Good afternoon, this is the Chorus Call conference operator. Welcome, thank you for joining the Italgas Full Year 2022 Results Conference Call. As a reminder, all participants are in listen-only mode. After the presentation, there will be an opportunity to ask questions. Should anyone need assistance during the conference call, they may signal an operator by pressing star and zero on their telephone. At this time, I would like to turn the conference over to Ms. Anna Maria Scaglia, Head of Investor Relations of Italgas. Please go ahead, madam.
Hi. Good afternoon, ladies and gentlemen, and thank you for joining us. Today, we walk you through Italgas full year 2022 results. I'm Anna Maria Scaglia, Head of IR, joined by Mr. Paolo Gallo, our CEO, and Mr. Gianfranco Moroso, our CFO. We will address any question you might have at the end of the presentation. I now leave the floor to our CEO, Mr. Paolo Gallo.
Good afternoon to everybody and welcome to this conference call. I will start the presentation starting from page number two, that summarize, highlight some of the major results. The first one is that we have gone through the 24 quarters of consecutive growth since the demerging from Snam. Our performance, in particular of the Italian regulated business, has been marked by the intervention of the regulator, by the WACC review that has been significantly in terms of effect. We are talking about more than EUR 62 million in the year 2022 compared to year 2021. That has been partially mitigated by the ramp growth and the cost control. The news that we have in 2022 is the consolidation of DEPA Company.
Starting from September 1st, we are going through some number later. Of course, the acquisition has been extremely important. We have gone through a long process for acquiring the company. Now since September, we have started working on the integration of the three company in order to push them following the journey that we have already done in the past years through the digital transformation. Of course, we will do it at a faster pace in respect of what we have done initially, considering our expertise and competence. The other element that I would like to underline is the ESCo. We have more than triple the EBITDA of last year, and we will give you some more numbers about the ESCo. The result has been extremely positive, also a good contributor to our final result. Financial strategy is...
Financial structure is something that Gianfranco will address, we can anticipate that we have almost no impact from rising rates. Finally, we will go through some number in the ESG performances that confirm our leadership position. Moreover, we are on the direction to achieve the targets that we have set in our strategic plan. Based on the result that we achieved in 2022, our Board of Directors is going to propose at the next Assembly General, that is going to happen on April 20, to distribute a dividend of EUR 0.317 per share for the financial year 2022. That represent an increase of 7.5% in respect of last year.
It shows the capability of our dividend policy to return additional value to our shareholder in respect to the floor that we have set in our dividend policy. If we move to the following page, we are on page three. We have some numbers regarding revenues. Revenues were up by 12% in respect of last year. The focus on the cost remains strong. In fact, you see that the EBITDA adjusted is higher. The understanding the fact that the revenue were significantly reduced by the WACC review, the EBITDA is higher by 7.3%, thanks to the cost control that we have also applied in 2022. Overall, OpEx, of course, are on a year-on-year basis higher, this is driven by the ESCo activity.
Because on the other side, the cost of the distribution activity continued to decline, as I will show later. Overall, considering our cost of debt, we are able to achieve an adjusted net income growth of 7.6% in respect of the result of 2022. Let's look about still on the following pages, something about CapEx and operating cash flow and financial debt. CapEx reached the number of more than EUR 800 million, down 6% in respect of the previous year. We'll go through in details in a moment.
The big difference in respect of last year, and Gianfranco will explain in more detail, is a reduction in the operating cash flow, driven by a negative contribution of the working capital. This trend has already emerged, if you remember, in the third quarter of last year, and we will give you more flavor and more comment later on. Thanks to the extraordinary transaction we carried out in 2022, the sale of Gaxa, the transaction called ERG, the sale of 10% of the NewCo in Greece, and the sale of the Naples assets, we recorded a cash-in of EUR 325 million.
As a result of these elements, the cash flow evolution and the payment of DEPA Infrastructure in September, our net debt increased just above EUR 5.9 billion, if we exclude the effect of IFRS 16. Just to tell you which is the physical situation right now is on the following page. Now thanks to the Greek contribution, we have our total network exceed 80,000 km. We serve more than 2,000 municipality, Aqua in the active redelivery points are close to 9 million overall, including Italy and the affiliates and of course Greece. To give you just a more flavor about our physical assets. If we take a look at our investment, that is on the next page.
