Naturgy Energy Group S A

Good morning. We welcome you to the Naturopathy first half 23 results presentation conference call. During the presentation, all participants will be on a listening only mode. There will be an opportunity to ask questions after the presentation. If you wish to ask the question during the Q&A session, you may do so by pressing the star key followed by five on your telephone keypad. If you are experiencing any difficulty listening to the conference at any time, please make sure you have your headset fully plugged in, or alternatively, please try calling from a different device. I now hand the conference over to Ignacio Jiménez Carrasquilla, Capital Markets. Please go ahead, sir.

Good afternoon, everyone. This is Ignacio Jiménez speaking from the Capital Markets team at NatuG. Thank you for joining us today for the presentation of first half 2023 results. Next to me is our Executive Chairman, Mr. Francisco Ruines, our Head of Financial Markets, Mr. Steven Fernández, our Head of Financial Planning and Control, Mr. John Ganuza, and our Secretary of the Board, Mr. Manuel García Cobaleda. You will understand our management has quite a busy agenda today, so we will need to stick to the scheduled time for this presentation, which is one hour. We will start going through the presentation. and continue later on with the Q&A session, first with the questions online, and then we will finish in with those submitted through the webcast that have not already been answered. And with that, now I hand it over to Stim to start with the presentation.

Thank you, Nacho, and good morning, everyone. We'd like to start off today's presentation by focusing a little bit on what's happened over the last six months, beginning with the demand evolution in the main markets where we operate and where we can actually see mixed demand across those markets with declines mainly happening in Spain and in Brazil. It's worth highlighting Spain, for example, that we've had a very mild winter, and this has had a negative impact in terms of gas demand. But in the case of Brazil as well, it's also worthwhile reminding you that last year, at least H1 of 22, was a very wet period. And this year in particular actually was a very dry period, and this year is very, very wet, which means that there's a lot less gas demanded for electricity generation, and that explains that decline. If we move over to the main evolution of the energy markets, we can also see a decline in most of the indices that we follow. You can see the Brent, the TTF, of course the Spanish electricity market. This is a function of a number of elements. On the one hand, we do see weak demand across some of the key regions, for example, in Asia that's having an impact in terms of the commodity prices, as well as, as I mentioned previously, in some of the markets where we operate, mild weather conditions, which have also affected the overall prices. On top of that, it's worthwhile reminding you that the first half of 2022 was also highly marked by the war in Ukraine. And what we are seeing right now is more of a normalization of prices or a resumption of normalized trends. If we move across to FX, what we've seen is basically all the currencies in which we operate have appreciated, albeit moderately, with the exception of Argentina. As a reminder, in Argentina, this is a year-end figure, not an H1 figure as a result of the hyperinflationary economy that it is. Overall, the impact of FX on the results has not been particularly high, so we can say almost negligible. So with that said, if we move over to the consolidated results, first point that we have to remark is EBITDA growing by around 39%, shy of 2.9 billion euros, with a net income of around 1 billion euros, up 88%. We've also spent quite a bit of effort investing in the companies we have. So our overall capex has grown to almost 850 million, up 16%. And on top of that, the net debt of the company has been reduced by 11% to a level of 10.7 billion euros. I think when we look at these results today, we can say that they are very solid. It's been a very solid first half of the year. Indeed, that net debt reduction that I mentioned previously is supported by a strong cash flow generation across the board, and it puts the company in an enviable position to continue investing and looking to the future to continue deploying its cash for the 2023-2025 period. It's true that these results have been marked, nonetheless, by a lower demand, as we previously examined. and a decrease in enterprises, which makes them more remarkable, if we may. Finally, a quick word on the dividend policy. We are announcing today a 50 cents dividend that is payable on the 7th of August, and this is part of the new revised 23 to 25 dividend policy of 1.4 euros per share, which we'll detail a little bit more in a later slide. All in all, the markets, businesses, so that would be markets, contributed around 57% of the group's EBITDA. Networks and renewables, if we combine them together, contributed around to 85% of the CAPEX. That is a testament of the group's great effort to invest in the energy transition, and I think it comes through with these numbers. And as you'll see later on in the presentation, this is going to be a trend that's going to be sustained in time. In terms of cash flow, the strong EBITDA results, coupled with a change in working capital of almost 1 billion euros as a result of the moving prices, have allowed us to significantly reduce the net debt level position as of the first half of the year. And in fact, when we look at it from a metrics perspective, I think it's worthwhile understanding that net debt to EBITDA has moved from 2.4 times as of the end of last year to around 1.9 times today. We are still in a very good position with the gross cost of debt increasing to around 3.8%, which is roughly the level where we expect the year to close. And this does not fully recognize the strong remuneration that we're getting from our cash position, which hovers somewhere between, depending on the instrument, 3.4% and 4%. Fixed rate levels are around 79%, so roughly unchanged relative to where we were at the end of the year. So the company, again, is in a good position to offset the increasing rates environment that we have been seeing as of late. So with this, I'll hand over to John to go over the performance by business units. Thanks.