Good afternoon, ladies and gentlemen, and welcome to Terna First Half 2023 Consolidated Results Presentation. At this time, all participants are in a listen-only mode. Please be advised that today's conference is being recorded. I would now like to hand the conference over to our host speaker today, Mr. Omar Al- Bayaty, Head of Investor Relations and Sustainability. Please go ahead, sir. Thank you. Good afternoon, everyone. Welcome to Terna First Half 2023 Result Presentation. The call will be hosted by our CEO, Giuseppina Di Foggia, and our CFO, Agostino Scornajenchi. Following the presentation, we will have the Q&A session. We kindly ask those connected to send question to investor.relations@terna.it. Please, Giusy, the floor is yours. Thank you, Omar. Good afternoon, everybody. Last May, the Annual General Meeting appointed the new Board of Directors with Igor De Biasio as chairman and myself as CEO. I'm delighted and proud to take up this new challenge. From what I have seen, Terna is in excellent shape. Our people have outstanding skills and know-how, which means we will continue to grow in a sustainable way. Energy transition is a mandatory path to a sustainable future. We intend to further enhance Terna's role in the energy transition, continuing along our strategic roadmap for the development of the electricity system of the future. Before starting to analyze the figures, I would like to share with you the main achievements of the first part of the year. Regarding regulated activities, let me remind you that last March, we presented the new 10-year National Development Plan. More than EUR 21 billion of investment aimed at continuing the integration of renewable sources and the progressive phase-out of coal-fired power plants. Terna's foreseen CapEx plan will be crucial to achieve national and European decarbonization targets. I'm pleased to say we are well on track with the investment and usage in our plan. What have we achieved regarding sustainability in the period? Four of the most prestigious international indices that select leading companies in terms of ESG best practices, have recently confirmed the inclusion of Terna. Our ESG commitment is also reflected in Terna's refinancing. Last May, Terna signed an ESG-linked revolving credit facility for EUR 1.8 billion. Last week, we successfully launched a fixed rate green bond of EUR 650 million. The market reacted positively with demand outstripping supply by almost 4x the offered amount. These transactions demonstrate that group's strong commitment to introduce ESG criteria, also as a strategic lever to create value for all its stakeholders. Regarding our shareholder remuneration, in June, we paid EUR 0.2083 per share as a 2022 final dividend. The total dividend for the year, including the interim payment of last November, is equal to EUR 0.3144 per share, in line with our dividend policy. After this brief introduction, let's now look at the latest trends of electricity demand in Italy, turning to the next slide. As you can see from this chart, in the first six months of 2023, national demand was about 151 TWh, with a decrease of 5.3% on last year, when national demand was 159 TWh. The reduction in electricity demand in the first half of the year is mainly due to the increase in average temperatures in the winter period and the reduction in industrial consumption. In the first six months of 2023, renewable sources covered about 35% of national demand, 3% point higher than the last year. National net total production stood at 126 TWh, about 10% lower than the same period in 2022. Despite that, let me highlight the increase in hydro and photovoltaic production, which grew by 18% and 4%, respectively, compared to the first six months of last year. I should add that in the first half of 2023, renewable sources covered about 42% of the national net total production. Now, let's move to the main figures of the period. In the first six months of 2023, group revenues and EBITDA were up by 12% and 8%, respectively, on last year, which means EUR 155 million and EUR 72 million higher than the first half of 2022. For the first time in Terna's history, EBITDA crossed the record threshold of EUR 1 billion in the first six months of the year. We also reported a group net income of EUR 411 million, the highest amount ever, with an increase of 3% on 2022. Group CapEx was EUR 831 million, recording a double-digit increase of 26% on the same period last year. Let me underline that, that this is a record-breaking level of CapEx for the first half of the year. This is proof of our ability on execution, confirms, once again, Terna's central role in the energy transition process. To support this acceleration, at the end of June 2023, net debt stood at EUR 9.5 billion, versus about EUR 8.6 billion at the 2022 year end. Thanks to this solid set of results and our focus on execution, we are well on track on delivering our 2023 targets. I can confirm that we will achieve all the guidance provided. Allow me to invite CFO Agostino Scornajenchi to give you a more detailed analysis of the half yearly figures of 2023. Thank you very much, Giusy. Let's start with revenues analysis, moving to page 8 of the presentation. Total revenues in the first half of 2023 increased by 11.6%, reaching EUR 