SNAM Stock

Welcome to the H1 2026 Results Presentation Conference Call. My name is Gara, and I will be your operator for today's event. Please note, this conference is being recorded. [Operator Instructions]

I will now hand you over to Francesca Pezzoli, Executive Director, Investor Relations and Sustainability, to begin the conference. Please go ahead.

Good afternoon, ladies and gentlemen. Welcome to the presentation of Snam's consolidated results for the first half of 2026, which were approved by the Board earlier today. I am here with Agostino Scornajenchi, Snam's CEO and General Manager; and Luca Passa, Chief Financial, Sustainability and International Asset Management Officer.

The presentation will be divided into 3 parts. First, Agostino will offer an overview of recent market developments and the main industrial and financial milestone achieved during the period. Luca will then provide a detailed overview of our financial performance. After that, Agostino will provide closing remarks, followed by the usual live Q&A session.

With that, I'm pleased to hand over to Agostino.

Thank you very much, Francesca. Good afternoon, everybody. Before commenting our first half results, I would like to start with a broader perspective on the energy system on Slide #3. When discussing energy, it is important to keep a clear view of the facts and the underlying numbers.

In Italy, as in many other major European countries, figures state that natural gas is the backbone of the energy system. In particular, in Italy, it accounts for around 37% of the country's primary energy consumption, making it the largest single energy source. Its importance becomes even clearer when looking at power generation. While electricity accounts for only around 1/4 of Italy's final energy consumption, a share that has remained broadly stable over the past decade.

Natural gas generates roughly half of the country's domestic electricity production, excluding imports, which account for around 15% of supply. This underscores the critical role of natural gas in ensuring flexibility and system balancing. This contribution is not only essential today, but likely to become even more important in the years ahead.

As renewable penetration continues to increase, the need for flexible generation capacity will grow. At the same time, ongoing electrification of final users and new sources of demand, including data centers, could trigger electricity consumption growth after years of stagnation, further reinforcing the need for reliable and resilient gas-fired generation fleet, which is the only flexible generation technology available. This is why we believe the future is not about replacing one technology with another. It's about building an increasingly integrated, diversified and resilient energy system, where electricity, molecules, storage and infrastructure will work together. This is why we consider this as the energy integration era.

Moving now to Slide #4. Well, we are living in a world increasingly shaped by competing geopolitical blocks, where access to energy has once again become a source of economic and strategic power. The events of the past few years from the war in Ukraine to the recent escalation in the Middle East have reminded us the importance of resiliency.

One lesson stands above all others, energy systems must be diversified and built with redundancy. We need multiple routes, multiple suppliers and sufficient spare capacity to absorb shocks that are unpredictable by definition. The slide clearly illustrates how rapidly Italy has transformed its supply mix, moving from a system largely dependent on pipeline import from Russia to a significantly more diversified one, leveraging both the flexibility of existing gas infrastructure and the addition of new strategic assets.

In particular, LNG plays a pivotal role in this transformation. LNG imports have more than doubled since '21 and accounted for 32% of total inflows in the first half of 2026, supported by the commissioning of the Piombino and Ravenna regasification terminals. As a result, LNG has evolved from a complementary source of supply into a structural pillar of Italy's energy security, significantly enhancing the flexibility, resilience and diversification of the country's gas system.

In this context, Italy holds a unique position in Europe with 5 entry points by pipe and 5 LNG terminals, diversified sources of supply and strong connectivity with both North Africa and Central Europe. This creates optionality, which has become one of the most valuable assets in today's geopolitical environment. Italy can really help Europe enhancing its security of supply.

Such security of supply is built on 2 complementary pillars: diversified import routes and strategic storage capacity. And I'm now on Slide #5. Diversification protects against supply disruption or changes. Storage provides flexibility, meets seasonal demand peaks and acts as a strategic buffer, helping market stabilization during a period of stress. This has become even more evident over the last few years.

Through a proactive approach and close coordination with institution and the regulator, Snam has ensured the condition for a timely and efficient storage refill ahead of winter. As of today, storage levels reached around 70% of total available capacity compared with a European average of approximately 55% and this including Italy. Moreover, through actions held in April, it has been allocated sufficient capacity to achieve the target of filling Italian gas storage facility to at least 90%.

The coordinated effort of institution in achieving this target has helped minimize overall system cost. This really represents a critical factor in the current context of supply uncertainty, supporting system security while helping to mitigate price volatility and reducing market speculation. While storage filling is a necessary condition, it is not sufficient on its own to ensure security of supply throughout the next winter.

Nevertheless, thanks to its storage position, diversified supply portfolio and infrastructure flexibility, Italy is currently better positioned than many, many other European countries. Now it's time for our European peers to accelerate as the rest of Europe continues to lag behind.

Moving now to gas demand on Page 6. In the January-June period, Italian gas demand amounted to 33.1 billion cubic meters. The 0.4% increase year-on-year was mainly driven by the thermoelectric sector due to lower hydroelectric generation and rising power demand. '26, it is the second year in a row, displaying a recovery of volumes, notwithstanding high and volatile prices.

Residential consumption was primarily influenced by weather condition and overall demand proved to be quite volatile. Export remained broadly stable at around 1 billion cubic meters, mainly through Tarvisio. So far in Italy, we have not observed any physical disruption to gas flows as all the Qatari volumes affected by force majeure were effectively replaced by cargoes from alternative geographies, mainly from the U.S.

Looking more broadly at Europe, gas demand across the sixth largest market has declined by around 1% since the beginning of the year, with the most significant reduction recorded in France and U.K. At the same time, LNG inflows have remained resilient and slightly increased overall. Lower LNG imports from Qatar has been largely offset by higher volumes from the United States. Meanwhile, storage levels in Europe, as previously discussed, remain at the lowest point seen over the last 5 years. While physical flows were unaffected, geopolitical uncertainty drove prices volatility.

In order to facilitate the access to updated, trustworthy and neutral data, I'm glad to announce that we have just launched Polaris, Snam new monthly energy market report designed to provide investors and stakeholders with a timely, reliable and data-driven data and analysis on the Italian energy system. Each addition will include key market indicators, gas demand and supply dynamics and storage trends. In addition, every quarter, the report will feature an in-depth analysis of different strategic topics, helping to provide context behind the headlines.

Now I'd like to highlight an important dynamic that we observed during the severe heat wave that affected Europe over the past few weeks on Slide #7. The data provide a very clear illustration of the role of gas-fired flexible generation plays in maintaining system stability during periods of stress. During the hottest week of June, we observed a significant decline in wind generation, which is a fairly typical pattern during prolonged heat wave conditions. At the same time, electricity demand remained robust, driven in part by higher cooling needs.

Gas-fired power generation stepped in to fill the gap. In some weeks, gas generation almost doubled, effectively compensating for the lower output from wind. This is an important reminder. Gas demand is not only evolving in terms of volumes, but also becoming increasingly volatile. Beyond average consumption level, there are periods where gas is required at very short notice and in significant quantities to offset fluctuations in other sources of generation.

On Slide #8, we highlight the key achievement delivered across our industrial growth agenda, which remains the core pillar of our strategy. Progress has been made across all of our platforms, including natural gas infrastructure, carbon capture and storage, hydrogen and market solution.

Starting with transport, the Adriatic Line Phase 1 is 90% completed, and the first batch of the Sestino Minerbio line entered in operation. Storage levels reached around 67% at the end of June and are at 75% today, with the 90% filling target before the next winter already secured through the above-mentioned auctions.

LNG continues to provide significant volumes and flexibility, accounting for around 32% of total gas imports with 110 cargoes already delivered to Italy. Moreover, we sold 40% of Ravenna capacity forward for the next 10 years.

Moving now to hydrogen and CCS. Our projects have been confirmed as project of common interest and project of mutual interest, underscoring their strategic relevance. On the Ravenna CCS project, following the approval of the environmental impact assessment for the first section of the transport network, the permitting process continues to advance. The environmental impact assessment and the single authorization procedure for the storage phase are currently underway.

On biomethane, the binding offer phase has been concluded, confirming strong market interest in the asset. We are now close to defined next step of the process, targeting signing by year-end with the business to be classified as held for sale.

Moving now to Page 9, some highlights for the period. On the regulatory front, the energy law decree has mandated ARERA to define the regulatory framework and the key principle for CCS. The first consultation document for the 7 gas transportation regulatory period was published during the quarter, and we submitted our comments by the June deadline. There are 2 months remaining in the observation period for the macroeconomic variables underpinning the '27 WACC WACC market.

Based on the data observed to date and the forward curves today available, regasification appears to be on the edge of activation, excluding France. However, given the elevated market volatility, we consider still premature to draw definitive conclusions.

Moving now to financing. In June, we successfully issued a dual tranche European green bond, a sustainability-linked bond and the Board of Directors today approved a potential U.S. dollar future issuance following last year inaugural one.

On sustainability, we continue to progress with sustainable finance reaching 90% of total and Scope 1 and 2 emission expected to decline by more than 30% versus '22. We also renewed the gender equality certification for the group.

Results, we delivered a sound H1 '26 figures with adjusted EBITDA of EUR 1,572 million, that is up 9% year-on-year, driven by organic growth and larger perimeter. When adjusted for the one-off related to 2024 deflator update recovery booked in Q1 '25, adjusted net income at EUR 733 million is up 3% year-on-year, net of the above-mentioned one-off, thanks to higher EBITDA, partially counterbalanced by additional depreciation and financial charges.

Investments at approximately EUR 1.6 billion include the acquisition control of OLT. Net debt stood at EUR 18.8 billion versus EUR 17.5 billion at the end of '25. After the investment activity carried out during the period, the payment of the dividend, but also the OLT control acquisition and the cash out for Italgas exchangeable refinancing. Net of these nonrecurring items related to OLT and Italgas, net debt remained broadly stable and also the average cost of debt remained stable at 2.6%.

And now let me hand over to Luca for additional details. Please, Luca.

Thank you, Agostino, and good afternoon, everybody. I am on Slide #11. Out of the total investment, around 33% refers to the OLT transaction. Considering only technical investments, over 50% are related to the development. 27% of the investment gross of OLT enterprise value acquisitions are European taxonomy aligned and include H2-ready replacements, dual fuel compressor station, biomethane plant connection, H2 and CCS investment and a large part of the biomethane CapEx and energy efficiency, excluding cogeneration. This figure will be 42% excluding OLT.

SDG alignment is calculated only on technical investments, excluding the OLT business combination and is 52%, of which the majority goes towards SDG 13, 9 and 7, respectively, climate action, industry innovation and infrastructure and finally, affordable and clean energy.

