Terna Rete Elettrica Adr

Good afternoon, ladies and gentlemen, and welcome to TURNA's first half 2024 consolidated results presentation. At this time, all participants are in listen-only mode. Please be advised that today's conference is being recorded. I would like to turn the conference over to our host speaker today, Mr. Omar Al-Bayati, Head of Investor Relations, Corporate Development, and Sustainability. Please go ahead, sir.

Good afternoon everyone and welcome to Terna First Pass 2021 results presentation. The call will be hosted by our CEO and General Manager Giuseppina Di Foggia and our CFO Francesco Beccali. Following the presentation we will have a Q&A session. We kindly ask you to send any questions to investor.relations at terna.it. Please do see that the call is yours.

Thank you Omar and good afternoon everybody. Before starting to analyze the figures, I would like to share with you our main achievements and highlight some of the key topics in energy transition that we have focused on. First, let me start by reminding you that our 2024-2028 industrial plan is based on the concept of a twin transition, energy and digital, with innovation leveraged to support grid development. Therefore, on the one hand, we are moving forward with the execution of our CAPEX plan to deploy the structures required to enable energy transition and meet the European decarbonization targets. But at the same time, we are investing in digital tools and technology that will help to maximize the efficiency of the whole energy system. In December 2023, a new law charged Perna with the task of creating and developing a digital platform for institutional communication on transmission grid development. Connection Request of Renewable Energy Sources and Storage Systems. In May of this year, TERNA launched TERRA, a new portal available to local and national administrators, the regulatory authority ARERA, and applicants that will enable efficient, environmentally sustainable territorial plumbing. Digitalization will also increase efficiency in dispatching activities. In May, Herrera published consultation document 170-2024 regarding the renewal of incentive scheme for the reduction in dispatching costs, providing high visibility for the 2025-2030 period. This mechanism is designed to align the interests of the PSO and the Italian system, above all, guaranteeing the security of the network. At the same time, Terna will be rewarded for its ability to manage the system at a lower cost, generating savings for customers. Let me move on now to talk about sustainability. For us, sustainability is not only in what we do, but more importantly, in how we operate. This is the main reason why Ternas' sustainability plan is embedded in the industrial plan. The activities envisaged by the sustainability plan include the projects and actions conforming Ternas' commitment to delivering a just transition, a fair, inclusive process that takes into account the potential impacts on all stakeholders, including the workers, local communities, and suppliers. Thelma's recent efforts in sustainability field have also been publicly recognized by rating agencies with our inclusion in the new SMP Global Indices focused on SDGs and biodiversity. The company has also been recognized for its best practices in the ESG field and included among the 500 most sustainable companies by China. Sustainability is also one of the pillars for our financing operations. In fact, in addition to the hybrid green perpetual bond issued in April, in May and July, This year, Terna signed two ESG-linked credit facility agreements for a total amount of 450 million euros. The transactions will allow Terna to count on a liquidity appropriate to its financial soundness and confirm, once again, the group's commitment to a model that aims to reinforce sustainability as a strategic lever for creating value for all its stakeholders. This includes obviously shareholders and on June 24th we paid 22.50 euro cents per share as the 2023 final dividend. This, when added to the interim payment of last November, brings the total... 2023 dividend to 33.96 euro cents per share. And now let's have a closer look at the execution of the main project. Before analyzing in detail the main project, Let me once again underline that we consider the execution of our development projects the core of the agenda in the coming years and we are working to mitigate and minimize any risk. In fact, of the 2024-2028 CAPEX plan, more than 80% has been already authorized and approximately 75% is already covered by existing procurement contracts. Concerning the main project, I would first like to highlight that on 10th of May, the interconnection between Italy and Tunisia was fully authorized by the Ministry of Environment and Energy Security. Procurement activities have started with tenders now ongoing. The link will connect Europe and Africa and is a concrete example of Italy's role as the Mediterranean hub for energy transmission between the two continents. I can further report that earlier this month, Tunisia also confirmed authorization of the project. Let's move to the Tyrrhenian link. The project is a double underwater table that will link the Italian mainland, Sicily and Slovenia. It will increase the security of supply for our two main islands, enable the integration of new renewable energy sources, and consequently contribute to the energy transition of Italy. Both links have already obtained full authorization and procurement contracts for both HDDC cables and stations have been awarded and signed. Two other relevant projects in our CAPEX plan, the Sacoitri and the Adiatic link, have also obtained full authorization and have main procurement contracts signed. SACOITRI is a submarine connection between Slovenia, Corsica and Italian mainland that will contribute to increase the security of supply in Slovenia and allow us to eliminate bottlenecks in the area. The ADIATIC link is a submarine connection between Abruzzo market which will increase market efficiency and allow for the integration of renewable energy sources. These are examples of major projects that confirm that we are well on track with the execution of our CAPEX plan in the coming years. All these interventions are fundamental to face the changes the Italian energy system is experiencing. This can already be seen from the evolution of electricity demand in recent months. Going to the next slide. As you can see from this chart, in the first six months of 2024, national demand was about 152 terawatt hours with an increase of 1.1% versus last year when national demand was about 150 terawatt hours. In the first half of 2024, Renewable sources covered about 44% of national demand, 9 percentage points higher than last year. In this regard, let me highlight that in May, renewable sources covered 52.5% of electricity demand, the highest ever value on a monthly basis. This figure was also repeated in June. Regarding a national net total production, this stood at 126 TWh, almost 1% higher than the same period of 2023. Let me highlight that considerable increase in hydro production, which grew to a value of 25.9 TWh, Up 65% compared to the same period last year. Let me also say that in this first half of the year, renewable sources covered about 53% of the national net total production, overtaking production from fossil fuels for the first time. The increase versus last year is also due to the contribution of wind and solar production which grew by 11% and 70% respectively compared to the first six months of 2023. I mentioned three topics at the start of this presentation and one of these is the adequacy of the electricity system. Expected adequacy margins are higher than in past years. The gradual improvement is the result of capacity market auctions organized by CERNA. The capacity market has ensured efficient use of gas-fired plants and promoted the construction of a new power capacity by means of long-term contracts that guarantee Remuneration for Investors The new capacity is also useful for enabling the gradual shutdown of coal-fired generation under conditions of system adequacy. And now let's move to the main figures of the period. In the first half of 2024, We registered a strong growth in all PML lines and CAPEX. Indeed, group revenues and EBITDA increased by 18% and 23% respectively versus last year, resulting 269 million and 238 million euros higher than the first six months of 2023. We also reported a group net income of 545 million euros, up by 32% compared to the same period last year. For the first time in term of history, group capex crossed the record threshold of 1 billion euros in the first six months of the year, with an increase of 26%. Thank you very much. Let's start with revenue analysis. Total revenues in the first six months of 2024