1,485 million, up by EUR 155 million versus last year. The growth was attributable both to regulated and non-regulated activities, which contributed for EUR 110 million and EUR 45 million, respectively. Let's now go into the details of the revenues evolution, moving to the next slide. The regulated revenues reached EUR 1,263 million, EUR 110 million better than last year. The increase was mainly driven by the investments acceleration made on the national grid, the higher output-based incentive effects related to the higher benefits generated for the system. Non-regulated revenues reached EUR 222 million, 25.3% higher than last year. Non-regulated growth was mainly attributable to the increase in revenues coming from Brugg and Tamini, and to the higher contribution of the energy solutions, mostly related to LT Group. International revenues were set to zero, in accordance with IFRS 5 accounting standard, referred to assets held for sale. Let's go through operating cost analysis at page 10. As you can see in this chart, total operating costs stood at EUR 466 million, 21.4% higher than last year. Regarding regulated activities, the increase was mainly attributable to the insourcing of new competencies and increased level of activity, while non-regulated activities have been impacted mainly by higher costs for the purchase of raw material and services related to Brugg and LT Group. Let me now analyze EBITDA, moving to the next slide. Due to the previously mentioned effects, first half 2023 group EBITDA reached EUR 1,019 million, EUR 72 million better than last year. The increase was mainly attributable to regulated activities, which contribute for about EUR 67 million more versus the same period of last year, showing an EBITDA of EUR 990 million in the first half of 2023. Let's now have a look to the lower part of the profit and losses, turning to slide number 12. Depreciation and amortization amounted to EUR 380 million. The increase versus last year was mainly due to the impact of new assets becoming operational in the period. As a consequence, EBIT reached EUR 639 million, 5% higher versus the first half 2022. We reported net financial expenses at EUR 59 million. The increase versus last year was mainly due to the high level of inflation registered in the period, to the increase of the interest rates, partially mitigated by the increase in capitalized financial expenses and financial income on available liquidity. Taxes stood at EUR 169 million, EUR 8 million higher versus last year, essentially due to increased profit to positive one-off item recorded in first half 2022. As a consequence, our tax rate stood at 29.1%. As a result, group net income reached EUR 411 million, 3.3% higher versus the same period of last year. Moving to CapEx analysis, at page 13. In the first half of 2023, total CapEx amounted to EUR 831 million, 26% higher than last year, confirming the solid acceleration aimed at enabling the energy transition process. Indeed, we invested about EUR 777 million in regulated activities. Among the main projects of the period, it's worth mentioning the Tyrrhenian Link, the Paternò-Pantano-Priolo in Eastern Sicily, and investments in stabilization devices as synchronous compensators. Among CapEx categories, development CapEx represented 50% of total regulated CapEx. Defense CapEx stood at 12%, while asset renewal and efficiency was 38%. Non-regulated and other CapEx stood at EUR 54 million. This includes capitalized financial charges and other investments. Regarding net debt and cash flow analysis, shown on page 14, net debt at the end of June 2023, was about EUR 9.5 billion, around EUR 900 million higher than 2022 year-end level, and mainly as a consequence of the investment in the period, and of the reduction of net trade payable vis-à-vis the 2022 year-end. During the period, we generated an operating cash flow of EUR 750 million, which sustained the CapEx acceleration made on the national grid. Let's now make a deeper analysis of our debt profile, moving to page 15. In line with our cautious and proactive debt management approach, at the end of this first half, we registered a fixed over floating ratio on gross debt of about 89%, and an average duration of about five years. In April, Terna successfully launched a six-year fixed rate, single tranche bond issue for a total amount of EUR 750 million, issued with a spread of 70 basis points over the mid-swap, and an annual coupon of 3.625%. In addition, few days ago, Terna launched a ten-year fixed rate green bond addressed to institutional investor for a total amount of EUR 650 million. The issuance has been very successful in the market, and a final spread of 90 basis points over the mid-swap. The green bond will have a duration of 10 years, and will pay a coupon of 3.8775%. The net proceeds from the issue will be used to finance the company's eligible green projects, defined in compliance with the Terna Green Bond Framework. With the aim of confirming our leadership in the sustainable financial market, let me just recall that in May, Terna signed an ESG-linked revolving credit facility for a total amount of EUR 1.8 billion. This transaction allows Terna to count on a liquidity appropriate to its current rating, further strengthening the company's financial