Let's now move to the EBITDA analysis on Slide #12. Adjusted EBITDA for the period was EUR 1.572 billion, plus 5% compared to last year and plus 9% netting the EUR 52 million deflator one-off recognized in the first quarter 2025. The growth is mainly attributable to regulated revenues increased for about EUR 47 million, mainly related to tariff RAB and output-based growth, partially counterbalanced by past money effects. Perimeter effects related to Stogit Adriatica growth for EUR 8 million that entered into perimeter from March 2025.

Ravenna FSRU for EUR 8 million that started operating from May 2025, OLT consolidation for EUR 32 million consolidated from March 2026. On top, revenues from biomethane connections to our network for EUR 10 million. The slight increase in regulated costs, about EUR 6 million, is mainly attributable to labor cost and new hires.

With regards to the Market Solutions businesses, the EUR 10 million EBITDA contribution increase mainly is driven by biomethane following higher business volumes and to the energy efficiency for energy performance contracts in the Public Administration segment. As for the full year 2026 guidance, we confirm adjusted EBITDA to reach around EUR 3.1 billion, driven by RAB growth, OLT consolidation and the full year contribution of Stogit Adriatica and Ravenna FSRU.

Moving to Slide 13. Our associate portfolio once again demonstrated strong resilience in the first half of 2026 despite the ongoing geopolitical volatility affecting global energy markets. Overall contribution from associates reached EUR 212 million, up 4% year-on-year. The positive and negative drivers broadly offset each other, highlighting the benefits of a diversified portfolio and its ability to deliver stable earnings even in a challenging market environment.

Let me now walk you through the main movements during the period. Starting with TAP, the assets delivered another very strong performance, supported by additional 1.2 bcm per year of transport capacity and a continued focus on cost efficiency and financial optimization. As a result, TAP was the main positive contributor to the portfolio's performance during the period. Looking ahead, we expect its contribution to be more than EUR 15 million, 1-5, above 2025 levels by year-end, driven by both incremental capacity and by a stronger financial profile.

Turning to SeaCorridor. The performance reflected additional revenues during the second quarter, highlighting its role as a major import and diversification routes in time of uncertainty in the global LNG markets. Terega delivered a much stronger second quarter, partially recovering the weaker start of the year, thanks to cost rephasing and some additional bookings. However, lower cross-border bookings at the Spanish interconnection point are expected to weigh on the full year results.

EMG was the only associate directly impacted by the conflict in Iran. Flows have fully resumed in April, and it's now running as expected. Finally, among the Italian associates, we recorded a lower contribution from Italgas due to the absence of a regulatory one-off recorded last year, combined with the dilution of our participation to 11.4%. We expect it to be more than compensated by year-end by the full year contribution of gas.

Building on the excellent performance delivered in the first half, we expect around EUR 365 million contribution from the overall associate portfolio for the full year. To provide a more detailed view on our associates and better understanding of their values, we have included a dedicated section in the appendix of this presentation.

Let's now move to the first half 2026 net income analysis on Slide #14. Adjusted net income for the period was EUR 733 million, minus 2% compared to first half 2025 and plus 3% net of the deflator one-off recorded in the first quarter 2025, net of fiscal effect. The trend is attributable to higher EBITDA already commented, higher D&A for EUR 45 million following new assets entering into operation and perimeter effects related to Stogit Adriatica, Ravenna FSRU and the OLT consolidation.

Net financial expenses increased due to higher average net debt with an average net cost of debt substantially stable at approximately 2.6% compared to 2.5% in the same period of 2025. Higher contribution from associates for EUR 8 million as a result of higher international associates for EUR 10 million, counterbalanced by a decrease of EUR 2 million in the Italian associates. Finally, higher income taxes due to the increase in the IRA rate.

As for the full year guidance, we confirm an adjusted net income above EUR 1.450 billion, which reflects the EBITDA performance, partially counterbalanced by higher D&A and higher net financial expenses. It includes around EUR 40 million of IRA increase related to the energy decree.

Turning now to the cash flow on Slide #15. Cash flow from operations for the period amounted to around EUR 1.832 billion and was the result of EUR 1.232 billion of funds from operations and about EUR 600 million of positive working capital. The change in working capital was mainly driven by about EUR 400 million of tariff-related items, mainly related to the additional tariff components and about EUR 200 million of Superbonus fiscal credit decrease.

Net investment for the period amount to EUR 1.154 billion, including the cash out related to the OLT transaction net of cash acquired. Outflows were mainly related to the payment of the dividend for EUR 1.04 billion. On top of that, we accounted the impact of the Italgas bond refinancing for EUR 432 million, while other items are largely attributable to the OLT debt consolidation, resulting in a change in net debt of about EUR 1.294 billion, of which EUR 913 million of nonrecurring transaction related to OLT and Italgas.

As for the full year 2026, we expect the change in working capital to remain broadly stable at around EUR 600 million. The unwind of tariff-related items should be substantially offset by a further reduction in the Ecobonus receivables and by the positive working capital effect stemming from the disposal of a portion of the gas volumes acquired in 2022 under the strategic storage scheme earmarked for the liquidity corridor.

Moving to Slide #16. Net debt at the end of June stood at approximately EUR 18.8 billion. The average cost of debt remained broadly stable at 2.6%, while the fixed to floating mix stood at 65%, 35%. This reflects a tactical rebalancing towards floating rate exposures aimed at preserving flexibility and optionality for future refinancing opportunities in a still volatile interest rate environment as well as in the view of the upcoming new WACC period starting in 2028. Sustainable finance reached 90% of committed financing, up 5% versus December 2024 closing.

Following the refinancing in January of the EUR 500 million exchangeable bond into Italgas shares, we completed in June a dual transaction consisting of a 4-year European green bond and a 10-year sustainability-linked bond for EUR 750 million each. In parallel, we secured approximately EUR 1.2 billion of additional bilateral bank facilities, and we signed a second tranche with the European Investment Bank for EUR 124 million to finance the biomethane connection projects.

In addition, we strengthened our liquidity profile and funding flexibility by extending and upsizing our core sustainability-linked revolving credit facility to EUR 5.1 billion.

Our credit profile further improved during the period. Moody's upgraded Snam to Baa1 with stable outlook. Fitch reaffirmed BBB+ with stable outlook, highlighting metrics close to a single A category. And finally, S&P confirmed the A- rating while improving the outlook from negative to stable. Overall, these developments confirm the strength of our sound investment-grade profile. As for the full year 2026, we upgrade our net debt guidance from the previous EUR 19 billion to EUR 18.9 billion, mainly thanks to the expected better working capital evolution.

And with that, I conclude, and I will hand over to Agostino for the closing remarks.

Thank you. Thank you very much, Luca. I'm now on Slide 18 for my conclusion. Well, natural gas plays a key role in the Italian integrated energy system. It remains the country's largest primary energy source while also supporting around half of domestic electricity generation. In this specific context, security of supply is the main priority. Through our infrastructure, we contribute to national energy security in 2 key ways.

First, providing a highly flexible and diversified system where pipelines and LNG terminal work together to ensure access to multiple sources and routes of supply. In recent years, LNG has evolved from a complementary source into a structural component of Italian energy mix, significantly strengthening the system resilience. And second, by supporting the timely replenishment of our gas storage facilities.

As said, today, our storage sites are around 70% full, well ahead of the European average, with the 90% level for next winter already contracted. While this is not by itself a guarantee against all potential challenges in the coming season, it is certainly the right place to start.

In the first half of the year, we delivered across all our priorities and advanced the execution of our clear strategy. This is translating into a strong financial performance, underpinned by the strength, visibility and stability of our regulated business model.

Looking ahead, we confirm that we are fully on track to achieve our 2026 financial targets while improving our net debt outlook, reflecting once again our continued focus on financial discipline, balance sheet strength and long-term flexibility.

With that, we are now happy to take your live questions. Thank you very much for your attention.

[Operator Instructions] And the first question comes from the line of James Brand of Deutsche Bank.

And also for the additional disclosure on the associates, that's kind of interesting to see. Just had a couple of questions. Firstly, on the seventh regulatory period consultation document. Just wondering whether you had any thoughts on that? Does that seem to be kind of heading in a similar direction to current regulation? Or are there any major changes that are worth highlighting?

And then secondly, on TAP, obviously see quite a nice step-up in profitability this year based on the expansion that you've done. Are there any more opportunities for expansion of the TAP pipeline? Could we see another one in a few years? Or is it kind of maxed out now in terms of where you can get to?

Okay. James, thank you very much.

Well, on consultation document, the ARERA that was the new Board recently appointed started the consultation around the seventh regulatory period. And they published half May, on the 14th of May, the relative consultation document. Well, we see both positive elements and also area of attention about that. A key positive aspect is that they have proposed a simplification of the ROSS framework, which could reduce fast low money volatility through the application of the current capitalization rate. There are, of course, areas of attention that are related to the potential increase in gearing that us in the WACC formula, which ARERA considered more consistent with our current leverage profile.

On this point, of course, we have a very different view regarding the methodology to be used to calculate the leverage ratio. And therefore, we have submitted all our comments that is, let me say, the standard process in this consultation framework. There is another point of attention that this is a potential revision of the remuneration of work in progress. And again, we submit our observation on this given that we consider the remuneration of work in process a structural element of the remuneration profile of an infrastructure player as we are.

There are a lot of other details that are under discussion. We do expect that the authority will adopt a final resolution in the fourth quarter of '27. We just had a public hearing from the authority. We were yesterday with them. Let me say, on top of the standard, let me say, negotiational approach that you have to take each time there is a new Board that is planning to introduce a new regulatory framework, let me appreciate the spirit of transparent, proactive cooperation among the different parties.

We have taken difficult decision with the authority and with the Ministry of Energy this year. I've mentioned what we did on storage. I think that this is an important element of the discussion. Of course, we will do our job in negotiating as best as we can all the regulatory, let me say, tools, but we will do that in the spirit of cooperation, having clear in mind that our main task is to ensure security of supply and energy security to the country. On TAP expansion, please, Luca.

James, on TAP, I mean, TAP is obliged to conduct market test basically on expansion of the capacity every year. We did a test last year, which didn't provide any binding, let me say, request for additional capacity. However, we're starting with a binding market test in the first quarter of 2027, which has a full level of potential long-term capacity if clearly are requested by the market. And this will be Level 1, which is 1 bcm additional; Level 2, which is 2 bcm, Level 3, which is 3.6 bcm and finally, Level 4 for 7.4 bcm, with operations to basically be in place by 2031, 2032. So clearly, we will expect next year to understand whether there is additional need for additional capacity.

The next question comes from the line of Javier Suarez Hernandez of Mediobanca.

Three questions from me as well. The first one is a question on the European context. So the question for the CEO would be, how do you see the security of the European gas system ahead of the winter season? I know that it's a very broad question, but just interesting to see from your perspective, the difficulties the European natural gas supply may be facing ahead of the next winter season. That would be the first question.