As I told you, we invested EUR 814 million in the year, around 6% less than the previous year. Inside this number, we can see for the first time the contribution of Greece that, for the time being, is limited to the four months of the latest four months of 2022, and is equal to EUR 39 million, while the remaining, of course, is overall in Italy. As you can see, there are a general decrease in all our investments. Sardinia, the reason is being that we have nearly completed a network. We are still investing. We have invested in putting into operation new LNG regasification plant as a support of the gas distribution.
In Italy, we have continued to invest in the repurposing and the extension of the network, but the only area where we have continued to increase our investment is the digital transformation of our asset. That is an extremely important element, considering that the contribution of the smart meter has been really, I'm not saying close to zero, but very insignificant in respect of 2021. That is because we are continue to replace all the other equipment, introducing also new equipment to make our network. You know that our target is that by the end of 2023, to have 80% of our network fully digitized and fully under control and complete remaining 20% by 2024.
In Italy, just to give you another element, we have in Italy and Greece, we have completed more than 500 km of new network, including extension in Italy and Greece. That is the overview of the CapEx. Before getting into the numbers, I would like to give you some result on the ESG. The data refers only to the Italian perimeter, but in the press release that we have put on the just around lunchtime, you have more data also about Greece. The difference is that in Italy, we can compare to our baseline established in 2020, while the baseline in Greece is going to be 2022.
The effort in 2022 in improving our environmental performance remains strong. It is clear that the trend and the direction will allow us to reach our 2030 targets. Very important and very impressive is that the energy consumption dropped by 21% year-over-year basis. About 2/3 of this reduction relate to the industrial process where we have applied the Geoside expertise. We have leveraged the Geoside expertise to optimize our process, exactly like other Geoside clients do. Also as a consequence of this drop of the net energy consumption, we see a drop in the Scope 1 and 2 by 12% in respect of last year.
Two-third, also here, 2/3 of this reduction is explained by lower fugitive emissions. Thanks to the fact that we have make a step forward in using Picarro technology and use it on a proactive way in order to find out immediately the most largest emissions, fugitive emission and reduce the overall emission during the year. The data is even more remarkable because we have inspected more than 100% of the network. The increase in respect of last year is 6%. That means that we have increased 106% of the network. I mean, this is remarkable because, of course, the more inspection you perform and the more the highest is the probability to find some leakages. Overall, the gas leakage rate measured over the gas distribution remain below 0.1%.
In particular, is equal to 0.087. Last but not least, the Scope 3 emission. Is the first time that you see a full year in Scope 3 emission. We're down by 7% in respect of the recalculated Scope 3 of 2021. As you may recall, as a part of our strategic plan commitments, we indicated the target to cut Scope 3 emission by 33% by 2030. We wanted to be sure to properly account those numbers in the same way that we account Scope 1 and Scope 2. We were able to do that because it is thanks to the engagement that we took with our supplier. You can refer to the appendix or to our more detailed communication about all these numbers.
If we move to the following pages still on the ESG social targets, we wanted to underline two very interesting KPI. That is the training hours and the female presence, the women in responsibility roles in the company. Regarding training hours, it's very extremely significant, the increase of the training hours per employee in respect to 2021. The increase of 15.4% is really an important number. If you look inside, you can even see that the increase has been even higher regarding training on digital transformation. That has increased significantly and represent 26% of the overall hours of training. Regarding the women in responsibility role, we have reached, as you can see, 25%, so one out of four are female in the responsibility role.
Overall, we are nearly 18% of the female as overall personnel in the company. Of course, that is not enough. As you can see, our target is even higher. But you can understand that we have a strong, in that case, legacy about having many men in the company that comes from many, many years ago. Let's move to the result. That is on page nine. As we have... We wanted just to underline the difference between 2022 reported result and 2022 adjusted result. The difference is in capital gain and fair value adjustment related to non-recurring transaction. Namely, capital gain is referring to Gaxa. So the sale of Gaxa to Edison, the sale of majority of Gaxa to Edison, and the transfer of asset from Medea to ERG.
