Good afternoon. This is the Chorus Call Conference Operator. Welcome, and thank you for joining the ENAV first half 2023 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 Mr. Vittorio De Domenico, Head of Investor Relations of ENAV. Please go ahead, sir. Thank you, Alessandra, and good afternoon, ladies and gentlemen. Welcome to ENAV first half 2023 Results Call. Here with me, there are Mr. Pasqualino Monti, the CEO of ENAV, and Mr. Luca Colman, the CFO. They will be running you through the presentation. After that, we will be happy to answer your questions. And with that, I leave the floor to Mr. Monti. Thank you. Thank you, Vittorio, and good afternoon, ladies and gentlemen. As you know, I have been at the head of ENAV for about three months now, and before illustrating the results for the first half of 2023, I would like to give you a snapshot of the strategic initiatives undertaken. Initiatives on which I will focus my attention in the coming months. In fact, I'm working on updating the industrial plan with the objective of closing it by the end of this year. I intend to refresh the group mainly through the implementation of three strategic lines. First, I want to continue expanding the non-regulated market, which I consider a key point for improving the group's margins. Secondly, I intend to grow the group itself in an inorganic way by assessing and exploiting any acquisition opportunity offered by the market, but consistent with the nature of our business. Finally, I intend to carry forward a significant technological upgrade, functional both to the growth and improvement of the operational performance of air traffic management. This is and will remain a core business, which aims to maintain and consolidate its strategic positioning, which sees the group as a leader in the air transport sector. I will update you on details as soon as the business plan is completed. Let us now analyze the results for the first half of the year. In terms of service units, air traffic volume increased by double digits year-over-year, with 16% growth in en-route traffic and 13.7% increase in terminal traffic. In order to better understand the dimension of this growth, it is sufficient to note that the volumes handled in the en-route, again, in terms of service unit in the first half of 2023, exceeded by 4.2%, even the pre-pandemic volumes of 2019, a record year for flights for Italy. Revenue from core business, which totaled EUR 442.7 million and climbed 12.8% year-over-year due to higher traffic, was the primary primary factor in the first half of the year to total revenue growth of 5.9% to EUR 456.6 million. Due to the rise in OpEx and the personnel costs, EBITDA came to EUR 94.7 million, a minor decrease of 2.4% from the previous year. EBITDA margin was 21.7%. As a result, in the first half of 2023, we reported a net profit of EUR 18.4 million. The amount spent in CapEx was EUR 30.3 million, while financial debt was EUR 416.5 million, nearly matching the EUR 407.8 million recorded at the end of 2022. The net debt to EBITDA ratio stayed nearly constant at 1.5x. Cash totaled EUR 270 million at the end of the first half of 2023. Thank you for your attention, and now I turn the floor over to Luca to further details on the first half results. Thank you, Pasqualino, and good afternoon also from my side to all the attendees. Moving to slide 3, let's look at the en-route traffic trends reported in the first quarter of the half 2023. [crosstalk] Service units went up to 16% year-on-year, driven by a double-digit increase in international and overflight traffic, which grew 21.7% and 20.6% respectively. The strong performance was driven by increased demand for travel that has been widespread, despite the generalized increase in price for goods, in particular for airline tickets. national traffic was flat year-on-year, having yet recorded pre-pandemic volumes, starting from last year and therefore much earlier than the other components. Analyzing different components of en-route service unit, we see that the most important one remains the flight, accounting for 43% of total, growing a double digit, 13.3%, back to the pre-pandemic year, 2019. This outcome has been driven by a recovery of flights in almost all destinations, and particularly to and from Asia and Africa. As we already anticipated, it is notable that then will traffic in the first half, as well as in the first and second quarter this year, exceeded by 4.2% of the volume we managed in the same period of 2019, marking the highest volume in terms of service units ever recorded in Italy. Regarding flights, I can also attest that the up, the upward trend is continuing, with a 1.2% increase reported in July 2023, compared to July 2019. In term of service units, let me remind you that usually those registering averages, a growth which is a few percentage point higher than the one seeing the number of flights. For what concerned the terminal traffic on slide 4, service unit increased 13.7% year-over-year, showing strong performance in all three charging zones, driven by the increased demand for travel. If we look at the terminal traffic by