The second question is a follow-up on your latest views on the impact on the company and its profitability from the implementation of the full ROSS system or the full ROSS framework from 2028. And the third question is if you can update us on the -- where we are in the definition of the CCS framework instrumental for the capital -- for the CapEx acceleration on that area. Any significant discussion with ARERA or any feedback from the regulator would be appreciated.

Well, thank you very much, Javier, for your question. Well, let me say, I think that we did properly our part of the job accumulating storage capacity for the coming winter. I said before, it is important for our national balance that, of course, it's not enough to solve the European problem. The European problem can be solved only with the cooperation of all other involved countries. Having said that, we see that there is a lot of physical flexibility on gas market. So there are a huge amount of volumes increasingly available, mainly from the U.S.

So in normal condition, we do not see any physical constraint. The problem is that we are not in a standard framework. We are in the middle of a war. We were expecting the war ended somewhere before summer, that is not the case. So normally, we do expect, for sure, additional price volatility and let me say, potential price pressure, given that at a certain point in time, the other countries will have -- they must accelerate on storage refilling for next winter. So for sure, we see pressure -- potential pressure on price. But I think the flows will be enough. But again, my statement is related to standard framework. We are not in a standard framework. So we cannot exclude that in case of, let me say, escalation of the conflict and also extension of the conflict, something could also affect in terms of physical availability. But we are not there for the moment. Lucas, on ROSS implementation, please?

So when it comes to the full ROSS implementation, I need to basically refer you still to the publication of what they did, what ARERA did back in August 2025, which is basically the bonus-malus mechanism that has been provided officially to operators and to the market, whereby we submit a 4-year industrial plan of the company, which is part of our 10-year development plan. And there is a bonus miles incentive mechanism that correct for CapEx estimate.

Basically, you have an incentive of 0.3% on CapEx if the CapEx is lower of 1% versus the baseline submitted. There is no incentive in case the deviation is between 1% and 5%, and there is a malus of 10% of the difference in case of a deviation of more than 5%. Now as you know, this applies to the years 2026 and 2027, but will not affect basically remuneration.

Now in the latest consultation around the seventh regulatory period regarding basically the potential evolution to ROSS, they only mentioned the possibility of simplified the fast/slow mechanism, basically disconnecting from the 5-year average that has been introduced in 2024 that for us will be clearly beneficial. But I cannot give you any impact as of now because it's very difficult. I can only refer you that in the first half of this year, we actually had a negative impact on the fast and slow money effect because clearly, we have evolution when it comes to the growth and decrease of investment year-on-year. So applying the 5-year average, this has a negative impact.

Okay. Regarding evolution of the CCS framework, we confirm that the government assigned to ARERA the responsibility to define a regulatory framework for CCS, and we confirm that on the basis of the information that we have access to, this regulatory framework will be based on the same principle that today is applied for natural gas.

The next question comes from the line of Bartek Kubicki please, of Bernstein.

A few questions from my side or more like topics to discuss. And firstly, I would like to start with your, let's call it, relatively bullish on the gas demand, and I have 2 questions related to that. First of all, in your modeling, what do you assume will happen to gas demand coming from gas-fired power plants once Italy deploys all the batteries they want to deploy. As you can imagine, there's quite a lot being under construction and will be under construction in the country.

And secondly, I know it's not a discussion point today about the stranded asset risk, but we are wondering according to today's regulation and regulatory framework, what happens to the asset -- gas asset, which is stranded? Is it somehow compensated via the regulatory recovery mechanism? Or is it the cost you are going to fully cover? That would be kind of the first topic.

And the second topic will be on your fixed floating cost strategy. And firstly, if you can maybe provide us a difference between your fixed cost level and floating cost level right now. So what is the benefit of moving more into the floating costs? And consequently, also, how do you compare it with your allowed cost of debt? So what is the potential outperformance you are getting from the fact that you are moving towards the -- towards having more floating debt on your book?

Okay. Thank you very much. Bartek, regarding your first question, and maybe we could organize time-based panel to provide the proper answer to that. I think that it is not correct to talk about bullish expectation on gas demand. This is not the message we want to address. The message that we want to address is that in a framework of energy integration system, you will need a certain amount of gas to provide energy flexibility, stabilization services that others are not able to provide.

So we have seen an increase in our gas consumption in June. We see an increase of gas consumption in July, plus 7% up to date. Let's see what will be, let me say, the conclusion at the end of the month. It's huge. The reason why we have such a huge increase is that there are some unexpected factor. There is a heat wave taking place in Italy while we are talking now. There is lack in hydroelectric generation. And there is someone that need to fill the gap. Gas is there to fill that gap.

So today, we see a massive increase of national consumption. And maybe next month, we will see something different. At the very end, we will need a certain amount of different sources covering a flexible and variable demand that will depend from a lot of elements. In these different fluctuations, the role of gas is to compensate, is to be there in any case, to provide the final resource to keep the system, the energy system stable. This, of course, should have impacts in terms of remuneration. And just to comment what you said on batteries, we are talking of different things. So we cannot compare the role of batteries and the role of flexible generation fleet.

Batteries will provide and already provide excellent real-time services, super short-term services. They could provide a lot of services for some hours, not in days. Batteries are not a source. Batteries are only a way to transfer, let me say, power toward different timing, but they're not producing anything. They are simply releasing something that has been produced by someone else with some technology. It's not a source.

What you will need is a stable source of energy. Of course, this should have impacts in terms of remuneration. You know what we think about this. We consider that the more you enter in an energy integration framework, the more distributed domestic private, volatile renewable you will put in the system, the more you will need a central, let me say, regulated long-term stabilizing element that for sure will be composed also by gas generation fleet, including the role of the grids, the electricity grid and the gas grids.

I said other times and also during the business plan presentation, I'm not afraid to say that in the long term, the regulated principle of remuneration on invested capital that today we apply on the grid infrastructure should be applied in a similar way also to flexible generation.

On your second question, Bartek, regarding fixed to floating, as you have seen, we have decreased the amount of fixing from the 75% to 65%, and that is just for basically this part of the year. The reason is very simple. We see an arbitrage currently between the floating rate curve as well as the interest rate fixed rate longer term. And therefore, we took the advantage. The impact on our basically financial expenses is a reduction in the region between EUR 10 million and EUR 12 million for the full year.

Now by year-end, you will see our threshold of fixing going back closer to 75%, which is our overall target over our basically asset liability management strategy. Now this is not only in terms of fixed to floating, but also in terms of duration. The closer we get to a new WACC regulatory period, the less the duration is required from our liability side. Therefore, also in terms of duration, we are shorter in the region of 0.5 years vis-a-vis before.

Now in terms of financial expected for the full year, notwithstanding a higher average net debt for the full year and the new guidance at 18.9%, we confirm our guidance for financial expenses of EUR 335 million for the full year, which is a combination of higher financial expenses on debt for EUR 30 million and higher financial expenses, not from debt for about EUR 27 million.

If I may, if you don't mind to follow up on the point number one, and especially, if we can maybe touch base this stranded asset regulation, whether there is anything in place in Italy or not, meaning if, let's say, a pipe is stranded, who takes the cost of the depreciation, which has not been kind of recognized yet?

Bartek, there is no policy in place. But so far, never. We have an asset that has been declared stranded by the regulator. Actually, as you might recall, we presented an hydraulic studies of the expectation in terms of load factor, the infrastructure also for 2030 and 2040. And we are talking of utilization of the infrastructure in terms of available capacity, which is north of 90% Therefore, if you take into account this utilization factor vis-a-vis other type of infrastructure that today provides energy, I think that eventually...

You could have some surprise.

Exactly. But there is no mechanism in place.

The next question comes from the line of Dominic Nash of Barclays.

I've got 2 questions, please. The first one is you've highlighted the data centers, electrification and potential Russian gas displacement as potential drivers of Italian future gas demand. At what point do you see your existing LNG storage and transmission infrastructure becoming constrained, if at all? And could that require investment in RAB growth above your current plan, which is like EUR 41.3 billion of RAB in 2035?

And the second question is storage. You're highlighting that storage is strategic. I'm not -- I think Javier asked a question earlier about is Europe going to go short this winter. And I think there are some -- there are some -- there is some nervousness here. Clearly, you're in a good position. But if storage is such a strategic asset, do you think you are achieving an adequate remuneration for the importance of them?

Thank you very much. If you -- let me start from the second one. Of course, if you ask me if am I happy with the remuneration that I currently have, the answer is always no. Given that it's our job to extract the maximum remuneration that we can from our asset. Honestly, I have to say that we consider the remuneration scheme applied to the storage facilities that we have as adequate. Of course, we will try to insist on this with ARERA in the coming months, including also with an important regulatory aspect that is related to LNG.

Our grid was composed for several years by pipes. At a certain point in time, we started to manage also storage that received a remuneration scheme similar to pipes. And the recent years, we started with LNG. And LNG, we have a real issue. Given that remuneration on LNG is kept at 64%. There is a limit on the principle of guarantee that we want to remove. Given that LNG is not anymore a commercial option. If you look at the figure we have presented today, 32% of the total flows are coming from LNG terminals. They are not options. They are a mandatory and long-term need for the system. That's why we are asking for a long-term stable and visible 100% remuneration on our LNG terminals.

And as far as the EUR 41.3 billion of RAB, these do not include any capacity addition nor an LNG nor storage, which clearly will be a discussion for the next update of the business plan at the beginning of next year.

Yes. If you look which is the evolution of the system, you mentioned data centers that will have a massive impact on final consumption. And if you look at the consumption profile of a data center, it's maybe it's not so digital. It's something maybe close to an industrial consumption scheme. It's more to a steel industry or cement industry, it's not that not in light, let me say, not in digital, something really heavy.

To provide that amount of energy with that consumption profile, you will need a baseload source. And today, in Italy, baseload source could be considered hydro that it is what it is. Could be nuke that is out of the game today. We hope that it will be reentering the game soon, but it will take years. And the only remaining one is gas. That's why for sure, the more data center we will include in the country, the more baseload generation we will have to provide to them.

The next question comes from the line of Francesco Sala of Banca Akros.

The first one is if you can give us an update on the asset rotation and more specifically on the disposal of the biomethane unit. And secondly, more general questions about the increase we have seen in interest yields and corporate bond costs. I wonder whether compared to the assumptions of the business plan, whether this changing something in terms of your CapEx plan or whether there is flexibility within your plan to address potentially this increase in costs?

On the asset rotation, in particular, the biomethane basically disposal process, as mentioned by Agostino before, we concluded as of yesterday, the second phase, which was to receive binding offers for multiple interested parties. We will compare basically this offer in the coming days and activate the final phase for the process, which see us concluding or signing, let me say, the disposal by the end of 2026, so this year.

