Good afternoon, everybody. We just concluded our board meeting. We approved unanimously the quarter results that we are very happy with, because we are fully in line with our business plan expectations. It wasn't easy. Our business plan, of course, hadn't envisaged a situation such as the one we are experiencing with an increase in interest rates, inflation, with an impact on the cost of energy and on net working capital, all of which are negative things. That's why the results we'll be illustrating today are even more satisfactory for us, and we're very pleased. I think it goes to show how sound our industrial model is. Let's begin with our development model. Over the first nine months, we invested EUR 478 million, twice the amount we invested last year.
We are continuing with this growth rate and with this kind of investments, which is consistent with the business plan that we are continuing to work on. 90% of our investments are on infrastructure. 70% of the total amount invested is on the regulated side of the business, which means that these investments still aren't visible in terms of our numbers, but they will certainly contribute to our cash flow in the future, which means that we're building the future and we are managing the results today. Now, if we look to the results, to give you just an overview of what we've done, you'll see that the adjusted figures for 2025 compared to 2026 shows a 7% growth of our EBITDA, which is supported by all three business areas.
Keep in mind that we adjusted the figures so that we could remove the one-off numbers from 2025 linked to certain tariff decisions, which dated back to previous effects, eliminating the MUI numbers, which gives you an idea of how solid the business is. This growth, also from a reported standpoint, brings to improved results compared to the ones we posted last year, which means that we have more than offset the positive one-off events we saw in 2025. Now, as to whether or not the businesses support EBITDA growth in a balanced way, well, the levers we use are the ones that we have available. We look to achieving both organic growth and the growth through M&A, which is exactly what we have always done, and as we had promised while illustrating our business plan.
Now, let's take a look at how we generate value in our net results. As you can see, the net profit has grown, adjusted by 16.5%, despite having already absorbed the negative effects of the additional IRAP tax, which is worth EUR 6 million. Even here, the reported side of things is up compared to last year. So even in terms of profit, the result is on the rise on the reported figure. On the more structured figure, you can see that the size is positive as well. The net debt-to-EBITDA ratio has gone up to 3x due to the seasonality effect. We know that this is a somewhat complex month, even more so given the energy price we're seeing, which of course has an impact on the net working capital.
Although the levels that we've seen are very comfortable in terms of our soundness, given the fact that this is a temporary effect and it will be reabsorbed once the energy prices come down. Even here, we can appreciate how all four of the pillars in our growth are solid, they are robust, and we are continuing with our growth and with achieving our business plan targets. Let's see what supported the growth in each individual business, beginning with energy. As you can see, the overall growth is worth EUR 38 million in adjusted terms. That is underpinned by growth in power generation, which compared to the month of June, brings a further EUR 4 million-EUR 5 million linked to some of the opportunities linked to the price of energy, especially during the summer.
On the free market, we have an overall growth worth EUR 24 million, which is obtained basically by using three levers. On the one hand, we optimized the cost of the acquisition of raw material, which means that we worked on transforming both the buying and the selling. You may remember that during the energy crisis in 2022 and 2023, shaping costs were the issue we had to deal with all the complexities we described to you. Even in this context, we were able to optimize things. Thanks to the improvement we had worked on in the past, allowing us to further improve our margins, not so much by increasing prices. In fact, we tried to keep prices as low as possible so we could continue to work on developing our commercial activities and to promote the loyalty of our clients, and we tried to focus on procurement.
We also worked on another lever, operational costs. We didn't make any amendments in this regard, and this allowed us to contribute positively to margins. When it comes to development, we are continuing to transform our Servizio a Tutele Graduali, the STG customers, bringing them to the free market with the view of stabilizing the tariffs these clients have, with the idea of giving them the best possible solution given these turbulent contexts we face. We have an overall growth which has more than offset the fact that we no longer have the extraordinary contribution from the last-resort market. Let me now hand it over to Mr. Iacono, who will be describing the waste sector.