destination, we can see how international components increased by 21.7%, while the national one increased only 2%, having recovered, as for the route, pre-pandemic volumes early than the other component. This growth has been continuous and consistent in the past quarters, in the second quarter, 2023, has brought terminal volumes at 98.3% of the volume managed in the same period of 2019. Moving to slide six, you can see that group revenue in the first half, 2023, grew 5.9% or EUR 24.5 million year-on-year, reaching EUR 436.6 million, driven by a positive contribution of regulated and not regulated businesses, as well as not regulated ones. Within the total revenue, en-route and terminal increased both by 12% year-on-year, supported by the rise in traffic volume, especially in the second quarter, which marks the beginning of the summer season. At the same time, as shown at second graph on the right end of the page, the not regulated revenue grew 42.7% year-on-year, thanks above all to the supporting activities performed in Qatar. Let's now analyze what happened with the balance in the first half of this year, where we registered a negative balance contribution for EUR 24.1 million, compared to positive EUR 31 point recorded in the same period of 2022. The negative contribution this year is due to a EUR 45 million negative balance reversal related to the one occurred in the combined period, 2020, 2021, and cash gene throughout the choice, starting from January 2023. A positive balance from inflation for EUR 15.1 million, taking into account the actual inflationary increase recorded in the year 2022, in comparison to the figure forecast in the Performance Plan. This is the first time we see inflation balance for the first half results, given it is also the first time that we have a meaningful amount to carry forward from the previous year. Please note that, given there was no inflation balance from the year 2021 to be added into the first half 2022 figure, the year-over-year comparison is homogeneous. We have a positive balance for EUR 6.5 million accrued in the first half and related to Terminal Charging Zone 3, and another positive balance for EUR 1.5 million accrued in the period and related to the Terminal Charging Zone 1. Then we have some minor negative adjustments for a total of EUR 1.4 million related to EUROCONTROL and other change. On slide 7, we show the cost for the first half, 2023, in comparison with the same period of last year. Total operating costs were EUR 341.9 million, up 8.5% year-on-year, due to the increase in both personnel costs and external costs. For what concerns staff costs, it went up by 8.2% due to a year-on-year increase in headcount in the group for 110 units, amongst controllers and technicians. That coupled with the a renewal of labor contract completed in the fourth quarter, 2022, that pushes up fixed remuneration by EUR 8.8 million. For this reason, the year-on-year comparison is not homogeneous, given that the first half 2022 cost base didn't include the, the renewal of the labor contract. Higher overtime paid to air traffic controllers and the accrual of the MBO, both as a result of the increase in traffic recorded in the first half of 2023, that pushed up variable remuneration by EUR 4.4 million year-on-year. As a consequence of these two components, also Social Security contributions grew in the first half by EUR 5.2 million. What concerns external, they increased EUR 5.2 million year-on-year, mostly due to a rise in EUROCONTROL contribution, which went up by EUR 3 million, and an increase in maintenance costs for EUR 1.6 million. Then we have EUR 1.4 million growth in costs related with the personal business trip and the increase in external service for approximately EUR 0.9 million. These increases were partially offset by a EUR 2.4 million reduction in energy costs. Moving on, the next slide, we can comment EBITDA and the movements below. EBITDA grew that EUR 9.7 million, with margin at 21.7%, but somewhat declining year-over-year, over the year. However, it should be noted, as explained in the previous slide, that the first half of 2023 includes a set of effects not present last year, such as the renewal of a labor contract signed at the end of November 2022, which became effective from 1st January 2023, as well as some new property maintenance contracts and the effect of the rise in the inflation rates. Let me also remind you that for what concern inflation, we are fully covered on the real one at the EU regulation. Moving down in the P&L, another discontinuity is within the net financial expenses, amounting to EUR 6.6 million in the first half, mainly due to increased the interest rates on debt, which resulted in financial expenses of probably EUR 10.4 million, partially offset by EUR 4.2 millions of financial income, primarily coming from the balance actualization mainly. With regard to income taxes, we recorded negative EUR 8.1 million, increasing EUR 4.2 million year-on-year, due to the lower taxable income. As a result of these movements, we recorded EUR 18.4 million net result in the first half, which is in line with enough seasonality. Given