For the rest of the asset rotation, as you might recall, those include different type of assets, and as always, when it comes to M&A, you will see announcement first of comments from the management. Therefore, we are working on several topics, and you will be informed when we announce the closing of some of this transaction. But everything is progressing according to plan. We have 5 years to execute our asset rotation program.

As far as the second question, interest rate increase, these do not affect our net financial expenses, as I commented to one of your colleagues in a call previously for this year, clearly might affect the evolution of our interest rate expenses for the remainder of the business plan, which we'll update again at the beginning of next year. However, we have been managing our issuance pretty actively and having an average cost of funding into the market, which has been in the region of 3.5%. If you think that 5-year average in terms of swap rate are just shy of 3%, therefore, just 50 basis points in terms of credit spreads.

As you've probably seen, we also got authorization to issue in the U.S. market, which is something we might consider for the remainder of this year or the beginning of next year. Then on top of interest rates, we should comment on inflation. Clearly, inflation is higher than our assumption in the business plan, especially for the first 2 years of the plan, i.e., 2026 and 2027, this might have a positive impact when it comes to RAB revaluation in the region of EUR 30 million, which are not at the moment part of our business plan.

[Operator Instructions] At this time, there are no more questions. So I hand the conference back to the speakers for any closing comments.

Thank you very much for listening. As usual, the Investor Relations team is available for any follow-up questions. Thank you. Good afternoon.

Hello, everyone. Welcome to the Q1 2026 Results Presentation Conference Call. My name is Gara, and I will be your operator for today's event. Please note, this conference is being recorded. [Operator Instructions].

I will now hand you over to Francesca Pezzoli, Executive Director, Investor Relations, Sustainability, P&C and Ratings. To begin the conference. Please go ahead.

Good afternoon, ladies and gentlemen. Welcome to the presentation of Snam's consolidated results for the first quarter of 2026, which were approved by the Board earlier today. I am here with Luca Passa, Snam's Chief Financial, Sustainability and International Asset Management Officer.

Luca will walk you through the most recent market trends and update, the latest regulatory developments and the main industrial and financial achievements over the period. He will then provide a detailed review of our financial results, and then we will open the floor for your questions. With that, I'm pleased to hand over to Luca.

Thank you, Francesca, and good afternoon, everyone. I'm on Page #2. Italian Gas demand was up around 0.5% in the first quarter of 2026, with exports stable at 0.5 bcm. Physical flows were unaffected by Hormuz developments, while geopolitical uncertainty drove price volatility.

2026 WACC is stable across all our businesses, providing visibility on returns. In parallel, the recent Energy Law-decree has mandated ARERA, our regulator, to define the regulatory framework and key principle for CCS, representing an important step towards greater clarity on the development of this segment.

We delivered sound first quarter 2026 results. Adjusted EBITDA of EUR 775 million is up 9% year-on-year when adjusted for first quarter 2025 one-off related to the 2024 deflator update recovery, driven by organic growth and larger perimeter.

Adjusted net income at EUR 375 million is up 2% year-on-year, net of the above mentioned one-off, thanks to higher EBITDA, partially counterbalanced by depreciation and financial charges. Investment at approximately EUR 1 billion includes the acquisition control over OLT. The transaction is strategic to expand our LNG footprint, which is essential for national security of supply.

Net debt stood at EUR 18.5 billion versus EUR 17.5 billion at the end of 2025 after the investment activity carried out during the period, the payment of the interim dividend, OLT control acquisition and the cash out for the Italgas Exchangeable refinancing. The average cost of debt remained broadly stable at 2.6%.

Moving to M&A and financing. In March, we completed the acquisition of the control of OLT and promptly refinanced its existing debt, achieving more favorable terms and optimizing the capital structure. In addition, we have extended an increase to EUR 5.1 billion, our Sustainability-Linked revolving credit facility.

Following the presentation of our business plan, Moody's upgraded our rating to Baa1 with stable outlook, while S&P Global Ratings revised its outlook from negative to stable this morning, confirming the A- rating. At the same time, equity analysts have revised upwards their estimates and target prices, confirming the positive market reception of the plan in terms of value creation and strengthening of our credit profile.

Moving to Slide #3. Adriatica Line Phase 1 is 80% completed. It was 68% at December 2025 with total grants cash in for around EUR 291 million, including EUR 57 million received in the quarter. Storage levels already reached around 50% at the end of April, and they are at 53% as of today with 90% filling target before the next winter already secured to the latest auctions.

LNG continues to provide significant volumes and flexibility, accounting for around 33% of total gas imports with 52 cargoes delivered to Italy versus 45 last year. We have successfully completed Phase 1 of the competitive auction process for the disposal of our biomethane business which attracted very significant market interest.

We are now moving into the second phase with the objective of signing by year-end with the business to be classified as for sale and the closing at the beginning of next year. We also made important progress on sustainability. Sustainable finance reached 86%, up 1% versus December 2025.

We maintained extensive engagement with shareholders, reflecting in an average approval rate of around 98% across all AGM items. On ESG ratings, MSCI AA was confirmed, and we are included also this year in the Dow Jones Sustainability Best-in-Class index.

Moving to Page #4. In the January-March period, Italian gas demand amounted to 21.8 bcm. The 0.5% increase year-on-year was mainly driven by the thermoelectric sector, 0.1 bcm or plus 2%, partially offsetting lower hydroelectric generation. Demand from the industrial and civil sectors remained broadly in line with the first quarter 2025 levels.

In the early months of the year, residential consumption was primarily influenced by the weather conditions. Export was stable at approximately 0.5 bcm, mainly through Tarvisio.

Looking at the supply flows, we have seen a further increase with LNG volumes up 17% versus first quarter 2025, mainly driven by the good availability of the Ravenna terminal, which has been fully operational since May 2025.

The additional LNG capacity is significantly enhancing the country's energy security by diversifying supply sources, which is particularly important in the current geopolitical environment.

So far in Italy, we have not observed any physical disruption to the gas flows with all expected cargoes in March delivered as planned. In April, Qatari volumes affected by the force majeure were effectively replaced by cargoes from alternative geographies.

More broadly, Europe has experienced limited physical tightness so far, supported by weaker weather-driven demand in March and April as well as reduced competition from Asia. Storage refilling remains as a key European theme looking ahead. And in this context, we have proactively accelerated the injection into our storage facilities, securing the volumes required for the next winter season.

In fact, moving to the Slide #5, through a proactive approach and close coordination with institution and the regulator, Snam has ensured the condition for a timely and efficient storage refill ahead of the winter. Following the destruction, sufficient capacity has been allocated to achieve the target of filling Italian gas storage facilities to at least 90%.

In total, around 17.5 bcm have been allocated out of a domestic storage capacity of just over 19 billion cubic meters, taking into account both the gas already stored and the volumes contractually secured. As a result, by the end of April, storage levels reached around 50% of available capacity today at 53% compared with a European average of approximately 33%, which includes also Italy.

This represents a critical factor in the current context of supply uncertainty, supporting system security while helping to mitigate price volatility and reduce market speculation.

Moving to Slide #6 on investments. Out of the total investments, around 54% refers to the OLT transaction. Considering only technical investments, over 50% are related to development. 90% of the investment gross of OLT enterprise value acquisitions are European Taxonomy aligned and include.

H2-ready replacement, dual well compressor stations, biomethane plants connection, H2 and CCS investment and large part of biomethane CapEx and energy efficiency, excluding cogeneration. SDG alignment is calculated only on technical investment, excluding the OLT business combination and is 56%, of which majority goes towards SDG 9, 13 and 7, respectively, industry innovation and infrastructure, climate action and affordable and clean energy.

Let's now move to the EBITDA analysis on Slide #7. Adjusted EBITDA for the period was EUR 775 million, plus 2% compared to last year and plus 9%, netting the EUR 52 million deflator one-off recognized in the first quarter of 2025. The growth is mainly attributable to regulated revenues increased for about EUR 33 million mainly related to tariff RAB and output base growth.

Perimeter effects related to Stogit Adriatica growth for EUR 8 million that in 2025 entered into perimeter from March, Ravenna FSRU for EUR 10 million that started operating from May 2025 and OLT consolidation from March 2026. The slight increase in regulated cost is mainly attributable to labor costs and new hires.

With regards to the Market Solutions businesses, the plus EUR 7 million EBITDA contribution is mainly driven by biomethane following higher business volumes and to energy efficiency and energy performance contracts in public administration segment.

As for the full year '26 guidance, we confirm adjusted EBITDA to reach around EUR 3.1 billion, driven by RAB growth, OLT consolidation and the full year contribution of Stogit Adriatica and Ravenna FSRU.

Moving to Slide #8. During the first quarter, our associate portfolio confirmed its resilience against a backdrop of heightened geopolitical and macroeconomic volatility. TAP delivered a strong quarter, supported by the capacity expansion by 1.2 bcm a year, reinforcing its strategic role in the diversification of Italy's gas imports.

Desfa benefited from lower net financial expenses, although this effect is expected to reverse over the year. SeaCorridor performance was mainly driven by higher operating costs and depreciation, also reflecting phasing effects related to carryover activities that we partially absorbed during the year. Teréga was impacted by lower cross-border bookings at the Spanish interconnection, an effect expected to be recovered over time through standard regulatory mechanisms.

The recent agreement by Enagás to acquire 31.5% stake in Teréga in which we hold a 40.5% interest clearly highlights the underlying value of the assets, which benefits from a stable and visible regulated return profile, supported by an integrated gas infrastructure platform made by pipelines and storage with upside potential from the development of H2 and CCS infrastructure.

EMG was the only group associate directly affected by the conflict in Iran with a temporary reduction in gas flows in March, resulting in a limited impact of EUR 2 million on the first quarter results, which flows back at regime from April 3.

Finally, Italian Associates benefited from a one-off effect linked to the OLT transaction closing. Overall, first quarter performance is in line with our full year expectation of around EUR 360 million contribution. The year-on-year decline is mainly driven by the one-off and perimeter effects, including the ADNOC divestment in early 2025 and the deconsolidation of OLT from associates that following its full consolidation on a line-by-line basis from March.

Let's now move to the first quarter 2026 net income analysis on Slide #9. Adjusted net income for the period was EUR 375 million, minus 8% compared to the first quarter of 2025 and plus 2% considering the deflated one-off recorded in the first quarter of 2025, net of the fiscal effect.