These two represent the capital gains. There is a value adjustment related. That is referring to the acquisition of [Janagas]. The overall amount as a different is EUR 11.6 million post-tax. That is the difference of these three non-recurring transaction. In the subsequent pages, I will only compare adjusted numbers between 2021 and 2022. On page 10, we have the difference, and we notice that despite the negative impact from regulation, nearly EUR 63 million for lower WACC and the X-factor, we have recorded higher revenues driven by RAB, thanks to the investment that we carried out in the previous year, and other tariff components. The big increase is coming from the ESCo, almost EUR 150 million in term of additional revenues.
Last but not least, the data that represents EUR 51 million in additions of 2022, that of course was zero. Also, our cost increase in respect of last year, driven by the increase of ESCo and of DEPA, as similar to what we have seen on the revenue side. D&A was higher by EUR 34 million due to higher CapEx. Tax rate was 26.6%, as Gianfranco will explain in a moment. Final result is that there is a big increase in the net profit after minority of 7.6%. If we exclude the adjustment, so if we go to the reported numbers, the increase of net profit is equal to 12.3%. Let's analyze in a more detailed revenues on page 11.
As I anticipated, the impact of the regulation in 2022, in respect to 2021, is nearly EUR 63 million, divided between the WACC review and X-factor. Regarding the smart meter, there is a very limited contribution because we have completed the replacement of the old ones. Therefore, there is a drop of EUR 12 million. Those negative effect were more than offset by in distribution. Thanks to the RAB, there is a nearly EUR 37 million increase in tariff. We booked almost EUR 7 million additional, split between previous tariff, previous year tariff adjustment, and other regulatory revenues.
I wanted to underline that of these EUR 7 million, EUR 4 million are linked to higher incentive for emission re-reduction, thanks to the Picarro technology. DEPA contributed, as I anticipated, by EUR 51 million, regarding the last four months of 2022, and the rest of the business in Italy contributed for additional EUR 146 million of incremental revenue, thanks to the ESCo and to the Naples capital gain. On page 12, you have, let me say, just a table to compare revenues line by line with the revenues adjusted in 2021. If we move to cost, it is on page 13. What is extremely important is that we have continued to reduce our cost, when we look on the like-for-like basis, by more than 5%, equal to EUR 18.5 million.
We had higher white certificate cost for EUR 4 million. The Gaxa, the sales of Gaxa, and the Naples disposal implied nearly EUR 6 million lower, EUR 5.7 million of lower cost in the year. Of course, we have higher cost in DEPA, nearly EUR 21 million for the four months. As a balance of the highest of the higher revenues that we have seen before by our ESCo activities, we have also seen an increase of EUR 92 million in cost. If we put together revenues of ESCo and cost of ESCo, the EBITDA achieved by our ESCo is, the margin is 18%. Our target to continue to stay close to 20% as a margin has been achieved also in 2022.
The next page just show, line by line, the comparison of cost between 2022 and 2021. The major elements to underline, I already said. I will pass now the floor to Gianfranco for the remaining part of the presentation.
Thank you, Paolo. We are now on Slide 15. 2022 adjusted EBIT amounted to EUR 623 million, marking a significant increase of 6.8%. This is the result of an increase in the EBITDA of our Italian perimeter of about EUR 43 million as a result of the evolution of revenues, OpEx, already explained by Paolo. EUR 25 million higher D&A, mainly related to the CapEx executed in the last 12 months, and EUR 5 million for higher accelerated depreciation for medium and large meters on the back of regulatory change. In particular, the resolution to up to [269 ] of ARERA has provided for more stringent requirements in metering performances. Finally, DEPA incrementally beat the contribution of EUR 21.4 million, while DEPA EBITDA contribution was EUR 30.6 million in the four-month period. Now to slide 16.
Adjusted net profit after minorities reached EUR 395.7 million, with an increase of 7.6%. Net adjusted financial expenses marked a level of EUR 56.3, only EUR 2.3 million higher than last year, despite the current volatility in financial markets, thanks to our debt structure. The increase of the average gross debt was mostly mitigated by lower average cost of debt. The contribution from associates decreased by EUR 1.8 million, mainly driven by some capital gains realized in 2021. Please note that the capital gain following the disposal of majority stake in Gaxa has now been reclassified as an extraordinary item.
