Terna Stock

Good afternoon, ladies and gentlemen, and welcome to Terna's First half 2026 consolidated results. [Operator Instructions]

Please be advised that today's conference is being recorded. I'd like to hand the conference over to our host speaker today, Fabrizio Renacci, Head of Investor Relations. Please go ahead, sir.

Thank you. Good afternoon, ladies and gentlemen, and welcome to Terna's First half 2026 Results Presentation. The call will be offset by our CEO and General Manager, Pasqualino Monti; and our CFO, Francesco Beccalli. In the presentation, we will provide some highlights of the period, and then we will walk you through the operational and financial performance.

Following the presentation, we will have the Q&A session. I kindly ask you to send any questions through our email address [email protected] Thank you. And now let me hand over to our CEO, Mr. Monti.

Thank you, Fabrice, and good afternoon. I will start with some opening remarks on the first half of 2026. Solid execution in the development of our good infrastructure is the main priority. We have achieved the relevant progress on the -- with the completion of submarine cable installation on the intersection, and we are on track on the major development milestones of our investment plan.

Terna continues to play its key roles in the talent system, enabling renewables and ensuring grid security. Over the first 6 months of the year, we have integrated around 3.4 gigawatts of the renewable capacity and more than 1 gigawatt hour of storage.

As the energy transition continues to gain momentum, guaranteed to connection to show visible growth up by 1.2x of renewables and by 1.4x for storage year-to-date. Sustainability is at the core of our strategy and our global leadership continues to be recognized by leading international institutions.

Looking ahead, we are starting to work on the update of the industrial plan. As you know, by 2027, Arera will update the current regulated framework, which expires at the end of next year. Our internal work on the strategic plan must be aligned with the timing of the regulation. With the regulation visible and defined, we will be in a position to share with the market the new industrial plan. in due course in 2027. And now let me hand over to our CFO, Francesco Beccali.

Thank you, Pasqualino, and good afternoon, everyone. -- the group delivered another strong set of results in the first half of the year. Terna improved across all our key financial indicators, showing once again the solid of our business model. I will give a later presentation on the main drag. We continue to accelerate investments to support the development of the city system while maintaining visiting and sustainable financial profile.

Let's start with CapEx, turning relate to next slide. In the period, CapEx amounted to EUR 1.6 billion, marking a 20% increase compared to the same period of last year. Out of this amount, around EUR 1.5 billion was invested in regulated activities with 60% devoted, almost 30% for asset renewal and efficiency and rest for different CapEx. Among the main projects of the period, our investment efforts mainly focused on the security, the interconnection Italy and Tunisia our lives and the opco aggregately.

On decent, investments totaled around EUR 172 million, in line with our business plan with the aim of ensuring great resilience and security. The installation of synchro competitors, suncreactors and dumping register system. Nonregulated and other CapEx reached around EUR 160 million of which about EUR 41 million of nonrelated investments and EUR 76 million of capitalized financial charges.

As of today, about 92% of the projects included in our business plan are covered by contract awarded and 93% completed the authorization.

Let us now move to the main figures of the P&L, turning to Slide #7. Let's start with our revenue performance. In the first half of 2026, group revenues increased by around 12% reaching EUR 2.1 million, an improvement of approximately EUR 219 million compared to the same period of last year and regulated revenues reached EUR 1.66 billion with an increase of 4% vis-a-vis previously.

The growth was mainly driven by higher output terabit and recognized depreciation from new assets and let onstream and but also all miss partially offset by a lower component forming the update of the notional catalyzation rate of 2026, '27 of the year and lower revenues recognized during the period compared to the first half of 2025, which included the estimated sector of the tariff decoupling mechanism.

Let me remind that in the first half of 2025, we booked EUR 17 million one-off related to previous years special recognition following the shift to SICP for the revaluation. Net of this effect, revenue in the first half of '26 would have increased by 13%. Nonregulated revenues reached EUR 451 million, up 50% year-on-year. This improvement reflects the higher contribution from the Energy Services segment, following also the consolidation of SDA Avenue in the second part in 2025 and also the contribution on the Equipment segment, supported by a strong market environment and higher order intake with both Blue Cable and cities.

Now let's go through operating cost final. Total operating costs came in EUR 647 million, up 21% year-on-year, markets, an increase of around EUR 112 million compared to the first half of 2025. In the regulated segment, the cost base increased by 3% mainly reflecting stock and increased external services and other operating expenses. This increase was largely offset by higher capitalization.

As for more regulated activity, the evolution of operating cost was mainly driven by the increase of perimeter in the energy services business and higher volumes on the Equipment segment.

Let me now move to EBITDA as the following slide. Group EBITDA reached around EUR 1.5 billion in the first half up 2026, up 8% year-on-year, corresponding to an increase of approximately EUR 107 million. The increase was mainly driven by regulated activities, recording an EBITDA of EUR 1.4 billion, up by EUR 60 million versus previous year. Nonregulated activities recorded a strong performance with EBITDA increasing by around 81% to 106 million units. This related into an EBITDA margin of 24% compared to 20% in the first half of 2025 highlighting the improved profitability of the business.

