Good afternoon. This is the Chorus Call operator. Welcome and thank you for joining the ERG Q1 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 Mr. Paolo Merli, CEO of ERG. Please go ahead, sir. Good afternoon, everybody, and welcome to our webcast on the first quarter results. Here with me is Michele Pedemonte, our CFO, who will take you through the results in more detail after my opening remarks. Let me summarize the key figures of the period. For the sake of clarity, those numbers are based on the continuing operations. As such, any comparison is on a like-for-like basis that's excluding hydro and CCGT from the scope. Results are strong and better than expected, mainly thanks to the growth of the portfolio. EBITDA under EUR 68 million, up 69% year-on-year. Significantly stronger volumes, plus almost 30% in all geographies, thanks mainly to the contribution from new assets that progressively entered into operation in the second half of 2021, and as of January 2022. In a nutshell, results reflect the ongoing growth of our portfolio of assets following significant investments in 2021. In Italy, despite a lot of talk about extra profits, the scenario was basically neutral, as the significantly higher merchant prices were offset by negative mark-to-market of derivatives and the lower value of incentives inversely correlated to it. We invested EUR 146 million during the first quarter of 2022, which is five times more year-on-year. A significant portion was related to the solar acquisition in Spain, EUR 96 million, whilst the remainder refers to the plans currently under construction, U.K., Poland, France, Sweden, and Italy, both repowering and greenfield. Net profit from continuing operations was EUR 84 million, more than double year-on-year, reflecting the stronger operating results and lower financial charges. Let me be clear once again. This number, I mean the EUR 84 million, does not include any windfall taxes either in Italy or in Romania, as those are temporary and extraordinary measures, subsequently accounted, say, as non-recurring items for a total amount of EUR 17 million, out of which 14 in Italy and three in Romania. To be even more clear, the 14 million in Italy are based on a tax, extra tax rate of 10%. Finally, net financial position at the end of March was EUR 890 million, down significantly compared to the EUR 2,051 million at the end of 2021, mainly reflecting the cash in of the hydro disposal. Let's now move on to the next chart, I'm on page number, to say that our journey forward continued over the period with some significant achievements. As far as asset rotation is concerned, we finalized the hydro disposal and also reached an agreement for the thermal plant sale. The closing of which is expected to take place in the third quarter of this year, subject to antitrust approval. We continued to expand our portfolio of renewable assets in Europe. We enter in Spain with 92 MW of solar, and in Italy we secured through auction tariffs of 97 MW, of which 50 from repowering and 47 from greenfield projects. Most importantly, we order wind turbines for a total of 240 MW of repowering projects in Italy, which are now finally under construction. We enter into the storage market with the awarding of a tariff through the last capacity market auction for two projects, totaling 22 MW. We strengthened our quasi-regulated business model by closing two long-term PPA with ENGIE in U.K., covering assets that are about to enter into operation in the coming months. As discussed during our business plan presentation, the integration of ESG into our strategy proved to be successful once again, with some important recognitions, as you can see in the chart, such as the entry into the Bloomberg Gender-Equality Index and into the Supplier Engagement Leaderboard of CDP. Let's move now on page six. Execution of our business plan is very well on track. Following the sizable investments made in 2021 and early 2022, we add about 400 MW of fresh installed capacity and service in the period, which drove up our operating results. This considerable step-up in scale allowed us to strengthen both technological and geographical diversification even further. With 170 MW out of the 400 MW of solar, and all the 400 MW spread across four different countries outside Italy, as you can see from the chart. Looking at the coming months, we expect to add further 250 MW currently under construction, again, in four different countries, U.K., Poland, France, and Italy, which is the first projects of our power. This fresh capacity is going to enter into operation in a time of high energy prices, which we have now reflected in our full year guidance, which I'll discuss later on. Before I do that, I now hand over to Michele for his review on results. Thanks, Paolo, and now let's have a look at our Q1 results. We're at page eight. As a premise, please note that after the disposal of ERG Hydro and the signing of the sale agreement for our CCGT plant, we're presenting figures on an adjusted basis, including only wind and solar operations. The CCGT is considered among the discontinued operations. Let's start with an overview of the unitary revenue and spend. All-in unitary revenues for wind was strongly up year-on-year in all countries where we operated, with the exception of France, where we have fixed price schemes, and Italy, as the rise in electricity prices has been offset on one hand by the hedging run in line with our policy, and on the other hand, by the level of incentive, which declined from EUR 109/MWh to EUR 43/MWh, being inversely correlated to last year electricity prices. As regards the solar, unitary revenues in Italy was slightly up year-on-year, thanks to rising electricity prices, partially offset by hedging. Overall, a positive scenario, in particular for our foreign countries. Now a focus on production. Italy production at 706 GWh, +7.5% year-on-year, due to better wind condition, coupled with better sun irradiation. In France, production was up 23% at 322 GWh, thanks