We accounted for EUR 151 million of income taxes, marking an increase of approximately EUR 80 million due to the higher taxable income, with a tax rate of 26.6%, a touch below the figure of last year, 27%. Due to the consolidation of data, tax rate increase is lower at 22%. Looking at the evolution of the cash flow on slide 17. Cash flow from operation was around EUR 571 million, covering the majority of net CapEx executed in the year. It appears quite clear that this is the consequence of the net working capital evolution that brought a negative contribution of almost EUR 240 million.
The main drivers of change in working capital were higher Superbonus and Ecobonus receivable for more than EUR 130 million, and the impact of lower volumes due to mild weather and to government resolution to participate the heating of the building, amounted for EUR 75 million, resulting in higher receivable from Cassa Conguaglio, the central clearing system. Net CapEx generated a cash outflow of almost EUR 720 million. The disposal bar show EUR 325 million, including the impact of the item of Naples and of extraordinary transaction we carried out in 2022, namely Gaxa and ERG. The M&A bar, the acquisitions, is mostly related to the acquisition of DEPA, including the 49% stake of Edates and the minority stake in Picarro.
Finally, taking into account the dividends outflow, all this resulted in a net debt increase of approximately EUR 1 billion. As we anticipated for the financial expenses, let me now make an update of our debt structure at the end of December, slide 18. At the end of 2022, we have executed a new ESG loan of EUR 250 million, a new EIB loan of EUR 150 million, 15 years tenure of supporting energy efficiency projects. We also signed a new financial package with DEPA as a borrower, securing a long-term support for its development plan. The current composition of our debt is 91% fixed and 9% floating. The liquidity at the end of the year was above EUR 450 million following DEPA payment. You can see, our debt maturities profile remains very solid.
The next bond repayment is due in 2024, together with EUR 500 million of bank loans to be repaid. Despite the current volatile financial market, we continue to rely on one of the lowest average cost of debt, approximately 0.9%, as well as on a very limited exposure to interest rate volatility. Both Moody's and Fitch confirmed their ratings in the second half of 2022. Moving on the balance sheet, slide 19. The net invested capital amounts to almost EUR 8.4 billion, with an increase of almost EUR 1.3 billion compared to end 2021, mainly related to the consolidation of the infrastructure. On the liability side, the consolidated net debt was EUR 6 billion, including the IFRS 16 impact of approximately EUR 70 million, with an increase of EUR 1 billion compared to the year end 2021.
I leave now the floor back to Paolo.
Thank you, Gianfranco. I think we have gone through a very important presentation and a very strong set of results, 24 consecutive ones. as you know, on June 14th, we'll present the new strategic plan, and at that time, we'll provide to you the guidance for the year 2022-2023. The strong achievement that we have reached in 2022 allow us to propose, as I anticipated in the opening of this presentation, to the next assembly general meeting, dividend per share related to such result to EUR 0.371 . This is 7.5% higher than last year. If you look at the last three years, we have a CAGR of 7.4% growth.
As the number in this slide shows that our commitment to distribute 65% payout of the net income, if it's higher than the yearly 4% increase, represent an upside option that immediately delivers additional value to our shareholder, and it has been proved that it's been working for all the period of this validity.
Now I would like to open the floor to questions that you may have on those numbers and other curiosity that you may have. Thank you. Floor is yours.
Thank you. This is the Chorus Call Conference operator. We will now begin the question-and-answer session. Anyone who wishes to ask a question may press star and one on their touchtone telephone. To remove yourself from the question queue, please press star and two. Please pick up the receiver when asking questions. Anyone who has a question may press star and one at this time. The first question is from Javier Suarez with Mediobanca. Please go ahead.
Hi, good afternoon, and thank you for the presentation. Three questions. The first one is on the numbers. In slide 12, there is a significant increase in the contribution from revenues, from the contribution of what you call other revenues from kind of EUR 75 million in 2021 to more than EUR 220 million in 2022. You can help us to understand the breakdown of those of that increase. I guess that that is mainly coming from the ESCo related activities, but any further clarity on that would be appreciated. Also, on the numbers, is on the working capital absorption of EUR 240 million that you are showing in slide 17.
