater income before taxes close to 1 billion 200 that for sure provides a greater effect on the payment of taxes. net income before indeed special items it's 816 and 864 including special items. On page 14 we see indeed the net free cash flow, cash flows that actually gave us the possibility to create the flexibility we wanted to reach so we then could carry out the activity we had conducted during the year and then meaning to have our operativity on the stock exchange in the purchase of commodities And so going back to indeed compared to an operational activity in 2022, 2023, during which we had moved for opportunities to OTC a contract, a bilateral contract that allowed us to have a longer terms of our payments. Now we are back on the stock exchange platforms where you have spot terms, about 12 days as an average, but we have more flexibility in our operations and therefore to benefit from these also in the future. Regarding the prices for electricity and gas in the last quarter, especially in the receivables part, there was seasonality. that was slightly stronger but no reason of concern because in the next quarters there will be a stabilisation of our working capital. Regarding taxes and indeed financial expenses, 400 million and 1,345,000 is operating cash with which we have paid almost all of our capex. Our dividends are paid for 300 million net free cash flow of 465,000 negative that we have managed. both with the issuance of the hybrid bond and with the issuance of other loans, the syndication of the loan to manage the acquisition also of a network from from a distribution that you see here that is indicated of 1 billion 400. So we have a delta, therefore our NFA for 468 to 5835 with a leverage that is a very solid and sustainable that is given as 2.5 times. that confirms the growth direction with a financial stability, which is quite important. And regarding our plan, we had declared that we wanted to stay below 2.7 and our internal target was not to go above 2.6. Therefore, this result is very important and significant for us. And here on page 15, you see this new directive that we have implemented. It's the CSRD directive. that has been introduced in Italy with 125 degree that contemplates indeed the reporting that is a sustainability report integrated into our management report. and in order to guarantee a connection of data reported in the sustainability report being connected with financial statements data, we actually did this exercise and it was simpler in certain concerns because the group was already used to have this structured way regarding financial reports, regarding the sustainability and the related effects and impacts on economic and financial parameters. And then this becomes a single report integrated that will allow the reader of our report to have all the data all the connections that are contemplated so you see on the slide on the right part several indicators that have been reported by the group for time with important results obtained in 2024, one for all the emissions. So it's quite good, 258 grams of CO2 kilowatt hour with a 17% reduction compared to 2023. Another important indicator is the one related to taxonomy. These are reports that have become standard and mandatory already for a few years, so we have been reporting them and aligned with taxonomy. We have a 72% of overall capex, 55% of those that are eligible according to taxonomic criteria. I would like to focus on the CAPEX, that is the most important parameter in this report, and the last two indications, which are significant. We have increased the employees of the group, there is an expansion policy with new hires, being very careful to all talents and newer skills to be brought inside 6% increase of our employees in the group and the MSCI rating that indeed is back to A level after a couple of years during which we suffered, especially in 2022, with CO2 emissions as the effect of the operation of the coal plant that actually penalized us in this rating. So I think we can close the presentation and we confirm that 2025 has started quite well. We confirm the guidance we had already given with this EBITDA around 2.2 billion. and the ordering net income amounting to 0.68 to 0.70 billion and the dividend that we will pay will be 10 cents 213 million euro as a whole And I would say that with the last slide, then we leave a space for the Q&A. So in the last slide, we have indicated certain elements that are included in our industrial plan to 2035, confirming the solidity and robustness of our company. Also for the next few years, we have indicated supportive edging activity and for sure you will ask us details and we will give you the capacity market that has reached a very important volumes until 2027. The RES platform development is on track and it is a very effective and then the expansion in free market where indeed we have a turn much lower than what has been communicated by the authority and then of course the integration of newly acquired regulated networks which is quite significant and then of course the topic of the new business unit of a circular economy and our robust activity regarding sustainable finance and we also deal with important innovations and as a matter of fact we have been the first european issuer of a eu green bond so We have a strong commitment towards our industrial plan and we will for sure perform very well in the next few years. And now the Q&A.