the current and expected traffic volumes supporting our positive economic and financial performance, we confirm the outstanding 2023 outlook. In the last slide, we present enough liquidity and the financial position, which, as you can see, remains very strong. We closed the first half with EUR 270 million cash and additional undrawn credit line for EUR 214 million, out of which EUR 165 million are committed. Net financial debt stood at EUR 450 million, EUR 15 million, increasing EUR 7 million compared with the net debt of EUR 408 million as of the end of December 2022. In more detail, the change in net debt is mainly driven by net cash in from operations for EUR 29.5 million, which is almost double if compared to the first half 2022 cash in of EUR 16.2 million. Then we have the cash out for EUR 32.7 million related to the capital investments, so the cash topics, and then a cash outflow for EUR 2.2 million related to 500,000 treasury stock, buyback performed between January and February 2023 for the management LPI. We have a negative change for EUR 2 million in non-current commercial debt, mainly related to gross negative balance to be returned to airlines. As a result of this change, net debt/EBITDA ratio remains stable at 1.5 times compared with the end of 2022. With that, we can open the, the Q&A session. 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 the 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 Nicolò Pecina of Mediobanca. Please go ahead, sir. Yes, good afternoon, all. I would have a few questions on the strategic guidelines mentioned to be included in the new business plan at the end of the year. First of all, I'd like to ask you to elaborate on the diversification of the business through M&A. Do you refer to the regulated- Sorry, Nicolò. Sorry, just a second. The line is very bad. We can, we cannot hear you properly. Can you try to do one question at a time and maybe lower near the microphone? Sorry. Thank you so much. Can you hear me better now? Yes, now it is better, yeah. Good. All right. On the strategic guidelines of the new business plan, I'm wondering if you can elaborate on the diversification of the business through M&A. In particular, I'd like to understand if you refer to the regulated or the non-regulated business, and if you can explain what you see in the market, if you see plenty of opportunities, and how you see the competition for these potential targets. Second question on the technological upgrading. I'm wondering if you refer to internal development of new technology, if you see revenue opportunities attached to this new technology, and what it implies in terms of inaudible. The last question is on the capital optimization. How relevant is it in the new business plan? Should we assume that M&A has the priority over an increase of the shareholder remuneration, or would you be open to increase the dividend in case no M&A opportunity materializes? Thank you. The next question is from- Sorry, sorry, sorry. Just we, we have to do... We, we answer. Just, just a second. Okay. Okay. Hello. For questions, we are looking for M&A, we are looking at both regulated and not regulated. Sorry. The second one, I confirm what I said to the beginning of the call. I will update you on the details as soon as the business plan is completed, maybe in November, in November or December. Nicolo, can you repeat again the third question, please? Capital optimization, in the new business plan, will you prioritize M&A over shareholder remuneration? I, I think I can answer this for you. The answer is no. As of now, there is no prioritization on the three main items that we are looking for. The M&A, the shareholder remuneration, and, let's say the, the, in the capital allocation, the, the, the technical, the technical development. In general term, maybe, Nicolo, what you have to do, wait for the business plan. Just wait couple... For all, I imagine that you provide a lot of question about these three items, but I think, we should leave the CEO and the company work on the business plan. In a couple of months, we will give you all the answer, all the detail, in the case, but just at this moment, maybe in general term, it's too early to give you detail on this point. Sure. Many thanks for the answers. The next question is from Eva of UBS. Please go ahead. Thank you, and good afternoon, everyone. Maybe if we start with your guide, you have confirmed your outlook, which included mid-single digit revenue and EBITDA growth. In the first half of the year, we see that revenue is in line with this, but EBITDA seems to be lagging. Can you please walk us through the building blocks that you expect it to lead to catch up in the second half of the year? Perhaps somewhat linked to that, for the traffics, en-route traffic, I believe that you need to achieve around about 7.5% above 2019 levels to achieve the assuming it's underpinning the guidance. In the context of a number of airlines, which seem to be suggesting that they're scaling back capacity to an extent owing to operational challenges, what is it that you expect to lead to this acceleration? Thank you. Okay, for what