Snam Spa

Good afternoon. This is the College School Conference Operator. Welcome and thank you for joining the SNAM First Health 2025 Consolidated Results Conference Call. As a reminder, all participants are in listen-only mode. After the presentation, there will be an opportunity to ask questions. Did anyone need assistance during the conference call? Then make a signal and Operator will press install and zero on the telephone. At this time, I would like to turn the conference over to Francesca Pezzoli, Head of Investor Relations at SNAM. Please go ahead, Madam.

Good afternoon, ladies and gentlemen, and welcome to the presentation of SNAM H1 2025 consolidated results, which were approved by the Board earlier today. Our presentation will be divided into three parts. First, SNAM's CEO, Agostino Scornaienchi, will share his opening remarks offering an overview of recent market developments, regulatory updates, and the main industrial and financial milestones achieved during the period. Luca Passa, NAMCFO, will then provide a detailed review of our financial performance. After that, Agostino will return for some closing remarks, followed by our Q&A session. With that, I'm pleased to hand over to Agostino.

Thank you very much, Francesca. Good afternoon, everyone, and thank you for joining us today. This is my first call since my appointment as SNAM CEO in May. I'm honored to lead such a solid organization, which is a pillar of the energy system and plays a central role in ensuring energy security for our country and for Europe. I found a company with strong fundamentals and with people. Let me begin by highlighting a few key facts that underscore the central role of Italy's gas infrastructure. Here, we transport around 600 terabyte power of energy, twice the amount carried by the electricity grid, and at less than 50% of the unit cost. Approximately 40% of this gas is used in gas-fired power generation, producing around 120 terawatt-hours of electricity. This accounts for about 45% of Italy's total electricity output and up to 70% on days when renewable generation is low. In addition, we deliver more than 110 terawatt-hours for industrial and hard-to-abate sectors, including steel, ceramics, and chemical subsectors. Moving now to slide number four, the energy crisis and geopolitical situation have reshaped perception of energy security across Europe. This has triggered the need of strengthening gas infrastructure. In few years, the country shifted from a system largely dependent on pipeline imports from Russia to a more diversified mix. including growing imports from North Africa, Azerbaijan, via the TAP pipeline, and liquefied natural gas. LNG in particular more than doubled versus 21, accounting for 30% in H125, supported by new regasification terminals in Piombino and Ravenna. has created the need of the new marine infrastructure requiring a new set of engineering and operational competencies. Moreover, gas plays a critical role as a stabilizing energy source in a system increasingly dominated by intermittent renewables. Events such as Spain's blackout highlight the importance of determining the appropriate share of traditional generation needed to ensure system security without creating excess capacity. Rather than focusing solely on an energy transition, we strongly believe we are entering into an energy addition or energy integration phase based on a balanced mix of energy sources to maintain both competitiveness and sustainability. Let me now turn to some key trends at page five. in the Italian gas market during the first half of 25. Between January and June, gas demand in Italy reached 33 billion cubic meters, a 6% increase compared to the same period last year, marking the first rebound in four years. Residential and commercial sector were up by 3%, largely due to slightly colder weather conditions, while industrial demand remained broadly stable. The key driver of the increase was the thermoelectric sector, which grew by 12%. This underscores the critical role of gas-fired power generation in balanced energy systems, especially as we integrate an increasing share of renewable energy. The flexibility provided by gas plants proved to be vital to maintaining grid stability in a context of greater intermittency, and this is an European phenomenon, with gas-fired electricity production up 17% in Europe. Exports have also risen sharply, growing largely fourfold compared to the previous year, driven in particular by flows from Tarvisio. Looking at supply flows, we have seen a notable shift. Pipeline imports decreased by 1.8 billion cubic meters, more than offset by liquefied natural gas imports, which rose by 2.4 billion cubic meters, with a significant 32% increase. This growth was supported by the full return to operation of the OLT terminal in Livorno and the start-up of the new terminal in Ravimna. As a result, liquefied natural gas accounted for over 30% of Italy's gas imports. This contributes significantly to enhancing both the country's energy security and the diversification of supply sources, which is crucial in today's complex geopolitical environment. We have been able to successfully navigate sudden shifts in market dynamics and gas flows, ensuring security of supply, thanks to the flexibility of SNAM's existing infrastructure, further enhanced by the