I was wondering if you can give us a kind of an idea of what you are expecting from that working capital figure to impact your net debt in 2023, and if you are expecting for at least a partial reabsorption in 2023. The second question is on the growth coming from the ESCos. I think that the government intends to reduce the incentive for investment related to energy efficiency. The question for you is if you can set up with us your expectation on the impact that this may have in the performance of this activity that has been proven to be extremely solid in 2022.
I just questioning myself if that may be impacted in 2023 by any regulatory change related to fiscal incentive. The third and final question is on the performance of DEPA. We have seen DEPA consolidated for a quarter, the last quarter of 2022. I think that the EBITDA margin is below 60%. You can share with us first off on from the operational, from a operational stand point of view, the areas through which or on which Italgas may enhance the performance of DEPA. Many thanks.
Thank you, Javier. Let me start from the second question, if I'm not wrong, the working capital evolution. As I explained, there is a big portion of that that is coming from the increase in the receivable from the Superbonus activity, let's say. This Superbonus has the possibility to be recovered in a period of four years. Basically, what you see in this end of year increase is the result of the activity performed until December 2022, that give you the right to be recovered in four installments, starting from 2023 and going forward.
To give you an idea, this will be, there will be the possibility to compensate with the current fiscal charge due for 2023, the first payment in June, the first quarter of this amount. The other element that is quite important is the receivable with the Cassa Conguaglio for the volume that we have billed in 2022. The difference comes from the last quarter of the year due to the mild weather and also the resolution made by the government to postpone the date of starting of the heating period in the buildings. This, as usually can be recovered within in December 2023.
Our expectation is to have a temporary impact, a temporary effect of this situation in the working capital, at least for the balance that we have in the balance sheet at the end of December. Finally, on the working capital, as you know, there has been a modification in the terms of payment or repayment of all the mechanism to support the value chain in terms of bonus gas. We can expect in 2023 that the amount that eventually we will pay to the sales company as a discount will be recovered in the same month. Also on that portion of the working capital we are quite confident.
Regarding Javier, you are asking to give you an explanation about the higher revenues that we recorded in 2022 as per 2021, mainly driven by two, let me say three facts, if you want. First one is the ESCo. ESCo represented an increase year-to-year of EUR 115 million. Then we have DEPA. DEPA represent, as I told you, EUR 51 million. The third element is capital gain coming from Naples and other transaction that we have done that were not adjusted.
That is EUR 30 million. Those are the three pieces, if you want, that represent the increase of the revenues. On the question regarding ESCo, I mean, the line was not so clear, but I can understand or I can guess what was your questions, and if not, please correct me. You were asking, let me say, the future of the ESCo, especially in consideration of the fact that the [bonus 110] will end by 2023. That was something that was already evaluated in our strategic plan. Our effort today, through potential M&A, potential because nothing has been completed yet. On potential M&A and also in with other customer, we are trying to move our activity towards, in particularly, energy efficiency at the industry level.
Something that may eventually require some small investments, but will guarantee us a quite a stable cash flow in the year to comes. What we are doing, we are trying to replace the majority of our Superbonus activity with other kind of activity, especially focus on the industry energy efficiency. We expect, nevertheless, that in 2024 onward, there will still be some, let me call it, refurbishment of buildings with a lower incentive. As you know, the 110% will not go to zero, but will be significantly reduced in 2024, in 2025. Still, we expect there will be some activities going on. That is the change that we are taking on the ESCo. I hope that is the answer to your questions.
If not, please tell me. On the last one on DEPA, first of all, we have consolidated not the last quarter, but the last four months. You mentioned the fourth quarter, these four months that we have consolidated starting from September 1st. What we are doing is we are in these four months and also in January and February, we had gone through a review of the current organization of the three DSO. What we are trying is to implement or to start the journey that we started many years ago, back in 2017 in Italgas, regarding digital transformation. Digital transformation not only of the asset, but also of the processes. Just to make you an example, in 2023, we will move all IT infrastructure currently owned by the three DSO into cloud.