The strong EBITDA performance recorded in the period highlights the solidity of the business model and represent the foundation for the achievement of our full year guide, which we see where reach.

Let's now take a closer look at the rest of the period. Turning to the next slide. D&A amounted to EUR 506 million. The increase versus last year was mainly due to the impact of new assets from a stream during the period. As a result, EBIT reached EUR 161 million, up 5% year-on-year. Net financial expenses were EUR 94 million, up by around EUR 17 million versus last year, mainly reflecting the higher average cost of debt compared with the first half of 2025. Taxes street at EUR 274 million, EUR 25 million higher versus last year, attributable to the higher profit before tax and a temporary 2% touch point increase in the year tax rate for 2026 and 2027.

Our tax rate was 31.6%, with a 29.1% in the first half of 2025. As a result, group net income reached EUR 591 million, 1% higher versus last year. Adjusting first half 2025 figures for higher era tax introduced by the first half of 2026 would have been up sort highlighting the underlying strength of the group's perform.

Moving now to cash flow and net debt evolution. At the end of June 2026, net debt stood at EUR 12.6 million, around EUR 0.5 billion below the 2025 year-end level. Reflecting our financial age. This figure also continued to benefit from the EUR 850 million European green issued in January which is accounted for...

Cash flow generation was around EUR 1.7 million, enabling us to fully part our investment program while maintaining a sound financial position. Looking at our debt profile, around 72% of gross debt was at rate at the end of June, while the average debt maturity set at approximately confirming the resilience of our liability structure.

As previously mentioned, during the first half of the year, we further strengthened our sustainable finance profile. In January, we successfully placed a EUR 850 million European green, which received orders of more than EUR 7 million, almost 9x the amount of. This transaction represented the first Winbond standard iron issuance in the Italian market and achieved room subordination premium ever reported for euro-denominated below 60 basis points, confirming the strong comfort investors place in dermatan profile.

In addition, we continue to stand our sustainability-linked funding framework tightening of new EUR 100 million ESG credit facility with financial conditions. Finally, in June, we increased the size of our rent program from EUR 4 billion to EUR 6 billion further our financial facility and strengthening our access international capital market.

Overall, our timing structure remains well diversified and fully aligned to the group's strategy, providing the financial switch VP needed to support our investment ambition.

And now come to. In the first half of the year, we have continued to make solid progress across all our key areas of activity. On infrastructure, we are advancing the development of the grid is important milestone achieved on our main projects, confirming our strong focus on execution. On the financial side, we delivered once again a strong performance with double-digit revenue growth, solid EBITDA expansion and continued cash generation while maintaining a disciplined approach to capital allocation and financial level. These all with a strong set of results, and thanks to the high level of visibility we have for the rest of the year, we can fully our 2026. Thank you for your attention. We are now ready for the Q&A session.

Thank you, Francisco. We can open the Q&A session. As always, we have received questions from the analysts. So I want to start by thanking all of the analysts for sending before and their questions. We have obviously grouped them by subject, by topic, trying to be as effective as possible.

We actually start with a couple of questions on the OBI. The first one, the analyst is asking if we can provide some details on the output-based incentives that we have accounted for in the first half of 2026.

Sure, Felito. In the first half of the year, we recognized approximately EUR 76 million of automation centers consisting of $43 million of interzonal incentives accrued following the mitigation of the usual clawback condition and EUR 33 million related to the MSB incentive studies for the 2025 performance.

The last number reflects the final up from areas inventory system. which concerns a higher incentive amount than the prudential estimates recognized at the end of 2025 validating the assumptions and calculations previously submitted by the natural.

Excellent. Then the second one, the second part of the question is on the BI is the CFO, we could remind what was the guidance for ODIs for full year 2026.

What I can tell you is that out of these incentives in '26 will mainly linked to the mechanism for reducing dispatch service market cost considering both patching and interzonal and including all the potential guarantee centers. We expect to book more or less EUR 200 million of incentives overall.

Then we switch a bit to -- more to the regulatory side of things. The question is, when do you expect Arera to make substantial progress with the consultation and publications on the ROS system for electricity transmission.

Well, we see mainly 2 big regulatory livestocming up. The first one concerns eventual steps regarding rotavation, to further align objective with the systems interest. As of today, a consultation paper on these incentive schemes have not been planned Augie.

And the second one with regard to next at the start, as you know, in 2028. And therefore, the relative consultation process will likely be end during 2027.

Okay. The next one is still on regulation more on a technical aspect. What is the mark-to-market for 2027, what do you expect the regulator to change the basket of peers or the taxation parameter?

Well, from a mark-to-market perspective for 2027, I'm looking silane, which is the most sensible to potential like current states under the district thermal would point to lower work level. However, the geopolitical situation and the result as well as macroconomic conditions suggest cash caution. As part of the consultation process of an -- could provide the current market of comparables in case recent trends in interest rate spread and credits.