The trend is attributable to higher EBITDA, partially counterbalanced by higher D&A for EUR 434 million following new assets entering into operation and Perimeter effects, Stogit Adriatica, Ravenna FSRU and the OLT consolidation, all of which weighs for about EUR 14 million. Higher net financial expenses due to higher average net debt with an average net cost of debt stable at approximately 2.6%, slightly negative contribution from associates for EUR 4 million as a result of higher Italian Associates contribution for 7, counterbalanced by a decrease of EUR 11 million in the International Associates. First quarter 2026 taxes includes the IRAP increase and a benefit on the OLT from the recovery of deductible financial expenses raised in the previous years.

As for the full year 2026 guidance, we confirm an adjusted net income above EUR 1.45 billion, which reflects the EBITDA performance, partially counterbalanced by higher D&A and higher net financial expenses. It includes around EUR 40 million of IRAP increase related to the energy decree mentioned before.

Turning now to the cash flow on Slide #10. Cash flow from operations for the period amounted to around EUR 860 million and was the result of EUR 626 million of funds from operation and EUR 234 million of positive working capital. The change in working capital was mainly driven by about EUR 400 million of tariff-related items and EUR 100 million of Superbonus fiscal credit decrease, partially counterbalanced by around minus EUR 180 million of temporary commercial net working capital and minus EUR 100 million related to the full service.

Net investment for the period amounted to EUR 574 million, including the cash out related to the OLT transaction, net of cash acquired. Other outflows were mainly related to the payment of the interim dividend for EUR 404 million and to the impact of the Italgas bond exchangeable refinancing for EUR 432 million, while other items are largely attributable to the OLT debt consolidation, resulting in a change in net debt of about EUR 992 million.

Moving to Slide #11. Net debt amount to around EUR 18.5 billion at the end of March 2026, with net cost of debt substantially stable at 2.6%, while the fixed to floating mix stands at 75%, 25%. Sustainable finance reached approximately 86% of committed financing, up 1% versus December 2025.

During the first part of 2026, we successfully issued an exchangeable bond in Italgas shares for EUR 500 million as refinancing of the existing bond. We secured bilateral banking facilities totaling EUR 600 million as well as drawn down EUR 140 million from the European Investment Bank signed early in 2025 for the connection of biomethane production plants into national gas network. In addition, we have extended and increased to EUR 5.1 billion, our sustainability-linked revolving credit facility.

As for credit agencies, Moody's upgraded Snam to Baa1 stable outlook in April on the back of the 2025 results and stronger forward metrics compliant with a 12% threshold on FFO net debt for the higher position. Fitch affirmed the BBB+ rating with stable outlook, flagging the metrics are very well positioned for the current rating and close to the A- positioning.

And finally, today, Standard & Poor's affirmed the A- rating, improving the outlook from negative to stable confirming the solid investment-grade profile of Snam. As for the full year 2026 guidance, we confirm a net debt at around EUR 19 billion, including the OLT acquisition and its consolidation. To conclude, we are delivering across all fronts, security of supply, strategy execution and financial performance.

I'm on Slide #12. we are supporting security of supply. The 90% storage filling target ahead of winter has already been contracted, strengthening the resilience and flexibility of the national energy system. At the same time, we are making solid progress in executing our strategy with key projects of advancing as planned.

This is translating into a solid financial performance underpinned by the strength and full visibility on our regulated business. Overall, we remain fully on track to deliver our full year 2026 guidance. We are now ready to take your questions.

[Operator Instructions] The next question comes from the line of James Brand of Deutsche Bank.

I have 2 questions. The first is on the new CCS regulation that you mentioned. In the strategic plan, I think there was EUR 0.8 billion of investment in the plan related to a new CCS pipeline. And I was just wondering is the regulation kind of shaping up and the early discussions around it, how you expected? Could that provide kind of upside to the plan? Or do you still see that level of investment as being reasonable? That's the first question.

And then the second question is just on the kind of trigger. Obviously, there's been some pretty big movements in bond yields and inflation. There's a kind of debate around whether France gets taken out of the measurement of the risk-free rate. Where do you see those debates going? And do you think if market prices stay where they are at the moment, you'd get a trigger later this year?

Thanks, James. You're right. It's EUR 800 million on CCS of investment during the plan. Regarding the regulation, what I can say at the moment is that the decree provides for basically ARERA to start drafting the guideline of the regulation.

The decree has not been translated into law. Once it's done, ARERA will have 120 days to draft these guidelines. We don't have, let me say, further visibility vis-a-vis what we already assume in our business plan, our business plan for the EUR 800 million of investment, which I remind are divided between EUR 400 million on transport and EUR 400 million on the equity injection in the JV for the storage part, which is a joint venture with Eni.

We are assuming an average return, which is 100 basis points higher than the one we are using for gas in transport and gas in storage. Now we will have more visibility during basically the course of this year, I suppose. And to the questions whether with this more visibility, we might decide to accelerate or increase investment, I think we will know a few months before we take FID, which at the moment is expected to be taken, I would say, the beginning first quarter next year. And that's what we can say at the moment on this topic.

Regarding the second question, so the movements, yes, we saw the movements on bond yields, on inflation. I can tell you that our mark-to-market for the 2027 trigger taking out France, and I will come back on that, is current below 30 basis points. Therefore, it doesn't trigger for the 3 businesses. The assumption is that France will be taken out because as you probably remember, they have been downgraded before the start of the observation period.

Therefore, we will have a discussion with the regulator on the calculation because technically is in within the regulation, the fact that France is still in, notwithstanding they are not any more AA country. As far as the other impacts, clearly, what might drive some upside to our numbers is inflation.

We are seeing inflation higher than our business plan in the next 2 years, 2027 and 2028 that clearly if that materialize, you will have a higher revaluation of the RAB. Overall, also in the longer year, we can say that the increase in inflation is in the region of 0.1%, 0.2% vis-a-vis an average that was 1.9% across the 5 years of the plan.

The next question comes from the line of Javier Suarez of Mediobanca.

I wanted to focus on the associate contribution. I think that during the presentation, the company has highlighted limited impact on the Middle East crisis or gas -- disruption in the gas market, et cetera, et cetera. So I just wanted to elaborate with you on the possible disruption in the contribution from associates if the situation in the Middle East continues to stay as a complicated one.

Do you perceive that as a risk in any of the subsidiaries? And if you elaborate on that, that would be helpful. Also on the associate interested on the -- by the entrance of Enagás in the shareholding structure of Teréga that you mentioned during the presentation.

Do you see that as an accelerator in the business plan of the company or the strategic relevance of that asset to better integrate different relevant European countries on the gas side as well?

And the third question is on the taxation. This quarter taxation is relatively low and stable versus last year. I understand that there is a one-off this quarter. So can you elaborate with us which is your expectation for a normalized taxation by the year-end?

Thanks, Javier. Regarding asset contribution around this geopolitical context. We do not foresee any other impact on our associates. The only impact, and I mentioned that during the presentation was on the EMG pipeline, which is the pipeline connecting Egypt to Israel, where flows for just 1 month were lower than usual.

They become, I would say, normal back at the beginning of April. The impact of EMG being all low flows is in a region of EUR 1 million per month to give you basically a sensitivity. But since the 3rd of April is running without basically any problem. And regarding the other subsidiary, we do not see any potential impact from the current geopolitical tensions.

On the second question on Teréga, first of all what we can comment is that clearly the valuation that Teréga assigned for the transaction, which they're call under antitrust and Golden Power approval in France is revaluating the sum of the parts of some of the analysts for our stake because according to the valuation Teréga is paying, basically, our stake should be in the region of EUR 750 million, more or less of value, while the sum of the parts is in the region of EUR 600 million.

So there is, let me say, a value crystallization there that could be extracted Teréga is a very mature asset, very efficient asset in terms of strategy, very similar to the Snam strategy because they are very much involved in transport as well as in storage, one of the few assets that is involved in storage.

And they are developing both hydrogen, as you know, to the [ BAM ] project as well as CCS. So then, I would say, acquisition is welcomed by us. They are a partner to us in other assets, and we welcome an industrial operator vis-a-vis financial investors in these assets also going forward.

Regarding taxation, yes, you are right. We have a positive impact of EUR 4 million around the OLT acquisition, which is basically lowering our tax rate. Tax rate for the first quarter is 24.5%. A normalized tax rate we are expecting for the full year guidance is in the region of 26.5%, which assumes a 2% IRAP increase that I have mentioned before.

The next question comes from the line of Bartek Kubicki of Bernstein.

I would like to touch base on 2 aspects. First of all, on the gas market per se and the regulation, meaning you mentioned first quarter was okay in terms of gas demand, but I would like to know whether you are seeing any gas demand destruction in April and May so far in Italy, but also in neighboring countries where you are exporting gas and whether you think the government may or more specifically the Italian government may do something to limit gas consumption in the country.

And also on the gas market, I would like to ask you about your kind of first impressions conversations with the new regulatory body or the regulatory board. And what is your view on their view and opinion on the gas market per se. Whatever is something different versus the previous regulator? And just a clarification on the biomethane, if you can just update us on the book value of those assets at the end of first quarter '26.

Thanks, Bartek. On first question, gas market, I would say, evolution. As I said, first up until the end of March is up basically 0.5%. We are estimating gas consumption for the full year at 64 bcm, which is higher than last year. April is a little bit less in terms of demand. It's minus 2% vis-a-vis April basically the 2025, and that is mostly linked to weather. Now the increase in gas demand we are seeing is coming from the thermoelectric sector being power generation with gas.

Therefore, we are not seeing any, I would say, effect from the current crisis around gas consumption. And on the second part of your question, whether the government is thinking about measures to limit gas consumption, we are not aware of any of the basically potential interventions.

Clearly, what the government is focused on is in lower the energy bills for both industrial as well as residential customers, but that is part of the energy decree that they have actually approved at the end of February. But there are no design or no potential intervention, at least for the moment around basically gas consumption.

On the second question, what I can tell you is we had, as all the other operators, the first public auction with new basically Board of ARERA, including clearly the Chairman. I think what I can comment there is that they are very receptive of our views on the current situation with regards to gas and in particular, infrastructure supporting basic gas flows.

So if I can comment, you asked what is the difference between them and the previous, I think they have been very pragmatic on what is the current situation, realizing that what we have done in terms of the actions we took through the auctions in order to secure basically the storage target at 90% is clearly a sign that this regulator is supportive of an infrastructure that is supporting clearly the gas as an energy vector in the country.

As far as the book value of our biomethane platform at the end of the first quarter, you can call it at EUR 635 million more or less, which is EUR 20 million more of what we had basically at the end of 2025.

The next question comes from the line of Mafalda Pombeiro of Goldman Sachs.

I only have one. Luca, is there any update on the progress or maybe even on timing that you could give us on -- with respect to your asset rotation program announced at your recent CMD. I think there's been a few press news hinting something could happen. And just interested to hear any comments you can give.