That is the first step that we have taken back in 2018 in Italgas. We are sure that we will do it more effectively and more quicker because we have already a nice, a good experience about that in Italy. We are trying to bring to Greece all our expertise, all our competence in that stuff, trying to help our Greek colleague to move forward, similar targets, similar objective, but a faster pace. I don't know if I have completely responded to your question, Javier. If not, please reply.
No, no, I, you did. I maybe have a follow-up question on the breakdown that you make on the other revenues. I think that you mentioned that there is a capital gain from Naples of EUR 30 million. The question is, the logic behind-
I didn't say the only from Naples. I said we have made also another couple of transaction about selling real estate. If we sum up the capital gains of Naples and the other two real estate sale, we have arrived to EUR 30 million.
Okay. Then the question for you is, the policy of the company is going to be on a forward-looking basis that any transaction that is generating a capital gain, that is not going to be adjusted, but that is eligible for future dividend payment. Is that a fair statement?
No, that is not. We have. There has been other three transactions, as I, as I mentioned, Gaxa, ERG and [Janagas], for which we have accounted as a non-recurring transaction. What we do is that we normally put in our day by day numbers are not adjusted. The transaction, they may not be that are recurring, sorry. We are just adjusted the number by a non-recurring transaction. The sales of Gaxa, for example, is 1 sale. It will never happen before. Will never happen again. We have adjusted. The transfer of the asset, the generator, a capital gain in to ERG, again, is something that happened once. It will never happen again. It's a non-recurring.
The fact of the sales, the capital gain of Naples or other real estate activity may happen again, and therefore we have classified them as normal operation.
Okay, interesting. Many thanks.
Next question, please.
The next question is from Stefano Gamberini with Equita. Please go ahead.
Good afternoon, everybody, many thanks for taking my questions. First of all, regarding page six, the breakdown of CapEx, which is very interesting in my view. I know that you will disclose the guidance for 2023 next June, but just could you give us an idea what are these parts in the 2024, 2025, in the next years, and why the digitalization trend and mainly the development and maintenance, we can say, could grow in the next years, considering a like-for-like situation. The second, regarding the slide 16, you underlined the trend of EBIT and of the EBITDA, but anyway, we noticed that EUR 40 million is more or less the change on the Italian activities.
Now, considering your target 2025, which is less than two years of an improvement or EBITDA level of around EUR 450 million versus 2022, and okay, EUR 30 million capital gain you recorded this year, the target of improvement in the region of EUR 400 million is still valid. What are the main drivers? Considering also what you underlined about ESCo, the change of approach in the ESCo, what are the other drivers in order to reach this target?
The third one, regarding the situation of the already closed tenders, like La Spezia, like Belluno, which still have to be awarded, the challenges that are there and when do you expect to get the awarding of these tenders, because if I'm not wrong, this could mean a strong acceleration of CapEx immediately after the tenders. Thanks all.
You have probably to repeat the second question because I lost most of them, but I going to reply on the. Let me start from the third one. It is the easiest one. You know that we have been awarded on Torino 1. It should start this month, let me say end of this month, the award. Belluno, that has been taking quite a long, let me say, journey to arrive to the award. I should remind you that the offer was submitted September 1st, 2017, and now we are in 2023. We should start probably mid of this year as award. Starting as award, as starting of the concession. In La Spezia, pending some discussion at court, we should start the concession in the second half of 2023.
I think those are the dates in which you. Let me say that I would put probably La Spezia in the last quarter of 2023. Regarding, if I well understood the first question regarding the CapEx, you were raising questions about the digital components, right?
No, about all the different components. If we move onwards 2024, 2025.
Mm-hmm.
These are the different components, Sardinia is down, digitalization probably will reach its peak in 2022, and the other component development, which part should grow and why?
Which part?
That you expect will grow in the next years. I guess the increase.
We normally disclose, Stefano Gamberini, we normally disclose this number at the strategic plan. We need to go back to our strategic plan back in June, for which we have already explained the evolution. Just to give you some, let me say, flavor about the difference, digitization will continue to be strong, and we'll see an increase by the end of the plan. You know why? Because we expect that we will start to install our new smart meters because of the fact that every communication will discontinue the GPRS system.