concern the data growth and, as said in an explanation of the slide, actually, we have the perimeter perimeter of the cost are not really homogeneous between the two, first half, 2022 and 2023. What we look at the second half to catch up for traffic, because traffic will increase, as I thought I also answered to the second question. The EUROCONTROL traffic is forecasted 6% increase versus 2019 for Italy. We still believe this is the traffic that we can, we can meet. We, after the summer season, what we are seeing in the summer season, where now in July, in June, sorry, July, we are reaching the peak have another management during these days. The traffic is very, very, very, very strong. That's the way we, we believe, to, to cover, that we catch up with, with, with our EBITDA. Matching. For considered traffic, as I said before, we still believe that 6%, versus 2019, forecast is still the same value. Did I answer your question? Absolutely. Thank you. The next question is from Alexander Astokova of Equita. Please go ahead. Hi, good afternoon. Thank you for taking my questions. Three on my end. The first one, a very short follow-up on, on, on the strategy and the new strategic plan. Just to go back to the inorganic expansion, both in regulated and non-regulated. Do you intend to, or you're looking only at opportunities in Italy or, or also abroad, in Europe or worldwide? The second one is on operational criticalities and the bonus malus. If the disruptions we are witnessing in Europe and everywhere will lead to a lower bonus versus the, I believe, more or less EUR 6 million you had in mind in 2023. The last one, on the next regulatory period, RP4. Now in my understanding, you are beginning the discussion with the regulator. What do you have in mind as a strategy? What will be the main items you will try to achieve in this new regulatory period? Thank you. Okay. We are, we are looking, good opportunities, on the market, in Italy or, or everywhere. For concern the second question about the bonus malus, we are still talking with the EU regulator. Let me see, we are not really, worried about that in this moment. We have up, until the end of the year to close the issue, so actually not, not an issue at the moment. Sorry, our attention, is, is more in Italy. Okay, thank you. Okay. The next question is from Marco Limite of Barclays. Please go ahead, sir. Hi, good afternoon, and thanks for taking my question. Not sure if I missed that, can you just give us an update on the Performance Plan for starting 2025, please? What's the timing and how that is progressing? My second question is actually a quick follow-up to an previous questions about the building blocks for EBITDA this year. Did I get right that you expect 6% traffic in the second half? How does that compare to July, that was only a +2%? Third question on CapEx. I think you have reiterated the guidance for 2023, which also included EUR 100 million CapEx for this year. You have done only EUR 30 million the first half. If you still think you will be spending EUR 100 million or actually you will be spending less? Thank you. I will start with the, the, the last question about the CapEx. Yes, the guidance around EUR 100 million, we believe to stay more or less, very close to these numbers at the moment. Normally, we have a seasonality also in the, in the implementation of our investment plan that foreseen actually the, the last quarter, the, the, I mean, the heavier ones. We, at the moment, still believe to close around EUR 95 million-EUR 100 million in CapEx by the end of the year. For what concern before, yes, we believe that, I mean, negotiations actually starting now, not yet officially. What is happening is, is that we are, we're looking at the European Commission want to change some, some, I mean, the general regulation. In what we have seen till now, there's no time to change, there's no willingness, it seems to be no willingness to, to change the regulatory framework. More or less expect to have a LPP framework. Say that by the end of the year, at the beginning of the next year, so 2024, we will start to negotiate the cost efficiency target with the European Commission, with all the other states. European Commission said that within the end of the spring, so at the beginning of the summer, they should start to define the cost efficiency target, the common cost efficiency target for all European countries. After that, we will start to draw our Performance Plan. Our Performance Plan will be given to the regulator in September, October 2024, and then the commission will have 3, 4 months to, you know, to check and get everything ready to start the new regulatory period, this 1st January 2025, with the new targets and new Performance Plan. That's more or less the, the plan in the timeline. What concern the second question. Can you say this again? Sorry. Can you repeat it, please? Sure, sure. I, if I got that right, you said that in the second half, you expect 6% traffic growth, which is gonna drive the growth in EBITDA year-over-year. If I'm not wrong, you're saying that July is only 1% up in 2019. Yeah, do you just expect volumes to, to