to 80 GWh coming from the 2021 investment, M&A, and organic growth. That more than compensated the weaker asset base production over the period in the comparison with Q1 2021. In Germany, production was up 72%, benefiting from a generalized better production, coupled with 42 GWh of perimeter effect, due to acquisition done in 2021. Eastern Europe production was up 32%, which reflects stronger wind conditions in all the countries, with Poland up 41%, Romania 32%, and Bulgaria 21%. Finally, we have the contribution to the portfolio for the asset based Northern Ireland in 2021 and acquired in Spain in January this year. This chart clearly shows that the increase in technological and geographical diversification of our portfolio, which will be further enhanced in the business plan phases. Now, at page ten. Q1 2022 EBITDA per country reflects the production and the trend in electricity prices. Starting from Italy, EBITDA was EUR 82 million, up year-on-year 14%, mainly due to higher wind. The strong rise in prices proved to be almost neutral in Italy. As a result, has been penalized by lower value of incentives, coupled with energy policy in the period. In France, EBITDA was up 12% year-on-year, benefiting mainly from the consolidation of the asset acquired in 2021. Perimeter effect in France was EUR 5 million, compensated by weaker asset-based production. In Germany, EBITDA grew consistently in the quarter due to the following items, perimeter effect, EUR 5 million, better volume, EUR 7 million, and better scenario, which accounted for EUR 6 million. In Eastern Europe, EBITDA benefited mainly from rising volumes, which accounted for EUR 9 million, and better scenario, which resulted in a EUR 14 million contribution. It is worth mentioning that as of beginning of 2022, U.K. and Spain started to contribute to our results for EUR 12 million and EUR 4 million respectively. Again, also the EBITDA showed a strong rise in geographical diversification in the first quarter of 2022. More than half of our EBITDA comes from a diversified panel of stable European countries, and this was 21% in 2021, considering all ERG assets, hydro and thermal included. This means a more reliable cash flow generation from an international market point of view, and also in terms of regulatory risk. Now at page 11, a brief overview of investments in the period. We invested EUR 146 million, an amount which is almost five times more than what we invested in Q1 2021. CapEx are composed as follows. About EUR 96 million of M&A related to the recent acquisition in Spain, 92 MW of solar assets, and about EUR 51 million related to organic CapEx in wind, referred to construction activities mainly in U.K., Poland, France and Sweden. It includes also EUR 21 million of CapEx in Italy for the starting of construction of the repowering projects at Camporeale, Partinico, Monreale, and the beginning of the solar revamping coupled with the greenfield project at Roccapalumba in Sicily. Let's now move on to financials at page 13, commenting on profit and loss on a recurring basis. I have already commented on EBITDA. Here we have higher depreciation, EUR 5 million, that reflects the contribution of the new assets, so a perimeter effect. Net financial charges at EUR 6 million versus EUR 8 million in Q1 2021, thanks to a lower cost of gross debt, mainly following the issuance of our third green bond in September last year, and to all our liability management operations brought forward during last year. Tax rate in the quarter was 22%, against 20% in Q1 2021. Taxation in the quarter is not including the effect of windfall taxes in Romania and Italy, as they are accounted as non-recurring items. I will show you the impact of this taxation for ERG in the next dedicated slide. As of January 2022, CCGT is consolidated in discontinued items with a contribution of EUR 5 million. As a result of all of this, adjustment profit amounted to EUR 89 million versus EUR 65 million last year. Now I am on page 14. Now a comment on the windfall tax the Italian government is implementing in Italy. First of all, this tax, to the best of our knowledge as of today, does not apply to effective earnings, but to the difference of the VAT balances recorded during the period October 2020 - March 2021, compared to the period October 2021 - March 2022. The VAT balances do not consider the hedging transactions and the incentives. This extraordinary tax is intended to eat allocated extra profits deriving from exceptional high electricity prices in the period to the benefit of Italian assets. As already explained in previous slides, we didn't get any extra profit in Italy, as we had a neutral impact from price trends due to the hedging policy, which is usually negative in the context of rising electricity prices, in addition to the discounted value for incentive. Figurative EBIT in Italy was only EUR 40 million up due to higher volumes coupled with lower depreciation. It is particularly frustrating that in such a context where we do not have any extra profits led by electricity prices, we have additional taxation to the tune of EUR 14 million with windfall tax rate at 10% or EUR 35 million with windfall tax at 25% as rumored. In this last scenario, the most probable one, the tax rate reaches an unreasonable 90%. In a few words, a tax out of any logic against Italian Constitution, with the only outcome to increase country risk and to delay the energy transition, which is crucial to fight the climate change and for a reliable power market. Finally, let's take a look at the cash flow statement at page 15 and the net financial position for the first quarter. Net financial debt closed at EUR 890 million, close to EUR 1.2 billion down from the end of 2021. Starting from the left, we have the cash in from hydro disposal, the effect of thermal and hydro net financial position deconsolidation, then our EBITDA, the investment made over the period, change in working capital, financial charges and others. A strong deleverage as expected that gives us the