Before that, I skipped something. I'm always focused on numbers, and I forgot to mention a very important thing. As you can see on the slide here, we have a new advertisement campaign, which I hope you've seen on all TV channels. This was an advertisement campaign that we're working on with Armando Testa, a very famous communications agency here in Italy. This is an ad which I think is very representative of our company. It says a lot about us. It describes everything we do to support our citizens and customers every day, and what we do together with them and our choices.
This is the strategy which, in the long term, has allowed us to generate value and promote customer loyalty. This is an idea that we've been working on for quite some time, and it is an advertisement campaign which I think represents us very well, and it also shows how valuable it is in terms of reducing costs and how we can work together. Therefore, we chose a claim saying that the decisions we make do not belong to Hera Group, that they are basically something that we do together with our customers. Keep in mind that we offer our services to over 7 million Italian citizens. Therefore, this is a way to give visibility to both our current customers and the new ones we will be trying to conquer. Thank you.
Thank you, Cristian. Good afternoon. Let us take a look at our waste business, which continues to grow. Our growth is supported by M&A, by strategic partnerships, and by our assets. The recent acquisitions we made of Sostelia and SEA, the partnership with Eni, with the partnership we have set up with them, have all strengthened our volumes, allowing us to increase our market share. Keep in mind that the Italian market continues to be structurally short in capacity.
In order to support this growth, we are speeding up the development of new capacities, even in high added value segments. In the slide here, you can see two assets we recently inaugurated. The first, on the left-hand side, is the R3GID asset, the most innovative asset in Europe, allowing us to enter the very high-quality rigid plastic market, which is used for strategic sectors such as automotive, home personal care, and consumer electronics. On the right-hand side, you can see an image of the F3 energy plant in Ravenna, devoted to hazardous industrial waste. It is one of the very few assets of its kind in Italy. It was built with the best available technology on the global level, allowing us to have improved capacity and better environmental performance.
This is quite strategic within the framework of the partnership we have with Eni, which means we have more volume, more capacity. What I always underline is that we always integrate the entire treatment, recycling, and soil remediation value chain, a model that further strengthens our growth and our leadership on the industrial level. Moving on to some numbers. The two strategic assets that we just presented are not present in these figures. The waste business is up 3.2%, and it more than offsets some non-recurring items that we will be seeing in a few minutes. So these results go to show how resilient our business is. As Cristian was saying earlier, our business faces a very complex macro scenario, proving the fact that our waste business is especially resilient. Let us look at the individual businesses we manage and which contributed to growth.
The first item refers to the perimeter linked to Sostelia and SEA, which has a positive impact on margins worth EUR 13 million. Organic growth is also doing well, EUR +3 million. That refers both to regulated activities and free market businesses, which is in line with the previous quarter results. On the regulated side of things, we have the contribution coming in from the inflation targets, which bring inflation in line with our real costs we have, besides our operational efficiency and a few integrated services. On the free market side of things, we have had positive contributions from all three business lines: treatment, recycling, and soil remediation. In terms of waste treatment, we are achieving good volume results thanks to the diversification of our portfolio, which allows us to treat a number of different waste segments.
In recycling, we are continuing to develop things, improving things compared to last year, with an increase in volumes. We are equally pleased with how we are doing on soil remediation, thanks to the wonderful ACR company, a company that we bought three years ago, which is the Italian market leader in soil remediation, with very important contracts for decommissioning, handling, and soil remediation activities, which they offer to major customers, even in the oil and gas sector. We also have two one-off events on the energy, waste-to-energy plant, as we already mentioned in July. The scenario that we are experiencing has slightly improved compared to the last month of June, which is at minus five. The increase in energy prices is in fact favoring us, and it is linked to the small volumes that we do not set due to company policy.
We have a one-off effect linked to our landfill, which we had already communicated. This is a temporary stop in the Feronia landfill at the beginning of the year. On the right-hand side, you can see that our M&A activities contribute structurally to our development, and this is a major growth and expansion potential. Sostelia, which is the most recent transaction, along with all of the other operations we have worked on, and these are the gems that we have been able to pick in a market which is still very much fragmented. These are the transactions that we have concluded successfully in recent years, and this is something that we want to continue doing. Over the years, we have proven to have the know-how in terms of M&A, and we have proven to be capable of creating value.