To be honest, Mafalda, we presented the asset rotation as a part of a combination of disposals for EUR 1.6 billion and a combination of potential acquisition for EUR 1.2 billion. We generally do not comment on M&A unless there is, let's say, a formal process ongoing like the one that we are currently doing for the biomethane platform.

I already said on that particular process, we just ended Phase 1. We are entering Phase 2 with the expectation to basically receive binding offers basically before the summer and potentially signing before year-end. Regarding the other assets around the asset rotation, again, I cannot comment.

Once we have something to comment, we will tell you what we have signed in terms of disposal or in terms of acquisition. But I cannot comment. I can tell you that there are ongoing discussion on both sides of the asset rotation, both on acquisition as well as on asset disposals.

[Operator Instructions] The next question comes from the line of Emanuele Oggioni of Kepler.

The first one is only a clarification on the guidance, the net profit guidance, I suppose is adjusted net profit, so does not include the IRAP, the additional IRAP of EUR 40 million a year in '26.

The second question is on an update on the TAP because the overall capacity is around 10 billion cubic meter it was in '25. But in '26, this capacity should increase by 1.2 billion cubic meter. So you can update on this considering that Q1 was basically flat, plus 3% flows year-on-year.

Thanks, Emanuele. Regarding the guidance, yes, it's adjusted net income for EUR 1.450 million. It includes this guidance EUR 40 million of additional taxation for the IRAP increase. So I repeat, it includes the EUR 40 million IRAP increase.

Regarding basically TAP, yes, you are right. 2026 since January, we started to operate the pipe with 11.2 bcm of capacity, which has been, as you know, through basically market testing agreed with the shippers that are using this pipe. Therefore, the improvement that you see in the first quarter are derived basically from that kind of additional contribution.

I can tell you that we are foreseeing TAP contributing above EUR 85 million for the full year of 2026.

There are no more questions at this time. So I hand the conference back to the speakers for any closing comments.

So thank you very much for listening. We are available for any follow-up questions. Good afternoon. Thanks.

Hello, and welcome to Snam's 9 Months 2025 Consolidated Results Conference Call. My name is Zach, and I will be your operator on today's call. Please note this conference is being recorded. [Operator Instructions]

I will now hand you over to your host, Francesca Pezzoli, Director of Investor Relations, to begin today's presentation. Please go ahead.

Good afternoon, ladies and gentlemen. Welcome to the presentation of Snam consolidated results for the first 9 months of 2025, which were approved by the Board earlier today. I'm here today with Luca Passa, Snam Chief Financial Officer. Luca will walk you through the key market trends, the latest regulatory developments and the main industrial and financial achievements of the period. He will then provide a detailed review of our financial results, and update of our full year guidance and a few closing remarks. After that, we will open the floor for your questions.

With that, I'm pleased to hand over to Luca.

Thank you, Francesca. Good afternoon, everyone. Let me start with the key trends in the Italian gas market during the first 9 months of 2025 at Page #2. Gas demand in Italy was above 44 billion cubic meters, a 2% increase compared to the same period last year. Residential and commercial sector was up 2%, largely due to slightly colder weather condition, while industrial demand was broadly stable.

The thermoelectric sector grew by more than 2%, driven by lower electricity imports and reduced hydroelectric output due to the lower rainfall compared to the same period in 2024, partially offset by weaker power demand. This confirms the critical role of gas-fired power generation in balancing the energy system, especially as we integrate an increasing share of renewable energy. Exports have also risen sharply, growing roughly 5x compared to the previous year, mainly through outflows from Tarvisio also driven by a decreasing TTF PSV spread differential becoming negative during September and October. Storage levels at 92%, well above the European average.

Looking at supply flows, we have seen a notable shift. Pipeline imports decreased by 2.8 billion cubic meters, more than offset by liquefied natural gas imports, which rose by 4.2 billion cubic meters, a significant 38% increase year-on-year. This growth was supported by the full return to operation of the OLT terminal in Livorno and the start-up of the new terminal in Ravenna.

As a result, LNG accounted for over 30% of Italy's gas imports. This contributes significantly to the enhancing both the country energy security and the diversification of supply sources, which is crucial in today's complex geopolitical environment. These dynamics highlight the relevance of a flexible and diversified infrastructure to ensure energy stability and system resilience in an increasingly volatile and interconnected environment.

Let's move to the key financial highlights on Slide #3. We have delivered sound 9-month results despite persisting volatility. Adjusted EBITDA of EUR 2.227 billion is up 6.6% year-on-year, driven by growth in regulatory revenues. Adjusted net income at EUR 1.096 billion grows double digit year-on-year, thanks to higher EBITDA and greater contribution from the associates, only partially offset by higher depreciation and financial charges. Investment at EUR 1.767 billion were broadly in line with the same period of the previous year.

Net debt stood at EUR 17.4 billion, down 1% versus first half 2025 after the investment activity carried out during the period and the dividend payment. The average cost of debt remained broadly stable at 2.6%. The Board of Directors also approved the distribution of an interim dividend for 2025 of EUR 0.1208 per share, representing a 4% increase compared to the previous year, in line with our dividend policy.

As for regulatory updates and as already disclosed, the regulator has changed the RAB indexation for 2025 to the normalized index of consumer price for the European Union countries relating to Italy, IPCA Italy. At the same time, the for 2024 was updated to 7.9% from 5.3% to recover past adjustments. Therefore, 2025 tariff RAB was lifted to EUR 26.2 billion from EUR 25.8 billion.

On the 6th of August, ARERA published a resolution for the progressive implementation of the full ROSS by 2028 with a transition period for 2026, 2027. The observation period for the 2026 WACC up date ended in September. The calculation is very close to the figure level, but the final outcome remains uncertain, and it will ultimately depend on the final inflation figure for 2026 and other components of the formula.

The Council of Minister approved on June 30, a draft law for the definition of legislative framework for carbon capture and storage, hydrogen and methane emission reduction that needs parliament approval. Last week, on the 27th of October, the technical rules for CCS were issued jointly by the competent ministries. Several progress also on the financing front. We have successfully issued our first U.S. dollar multi-branch sustainability-linked bond totaling $2 billion and EUR 1 billion of EU Green bond. Moreover, in October, we have cash in EUR 121 million of Adriatic line grants.

Moving now to our associates portfolio. The stake in ADNOC Gas Pipeline was sold to Lunate for EUR 233 million in March, while our 2% stake in ITM Power was disposed at the end of July. With regards to OGE acquisition in Germany, the foreign direct investment clearance is still ongoing, and this is one condition present for the closing of the deal. The long stop date is now November 17.

In addition, we have signed an exclusive agreement for the acquisition of Higas, which has the rights for the conversion of its Oristano LNG coastal storage facility in the Sardinia region into an FSRU terminal.

In 9 months, we have accelerated our strategy delivery. I'm now on Page #4. Let me remind the key highlights on gas infrastructure. We have more than 850 construction sites open, which represent a 19% increase versus 9 months 2024. Works on Phase 1 of the red decline are moving forward steadily with an overall completion at 43%. It was 35% at June 30. The BW Singapore regasification unit, moored offshore Ravenna began operations in May and 13 vessels arrived so far.

In the 9 months, Italy received 165 LNG tankers, half of which coming from the U.S. for a total volume of about 15 billion cubic meters. At the end of September, storage level was 92%, as mentioned, 10% higher than the European average. At the moment, we have improved at around 95%, well ahead of the rest of Europe to be fully prepared for the winter season.

Moving to our energy transition platform on Page #5. The first phase of the CCS project in Ravenna has delivered solid technical results. On the industrial phase, permitting for the pipeline is at an advanced stage and the process for storage has recently begun. We have submitted an application for the Connect European facility grants in excess of EUR 300 million, and we look forward to additional regulatory instruments to move ahead.

As mentioned, the Ministry of Environment has just published the Ministerial Decree on CCS technical regulation issued jointly by the competent ministries. On biomethane, we have 72 megawatts already in operation, authorized or under construction, and our mission is to speed the ramp-up and maximize the value of these assets. Renovit backlog is broadly stable at EUR 1.4 billion. With regard to the H2 backbone, we have been awarded EUR 24 million contribution by the Connect European facility to cover approximately half of the feasibility studies, and we are progressing with them.

Looking at sustainability and innovation, 35% of CapEx aligns with the EU taxonomy and 57% with SDGs, while sustainable finance is stable at 86% of the total. We expect 2025 Scope 1 and 2 CO2 emission down at least 25% versus 2022, which is our baseline. This is an improvement versus initial expectation of 20% reduction, mainly thanks to the new dispatching optimization tool supported by AI and a better performance on methane in this transition year of application of the new European rules.

Furthermore, for the fifth consecutive year, Snam received a gold standard recognition from the United Nations Environment Program, UNEP, for methane emission reduction, confirming the group high standard of transparency and accuracy in methane emission reporting and concrete commitment on emission reduction. Our first employee share ownership plan has had an outstanding participation rate of 55% of the total workforce even more relevant as the first window only allowed for subscription through own capital, tangible signs of employees' alignment with the corporate objectives and their active participation is Snam long-term value creation journey. I would like to take this opportunity to express personally my sincere gratitude to all colleagues who joined and supported this initiative.

Moving to Slide #6. Out of the total EUR 1.8 billion of investment broadly in line with the previous year, 35% is EU taxonomy aligned and includes. With regard to gas infrastructure, H2-ready replacements, dual fuel compressor station, biomethane plants connection. As for the energy transition businesses, H2 and CCS, a large part of biomethane CapEx depending on the plant's technical standards and energy efficiency, excluding cogeneration.

SDG alignment is at 57%, of which the majority goes towards SDG 7, 9 and 13, respectively, affordable and clean energy, industry innovation and infrastructure and climate action. More than 50% of the CapEx are development investment, reflecting the company industrial growth phase.

Let's now move to the 9-month 2025 EBITDA analysis on Slide #7. EBITDA for the period was EUR 2.227 billion, plus 6.6% compared to last year or plus EUR 138 million. Regulatory items were broadly neutral as the recognition of the 2024 deflator update for EUR 52 million and the adoption of Italian IPCA for RAB revaluation starting in 2025 for around EUR 23 million were counterbalanced by the WACC decrease for around EUR 77 million. The growth is mainly attributable to regulatory revenues increased for around EUR 119 million, Stogit Adriatica entered into the perimeter for -- from the 3rd of March 2025 and positively contributed by EUR 30 million. Ravenna FSRU that started operation from May and contributed by EUR 18 million.