flexibility to accelerate our growth in wind and solar. I think I touched on all the relevant items. Thank you for your attention. I will now hand over to Paolo for his final remarks. Thanks, Michele. Here we are with guidance for 2022. We revised the EBITDA range upward by EUR 50 million, and therefore the new range is 450-480. The upward revision is mainly due to the stronger contribution we experienced during the first quarter and coming from the new installed capacity and the contribution that we expect in the forthcoming months, coming from the further new installed capacity, which is about to enter into operations. In a backdrop, say, of a favorable price scenario, CapEx remains unchanged compared to the previous guidance, within a range of EUR 120-180 million. Investments are almost entirely related to assets under construction, and the acquisition closed in Spain at the beginning of the year. Here, in this number, there is no further assumption of M&A, which as you know, are a little bit unpredictable, at least, till the moment of closing. Net financial position based on the assumption of EBITDA and CapEx is confirmed within a range of EUR 750 million-EUR 850 million. We expect that the higher EBITDA net of tax will be more or less offset by the negative effect of the windfall taxes in Italy and Romania, which prudently or cautiously we have decided to insert in our cash flow, as well as the higher negative mark to market of derivatives. Before starting the Q&A, I'm glad to say that Fitch has just issued a few minutes ago, its rating letter confirming our investment grade rating BBB-, based on the 2022/2026 business plan. Most importantly, the agency revised upwards the upper threshold of FFO net leverage ratio from 4.2-4.4, which basically means more financing power for the company. The upgrade, reading the letter, reflects our execution, the asset rotation strategy, the acceleration of the geographical diversification process, the solidity of our infrastructure business model, the extension of the average lifespan of the incentives, as well as the recent track record in the PPA market, and the award of auctions in Italy for greenfield and repowering plants. I think it's a key achievement for ERG that recognize the validity and resilience of our business model. Very happy of this. Thank you very much for listening, and now we are ready to take your questions. Excuse me, this is the conference call 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 Enrico Bartoli with Mediobanca. Please go ahead. Hi, good afternoon, and thanks for taking my question. First one is related on some details, if possible, on your capacity to include in your revenues the increase in the energy prices in the main European countries where you operate, particularly Italy. I realize that, for instance, the U.K. when, if I'm right, you have some PPA contracts, the achieved price was close to the base load. The same was also related to the Eastern countries. If you can provide some details on how your contracts are leveraged to the current scenario, and if this level of prices can be considered sustainable over the next quarters. Second question is on more general on what is happening at political level in European level. Mainly after the European crisis, there is a political push for speeding up authorizations of renewable projects. Also, in this case, if you can elaborate what you are seeing actually happening in the main countries where you operate. The Italian government, apart from the windfall taxes, has approved some measures to try to ease the authorization processes, if you are seeing actually some speeding up happening in the main countries where you are. The third one is related to M&A. You are very clear about what is going to happen this year in terms of organic growth. You know, I was wondering if you are discussing any additional M&A transaction that we can reasonably expect over the next quarters. Thank you. Okay. Thank you. Thank you, Enrico, I'm very pleased to hear from you. I try to go through your questions. The first one was about the terms and conditions of the PPA. We have a confidentiality agreement on the conditions. What I can say is, the very last PPA and which are not yet effective because are related to the assets are about to enter into operations in the forthcoming months are at the level in terms of pricing they reflect the price of today's market. Let me say, I wouldn't be wrong to say that EUR 800 for 10 years is a collar that can provide you know, the right latitude of the market right now. The reflection, I think, must be taken into consideration is the fact that PPA levels right now overtake the value of prices through auctions. In this inflationary world, in this green inflationary world, I think regulators must accelerate their thinking about changing the auctions throughout Europe in order to make more appealing the investments in the EU. That's my personal opinion. Otherwise, the ambitious targets for storage capacity in 2030 are very, very challenging. The second one is about the simplification. Simplification is a part of the equation, in the sense the other one is the pricing. I just touched the point through auctions. About simplification, it's true. Yes. The government say over the last 12 months, governments, because it's not just a matter of Italy, in every country where we are, and in particular in France, in Germany, in the U.K., they are trying to accelerate the permitting processes. Still, in general, and, I'm sorry to say that, but in Italy, in particular, the permitting and the landscape is not absolutely what we need. It's. We are not where we need to be. I think it's a fact. We started the repowering project in 2018, and now we are reaping the benefits. Just because we launched this project in the right time, in the right moment. For instance, in the solar, we see more acceleration. As long as our projects require the single authorization, which means the Decreto VIA and the autorizzazione unica, it remains a