All of these structural growth drivers are solid, they are recurring, and they come along every quarter. Moving on to the networks business. The very first message that we would like to convey to you is that we want to continue to invest. We want to speed up investments in infrastructure. We have invested over EUR 500 million in the first nine months of the year. We are speeding things up compared to 2025. This is one of the many projects that we are working on. It is the new Bubano Reservoir, a drinking water treatment plant, which is a EUR 50 million investment that will improve service and improve the safety of our water sourcing. This is a quality investment, the goal of which is to deal with the increasingly obvious effects of climate change. We want to have cutting-edge water infrastructure.
In fact, the quality of infrastructure can be measured by their ability to guarantee continuity, security, and reliability of services, even in contexts, which, as we have seen in the past locally, have to deal with especially extreme conditions. Through these investments, we want to guarantee the continuity that our company has in obtaining premiums and the impact they will have on future cash flows. Moving on to some figures. The last slide pertaining to networks, you will see that EBITDA is up to EUR 418 million, up by 5% compared to last year's figures, EUR +20 million compared to 2025, except for non-recurring items, as Cristian was saying, which for the first nine months were EUR 31 million, and in June, they were EUR 23 million, stemming from the authority's recognition of a number of operational costs, including a reimbursement linked to some previous years.
In this case, as you can see, our performance was supported by all of our business lines, which are progressively benefiting from the intense investments we have made in recent years. It is a performance which is even more important because it is compared to the year 2025, because 2025, as you know, benefited from some one-off instances and premiums which are recognized every two years. Again, we are growing in all businesses. Let me just mention one specificity. In electricity distribution, even in 2026, we have had the approval of the tariffs defined by the ROSS method for 2024, which is worth slightly below EUR 3 million, which refers to the contribution of electricity distribution. Everything else is pretty straightforward.
We have two businesses, waste and networks, which we focused on very specifically in executing our business plan with an increase in investments, the goals of which have been fully met, which goes to show that the things we say whenever we meet and whenever we illustrate our business plan update, namely that our business plan only includes projects that have already been authorized and shared with the local territories, making our operational approach even more straightforward. All of which I think goes to show how reliable we are, how solid our structural growth is. Let me just conclude by saying that these results are the outcome of our constant efforts of everyone in Hera Group. We are working every day locally to improve everything. Thank you for your kind attention, and let me give the floor to Massimo, Financial Director.
Good afternoon, everybody. Good afternoon. As usual, let me just illustrate the cash flow for the first nine months of 2026. Beginning from the left-hand side, with an operating cash flow which is above EUR 800 million. We stand at EUR 802 million, which is up compared to the EUR 561 million we reported on in the first half of the year. Moving on to the right, you will notice that the net working capital, also due to the price scenarios that we experienced in the quarter which just ended, led to a cash absorption worth EUR 160 million, which was partly offset by the contribution we obtained during the year, namely the National Recovery and Resilience Plan contribution. This is the last year of the project, as you know, so a good chunk of that contribution is cashed in this year.
Continuing towards the right, we have the use of funds, grants, and contributions, which is in line with the levels we recorded in the first nine months last year. Then we can move on to the more interesting part of the growth of our organic perimeter, linked to the investments we make constantly and consistently with the targets of our business plan. Even in the third quarter, we have added an extra bit of investments compared to what we have done last year. All in all, we have gross operational investments slightly below EUR 780 million, which is a sizable amount, EUR 100 million more compared to what we had done last year, which is destined to development CapEx aimed at creating structural growth, which is in line with the intentions we stated quite some time ago to transform one-off opportunities into structural growth.