I would like to remind you that you can submit questions or make comments in today's call pressing star one on the keyboard of your device. To withdraw a question, please select star two. First question, Javier Suarez from Mediobanca. Hello, thanks for your presentation. I have two or three questions. First one about the context. Can you give me your indication about how you think it is possible to evolve the debate on extension of electricity and concessions and the indication that this could have in terms of upfront payment? last guidance what could be the upfront payment for your electricity distribution and then Talking about the context, what about the possible extension of the concession to produce hydroelectricity? Next question about hedging. Can you give us more details about the hedging level for 2025-2026 considering prices and volumes? A third question. Can you please inform me about the MSD contribution in 2024 and what you expect in 2025? And then last of you on the expected adapt in 2025. Thank you. We will answer to each question. Question number one about electrification of the networks. We expect quite soon to have implementation load decrease and distribution therefore will take place involving ARERA and the Italian Ministry at a national level. We assume A single digit, so an amount which could be between 6 and 7 billion euro in total for the whole national network. As you know, it's clearly written in the Italian decree, it's Arab-driven. our site that's good news for sure this will have an impact on an investment and one might think that the cash out will take place in about two years so it's not just a single outflow of money This is what is reasonably expected to happen. The percentage of national electricity network, let me just calculate and think, we are at 4-5% approximately, so 4-5% of the amount I have just given you. As to Hydra concessions, I think you have seen the Senate hearing of Minister Forte a few days ago. He has informed that there are now conversations with the Brussels representatives to remove this duty of tendering relating to concessions. Our Minister yesterday and today is having meetings in brussels if he has mentioned that during a public hearing in the italian senate it means he's confident that this is going to happen and we do the same so i would say that as soon as he gets the green light from brussels to eliminate from the PNR hydroelectricity, we will have a symbol LD for energy on the DS share, which continues to persist as the agreement that is reconciling all players. So it's a mechanism of assignment of concessions for the next few years. with project finance, a path, a financial approach for concessionary companies, identifying new investments so as to make sure that there is the right remuneration on the investments made. Hedging 2025 is fully hedged. as we usually do. We hedge about 70%. We are now at 77%. We want to avoid being short with production. We are hedged at 120 euros. The good news is that 2026 is already hedged at 32% at 114 euros per megawatt hour. So this is also benefiting from the first performance of the first month is 2025 with high prices msd yes as to msd we have a plan 2025 is evolving in line with the plan we have 80 85 million euro approximately we don't expect significant differences. The market has stabilized itself at this level. There is no reason to think therefore that there can be significant changes. As far as the debt is concerned, We confirm that we will remain below 2.7, presumably closer to the leverage ratio we have seen in 2024. This is our target and the horizon we are working on. A follow-up question on the comment of the CEO about the concession of the hydro concessions. I would like to understand from you, let's say, 300 million euro upfront payment for A2A. So you have mentioned that this will be in one or two years. Can you confirm that? Yes, we assume. You know, this money is an inflow. for the government, even if in the Italian degree they had specified that there should be an allocation to reduce the energy bills. But they can do whatever they want with this money. they are interested in collecting the money by 2026. And this is also reasonable considering there will now be the new parameters for 2025. The payments will be spread over the two next years. Thank you very much indeed. Next question, Francesco Sala, Banca Acros. Good afternoon. Thanks for the presentation. Three questions. Can you give us an idea of the prices customers, then the forecast for retail for 2025. Is there any margin pressure, competitive pressure? Sorry, can you repeat the second question? So what about the retail forecast for 2025? A third question. A strategic question, compared to three years ago, the range between your electricity sales and your production is now wider. So I would like to know whether this is a new normal or whether you think that this range can get closer in the next few years. Let's answer to the second question, talking about retail margins. In 2023 and 2024, we have had significant retention costs because We had contracts that were out of the market, fixed price contracts that we had closed during the energy crisis between 22 and 23 due to the fact that the antitrust authority had not allowed to change these contracts to variable pricing. It was a unilateral contract. contact change for the authorities. Customers have confirmed the fixed price contracts, so 700, 800 megawatt per hour, these were the levels. Therefore, we have had significant effects. When these customers, as it has happened, have contacted us, they were proposed offers to retain them, so the The idea was to retain the customers as much as possible, generating costs about €50 million for 2023 and €80 million of costs for 2024. For 2025, we have about €20 million. significantly less. So 2025 starts with a significantly higher retail marginality which cannot fully offset the competitive pressure but it can anyway support the performance of the ABTDA of this business unit. I would also like to draw your attention to the fact that this BU allows us to get 700,000 new contracts