little bit painful process. This is not jeopardizing our targets because the plan was already considering those hurdles. If I may, I would also be positive in the sense that the projects that we are now bringing forward are larger than the ones already in the business plan. I think you might have seen a newspaper that one of our projects has been approved, say, by the Presidency of the Council of Ministers, which is a quite significant project, the Nulvi Ploaghe in Sardinia. It's more than 100 MW. In this respect, some acceleration are there. In my opinion, not enough to ensure the country to reach the targets the national plan have set out for 2030. In terms of M&A, yeah, you are right. In the guidance for CapEx in 2022, there is nothing about M&A, because M&A, for its nature, is unpredictable. I, yeah, confirm that the group is working on several dossiers right now. There are some more advanced than others. For sure, the hope from our point of view is to grasp something by the end of the year, at least, to accelerate the growth, but also to accelerate the reinvestments of all the proceeds that came from the asset rotation. Enrico, I hope to have answered your questions. If not, then I'm here for- Yes. Very clear. Thank you very much. Just to follow up on the second one. Of course, we know the situation in Italy, and your comment was very helpful. Some more color on, for instance, on France and Spain. You are experiencing some faster development in terms of authorizations. Also there, let's say things are moving a bit, but not so much like in Italy. I say, in Spain, for instance, we are working on some agreements, on a kind of co-development approach. We have seen quite important step forward in the sense that, as you probably know, in Spain, there is a big problem on overbooking for the capacity, because one, every operator is booking capacity, maybe without having all the authorization to build the megawatt. Then there has been an overbooking, say, of the capacity. Now with this process, called the Concurso de Capacidad, they are trying to streamlining this process in order to avoid bottlenecks. Some projects we are looking at are in this kind of situation, and we are, say, confident that the country got the right fundamentals to invest. From a solar perspective, in particular, the country is the ideal area for us to invest. I would say Spain. Yes, we have seen important steps forward. In France, even in France, you know, here we have a proprietary pipeline, and we struggled very much in the last few years to bring forward to carry forward our projects. Right now we have seen some accelerations, which reflects also a change in attitude for the prefect. The prefect in France is basically the person in charge to give the final authorization, and at least related to some projects we have in our pipeline, we had this kind of feedback. In the U.K., there has been some changes over the last few months. For instance, till, say, mid-2021, there weren't auctions for onshore installation. The last auction was open also for onshore. We decided to go down the way of PPA because PPA is much more convenient. That's at least our analysis, even though maybe based on base load and blah, is more convenient right now in terms of pricing compared to a CFD awarded through auction. Thank you very much, Paolo. Very, very helpful. You're welcome. The next question is from Naisheng Cui with Barclays. Please go ahead. Hey, good afternoon, everyone. Congratulations for the great results. Well done. I have three questions, if that's okay. The first one is on dividend. I know in the past, ERG paid special dividends, and I just wonder, under what circumstances are you going to consider a special dividend going forward? Are there any criteria you can make for that to happen? Just want to have a bit of color on that. The second question is on your CCGT assets. Remind me, if that's okay, where do you source your natural gas from? Can you give an update on the sale process to ERG? Do you think that it's still going on pretty well? Just want a bit of update on that. My last question is on project development. Looking at the current market, the spot power price is very high, and you have a very strong balance sheet. Looks to me that probably having more spot exposure is going to be very favorable, a very natural thing to do. I wonder, what's your view on that? I know PPA probably is preferred, but just want to understand what's your view, just given the current condition. Thanks. Okay. Let me start from your question about the dividend. We just announced our dividend policy in March when we presented the business plan. We raised the dividend from EUR 0.755 to EUR 0.90. I clearly said that this dividend must be seen as a kind of floor because it's perfectly sustainable based on the bottom line expectations going forward and the stronger balance sheet the company is sitting on right now. The special dividend, maybe in the past we have paid a special dividend, usually following large capital gain on transactions. I cannot exclude this aspect, but let me say I would see more likely, and that's my hope, even my personal hope that the company keeps growing, creating the conditions maybe in two, three, four years to revise upwards our dividend as it happened in the past. If you see our dividend over the last 15 years moved from EUR 0.20, then EUR 0.40, then EUR 0.50, then EUR 0.75, and now EUR 0.90. On average, this company managed to increase it every three, four years, something like that. That's my expectation. Let's see, and we will discuss in one year. Right now, we have to pay the dividend, which is, I think, by the end of this month. I hope anyway to have answered your question. The second one was about the CDP. The sales process is going on as predicted for the time being, in the sense that it still remains subject to the antitrust approval. The other CP, which was the golden power, has been already cleared. Just one left, which is the antitrust. We expect to receive the so-called referral