quickly ramp up in the second half? Thank you. Okay. First of all, always take into consideration that when we talk about traffic and service unit is not exactly the same. When we said 1%, 1.2%, I think it is, in July of traffic, this mean that it leads to 3.3, 3.5 more point, percentage point of service unit. We are now in the summer season, around 4.5, more or less, the traffic that we expect to have also in July. Say that we have seen the last two weeks, last year the rule, that the summer actually doesn't really stop in August, the end of August or the middle of September, but it continues normally also the second part of September and October overall. What we have seen in, in, in increase, important increase on traffic also in autumn, and this is something that will help to reach the 6% of service unit increase by the end of the, of, of the year. This is, you know, our thought at the moment. I guess it would be important to, to wait for the, the end of the summer season to have a better than forecast for the end of the year. Okay. If I can follow up to this question, sorry for being long. I guess, yeah, you know, in Q2, you already, booked something like 4%, service unit growth, but EBITDA was flattish, year-over-year. I guess, why, why that will be, will, will change in the second half? Why a similar growth trajectory of 4%-5%, 5%-6% is gonna, drive, EBITDA growth? Thank you. Yeah. As, as we said in presentation, if you remember, in the first half, what we have is not the correct, I mean, full comparison between the cost, above all the personnel costs, 2022 versus 2023. For the reason why, that, we signed our, the renewal of, personal cost, personal contract, sub-contract, in November 2022. Say that, the first half doesn't really have all the costs. When you compare the EBITDA cost and EBITDA for this half, probably you don't have a fully comparable situation. By the end of the year, the effect in 2022 of the renewal of the contract will be full, so an impact will be 100%, and so the EBITDA margin will be affected by this. You look now, the EBITDA that we have now, that's very close to last year, without, you know, considering the fact that, of the cost effect that I just, I'm just telling you, you can imagine that the traffic is increasing, the ratio between revenue and cost will perform better in the next, in the next quarter. You can imagine why, we are quite confident that the EBITDA margin will increase in the second half. Then we have also some action put on the place, with our CEO, you know, to pushing on, cost controlling and flexibility on some, on some, on some areas, that will also affect the EBITDA. Okay, thank you. Very clear. The next question is from Luca Bacoccoli of Intesa Sanpaolo. Please go ahead, sir. Hello, good afternoon, everyone. Can you hear me? Yes, yes, Luca, we can. Yes, very well, thank you. Okay, good. My first question actually is a follow-up on the personnel costs evolution, if I understood correctly. It seems that in the second part, the +8% that we have seen in the first semester, should slow down, at least for, let's say, an easier comparison. I'm referring to the new contract signed last year. The second question regards the gap, the widening gap that you were mentioning between number of flights and the growth in the service unit, which I think is really very easy to understand on the domestic service unit. The question is, how this widening gap is improving the overall productivity and, at the very end, the profitability of the company? If this is a potential major, major driver. Thank you. Yeah. For what concerns the first question, let me say that just to summarize what we have told till now, is what concerns personnel, we expect to have 4% total increase by the end of the year, coming from the renewal of the contract, and 2% signed at the end of 2022. Sorry, just, just to be clear, 4% is the total. Of that, 2% is related to the, to the contract, the renewal of the contract signed the last year. Then we have 1% increase of headcounts, more or less, and then over time to manage all the traffic and addition, everything is related to the increase of traffic, that there will be more or less a 1% impact. We have a 4% increase for year. Sorry, Luca, to interrupt you. It means that in the second quarter, sorry, second semester, the personnel costs will be flat year-over-year? Yes, more or less. Okay. Sorry, for Luca, the, the second question, I don't think we, we, we, we get, we got the, the, the, the question. Can you please repeat it? There was problem with line. Yeah, yeah. I, I try to rephrase the question. You mentioned that the traffic, sorry, the service unit growth is higher than the number of flight growth, and this gap is widening versus the past. My question is, if this trend, first of all, will continue, and how it can impact the overall group profitability, given that the implied result of that is an higher productivity, because you have basically lower movements, but higher revenues for each, for each movement? Okay. In general term, I mean, the main difference is made by the distance flown, by the plane on our- Right. Yeah. flight. Yes. The