structure, and demonstrates the group's strong commitment to the introduction of a model which aims to reinforce sustainability at a strategic level for creating value for all its stakeholders. Thank you very much for your attention. Now, before starting the Q&A session, let me leave the floor to Giusy for her closing remarks. Please, Giusy. Thank you, Agostino. Having seen the strong set of results for the period, let me conclude this presentation with some closing remarks. First of all, Terna will continue leading the energy transition process by providing a state-of-the-art services, and ensuring a security of supply and efficiency for end users. As stated in the presentation, despite the extremely challenging scenario and the significant investments required to meet the needs of the system, Terna continues to preserve a solid and sustainable capital structure, as well as maintaining a low risk profile. This is our commitment also for the future. In addition, Terna will carry on guaranteeing value creation for our stakeholders, focusing on the execution of the actions foreseen by our industrial plan. Sustainability is a fundamental part of our business model. Our strategy will ensure we maintain a high quality standard of service in a system characterized by increasing complexity. Our strategy will also keep us on course to reach national and international decarbonization targets. Sustainability is not only what we do, but also how we do it. It is part of our way to manage business from the circular economy, to dialogue with the local community, from science-based decarbonization targets, to diversity and inclusion initiatives. This is the way we want to ensure a common, sustainable growth path to all Terna stakeholders. Now, before moving to the Q&A session, let me say that I'm sure our strong commitment and enthusiasm will guide us towards future growth, and allow us to face all future challenges. We are already working on the new plan that we expect to present by the first quarter of 2024. Thank you for your attention. We are now ready for the Q&A session. Thank you, Giusy. Let's start the Q&A session. We received a strong set of questions. For sake of time, we have grouped some of them together. We will begin with a series of questions for the CEO, then we will move on further questions for CFO. Giusy, the first group of questions are related to the CapEx plan. Any expectation of further increase? We are well on track with the execution of our CapEx plan, and we are committed to maintaining our strategic roadmap towards the energy transition. Indeed, last March, we presented the new National Development Plan with more than EUR 21 billion of investments expected in the next 10 years, and we are focused on execution. Any other consideration about our CapEx plan will be part of the discussion of the new business plan that we foresee to present by the first quarter of 2024. Thank you, Giusy. Regarding dividend policy, are you planning any change? Well, our dividend policy is fully sustainable, and is aimed at maintaining the right balance between fair shareholder remuneration and the sustainability of the investment plan. I believe that it guarantees constant and predictable growth, as well as full visibility over the plan period. As I mentioned before, any other consideration will be part of the discussion of the new business plan by the first quarter of 2024. Thank you for the comments. About international strategy, we can expect any updates? The consolidation of LatAm activities will allow Terna to maximize the value of the international portfolio, optimizing the group's risk return profile. At the same time, we will continue to scout for other opportunities. These may also be with partnership, and will be selected, ensuring a low-risk profile and limited capital absorption, leveraging the know-how developed by Terna. Thank you. We are also receiving some questions about potential interesting new geographies for international development. Well, our focus will be addressed on those markets with high growth profile and low country risk. We will take a gradual approach, offering and leveraging our know-how in the design and operation of infrastructures. Thank you. We are receiving also question about allowed WACC updates. If you can give us a comment about that? The allowed WACC will be subject to an evaluation. An evaluation to verify if the threshold foreseen by the trigger mechanism is met or not. The observation period for the main macroeconomic variables in the formula will close at the end of September. Since the calculation of the parameters and their potential review is still subject to the evolution of the main variables in the coming months. For the time being, we cannot provide you with precise guidance on the expected WACC final value for 2024. I can only tell you that an update of the allowed return seems likely, given the level at which rates are today. It's too early to comment about the 2025 allowed WACC level. Thank you for comments. We receive also some question related to the TOTEX framework. Any update on that? What's your view? We strongly believe that the introduction of a TOTEX would be consistent with the path already undertaking towards an output-based approach. The framework will be focused on