addition of new gasification terminals. In H1-25, we progressed on the strategy delivered. I'm now at page six. Let me remind the key highlights on gas infrastructure. Works on phase one of the Adriatic line are moving forward steadily. which 42% of the pipeline installation completed, and progress on the compression station reaching 20%, with overall completion at 35%. The BW Singapore regasification unit, moored offshore Ravenna, began operations in May. Short-term auctions have already allocated capacity for June and July, with four vessels having arrived so far. The first half of the year, Italy received more than 100 LNG tankers, nearly half of which coming from the U.S., for a total volume of about 10 billion cubic meters. At the end of June, the storage exceeded 70%, approximately 10% higher than the European average. At the end of July, we are about 80%. Moving to our energy transition platforms. The first phase of the CCS project in Gravina has delivered solid technical results. Our meeting for the pipeline is at an advanced stage, and the process for storage has recently begun. We expect the technical regulation on CO2 transport to be published soon. We look forward to greater regulatory clarity to move ahead with the next phase. On biomethane, We have 72 megawatts already in operation, authorized or under construction, and our mission is to speed the ramp up and maximize the value of the asset. Renovi's backlog is broadly stable at 1.4 billion euro. With regard to the H2 backbone, we have been awarded 24 million euro contribution by the Connected Europe Facility, energy program to cover approximately half of the feasibility studies. Let's look now at sustainability. 32% of CAPEX aligns with the EU taxonomy and 61% with SDGs in H125, while sustainable finance reached 86% of the total. We expect 25 scope 1 and 2 CO2 emissions down approximately 20% versus 2022, which is our baseline. As part of our commitment to transparency and biodiversity, we have published our FIS-TNFD, Task Force on Natural-Related Financial Disclosure Reconciliation Table. We have also launched our first employee share ownership plan, supported by a dedicated communication campaign aimed at reaching our entire workforce. Let's now move to the H1 results at page 7. We have delivered sound performance despite persisting volatility. Adjusted EBDA of 1,492,000,000 is up by 5.3% year-on-year, driven by growing regulated revenues. Adjusted net income of 750,000,000 plus 8.5% year-on-year, thanks to higher EBDA and greater contribution from associates, only partially offset by higher depreciation and financial charges. Investments at $1,122,000,000 were broadly in line with H-124 following the completion of works related to the Ravenna LNG terminal. Net debt reached $17.6 billion, mainly reflecting the investment carried out and the dividend payment. The average cost of debt was stable at 2.5%. Standard & Poor's raises NAM rating to A-, following the upgrade of the sovereign and confirming our strong credit profile. Let's now move to key regulatory updates. The regulator has changed the RAB indexation from 25 to the harmonized index of consumer price with the European Union countries related to Italy, the so-called EPCA Italy. At the same time, the deflator for 24 was updated to 7.9% from 5.3 to recover past adjustments. Therefore, 2025 tariff rub was lifted to 26.2 billion from 25.8. On May 22nd, ARERA published a consultation document that contained some adjustments to the implementation criteria for the ROS-based regulation and the general guidelines for the progressive implementation of the full ROS by 2028 with a transition period 26-27. It adopts a step-by-step, proportionate approach designed to ensure a smooth transition for all market participants. The Council of Ministers approved on June 30th a draft law for the definition of a legislative framework for carbon capture and storage, hydrogen, and methane emission reduction. The draft now needs to pass through Parliament, and it will lay the groundwork for establishing a CCS market in Italy and attribute to our era the role of regulator for the hydrogen and CCS market. Several progress were made on the financing front. In an extremely volatile geopolitical context, we have successfully issued our U.S. dollar our first U.S. dollar multi-trans sustainability-linked bond totaling 2 billion U.S. dollar and 1 billion first EU green bond. Very good job, Luca. With this transaction, we have completed the refinancing for the full year. Moving now to our associate portfolio. In March, the stake in AdBlock gas pipeline was sold to Lunate for 234 million. In May, we have successfully placed via accelerated book building the sale of a portion of Italgas option rights. In partial default, the capital increased, diluting our stake by approximately 2%. In addition, we have recently concluded our exit from ITM power for an amount of 11.5 million equivalent. With regard to OGE acquisition, the closing is up to some condition precedents that were partially met. In particular, no other should exercise the right of the German antitrust authority provided the green light. The process for the foreign direct investment is ongoing, and our base case is to close the deal by the end of Q3 this year. Now, I hand over to Luca for the comments on financial. Please, Luca.