per year. We have a churn rate of 8-9% less than the average for this industry and we have sales ability so we can get 700,000 customers per year. As to the PPAs in the B2B markets, If the question is about prices, we cannot provide an answer because this depends on customers' profiles. So depending on whether you have customers requiring pay-per-use or a different profile, you develop, you set a specific price which has hardly terms of comparisons. I don't want to give you prices that are not meaningful if not related to a specific consumption profile of customers. If the question is, is the propension growing for B2B PPAs, the answer is yes and no because we have to become faster Our professional association, Elettricità Futura, is proposing to have GSE as intermediate body between supply and demand because customers' propension also in the long run for energy intensive customers is still low. So there are some, but as I was saying earlier, 2.3 terawatt hour energy sold through mass market PPAs can be achieved, and I think that it will be difficult to reach higher volumes in B2V unless we found a formula with GSE that acts as a guarantor for the energy transition. Talking about the range, looking at the overall production, we have a lower gas production and increasing renewable production, but this is growing more slowly, so we have a situation where our total production is changing in terms of mix and we have more added but it's not growing in absolute terms and as in as for other b2b players we have confirmed our standing as a trustworthy sound player This has happened also during the energy crisis when many of our competitors have left customers and business lines. We have expressed our trust to industrial customers and we have grown significantly in that area. So therefore, I think we will still have that range because We see the positioning in the last few days. We have the energy release. You have these very interesting energy release figures. We are one of the players who have deployed a significant energy volume working with our industrial customers. who have presented requests to the GSE with partnership with A2A and renewable energy plants with specific features envisaged in these contracts. As we have highlighted also in the first slides, We are doing buy and sell side PPAs. Interesting to note that managing PPAs without energy management and customer base is difficult. There are pure generator players who collaborate with us for these activities. And of course, this is rebalancing our positioning.

Thank you very much. Thank you. And next question comes from Davide Candela, Intesa San Paolo. Good evening. Thank you for the presentation for the questions. I have three questions. The first question refers to waste. In Milan, you said you had some competition for collection from international operators. In general, do you see any risks with the fact that there could be international operators for collections and also for waste treatment, also concerning the peculiarity of the and a second question regarding regulations and the new structure of the circular economy. So this new structure within your organisation is indeed a business structure or is related to some corporate action and to have the partnership with other partners to divide the risk and increase their capital. And another question, we have seen last week the Terna plan with requests of indeed 100 gigawatt. Can you give us some evaluation regarding the role of a DUI for electric distribution, but also as an operator, as energy supplier, also based on what you have just told us regarding the role of ADWEA in the national energy market. Regarding collection and treatment, those are two different markets. Waste collection is a market. where, as a matter of fact, barriers at entrance are very low, and we should say that we have indeed men's equipment, and therefore, when you have the contract given to another player, so you have both men and equipment are used, barriers at entrance are very low because then the storages and the plants you need to perform these services are often owned by the local entity or in any case they should give the availability of these. This is the reason why there are some operators outside of Italy that participate in our tenders, because CC from Barcelona is much bigger than ANSA. Also, the knowledge of the service and of the area and the fact that AMSA participates with ADOEA Ambiente, that is used to do this and participate in tender for plans, but it was effective then, our participation in the tender. And so the technical part remains quite important. 70% regards the technical part and only 30% the economic part. so we were then able to win the tender but i don't think things can apply to treatment because the treatment is quite different because the complexity of obtaining indeed the authority for the plants is like a monster because we are used indeed even when we hear about nuclear power, we are very much used to quite a battle to obtain authorization even for methane. therefore as of today i don't think we have a risk of competition in treatment plans but only on a little bit with a plastic treatment or a glass but the big portion in what we are interested like wte i think there is a no issue and then of course I believe it's a very important regarding data center and regarding is Milan we have indeed 1.7 giga and in Milan so if I should make a forecast I would imagine that the required power for a data center in Milan for the next few years it could be about 500 mega not more but then of course there are more and more demands as it happened with renewables there are several developers and so some obtain the gold others not but there is a great interest about a can be a key player for two reasons, because otherwise they cannot actually install a data centre without a baseload energy, because they need baseload energy, a redundant energy, they cannot stop. Therefore, a company such as ours doing distribution and generation in Milan will become an essential And the second reason is that they also need to respect sustainability index. There is