We will see quite a steady investment in the digitization up to 2026, when we'll see again, another growth boosted by the new smart meter deployment. Greece will represent a significant part of investment in the years to come. We will move from the EUR 40 million that we recorded in 2022. We will significantly go up to. For example, in 2023, we expect an investment of around EUR 200 million, a little bit less than EUR 200 million, but that is the area. You remember that we, in our plan, we envisage an overall investment of EUR 1.8 billion in Greece, including the acquisition. The acquisition has been, let me say, less than EUR 1 billion.
We still have EUR 800 million of investment to be deployed in the next four to five years. You can imagine that is in the range of EUR 200 million per year. I don't see other significant numbers to be mentioned in terms of, let me say, the repurposing will remain stable overall the plan period. Those are the numbers. You are asking me if we are still confident to reach the EBITDA in 2025? That is your question.
Yes. What are the drivers that could push up, you know, considering the results, considering...
Push up for what?
Sorry. To reach.
You are looking if I'm confident on the number or if I confident to pass them, to outperform the number?
No, no. If you are, if you do outperformance it's even better. Just to understand that, you know, this trend, considering, 2022, which is another year, under shoulders, then we have just three years in front of us in order to reach an improvement of more than EUR 400 million. If you're still confident, considering the situation of.
The answer is going to be very straight. I'm not going to go around and say. We are confident to reach the target that we have set. We have demonstrated that we are able to outperform the targets that we have all, we have set in all our previous plan. We are absolutely confident to reach the target that we have set out for 2025 and 2028. How? You will discover that in our next strategic plan that will be presented in June.
Okay. Thanks a lot.
Next question, please.
The next question is from Bartek Kubicki with Societe Generale. Please go ahead.
Thank you. Good afternoon. A couple of things from my side, please. Firstly, I would like to discuss the volumes of gas distributed in Italy in 2022. In your press release, you are showing a 10.4% decrease on a year-over-year basis. I wonder how much of this you think is a structural demand destruction and how much is weather related? From this respect, what also do you expect in 2023 in terms of a structural demand destruction? Now, if we think that if in your, in this scenario, gas distribution volumes will be lower, what do you think the regulator will do to the tariffs in order to cover the shortage of cash flows to the system? Because simply the volumes will be lower to cover the revenues.
That's the first thing. Second thing on Greece, whether you can update us on anything on the regulation, whether When do you expect the regulatory framework to be finalized? I suppose 2023, you are still operating on previous year regulatory framework. Lastly, on those small real estate transactions you concluded last year, do you think, or maybe you can point or indicate what, how big the portfolio of real estate, unnecessary real estate is in your on your balance sheet, so that perhaps we can expect more of those transactions going forward. Thank you.
Regarding the volume of gas, I can tell you that more or less, 1/3 is driven by, was driven by climate, so mild temperature. mainly concentrated in November and December, because until end of September, the difference in respect of last year was close to zero. Two-third has been driven by all the initiative taken by the government to reduce gas consumption. Is going to remain over 2023? climate, we don't know, of course. we don't have the numbers yet for the first quarter of 2022. Regarding the initiatives, you know, like we have shown in our result from an energy efficiency point of view, some of the initiative will remain. we will see some reduction in energy consumption, not only gas.
In fact, our presentation was not only relevant to gas consumption, but was relevant to energy as a general, so electricity and gas. The savings were coming from in both area. Some of them will remain. Some attitudes, some habits that were taken in order to reduce the energy will remain over time. Especially think about us, what we have implemented, apart the closure of the offices for a long period during the Christmas time or Monday and Friday, apart of some, let me say, action taken in order to reduce the consumption in the building, some other will remain. I mean, whatever we have implemented in our buildings to control temperature, to control the consumption or depleting gas, will remain over time.
I can imagine that the 2/3s that are coming from initiatives taken by everybody will remain over time. That will involve not only gas, but electricity. Just to give you an idea of the impact of what happened in 2023, our, let me say, short in cash was very limited to EUR 75 million, out of more than EUR 1 billion, being a more than EUR 1 billion the overall revenues that we have the right to receive. It's quite limited.