to the Italian antitrust from the EU antitrust. When we receive this green light, we'll proceed with the normal traditional filing to the agency. I confirm that we expect the closing to become effective over the third quarter of 2022. That's our expectation. There is about the supply of the gas, I think you touched this point, everything is going well. Remember, ISAB is an Italian company, which is controlled by Litasco, which is a Swiss company. According to our understanding, there is no restriction, no sanctions on ISAB. We keep providing them with all the utilities based on the contract we renewed last year. The third question, if I got your point well, is our view on the energy prices going forward. It's quite evident that prices are going up, not just because the situation in Russia, which definitely exacerbated the situation. The trend for energy prices started mid-2021. We had several strategic reflections on that in the company. The peaks in the price were already touched in early December 2021. I think there is something more structural. You may remember that when we presented the business plan in May 2021, and at that time we had the first sign of some reversal trend for the energy prices. I said on some PPA we are slowing down, and I was referring at that time to the one we then signed just a few months ago in Scotland, because we have the feeling something's gonna change structurally. Of course, Russia, even the Russian invasion of Ukraine, has created a very, very particular situation where climate change has been, say, taken over by the necessity of guaranteed security of supply in Russia, because security means liberty, freedom, means democracy, and blah, blah. Now all the states are changing the plan to accelerate on renewables or any other, say, solution to this dependence. In this context, I think even though the war could finish tomorrow or in a month, as we all hope, the geopolitical risk in the market is there and will remain for long. I think the market is gonna face long-term high volatility and higher prices. It's not me saying that, it's the market saying that, because the forwards are well above 100 EUR per MWh, even looking at 2025 and 2026. I think that some paradigms on the market have changed. Yeah. Yes. Yeah. That's helpful, Paolo. I guess on the last question, I just want to follow up. Just wonder if ERG is willing to take more spot exposure, because I guess you have a stronger balance sheet, you can take on more risk. Are you willing to take more spot exposure, at least for the short term? I'd say, you know that one of the hallmark of our business model is relying on a portion of revenues be backed by incentive, tariffs, and so on, because these also influence the rating and the capacity of leverage of the group. Definitely what you are saying is a reflection we had, not now, not six months ago, but more than one year and a half ago when we were elaborating our plan with the asset rotation. For the CCGT and the hydro was a necessity to have a knowledge and know-how about energy management. We ask ourself if going forward with a more, a purer, say, wind and solar model, maybe we would have need just a sales department able and capable of, you know, signing PPA. The answer was not. We have to maintain energy management know-how because through these competencies we can optimize the way of selling energy, doing exactly what you did, some optimization, maintaining, for instance, PPA maybe on base load terms, not covering 100%, say, of the P50, but just covering 70% and leaving some space, say, increase our cash flow and revenues, leverage it on the current market conditions. The answer is yes, and I think it's yes because of our background. Because if we were an infrastructure fund, maybe we couldn't have that kind of competence built over the last 10 years, probably. Very helpful. Thank you so much, Paolo. Thank you to you. The next question is from Roberto Letizia with Equita SIM. Please go ahead. Yes, good evening. Thanks for taking my question. I apologize, I'll be a bit more technical on the guidance and figures. So I was wondering whether you can also give us an indication. I promise I will not take it as a guidance, but just an indication on how the EBITDA at the end of the plan may be potentially increased from the scenario you are envisaging, and this is leading to a significantly higher figure for the end of the year. Maybe just an indication of sensitivity of what can be a potential upside. Again, I will not consider it as a guidance, but just qualitatively say what's the space to go beyond that target. What is gonna be probably the EBITDA contribution of Germany and Eastern Europe, which are the ones who experienced the best results in the first quarter, by the end of the year, just to get a sense on how what is the upside on those regions that you already materialized in the first part of the year? Can you remind us how many megawatts will you add through this year, for the whole year? Then a more general question on the M&A that you touched, you have not included. I was wondering if you feel that the current environment, that it's a bit more stressful on the debt side, actually improves or not the condition for doing M&A. So if you feel that under this current environment you have more, equal or less options to achieve attractive deals. Very last one, we touched it also in the past call, but maybe you can update us over time on on what's the view on potential offshore deal participation from your side, given the relevant space in your balance sheet and increasing opportunity that this is materialized of course so in Italy. Maybe this is a new frontier from you that may arrive in a shorter period of time than initially expected. Thanks a lot. Okay, Roberto, let me try to address your questions. Probably you have to excuse me, but, in a qualitative way, the sensitivity is very difficult to say because depends really what kind of assets we are looking at. Let me try to explain better. For instance, right now