targets and benefits for the system, with the rewards linked to outcomes. In the TOTEX approach, we see an opportunity to create further value for the electricity system and the shareholders. It could promote an even higher overall efficiency through new output-based regulatory measures, ensuring benefits for the system. We are fully committed to TOTEX, and satisfied about the progress made with the resolutions on output-based incentives. Thank you. Regarding output-based incentives, do you think that the level of output-base is sustainable? The current framework rewards Terna for the benefits we are able to guarantee to the system. This is mainly through the reduction of Ancillary Services Market costs, and the reduction of bottlenecks among and within market zones. I believe that our collaborative relationship with the regulator will continue, with the common objective to enable the energy transition in Italy, always ensuring security of supply and efficiency for end users. In this regard, I think that the reliable track record the regulator has always shown in its decisions, will also be reflected in the design of output-based incentives. Thank you. We receive also question on procurement and authorization. Could you provide details on project execution? Yes. Once again, I underline, our CapEx plan is solid and safe, and our projects are well on track. Regarding procurement, despite the challenging scenario, potential shortages of raw materials do not represent a risk for Terna. I can say that we are on the right path regarding the authorization process, constructions, activities, and procurement, in line with the milestones set in the updated industrial plan. Thank you. About renewables. Any updates on renewables installation rate in Italy? Until 2021, the installation rate was around 1 gigawatt yearly, while in 2022, around 3 GW have been installed. This growth in the pace of installations has also been confirmed in the first months of 2023. In fact, since the beginning of the year, about 2.5 GW of new renewable capacity have been installed. The acceleration is ongoing, and we need to see a range of coordinated and integrated actions to stay on track. Yeah, about that, which are the necessary measures to accelerate renewable development? We need to further speed up the installation rate of renewable energy sources, so to achieve the decarbonization targets foreseen by the Fit for 55 scenario. The time required for a permit needs to be reduced, and the profitability should be more visible. Thank you. Some question about storage. Are there any news about this development? Could Terna be involved it? Despite its pivotal role in the energy system, storage capacity has not grown significantly in recent years, mainly due to the lack of proper investment signals from the energy markets. Our plan does not include any investment related to storage projects. Storage should be developed through market auctions, and Terna cannot be directly involved. We strongly reiterate the importance of storage development for the electricity system, and we will actively monitor its evolution. Thank you. Giusy, last question for you. There is a question regarding yield and growth, balance in Terna equity story. What's your view about that? We are fully committed to ensuring strong growth for the future, enhancing the value creation for our shareholders. The Terna investment proposition is based on a balanced combination of growth and value CapEx, and shareholder returns. We think that this is the most appropriate way to outline Terna's investment case, including a well-balanced opportunity of yield and growth. Thank you, Giusy. Now let's move to the question for the CFO. The first one: how many output-based incentives have you accounted in the first half, and is it confirmed the full year contribution? Yes, thank you, Omar. The output-based incentives that we have recognized in the first half 2023 are in the region of EUR 130 million or less. They are related to dispatching services and market efficiency incentives for EUR 100 million, and other items connected to cost savings and benefits on interzonal incentives connected to the creation of additional transport capacity among the different pricing, so for the remaining value. For the full year of 2023, let me say what I already said in the previous presentation, the first quarter. We assume a general amount of output base in the region of EUR 300 million, mainly related to the dispatching services for market efficiency incentives. For the remaining part of the business plan, at the moment, we expect the incentives contribution to continue in coherence with the, the performance I just described. Thank you, Agostino. What about the net debt evolution in second half, this year and 2024? Well, as you know, we are not going to provide any specific guidance for year-end 2023 and 2024. Let me say that our net debt will reflect the guidance that we have provided on CapEx and per share, and also on the level of working capital that we do expect for the end of 2023. You have to remember that the end of 2022, with benefit of a positive cash flow effect, deriving from some working capital fluctuation, related to some pass-through cash items that remain in our pockets, and will be progressively reabsorbed