In details, the regulated revenues growth breaks down as follows: Transport and storage revenue increased by around EUR 122 million linked to the investment plan execution. Fast money effect amount to around EUR 16 million, higher allowed OpEx mainly due to inflation recognition, positive volume effect. These items were partially counterbalanced by the absence of LNG extra revenue recognized in the second quarter of 2024 for around EUR 40 million, lower output-based incentives by EUR 60 million versus last year, mainly attributable to the storage reverse flow service and the expected phaseout of input-based incentives.

The increase in gas infrastructure operating costs, about EUR 29 million is mainly attributable to labor cost in large part due to the inflation recognition under the collective labor contract and new hires. With regard to the energy transition business, the plus EUR 5 million EBITDA contribution versus 9 months 2024 is mainly driven by biomethane supported by higher volumes.

As for the full year guidance, we update our guidance to EUR 2.950 billion EBITDA, which reflects the positive impact of the 2024 deflator update accounting for around EUR 52 million and the switch to the Italian IPCA index for RAB revaluation starting in 2025, worth approximately EUR 40 million for the full year.

I'm now on Page #8 on the associates. Their contribution to group net income was EUR 290 million, a plus EUR 57 million increase compared to the same period of the previous year. Out of the total contribution, EUR 197 million come from our international associates and the remaining EUR 93 million from the Italian associates.

Let's now dive into the performance of each one. TAP slightly higher year-on-year contribution is mainly driven by inflation adjusted tariff and lower net financial expenses. With 16% of Italian imports, TAP is the second largest pipeline import route and will be further reinforced by the start of commercial operation of the 1.2 bcm yearly expansion from January 2026. SeaCorridor operating performance is slightly higher, thanks to lower OpEx incurred in the first 9 months, expected to normalize by year-end and lower D&A due to some investment postponement. With approximately 15 bcm imported, it represents the first Italian import route. Terega contribution is substantially in line, thanks to cost savings, we partially offset the higher financial charges due to 2024 refinancing.

Moving to Austria. In 2025, TAG benefited from the new regulatory framework, which eliminates volume risk, bringing net income contribution to positive. Also GCA's performance benefited from the new regulatory framework, however, offset by a worsening in the bookings, which will be recovered in T+2 tariff. Worth mentioning the significant increase of exports from Italy to Austria underlying the strategic relevance of this route.

Desfa lower contribution was due to extraordinary auction premium on LNG imports and export to Bulgaria in 2024. However, the market outlook remains positive. Greek gas demand rose by nearly 17% year-on-year, driven by higher power generation needs and a colder winter. LNG remains key, covering over 40% of imports and the Alexandroupolis FSRU is now back in operation. Desfa ambitious CapEx plan underpins this strategy. And just yesterday, the Komotini compressor station starts of operations marked the interconnection strengthening with Bulgaria and the wider region.

Interconnectors contribution remains in line since we are reaching the yearly regulatory cap, thanks to capacity of almost 50% booked until 2026. EMG contribution is substantially in line compared to the same period of 2024. Regarding ADNOC, as already explained in March, we have completed the stake disposal. On the Italian associates, the growth is mainly driven by Italgas overperformance and by the higher contribution from Adriatic LNG following the increase of Snam participation in the company from last December. For the full year, we expect approximately EUR 365 million contribution from associates, excluding OGE potential contribution.

Let's now move to the 9 months 2025 net income analysis on Slide #9. Adjusted net income for the period was EUR 1.096 billion or plus 10% compared to 9 months 2024 due to higher EBITDA by EUR 138 million, as previously commented, partially counterbalanced by higher D&A by EUR 77 million following rising investment and the enter into perimeter of Stogit Adriatica from March and Ravenna FSRU from May, higher net financial expenses by EUR 16 million, mainly driven by a slight increase in financial expenses related to debt, reflecting higher average net debt with an average cost broadly stable at approximately 2.6%.

Contribution from associates is positive for EUR 57 million, as already commented as a result of higher international associates for EUR 33 million and higher Italian associates for EUR 24 million. Lower taxes reflect higher contribution from associates to EBT as well as tax credit adjustment related to 2024 income taxes. As for the full year, we update our guidance to EUR 1.420 billion net income adjusted, which reflects the positive impact net of taxes of the 2024 deflator update and the switch to Italian IPCA index for RAB revaluation starting in 2025 with a tax rate for the full year expected to be around 25%.

Turning now to the cash flow on Slide #10. Cash flow from operation for the period amount to around EUR 2.063 billion and was the result of EUR 1.717 billion of funds from operation and EUR 346 million of working capital cash generation. The change in working capital was mainly driven by regulatory working capital with around plus EUR 170 million due to tariff-related items, mainly driven by tariff receivable decrease, around minus EUR 110 million absorption due to balancing activities and default service, about plus EUR 130 million of cash generation, mainly driven by the super bonus fiscal credit decrease and around plus EUR 160 million of temporary cash generation due to a reduction in receivable from the compensation energy clearinghouse related to flexibility service to be reserved by year-end.

Net investment for the period amount to EUR 2.237 billion, including EUR 564 million of cash out related to Stogit Adriatica and around EUR 23 million of ADNOC disposal cash-in. Other outflows were mainly related to the payment of the dividend for EUR 969 million, resulting in a change in net debt of about EUR 1.188 billion.

Moving to Slide #11. Net debt amounted to around EUR 17.4 billion at the end of September 2025. Net cost of debt, which is calculated as financial charges net of liquidity incomes on average net debt for the period was broadly stable at 2.6%, while the fixed/floating mix stood at 89% / 11%. Sustainable finance ratio is at 86%, well on track to reach our long-term target of 90% by 2029.

Following the publication of a new sustainable finance framework, we successfully placed in May our first U.S. dollar multi-tranche sustainability-linked bond totaling $2 billion, which was the first sustainability-linked transaction globally with a net zero emission reduction target across Scope 1, 2 and 3. Moreover, in June, we have published a European bond fact sheet and issued our first European green bond of about EUR 1 billion, which so far is the largest senior single tranche by a European corporate.

Following this transaction, the funding for the year is completed, leaving remaining part of the year for further opportunistic prefunding activities. Credit ratings were confirmed by Moody's and Fitch following OGE acquisition announcement, while Standard & Poor raised Snam positioning to A- following the upgrade of the sovereign, providing the strength of our credit metrics and business profile.

As for the full year guidance, we reduced our net debt guidance to EUR 18 billion, thanks to higher cash conversion, a neutral net working capital effect, greater cash in from associates and an increase in investment-related payables. Net cost of debt is expected to remain stable at 2.6% with net financial expenses at around EUR 340 million.

I am now on Slide #12 to wrap up the full year 2025 guidance, where we confirm EUR 2.9 billion of CapEx for the year, of which EUR 2.5 billion on gas infrastructure and EUR 0.4 billion on energy transition. As well as tariff RAB for EUR 26.2 billion, already reflecting the effects of the ARERA Resolution 130 as discussed earlier. We upgrade our full year guidance with respect to an EBITDA of EUR 2.950 billion versus the previous guidance of EUR 2.850 billion, mainly to reflect the effects of the above-mentioned resolution for a total impact of approximately EUR 90 million.

Adjusted net income guidance moved to approximately EUR 1.420 billion from EUR 1.350 billion, mainly to reflect the above-mentioned resolution net of taxes. Net debt guidance significantly improves to EUR 18 billion, thanks to higher cash conversion, the neutral net working capital effect, greater cash in from associates and increased investment related payables. This outlook incorporates the expectation that the 24.99% OGE stake acquisition, if completed by 2025 year-end will be financed through either asset rotation or the issuance of a dedicated hybrid instrument.

Finally, the Board has approved the distribution of an interim dividend for 2025 amounting to EUR 0.1208 per share with a payment due starting from January 21, 2026. This is up 4% versus the previous year, in line with the guidance and represent a 71.4% payout.

To close on Page #13, the current energy scenario continues to highlight the crucial role of gas in ensuring system stability and resilience within an increasingly volatile and interconnected environment. We remain fully committed to support Italy's security of supply as shown by the high storage levels and the significant increase in LNG volumes injected into the network, demonstrating the country's role as a strategic energy gateaway for Europe.

We are also accelerating the execution of our strategy with over 850 construction sites currently active across the country, the commission of the Ravenna terminal and the city progress on the Adriatic line. Our strong performance over the first 9 months with all key financial indicators improving reflects the solidity of our business model and operational excellence. This, together with greater financial flexibility, allow us to upgrade our 2025 guidance on EBITDA, net profit and net financial debt, supporting long-term sustainable value creation for all our stakeholders.

We are now open to take your questions.

[Operator Instructions] And the first question comes from the line of Javier Suarez of Mediobanca.

The first one is on the latest draft law on CCS and hydrogen. If you can elaborate for us your reading of this first draft and the possible implication for Snam and its business model?

Then the second question is on the situation -- an update on the situation in Germany with OGE, which is -- the question is which is your best estimate for a decision for the conclusion or not of this deal and which in terms of deadline is the absolute maximum that you have to take a final decision in this operation.

And then the third question is on the slide on energy transition. You are mentioning a EUR 1.4 billion backlog. If you can give us some details and granularity on this backlog.

Thanks, Javier, for the 3 questions. So when it comes to the draft law for CCS H2, this was already widely expected. It was proposed on the June 30, and we are waiting for parliament approval. We give basically the power to the regulator in order to regulate these 2 energy vectors, which currently are not part of the mandate of the regulator. Therefore, is, I think, a very important step when it comes to finalizing our investment decision around these 2 businesses.

Now on CCS, on top of the draft law, as I mentioned during the presentation, also a technical specification last week were issued by the ministries and technical specification means security, how to handle, how to transport basically that type of molecule, basically CO2 molecule. So clearly, we are moving in the right direction and will allow us to basically give us, let me say, the way in which we are planning for CCS to take an FID on the industrial phase of the project by the beginning of 2027.

When it comes to the German update on the potential acquisition, I can only mention that we currently are on the Phase 2 of the FTI procedures, which has been going since basically the end of April and that we have a long stop date with our counterpart on the contract that ends on the 17th of November. Therefore, our expectation is by then to have an answer one way or the other. And therefore, we will know shortly whether we can finalize and conclude acquisition because this is the only condition precedent for us to basically execute finally the contract.

For the energy transition backlog, I can tell you that only 10% is now residential because it has gone down, as you probably remember, a lot of the works were related on the residential part of the Super Ecobonus tax allowances that was [indiscernible] in Italy up until 2023. 45% currently is on public administration, which has been the major focus of the company in the last couple of years and 45% on large industrial customers. So that is the split of the EUR 1.4 billion of backlog, which has a duration over 7 years currently.

The next question comes from the line of James Brand of Deutsche Bank.