Continuing towards the right, we have the cash flow devoted to dividends. Compared to June, we had the tail end of the distribution in the summer, with some of our control companies which distributed during the summer. Moving on to M&A and buyback operations, which we have an overall amount worth EUR 308 million, bringing us to a debt change equal to EUR 674 million compared to January 1st. As the Executive Chairman was saying at the beginning, we could also see the seasonal effects. Typically, the month of September is less favorable compared to what we report during the various quarters of the year. This, of course, had the extra burden coming from the overall scenario, and we will be seeing how things will be rebalanced given the price trend we will be seeing in the weeks to come.
The positive thing I wanted to underline is that despite the current price scenario, our cash scenario is stable, which allows us to be very comfortable dealing with liquidity, with temporary cash flow needs. Moving on to the next slide, as you know, we have a very cautious funding policy. This year, we emitted our EUR 500 million yearly bond, taking advantage of an especially interesting scenario following the summer months. So we did our usual pre-funding, allowing us to be well-prepared with the reimbursement of the expiring bonds, which happened in the first fortnight in October this year.
Our structured debt continues to have a very good balance between fixed rate and variable rate, allowing us to have a very smooth growth in the average cost of debt, which you can see in the graph on the right-hand side of the slide, where, as you can see, our average cost of debt is up from 2.82% to 2.85%. Since roughly 80% of our structured debt is represented by bonds, by the bond market, in other words, we have excellent flexibility towards the banking system so that we can manage any needs in terms of managing the energy scenario and any possible M&A or investment opportunities, which, as you know, we always want to have available because, of course, our growth allows us to deal with both such scenarios. I will leave it at that, and let me give the floor to the Executive Chairman for some conclusions. Thank you.
Thank you, Massimo. As usual, we gave you a fairly brief overview of our figures, but let me just conclude with some final remarks regarding these first nine months of the year. The results, as you have seen, are absolutely resilient compared to the overall context we are facing. They are solid numbers. We analyze them both in terms of drivers, in terms of business, and in terms of the way we manage our business. That basically every business underlines a good level of soundness in terms of how the businesses are developed. Of course, we are keeping our promises. It would have been easy, given the current scenario, to use the excuse of the complexities we face, but we have no reason to change. Whenever we describe our business plan, we tell you about our business policy, which is very cautious in terms of risk management.
I think the current scenario goes to show how solid our plans are. We are capable of reducing all of those external risk factors, things that we are not able to control, including interest rates or inflation or the cost of commodities, which means that through our policies, we can continue to grow very well. Over to you for some questions now, for the next 30 minutes or so.
Thank you. The first question is from Javier Suárez, Mediobanca.
Good afternoon, everybody, and thank you for the time. I have three questions for you. The first is linked to your balance sheet management. In a context in which we are seeing a higher net working capital absorption, in a context in which the price of energy is higher, we have seen that the net debt to equity of the company has gone up. There is this net working capital absorption.
Do you think this will continue for a longish amount of time, more than you would have managed? Is the company moving into an era in which the net working capital absorption will become a little bit more structural compared to the past? Does this mean that your attitude towards M&A can become a little bit more cautious? I do not think it is the same thing to be at 2.6 x compared to 3x . So again, given this new, more demanding net working capital absorption, will you be a little bit more cautious on M&A opportunities? Do you think it is safe to say that your attitude will change? The second topic I am interested in refers to your supply side. Do you think the government can decide to extend STG services beyond Q1 2027?
If so, what would that imply in terms of the management of the business and in terms of the customers you have? Plus, how many customers have you already switched to the liberalized market, and what could the possible impact of these government measures be on your business? Finally, on your regulated business, the government will be increasing the IRAP tax for the next few years. Now, conceptually speaking, an increased IRAP tax over the next four years should not be part of the discussion with the regulator on the remuneration of networks in a context in which your networks are based on real pre-tax, and how will you deal with increased IRAP tax from the accounting standpoint in your next business plan? Thank you.