an index that is called PUI. And of course, this is considered also regarding district heating and each mega of electricity, we can have half a megawatt thermal energy, and this improves the index of sustainability of the data center. And this means, you know, to be chosen by operators that, of course, need energy and such services. And so we consider this business very interesting. We also have a working team on this topic because I think that in the next five years this will become way more important. The second question I can't remember. Which was the second question? Regarding the circular economy. where you in our forum of our community in roma and investments in water are monster investments to be made in italy so indeed Yesterday, there was a vice president with a delegation to water in Italy and actually said that even the more virtuous company with 100 euro per inhabitant investment in Italy, that is the European standard in Italy, starting from very obsolete networks. They have indeed replacement rates of damaged pipes that are about two and three hundred years. This means that to be able to have a network capable of recovering indeed this old status, there must be at least €200 per inhabitant. If you multiply this for 60 million inhabitants, it's €12 billion, whereas now we have €6 billion estimated capex. So this, of course, requires more industrial investors Right now water has a very good profitability with returns on investments regarding the regulated part of that is even better. So there is much space also on tariff because our tariff is by far the lowest in Europe, one third of the German one and half the French one. So there is a lot of space in the tariff for the operator. and therefore we keep on investing on these within our perimeter. We are also participating in beads outside our area in Calabria, in Sicily and in other situations, and I think we could find very interesting spaces here. For the rest, Today we are a very big player in WTE. We have requests of collaboration from abroad, and this is for sure one of the expertise that could open up new opportunities. Thank you. Next question comes from Emanuele Oggione for Kepler-Chevlin. Good evening. Thank you for the presentation. I also have a few questions. The first is regarding hydroelectric production that is estimated and embedded in guidance of 2025. Considering that you were estimating a return on normal production, it's 4.1 tetrawatt hour of production and at the end of 2020, for you are able indeed to accumulate water in the various basins for about half a tetravatt hour. And so can you explain to us your visibility because it's true that it's only three months a year to date, but snow and rainfall on the Alps are still below the historical averages and even below the averages of the last few years. So this is the first question regarding the estimates of hydroelectric production. and the second question regards the asset rotation so regarding possible disposals or possible acquisitions because you have a quite big space of leverage you could have more so What do you think could be interesting? Where are you looking at? In which business sectors? What do you intend to sell, for instance, in gas distribution? Thank you very much. Well, Emanuele, regarding the first question, the answer is that in our guidance, we reported 4.1 terawatt hour and we started with full basin, higher level than 2023 because we have a half a terawatt hour. regarding the capacity of accumulation of the basins, regarding snowfall data from the last few days, 13% below average, so for sure for 2024 minus 30%, but this is above 2022 for sure. So I think the situation is very variable, so it can change. So in the Alps, there is a lot of snow, even 2m snows at 2000m altitude, and during this weekend there should be snowfall again, but of course it's very difficult to make estimate, but I think we should be comfortable to keep the value we reported in the guidance. Regarding acquisitions, of course, I won't tell you anything because even if there could be something, this is not a topic of discussion. in this situation but for sure when there are opportunities we are always there but what is good from your question is indeed the fact that apparently you confirm that we have quite good financial flexibility not to miss any opportunities in case they should be there. Yes, my question was more of a high level questions, meaning that are you still interested in making asset rotation? Thank you. Thank you very much. If you would like to make a question you can press star 1 on the keyboard of your mobile phone. At the moment there are no additional questions. There is a follow-up of Davide Candela from Intesa San Paolo. Yes, I apologize if I indeed exploit your availability. Follow up on 2025 and considering the weakness of wind production in the first quarter, and the volumes from indeed CCGT have increased by 20% and considering volatile prices scenarios, especially upward in the first part of the year. Are you expecting that the production could provide upside risk compared to your expectation in the plan? Well, Davide, for sure there is an opportunity. It was an opportunity in the month of January because since there was no wind and we were able to express good production with thermal plants, and the fact that we operate the plans in a flexible regime with the possibility of using them when we can optimize the marginality. Of course, this is a big opportunity for us. as it was the case in the last few months. We will see what will happen in the next few months, but the fact that we have the possibility of managing different technologies makes us capable of exploiting all market opportunities at the best. So if there is a lot of water, we go for water. If indeed there is no wind, we go for gas. And if there is a wind and sun, we go for renewables. So I think that this is well known to all of you. Thank you very much. Thank you all. Thank you for your participation. If there is any follow-up or additional questions, you can actually contact the IR office. Thank you very much and have a nice evening.