Congrats on the results. I just wanted to ask, I know you just kind of answered a little bit on CCS, but I was just kind of keen to understand the kind of time line there for getting more clarity and also what that opportunity could be worth for you if you're willing -- obviously, you haven't set anything out that's too concrete at the moment, but maybe just to delve into that a little bit. So you said you're hoping to start making decisions on projects in early 2027. Could you just tell us kind of what the next steps are on the regulatory side? Are we waiting for the law to pass and then the regulator to come out with some regulatory framework? Or if that's not the case, what else are we waiting for to be coming through, firstly?

Secondly, I guess these investments are going to be outside the RAB, but maybe that's not clear yet. And thirdly, is there anything at all you can say about the scope of the investment opportunity here? It seems like it could be a very big one. And obviously, you haven't set anything out, but is there any kind of rough commentary you could give us or help us in kind of understanding how big an opportunity it would be?

Thanks, James, for your question. On CCS, clearly, the draft law needs to be converted into law by the parliament, and we expect that to happen, I would say, before year-end or just in and around year-end. That will give the powers to ARERA to start formally work on a draft regulation. Now we expect this business to be fully regulated, therefore, contributing to our regulated asset base.

I will tell you what we have already included in our business plan presented last January, which is EUR 500 million of CapEx, of which EUR 300 million on transport and EUR 200 million, which is our share in the JV for the storage business together with Eni. The assumption for us is that clearly this EUR 500 million of investment will translate into RAB fully by the end of 2029. And the expected remuneration, at least what we assume so far is to have a remuneration which is similar to the one of gas for both transport and storage, but clearly at a premium. Our assumption is, on average, 100 basis point premium. Clearly, this is a discussion that we will have with the regulator once they are entitled formally to basically start drafting the regulation. But those are basically the expectation.

In terms of investment, clearly, if we take an FID decision at the beginning of 2027, the amount of investment for both, I would say, transport is in the region of EUR 800 million more or less, and that will last even beyond clearly the business plan. When it comes to basically the JV, there is another EUR 1 billion, EUR 1.5 billion of investment on our side that will go even beyond those type of dates. But let me say that we will be more specific in terms of the scope of this investment in the business plan update that we will give to the market during the first quarter of next year. But as you pointed out, clearly, this will be a sizable investment. What I can tell you is it will be a fully regulated business and accreting to basically the regulated asset base of the company.

And the next question comes from the line of Emanuele Oggioni of Kepler Cheuvreux.

The first is on the '26 allow WACC based on the official site of ARERA seems that they used the old ECB inflation parameter. So probably the trigger that will not be activated. I don't know if you can comment on this. We'll discover probably in a few hours or tomorrow.

The second question is on LNG, the Oristano projects and the possible acquisition. I think probably before you will ask you try to get a higher level of protection for -- within the current regulatory framework for LNG. So basically, volumes warranted similar to the previous 2 vessels in Italy before to go ahead to the investments. And if we can expect investments in line with the previous 2 FSRU, so around EUR 400 million, EUR 450 million per vessel.

And finally, when you can expect the update of the business plan will be in January or after along the year?

Thanks, Emanuele. We are finalizing -- my answer to the last question first. We are finalizing the date is going to be towards the end of February, beginning of March in terms of timing, but we have not finalized yet.

When it comes to the first question, what I can comment is you all analysts have models in order to model whether the trigger gets triggered or not and what is the inflation assumption that you need to set into the model for it to trigger or not to trigger. So clearly, this is a decision that ARERA will take. And as you said, probably they already taken, but it will be public in the next few hours. So I cannot comment on that. I can only add that ARERA has always been a very reasonable regulator. Therefore, I expect them to take a reasonable decision also on this topic.

When it comes to the Sardinia or Oristano project, first of all, this is going to be a virtual pipeline to the mainland. Therefore, also the LNG facility will be accounted into the transport regulation and nor the LNG regulation. So we will enjoy the same type of remuneration of a transport facility. The amount of investment that we are expecting to basically devote to both the LNG ship as well as the works that we need to do on site in terms of pipes is in the region of EUR 700 million will be fully detailed in the new business plan again that we presented between the end of February and the beginning of March of next year.

Then on the broader question, whether we feel that LNG terminals need to be fully guaranteed in terms of volumes. Clearly, this is very important for us. You have seen from the numbers that LNG is becoming a key source of imports when it comes to gas. Therefore, we feel that this investment need to be fully regulated, and we should have guarantee on volume at 100% rather than the current 64%.

The next question comes from the line of Sarah Lester of MS.

Just a really quick one, please, on your latest disposals preference ranking. So I saw that you mentioned the possible asset rotation to fund the Open Grid Europe acquisition. So just wondering if you're able to please provide a bit more color around how you currently consider the pecking order for the potential candidates for disposal post ADNOC. And I suppose this is actually a broader question, too. It's not just within the Open Grid Europe context.

No. The asset rotation is not just in the context of the potential of the acquisition. It's part of the review of the portfolio that we are doing following clearly the strategic positioning of the company going forward across certain regions. Now what I can comment today is only on the public process that we currently have ongoing, which is the disposal of our biomethane platform. We have hired publicly all advisers, including financial advisers, and we will be in the market with that portfolio probably closely after year-end. The book value of that portfolio, just for you to remember, is in the region of EUR 560 million as of today.

Okay. Next question is from the line of Marcin Wojtal of Bank of America.

Just a couple of questions on the numbers, if you allow me. So firstly, you increased your guidance for EBITDA by about EUR 100 million. Can you just remind us what amount of that EUR 100 million actually flows mechanically into 2026?

And my second question, could you just repeat the indication that you gave for associates for 2025? I didn't quite catch that decision, but if you could just clarify that guidance.

Yes. Marcin, the guidance for contribution of the associate portfolio for the full year expected today is EUR 365 million, which is slightly higher than what I said in the first half results call. And this EUR 365 million exclude any contribution from OGE because even if you go to closing, it will not be part of the contribution for this year.

When it comes to what of the current guidance upgrade will translate into 2026, I can tell you that the same contribution on the [indiscernible] that we had in 2025, which is about EUR 40 million, we will also driven into 2026. So EUR 40 million is what we expect to have higher contribution from the new indexation in 2026.

The next question comes from Davide Candela of Intesa Sanpaolo.

I have 2. First one is a clarification on net debt. You improved the guidance by EUR 400 million. I was wondering if that neutral working capital you're seeing is just temporary and as an effect for this year and will be reverted in the next year or it is actually a structural recovery you are seeing?

Second question, in the Slide 5, you mentioned a contribution with regards to the reduction of methane emission from AI. I was wondering if with regards to this topic, you are also seeing some benefits on the cost side and your general operation in your company.

Thanks, David. When it comes to the working capital neutral expectation towards year-end, I mean, this is our job. I mean we need to plan on a working capital basis being neutral every year. Clearly, we had swings in the past 2 to 3 years, given that the market was either long or short with the relevant prices impact that affect clearly our working capital, especially towards year-end. But the expectation, if prices, let me say, stabilize across the numbers that we are seeing in the last -- in the recent months, we should have neutral working capital every year. And that's on this point.

When it comes to the reduction of emissions, which is expected to be 25% vis-a-vis 2022, that is part of the work that we're doing on the way in which we dispatch basically our gas in the network. We fully digitalize our assets now is almost 18 months. And after clearly digitalizing our asset, we are using different type of algorithms also supported by AI intelligence in order to see what is the best dispatching method that allow us to consume less in terms of burning gas in order to pressure the gas into the pipes.

Clearly, there are also some cost benefit, but those are part of the remuneration and in the numbers that already we are seeing when it comes to what is the cost of dispatching our gas transport. I can tell you that we are just seeing the first signs of a full digitalized network system that might even improve going forward, not only on emission reduction, but on general efficiency going forward.

The next question comes from the line of Bartek Kubicki of Bernstein.

I would like to ask 3 questions. First of all, with regards to the slide on gas demand, you are pointing to higher gas demand from households. And my question is whether you see any reason to believe that the gas demand from households will structurally increase in the future? Or do you think it's rather going to be down trending and only impacted by weather?

Second of all, on the energy efficiency order book you discussed before, I would like to ask you what do you see in terms of margins? Meaning do you see margins improving over time? Or do you think there's an increasing competition and consequently, margins are being squeezed?

And the third question will be on your convertible bond on Italgas and the latest share price performance. If you can maybe explain a little bit how does it impact your financial costs and what it could do to your future cash outflows once the bond is redeemed?

Thanks, Bartek, for your 3 questions. So when it comes to gas demand, besides also the weather adjustment that you discussed, the expectation, and I don't think it's going to be driven mainly by residential, but both by industrial as well as thermoelectric production is for a stabilization of desire level of volumes. We expect this year to close basically with a full demand in the region of 64 basically bcm, which confirms the growth that we've seen in the first 9 months of the year. But let me also add that the expectation is to stay at this level up until 2030.

Therefore, I think there is a structural shift when it comes to usage of gas and in particular, for thermoelectric production, which only started this year, but will be structural, and we will see it going forward also for the announcement of other countries to increase combined cycle generation when it comes to electricity.

When it comes to the energy efficiency marginality, what I can tell you is that clearly, we have moved from a pure or, let me say, larger residential business to public administration and industrials. This business has always run in the region of 16% to 19% in terms of marginality. Currently, we are not seeing margin pressures, but the more the contracts are larger, the more sophisticated customers and all these customers, especially when it comes to public authority are public tenders, clearly, there is some kind of pressure on marginality, but it's not something that we are seeing because the book has been built over the last 24 months.

When it comes to the Italgas exchangeable, what I can comment is it is an exchangeable currently is in the money in terms of where the share price is vis-a-vis the conversion premium. Therefore, we have optionality to convert if you want, starting from, I think, is September, October next year or wait for maturity. And in that case, we will decide whether to deliver share, cash or a mix of those. There is no impact in terms of cash flows in the sense that we have an underlying and we have set the terms to which the instruments will be reimbursed.

The next question comes from the line of Charles Swabey of HSBC.

I just have one on U.K. gas storage and your ambitions there through dCarbonX. Just I was wondering if you could provide any update on sort of the timing or size of the investment there? And if you're in conversation with government about any sort of potential regulatory framework that might underpin that investment.

What I can comment, Charles, on that is that current consultation, DCX is clearly working -- developing, let me say, a project in that respect. But as of now, in terms of where we stand and what could be, let me say, a pre-FID type of schedule, it's very difficult to say. Again, for us, our participation in DCX as a developer of these projects, then we will consider whether we want to invest in the project or not. So we have no commitment in that sense going forward.

Thank you. As of now, there are no further questions. I will give it a moment in case there is any follow-up questions from the participants. There are no further questions. I will now hand you over back to your host, Francesca, for any closing remarks.

So thank you very much for listening. As usual, the Investor Relations team is available for any follow-up. Thank you. Bye-bye.

Thank you.