Well, thank you for your questions, Javier. Regarding your first question, the growth of net working capital given the current price situation is not something we are concerned with, not structurally at least, because these types of prices cannot be structural in the future, which means that we currently have the flexibility to manage these prices without forcing us to be more cautious on M&A. We will continue to do things as we have always done, and we have the flexibility to do that. The idea being that the prices go up, and as they go up, they will come down. But maybe Massimo can give us some extra information on this topic.
As far as your second question, what will happen if the STG customers will be extended? Well, the point is that we made a bid in a competition, in a tender, in which everything was defined and everything we did was described in a contract. 20 days ago, the Minister said that this was a possibility, it was an option. There are ongoing discussions, and we will see what happens. Of course, that I do not think has any impact on the value of the investment we made because we were able to obtain a large number of customers at very limited costs.
Therefore, were there to be an extension, of course, that would have an impact on 2026 and maybe 2027, but we will just have to wait and see. Although we trust that this will not happen. If it were to happen, we will continue in our campaign to switch customers to other types of contracts, and we will see what we can do legally, were there to be a legal change or a change of the rules which cannot be done.
Moving on to your question regarding the impact of the IRAP tax on regulated businesses, it is a very timely comment. Too bad that in the budget law being discussed, there is no mention whatsoever regarding the possibility of increasing the IRAP tax. We will see how things evolve and what ARERA intends to do about this. In theory, that is something that should be converted, at least for 2026, because, of course, this would have to be reviewed since the possibility of increasing the IRAP tax was not included in the bill's decree, the Decreto Bollette, so it should not have an impact on 2026. This is our interpretation of things, and we will see what we will be capable of doing for the next years were this decision to stand. Massimo, over to you.
Well, just to further comment on what Cristian was saying, our view is that there will be a more favorable progression compared to what we are currently seeing when it comes to debt to EBITDA. Of course, a lot will depend on how prices will evolve over the next few weeks. You may remember that the first time I participated in our conference call four years ago, our net debt to EBITDA was at 3.62x , and it referred to prices which were unprecedented. Plus, you have the topic of seasonality. At this time of the year, our gas storages are full. We still have not used them. Plus, we have other impacts this year, such as the payment of excises, which used to happen in 12 parts. Now it is based on consumption, so that too has a different impact.
Looking forward, we will see a trend in which this figure will progressively come down. Of course, by reaching year-end, a lot will depend on how prices will change in the final weeks of November and the early weeks of December. For the time being, I have not seen any reason to warn our top management, telling them to change their attitude when it comes to potential opportunities. In fact, I always try to give them the flexibility and the different tools that they would require to add value to our company's perimeter.
The next question is by Emanuele Oggioni, Kepler Cheuvreux.
Good afternoon, everybody, and thank you for your presentation. I also have a few questions for you. One is a follow-up on acquisitions. You basically confirmed that you have a good degree of financial flexibility and that your strategy is based on continuing to grow, to consolidate the waste business, and to invest in networks. Already a year ago, we saw a number of articles regarding your possibility of buying out the 25% stake in Herambiente.
This is news that we've seen in the past, although nothing has been done for quite some time, and I was wondering if maybe now would be the right time. I would also like to have an update on the STG service. Can you give us the number of customers? The overall number of customers has gone down from 4.3 million to 4.2 million, and in the first half of the year, you had some 800,000 STG customers.
More in general, the EBITDA of electricity supply, which had performed very well Q2, also in Q1, but especially in Q2, although it went down in Q3. So can you explain why this change of profitability year on year? The third question on the Gigas Rete acquisition. Can you give us some further information on their RAB and on their EV, which you said was in line with the RAB concerning this acquisition?
Thank you, Emanuele. Good afternoon. As far as the 25% stake in Herambiente is concerned, we want to confirm our interest. The discussions are ongoing, and as usual, we will keep you informed once we have news. As far as the remaining M&A opportunities are concerned, we typically look at two to three operations per year, where the size, which is similar to what we've always done, the multiples have to be adequate so that we can then extract 25% in synergies compared to your original EBITDA.