good point is, if you see the overflight now is overflight, the weight of the flight is 42% of our total route traffic. On these 45, the increase of overflight till now is around 13%, I guess, we said before, it was around 13%. The increase is very, very high, and the distance that normally is flown by this flight is much more important than the one that is landed in our country. This is a good point. That's the reason why I believe that given these, these figures, these numbers, we believe that, this difference between the flight and the service unit will also continue to 3.5 difference, will continue also in the next, in next month. We have seen this difference in last year, so it's not something that is happening now, it always been also in the next, next, month. We believe it will continue also, at least by the end of this year. Basically you have on one side, longer distance operated, and as well as I think, a larger size of each aircraft moving. That, that's the point, right? Yes, it's a combination. Sorry. Combination of the two. Yeah. Yes, it's a combination of the 2. Yeah. So it means probably higher revenues for each movement. Is that right? Yes, always consider that the weight, sorry, the distance, let me say the, the, the weight, the weight of the distance is high, is, is higher than the weight of the weight in the, the formula. Okay. The distance flow is much better than, so this, most of this difference is made by the distance more than the weight of the flight. Okay? Yeah. Yeah. Thank you. Okay, you're very welcome. As a reminder, if you wish to register for a question, please press star and one on your telephone. For any further questions, please press star and one on your telephone. The next question is from John Campbell of Bank of America. Please go ahead, sir. Yeah. Hi, good afternoon. Thanks for taking my questions. I've got 2 quick ones, if I can. I noticed in the presentation, at least in the first half or in the second quarter, it seems that the accounting treatment for the inflation balance mechanism has been slightly tweaked. Appears that perhaps you're spreading, the accrued inflation balance that was, captured, I suppose, in 2022, fairly evenly over the 4 quarters. Could you perhaps explain that change? Then the second question was related to a clarification, of a point on the call. Did I understand correctly, that the inorganic growth opportunities that you're canvassing, are based mainly in Italy, or are you also still looking in Europe? Thank you. Let's say that the regulation allowed to recover their actual inflation, the real inflation. Let me say that what happened, we haven't had any inflation in the last five, six years, till last year. It's the first time that in 2022, we had a really difference between the inflation forecast in the tariffs and the actual inflation. That's really the first time. That's the reason why in this first half, we have recorded the inflation that was the actual inflation. We have registered, sorry, we have posted the actual inflation, 2022 actual inflation, waiting, still waiting for 2023 inflation the next quarter. As usual, as normal, the inflation forecast in the year, we wait the, the third quarter, but the one, the carry forward of the previous year is something that is given, is done, and is also checked by EUROCONTROL, by the, the, the, you know, the 2022 actual, actual figure. That's the reason why this haven't, haven't been last, last, last year, because actually there was no inflation. Then also, if you remind, last year, 2022, sorry, better, 2020 and 2021, the regulation was a little bit changed, a little bit different. We were allowed to recover actual cost, and recovering actual cost would mean that there's already inflation side, if there are any of, of inflation. There was no inflation to carry forward in 2022 for that reason, because, we recover the actual, the actual cost. Did I answer your question? Great. Thank you. Next question is a follow-up of Nicola Messina of Mediobanca. Please go ahead, sir. Yes, just a quick follow-up on the performance of the non-regulated business, which is up more than 40% in the first half of the year, which makes the target for the full year of a high single-digit growth fairly conservative. I would like to better understand the evolution of this Qatar contract, and if you still confirm this high single-digit growth for the full year in the non-regulated business. Thank you. Yes, Nicola, at the moment, we confirm the guideline because we are in line with the budget. This is actually the, the, the, the figure that we have given, the, the guidance we, we have given. The Qatar is going well, so not really any particular update on, on this. Yeah. Thank you. Gentlemen, there are no more question registered at this time. Good afternoon. Thank you, Alessandra. Thank you so much everyone who has joined the call. For any further question you may have, you have the contact. Please feel free to contact us in Rome. We thank you again, and we wish you a good evening. Ladies and gentlemen, thank you for joining. The conference is now over. You may disconnect your telephone.