we're seeing the strongest contribution as you say, looking at the numbers, came from our foreign operations. Because, for instance, in Germany we have this CFD, this one-way CFD, so whenever the price is higher than the tariff, you got the upside. That's why Germany performed better than France, for instance, even though we have more assets, more megawatts in France. For instance, but vice versa, in France, the tariffs are kind of feed-in tariffs, so it's fully blocked. Another area where we are enjoying higher contribution is the U.K., because the plants that enter into stream at the end of 2021 are enjoying a sort of grace period before starting the fixing of the PPA exposed to merchant. In Eastern Europe, we have some part of the production which are very well exposed to the market, and that's why this area is generating good result. Let me also say that the first quarter was quite good also in terms of anemology. The presence of wind, especially when compared to the first quarter. All this together gave the set of results we are today presenting to you. The sensitivity is exactly the same, I've already gave during the business plan presentation. Every EUR 10 per MWh for the energy prices, and when I say energy prices, take a mix of the prices in the countries where we operate, roughly turns into EUR 10 million EBITDA, more or less. This is the sensitivity. About M&A, I can't comment on. I can comment on the situation, the specific situation we are working on. Yeah, you are right. The environment out there is quite complex because I think it's just the mirroring of the difficulty of growing organically because of the difficulty of the permitting, et cetera. There is a strong focus on the secondary market. That's why we as a company, we try to pursue a cherry-picking strategy, looking for maybe smaller assets where there is a little less competition, and so on. That's the way we are trying to operate in the secondary market and also looking at some co-development agreement, and we made some steps forward in this direction, which allow you to enter, say, in a earlier stage, instead of buying pipeline and paying, let me say, not sustainable value as sometimes it may seem from public, say, transactions you can find on the market. There was maybe a fourth question, but I didn't written, so I probably. Yeah, the offshore and the additional contributions specifically of Germany and Eastern Europe this year, only this year. Thanks. Yeah. The last piece, I'll leave you Michele to answer. The offshore is not part of the business plan, but I said, in the angle of innovation, we stated that we would have look at it, and that's what we are doing. I can confirm you that we have spotted a couple, two, three projects in a very, very early stage, so please don't take it as a target. They are in a very early stage, but they are quite big in term of scale. Big, it means, a few hundred megawatts each. We are performing some due diligence, we are performing some analysis. Let me say, especially floating offshore, for the moment is an idea because there is not yet a framework agreement, a framework, a regulatory framework, sorry, in order to sustain the development of this technology, at least in Italy. It's unthinkable that floating offshore can repay the capital invested with a tariff of EUR 60 or EUR 65 or EUR 70 per megawatt hour. You can easily understand that the capital intensity of this technology is 4 or 5 times the onshore. It would require a specific auction ensuring the right return. If not, the investment would remain just on paper. Yes, I think the only breakthrough to reach our target as a country is to, at some point, open up this kind of technology. That's my personal opinion. I would see more, say, in the 2025, 2030, than in the first five years of the decade. Yeah. In relation to the contribution of Germany and Eastern Europe, these two areas are areas where the production was very poor in the first quarter. And in addition, in these two countries, the structure of the incentives is such that we have some exposure to the current market prices. And this is the reason why we have such a good result in Germany and in East Europe in this first quarter. At the end of the year, we foresee a contribution of Germany assuming a more production in line with budget, so not so positive as in the first quarter. In the region of EUR 40-50 million, Eastern Europe in the region of EUR 70-80 million. Sorry, can you repeat the numbers? I missed it, sorry. Just the numbers. Germany, 40-50. Eastern Europe, 70-80. Thanks a lot. The next question is from Carlos Razuri with Schroders. Please go ahead. Hello, can you hear me? Yeah, perfectly. Okay, perfect. Yeah, I have three questions. The first one is on the slide 14, I believe, where you show the windfall tax impact. I'm just trying to understand what were you trying to show here, and if you could provide more details into how you arrived to your estimate for the full year impact, and also if this has already been provisioned in the first quarter. My second question is about the costs of wind turbine components that you purchased during the quarter. I just want to know how does that compare to your business plan CapEx. Finally, given that you haven't ruled out more M&A, I'd like to understand more about your strategy. How do you go about acquisitions? Which type of assets are you targeting? My understanding is that you've mostly acquire operational assets with a certain pipeline component, but it's mainly operational, so you're paying quite high multiples for these type of assets. Is that something that you expect to continue going forward, or could you change that approach post your new business plan? Thank you. Okay. Let me try to answer, starting from the windfall tax. Say, at the profit and loss level, we have accounted EUR 17 million as a non-special item in our reported profit and loss, which refers EUR 14 million on the so-called extra profit in Italy, or windfall tax, call like you want. Based still on the Article 