during the year 2023. Thank you for the comments, Agostino. Which is the cost of debt in first half 2023, and if possible, the full year 2023 expected cost of debt? As of today, as a consequence of the increase in the interest rates, we are slightly below 2%. You remember that the original cost of debt that we had communicated at the moment of the business plan presentation, was 1.3%. This figure will increase, of course. We do expect that at the end of 2023, we should land somewhere around 2.5%, reflecting the interest rates increase, observed and expected. You have heard the recent decision taken by the authorities on that. This will remain associated with our growing CapEx plan for the company. Thank you. We received question about PNRR. Could you update us on the funds and the impact on Terna? Well, let me divide the answer in two parts. The first one is that, last December, with respect to the ecological transition process, sustainability, resilience of the electric infrastructure, the Italian government approved the financing of nine projects for a total investment value of EUR 150 million, that we have proposed to increase the resilience of a portion of our grid, 1,700 km. We confirm that those projects will be completed by the end of June 2026. That is the deadline expected for the PNRR. Thank you. There is also... Sorry, let me conclude. There is also an ongoing discussion between Terna and the Italian government, for the definition of another subset of project that could ensure those objectives. In particular, those projects have the purpose of increasing the transfer capacity across different market zones, guaranteeing digitalization of the system, promoting energy exchanges between different countries, and ensuring safety of interconnected energy system. We are working on this set of objectives, and we will communicate it as soon as it will be possible. Thank you. About renewables, could you please give us an update on grid connection requests? Well, you know, Italy has set ambitious target for the penetration of renewable. The capacity will have to grow at least 65 GW, 70 GW, within the framework of the European Union Green Deal in the next year. This is an extremely important challenge. What we have seen was a huge increase of grid connection requests, especially from solar and wind future installation. We can remember that at the end of June, the number of those renewable connection increased by more than 100% compared to the end of 2021. As of today, the total level of connection requested coming from renewables, including storage, solar, wind onshore, wind offshore, hydro, biomass, geothermal, was not so far from 400 GW at the end of June 2023. Thank you. Coming back to net debt, when do you expect to complete working capital reabsorption? I've said before, we had some advantage at the end of 2022 from some known pass-through item that remain in our pocket. There was some delay from the Energy Authority in issuing some resolution to give us the possibility to give back some money to the market operators, This will be reabsorbed in the coming months. More in general, the first half 2023, you have seen a decrease of about EUR 370 million compared to the end of 2022. This result, of course, had a negative impact on our net financial debt, but is quite physiological, given that there is a slight reduction in net trade payables that is due to the increase in CapEx during the last part of the previous year. You know that in the second part of the year, we accumulate a lot of investments that need to be paid in the first part of the next year. Similar increase, we are in the region of EUR 150 million, in net receivable, resulting from regulated activities that are connected with the incentives mechanism revenues that we have accounted last year. This will be paid only after a specific period of liquidation, in line with the resolution that introduced such specific incentives starting from the end of 2022, and other marginal impacts on other net liabilities, primarily due to decreasing guarantee deposit and other, and other minor items. Thank you, Agostino. About rating. Yeah. What measures are you taking into consideration to maintain the current rating also in the future? Well, this is something that we have discussed several times. Let me confirm that we strongly believe that the current rating reflects the strengthiness of the group and its financial solidity. Of course, we have a significant capital increase that has been already made and something that will continue in the future. In this challenging scenario, the company is committed to maintain the strong financial structure during the plan. Taking actions on the debt side, as we did in the past, when we decide for a hybrid that sustained our ratings and our capital structure. Just a general reminder, you know that according with Standard & Poor's and Moody's methodology, the rating of Terna is still one notch above the sovereignty for the Italian Republic. In case of change in the rating of the Italian Republic, this will have, of course, an impact on Terna. Thank you for comments, Agostino. About PNIEC, can you share us your view on the new PNIEC draft? Which are the impact on Terna on top of the already planned on the 10-year development plan? You