The pipeline we look at with Cristian and with our business development managers is always filled with opportunities, and then, of course, some of these opportunities are finalized, such as the one you mentioned earlier, Gigas. Of course, Cristian will give you some extra information on that transaction. Generally speaking, we're active in the waste market, in the energy market, but not only those. As you know, those markets are very fragmented, and they're filled with opportunities.
Emanuele, I forgot to answer one of Javier's questions on STG customers, so thank you for asking. We have some 740,000 customers currently who are STG customers. As far as the evolution of margins is concerned, compared to last year, things change quarter by quarter, of course, especially when we compare things to last year, with all the differences even last year had on a month-by-month basis.
There's nothing extraordinary. If you look at the overall margins between electricity and gas, the situation is positive. What has changed for the first nine months compared to the first six months is that the gas contribution was a little bit higher compared to the contribution we got from electricity. Just to give you one element, just to give you one example from the industrial standpoint, clearly, in July and August, we had high consumption levels. We did have some costs linked to the unbalance, and that led to a lower margin.
Those are things which tend to happen when you manage energy. As you know, we have an average cost for the year. June, we did not spend anything. We spent slightly more in July and August, but that is just one small element which justifies the figures you saw, but nothing critical really. As far as Gigas is concerned, our strategy is to continue to develop our three businesses, and whenever we see a good opportunity, we tend to look into it. Gigas is a small distribution company that we were able to intercept in the province of Verona. They have 57,000 points of delivery. The EV was in line RAB. EUR 34 million was the value of EV, EUR 36 million was the RAB. It is close to our territories. It is a business that we are very good at.
We can look at economies of scale and the businesses we already have there in operations and the gas distribution. That is a way of further enhancing our infrastructure. As you know, that is of strategic interest for our company. Basically, it is almost as if we had invested in our RAB with an operational investment. We simply sped things up, and we will be benefiting from the synergies that we will be extracting from that transaction. In fact, the acquisition was made at a price even slightly lower compared to the RAB, so it was a great opportunity.
We now have a question by Francesco Sala, Banca Akros. Francesco, over to you.
Good afternoon. Thank you. I have three questions for you. Can you share your expectations regarding the supply business in Q4? For gas. For electricity also, is there anything specific we need to look at due to the high prices? Will there be any possible effects on network ing capital? Are you expecting a market concentration phase with opportunities brought about by smaller players who face difficulties that you see opportunities to buy customers or portfolios? Then I have a question on the generation, on the distribution business, which went quite well. What were the dynamics you saw in the first nine months? Was there anything new in Q3?
Supply expectations for Q4. We are working quite steadily. We do not have any visibility regarding any changes compared to what we have done so far. We expect to reach year-end, which results, which would confirm what we have achieved last year. Nothing strange really we will be seeing in the final weeks of the year. For the time being, there is nothing new, nothing to highlight other than, as I said, we still have good margins.
As far as the current scenario and any possible new opportunities, it is a possibility. We have looked at the last-resort markets, and we have seen that in October, some things did happen, and we will just have to wait and see if we can take advantage of these opportunities. Obviously, were prices to continue to be high for a few months, even at the current levels, that may cause tension for some smaller or less structured companies, and they may want to have a partner such as ourselves. In generation, your third question. Our presence on the generation market is fairly limited. Over the summer, the need for energy, the energy requirements went up.
In August, it was up 16%, so there was a larger demand for production, which allowed us to have higher margins and some trading optimization activities as well. We took advantage of that opportunity, and now we're seeing what opportunities there are given the current scenario. We always want to be ready to seize any positive elements and any opportunities that there may be to strengthen our position.
Mr. Fabbri, there are no further questions.
Wonderful. Well, thank you very much for your kind attention. If you still haven't seen our commercial, if you still haven't seen our advertisement campaign, please feel free to look at it on YouTube. We like it very much. I think it represents the company very well. All the best. I know this is a busy day for you, and we'll see you in January for our business plan update. That'll be the next time we'll have a conference call with you, and we'll give you an overview of the end of the year with some elements regarding the end of the year, and we'll look at the business plan update. Thank you.