37 of the law measures against the conflict in Ukraine. Now, the government thinks, at least that the rumors and some drafts are circulating, they are working on a revision of the tax rate from 10%-25%, extending the period to April 2022. This article will be inserted in a new decree, so extended the timing of conversion in law. If you wanna know the general impact moving up the tax rate to 35%, the impact should be roughly EUR 35-40 million for the group. Out of which 15 have already been accounted in our profit and loss. Let me specify that the guidance we gave today, we are giving today to the market of net financial position is already including the 25% assumption for the windfall tax. Okay. I don't want to comment, I think you all know that we are a little bit just for lack of a better word disappointed by this kind of tax because it's not linked to the real profit of the group, because it's measured just on the items, say, relevant for VAT purposes. For instance, the taxable base doesn't include the negative effects of derivatives. It does not include the reduction of incentives in Italy because incentives are inversely correlated to the energy price. It's really unfair. In fact, I think the chart Michele, our CFO, showed you demonstrates basically that applying this tax, the tax rate would be 90%. That's why we isolated, say, this item as a non-recurring because the law is a temporary measure. Again, it's not consistent with the Article 53 of our constitution, which says any tax must be consistent with the capacity of paying those taxes. It means with the profits and not with the settlement of VAT items. Can I ask for clarification before we move to the next question? For that assumption, I understand, like, there's a retroactive period. I believe it's October 1st to March 31st. Is that correct? It is correct, but that's the period through which they measure the taxable base. Everything Yeah, legal profits. Everything was already accounted in the first quarter, I mean, based on the 10% tax. Now, if they raise it to 25, we will made right provision during the second quarter. Yes, but anyway, there is a retroactive period. Another aspect which must be considered, the comparison, because the period, the same period twelve months before was right in the middle of lockdown. You know, they are comparing very high period prices with a very low period prices. That's another aspect to be considered when put on a jurisdictional, say, claim. Okay. Maybe an additional point that in the last draft is also included the potential extension to April. This April, if this additional month will be included in the next quarter results in any case. For now, for the time being, it's just a rumor. There is a draft, so we don't know yet what's going on exactly. It's a little bit too early. Anyway, the size, the magnitude is EUR 35-EUR 40 million. It's not the amount that is worrying us. It's the way they are trying to collect it, which is very unfair, and the consequences on the capacity of the country to attract further investments. This is, in any case, a full year impact because the law is a temporary measure. We expect that according to the current law, this is the impact in the quarter or maybe adding April, that remains in this area of valuation that Paolo just mentioned, can be considered a full year impact for this taxation, especially extraordinary taxation in Italy. Sorry. The second one, CapEx, say again, very difficult to say no. For the time being, we have just presented our CapEx plan. For sure, this kind of situation never seen with the price of steel that has doubled, all the materials related to energy transition are going up, you know, very, very significantly. Fortunately, we the biggest part of our megawatts in the pipeline and then in the plan were already secured through, say, framework agreement with wind turbine suppliers. We had already signed the BOP contracts in most cases. I wouldn't see a major risk related to this business plan. Going forward, new installments that are not yet covered by those kind of contract will be submitted to a strong pressure from the cost side, the CapEx side. That's not a ERG problem. It's an industry issue. That was my point before when I said that I think the regulators around the world, but especially across Europe, have to think about mechanisms that are capable of attracting investments, allowing energy companies to obtain the return which is consistent with the LCOE of the plants. That's my point. I think the 50 EUR per MWh world is not there anymore. That's the point, I think. M&A, what kind of M&A? On paper, if you bring me, you know, a business combination with megawatts, with the right mix of wind and solar, with the right mix of countries, with a large pipeline, some early stage, some almost ready to build, that would be the ideal target, say. Because we believe in the energy transition, we believe this is a long wave trend, not finishing in two, three, four, even ten years, but a long way, a secular trend, let me say. The problem is, the competition is very strong. Sometimes competition comes from oil company, from big infrastructure fund that maybe have different logic compared to a company like ERG. We have a strict financial discipline. We have our way of valuing pipelines. We have also accumulated important knowhow, and when we scrutinize pipelines, we can see the value that some others maybe can't see, because we have a maybe more strict criteria. In this, against the backdrop of this, we prefer to, you know, build inside the competencies. In fact, we have invested in our own organization, on our own pipelines, starting from scratch, and we are trying to accelerate on the co-development agreements. To answer your question, we are now looking more at the operative assets without excluding, if there is some cherry picking situation, pipeline. For the time being, for us, given also the bulk of cash in our balance sheet, the idea would be to invest it in something that already generates cash flow and