That in considering such a big decrease in volume of gas consumption that happened because of all the action and initiative that were taken, not only, I mean action, but the fact that the gas price was very high, that will induce many people, many industries to reduce their own consumption. That to respond also to your tariff. Regarding the Greek regulation, I will pass the floor to Gianfranco, so he can update you about the time schedule.
The discussion are ongoing with the Greek regulator, with RAE. There is not a precise deadline, meaning that it depends, of course, of the outcome of this discussion. We would expect a time period of, let's say, one to two month. Before summer anyway, depending also on the political election on which we do not have a still a date, and also say the local discussion within the regulator and with us in terms of define the tariff. In any case, the regulation provides that whatever will be the date of approval of the tariff proposal, the regulation provide the application starting 1st of January 2023.
Regarding the real estate transaction that you mentioned, yes, we still have some buildings, some area that can be disposed, not so many. Some of them are of today as limited by the fact that we are going to clean the land. For example, we have one important area in Venice still under cleaning, under soil cleaning. Of course, you cannot dispose it until you have completed the cleaning of the soil that comes from many, many years ago when Italgas was used to burn coal and coke to produce city gas. We still have, but I mean, we don't have a precise plan to dispose that. As soon as we have some opportunity, we will do it and we will take it.
Super. Thank you very much.
Next question, please.
The next question is from Davide Candela with Intesa Sanpaolo. Please go ahead.
Hi, good afternoon, gentlemen, and thank you for taking my questions. Just three quick questions on my side. The first one is with regard the plan you said that you were scouting for some M&A opportunities.
Davide?
Yes.
Sorry, can you repeat? The line went down for a second.
Can you hear me now?
Yes, please.
Okay. I will start again. The first question is on what are activities in the plan you said you were scouting for some M&A opportunities there. I was wondering if you have some this year on the table, and if you can update us on what you are seeing in the market as of today. A second question is on biomethane. Looking at the much clearer regulatory framework also with regards to the incentives, I was wondering if the company could evaluate the possibility to being involved in the production of biomethane. Basically, building greenfield plants for the production of biomethane and integrating them within the network.
A final one on hydrogen, a quick update on the pilot project in Sardinia and a broader question on hydrogen readiness of the network in general and how things are going and what we are working on to looking forward to integrate hydrogen within the network. Thank you.
Okay. It's easy to respond. Water activities, you are right. We have in the plan more than EUR 100 million allocated to M&A. We are still looking for. As of today, we are not being successful up to now. You know, the market is very, very particular, very peculiar, so it's not easy to find a possible seller of concession in the water distribution. We would love to enter, but as of today, we have not been successful. We still are running our small water concession in Caserta, improving the asset in order to reduce the water leakages, but it's a small concession. Hopefully we will get something in the near future, but we don't know. We have said that for a couple of years up to now. We have not been successful.
On the biomethane production, no, we are not interested to enter into the production of the biomethane. On the other end, we are very active in order to collaborate with any biomethane producer to facilitate the connection. We have already connected the first one since a few weeks now, that is the Bonollo producer of grappa. I don't know what is the name in English of grappa, but you understand very well. Is currently injecting biomethane in our network. We have worked very well with them, identifying and reducing the cost of connection, and moreover, making the connection fully digital. In order...
When I say fully digital, that means that we are checking in real-time the composition of biomethane. If the composition is not consistent and in compliance with the law requirement, we immediately stop the injection. We revert back the biomethane to the local producer. The connection has been extremely successful. It's the first one that we made fully digital. We are trying to collaborate with many others in order to facilitate them to connect to our network. We should see very soon other connection to be done into our network. Regarding our project in Sardinia, the conference of the VIA Regionale has been closed. Now we are waiting for the authorization to come, has been closed positively. We don't have any special remarks.
Hopefully, within the first semester of this year, we should start groundbreaking, so starting the construction of the photovoltaic plant, the electrolyzer, of all the other stuff. We are in a good point, we are just waiting the final authorization, the full authorization to arrive.
Next question.
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Okay. Many thanks for everyone who has attended the call. As IR team, we are available as usual for any follow-up needed. Thank you.
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