know, that, as required by the European regulation, the Italian government, decide for an update over its national and climate energy plan, submitted to the European Commission at the end of June. This update reflects the new European targets, namely the Fit for 55 package that we already discussed. This, of course, will generate an increase of the needs of the system to accelerate in developing renewable, and on our side, in accelerate realization of grids. Implications are clear. This update target share 65% of renewable energy and electricity consumption. That is a lot, and this will be mainly achieved by a strong growth of wind and solar capacity that will have to reach more than 100 GW in 2030. The wind capacity will have to increase by 57%, that was the actual of December 2021, and the solar capacity was more of 16 GW respect to end of 2021. Thank you, Agostino. Question about balance sheet structure? Do you believe that you have enough balance sheet headroom to maintain this level of investments in the next year to come, or do you need to reconsider your balance sheet structure? Well, Omar, let me confirm what I just said. Of course, we have to manage a significant CapEx increase in order to fulfill with the increasing needs of the system and to support the energy transition. This, of course, will drive to an increase of our financial leverage. As we already communicated during the presentation of our business plan, we are still committed to maintain a strong financial structure during the plan, also through actions on the debt side. On this regard, let me remember again, that we issued our first hybrid bond in February 2022, in order to sustain and support our capital structure. We cannot exclude that we will do that again. Thank you, Agostino. Come back to regulation, which will be your next step about product framework? About TOTEX, you know, we are, we are in the middle of a transition period. We do expect, let me say, a first application of TOTEX ROSS methodology, in a sort of, let me say, preliminary approach, and a long-term, approach, and a final integral approach that will take place, in the long term. Today, we are in the middle of the discussion with, with ARERA, with our regulator. ARERA issued two resolution, the first one related to the preliminary approach, and the second one for the final long-term application. Details are expected by year-end. Today, we cannot say something more. Let me confirm that, as usual, we do expect the TOTEX application will represent, more an opportunity than a risk for us. Given that the moment, the authority will provide the premium, will provide a value to our ability to create value for the system, to create value for the final user, we will be more than happy to have participation, a share of those benefits in our profit and losses. More challenging, more complicated, but we are sure that it will represent an opportunity for us. Thank you, Agostino. We receive also a specific question on Hypergrid. Is the Hypergrid project included in your 10-year development plan? Yes, it is. You know that in order to support the increase of the needs of the electricity system of the future, connected with the, the increase of renewable that, that, we have to follow in the coming years, as we did as today, we also change, let me say, a change of approach, also from a technological perspective. This is why we have defined the so-called Hypergrid projects, taking account different new drivers. First one is start synergies and exploit synergies with existing assets. Modernizing existing 220 kV and 380 kV power lines, with a limited intervention on existing lines and areas, but with different technology, in order to increase our transport capacity. There are a lot of areas in the country that are now not used, or they are close to being dismissed, we would like to work on these brownfield sites in order to not create any additional impact on the environment, but let me say, keep industries where they are already. Of course, we have to reinforce network security and robustness, and also we need to have a modular approach on the different project. As communicated to the market last March, the new Development Plan provides this Hypergrid approach, with the launch of different and innovative project for a total amount of EUR 11 billion, out of the more EUR 20 billion for the total size of the plan, to achieve the targets of the future with an increase of and a further acceleration of our investments. Thank you, Agostino. Last question for you, about operating expenses. Do you expect some recovery in recent OpEx increase, or at least the low TOTEX adjustment in the next regulatory period? During the first half of 2023, we have registered an increase in the labor cost. We have also registered an increase in external costs due to increased activities and also new initiatives, also communication activities, as the communication campaign. That was the broadcast communication campaign that was concluded two months ago. In the long term, we do expect that all this cost increase will be recovered in the tariff guaranteed by the regulator. Thank you. There are no more questions. Thank you. Thank you very much for your time today, and for taking part in this call. It has been a pleasure to meet you.