is fully de-risked. Okay, thank you. Can I add just one final question? If you think about your own development pipeline, so what you call the retiring greenfield projects, including this order that you placed for wind turbines for your project in Italy with CFD, what percentage of the cost base has already been locked in? What percentage? Sorry, I didn't get the last point. I assume that you have contracts with the suppliers of these wind turbines. I just want to understand what percentage of the cost base for your development projects has already been fixed. Michele, our CFO, is responsible also for the procurement of the group. I would say that all the 2022 CapEx are under framework agreement. They're part of our, the large part of 2023 CapEx, just for the framework agreement, doesn't cover 100% against this inflation, but is a very strong mitigation against this inflation on CapEx. We're speaking of 100% of 2022 and a large majority of 2023. Nothing beyond 2023? No. Okay, thank you. You're welcome. The next question is from Emanuele Oggioni with Kepler Cheuvreux. Please go ahead. Good afternoon, congratulations for the results, first of all. I have a few questions on my side. The first one is on the hedging policy. Could you update us on the hedging policy for 2022 and also 2023. The second one is still on the cost inflation, but not as regards the risk. Because I think the IRR is safe, considering it will be more than offset by the current power price scenario. My question is more about the risk or the disruption for the supply chain in the next few quarters. If you could elaborate on that. This is the second. The third question is on the pipeline. If you could update on the portfolio of the projects in the pipeline which you consider as a mature pipeline. Thank you. Okay. Michele, you wanna talk about the hedging and cost inflation disruption? Regarding the hedging policy, this year, for 2022, we have roughly 80% of our production covered, and this is with, through short-term hedging, using futures and similar instruments. This percentage decreases to 50% in 2023. It is important to say that with our new business plan, we moved our hedging policy from a short-term hedging policy to a more infrastructure business model, where the hedging is not based on the short term, but we try to target long-term hedging through PPA or, as we already did in the past, through auction and incentives. You have seen this through this year with the PPA that we closed in U.K. last year in France and also in Italy, in Northern Ireland and so on. There is a change in our strategy, where the short-term hedging futures remains as an optimization tool. This should be, you know, a residual part of our production to be covered in this way, and the idea is to have more long-term hedging through PPAs and auction. Regarding cost inflation, you know, it is not an issue, as commented by Paolo before. We have in front of us very tough months. For sure the supply chain is under stress. We are seeing it in different countries. The idea, again, is that ERG has selected the right partners, first-tier wind turbines manufacturer, first-tier panel PV supplier, as a way to mitigate this risk. In any case, the supply chain is under strain. What I can say is that our under construction are currently performing. We cannot exclude short-term delays, but at the moment, everything is going in the right direction. Finally, I leave to Paolo comment on the pipeline. The pipeline, we presented the plan a couple of months ago. No major changes from that. We had, compared to what we said in March, we had some advancement in the repowering in Italy. I mentioned the Montiflavo project, which was in our plan, expected to enter into operation in 2026, but compared to the assumptions we had a few months ago, there's been a strong acceleration, because as I said, the presidency of the council seems because we still have to receive the Decreto VIA, but seems that assigned the approval for this project, so it's a major acceleration. We had some advancement also in the solar pipeline, and as I said, not just in Italy, but also in Spain. We hope part of the securitization of the target for 25, 2016 will be covered by these new additions. We have also, you may remember, that there is a part of the pipeline also related to storage. Now storage seems it's becoming even more crucial because of the acceleration all the countries must put in place in order to, say, substitute the Russian gas. Then storage is becoming even more important. From this point of view, I have to say that the government has simplified very much the storage permitting. Now neither Decreto VIA nor autorizzazione unica for some kind of projects are required, but it's just needed a DILA, which is basically a communication to the comune to the municipality. That's something that should streamline very much the process. I hope the deployment of the pipeline in at least one, the projects we have already well identified. We are really working on several angles in all the countries. Remember that our strategic idea to spread out in more countries, it's not just based on, you know, trying to diversify the availability of sources, wind, solar, but also to be in the position to seize opportunities wherever they come. We are working to enlarge the pipeline, but surely, I personally said the pipeline is a dynamic KPI, but it takes anyway time to make it evolve. Everything is going well. Hope we have answered your question. Thank you. If I may, a quick follow-up on the level of the pricing for the hedging. 65. 65. For 2022 and 2023, uh. More or less. More or less 65. The same as for 2022 and 2023 is the same, 65. Yeah. Okay. Thank you. Thanks so much. Thank you. Primarily, there are no more questions registered at this time. Thank you very much to all, and see you next occasion, which should be the first semester results. Thank you very much again. Ladies and gentlemen, thank you for joining. The conference is now over. You may disconnect your telephones.