However, let me point out the regulator as of today, has not provided any indication today at such change changes are being considered. In our , excluding France, in case from the basket of comparables current mark-to-market buyers remained around the threshold and core market. We are still on the edge. However, we could be more precise on the file of potential outcome or only closer to the end of the vessel period the volatility that we were before. when value will be almost crystallized, and we will have more visibility on the conical elements for the calculation of some parameters, such as the basket of comparables for the country.

Thank you, now we changed a bit the subject, and we move to the financial structure. Question is, if the company sees room to improve the current financial structure and if asset transition or other solution to the great leverage could be considered by the company.

As to the first question, let me put it in the right perspective. And let me start by highlighting that our financial position is extremely song and our CapEx plan to 2028 is fully sell under the financial report. As was concerned by the rating upgrade we received in 2025 from both and Moody's consequently to a senior rating action in the garment on the solar.

Having said that, we remain firmly committed to preserving a strong risk point and we are ready to take any measures that may be needed to accord but committed. Looking at when we will update our industrial plan to reflect revised capture, we will then reassess the financial instruments required to confirm the financial summer for the company.

Still on the results and a bit of a deep dive. The analyst is asking which are the growth drivers behind the acceleration of the nonregulated business for the first half in terms of EBITDA, obviously compared to the same period of previous year.

Well, as shown during the presentation, normally, we had a business performance driven by agent acceleration in both Energy Services segment, which accounted for EUR 54 million of EBITDA and both a payment segment, EUR 33 million of code contributions. Most of this acceleration is related to the organic growth, mainly increased materiality. Overall -- only a usual part of it, we are talking about EUR 10 million out of EUR 116 million of total EBITDA is meaning to perimeter effect following the consolidation of the services business.

In general, looking in nonregulated activities at higher level they should not be considered as a stand-alone business, but we are closely linked to and complementary to our regulated core business. We are increasingly coming an industrial plant through which we can participate in key segments of the energy transition value chain while strengthening our execution capabilities and industrial -- this is a cemented we want to market to better appreciate because the growth of our market-based activity does not change the terms recoil.

On the call it reinforces our core business by creating industrial synergies and enhance skids and supporting the execution of our investor products. Looking at, we'll continue to evaluate growth opportunities, including M&A, small similar. But we will remain either selective and -- we will only consider transactions that are fully aligned with our core competitive offer tangible industrial series and generate appropriate economic returns for our shares.

Thank you,. So now we switch more to some financial dynamics. And analyst is asking on working capital balance for the semester and what are the expectations on the figure for year-end?

As to the net working capital its evolution in the first semester of the year benefited from lower cash outflows related to pass-through Ita and from higher receivables associated with regulated activities and margin-related items. On top of this, let me point out that in the first half of 6, we received about EUR 300 million of great in this context.

Let me also note that according to the new relation, we are entitled to receive the financial incentive between 5% and 15% of the overall gain value. Looking as said, we expect the network to capital at year end to remain broadly consistent the current trajectory. And with the execution of our investment plan, while continuing to be mainly improved by the evolution of pass-through items and receivables, which are very visible to project.

We move on to procurement. The question is if we see any risk that are particularly coming from the current tensions in the Middle East.

For wood console procurement, let me start by saying that we are well on track given that about 92% of the projects included in the 2024 industrial plan are covered by contract award. If we talk about geopolitical tension -- those may have some inline effects on the cost of key materials and on supply chain are.

For these reasons, we are already implementing mitigation strategies to reserve both time line and capital expenditures disti. It is also important to remember that our regulatory trend provides protection, again, increases in raw material prices. Since these are recognized in the rail assets comp.

Yes. So I think that given the message on strategy that was given at the beginning of the presentation, we focus the Q&A only on the operating and financial aspects of this semester, although we have received 2 questions which are more forward-looking, and I think we can say on these 2 questions is deal with you, Francesco.

The first one is -- can you provide a view about the EU proposal on electrification target and the potential implications for term.

Let me start by highlighting that it is only a policy document. So part -- and there are still no bias, either at level or a national level. Having said that, the electrification action plan, which indicates from the current 22% as the European for target for electrification of final and assumption further confirms my view the importance of electrification to strengthen the Union's energy photology and contestations on energy prices as well as the commissions rementions to continue in this direction. This makes it essential to continue with a robust investment planning transmission networks that we expect the regulators of the menial counties will have to import -- to this extent, it is worth note that the replacemission cost delivery is among the lower Europe.

Coming back to about the commission indicated that an accelerated energy transition gain at its core could reduce imports by more than 70% and of crude oil by more than 40% by '24. The EU would say up to EUR 250 million per year by 2020 on its cost security import post reduction by 2040 of their imports by more than 70% and crude oil imports by more than savings on European possible of up USD 160 billion per year and the reduction in the increase in generation cost of about 20%. -- this document confirms us commitment to mobilize more than EUR 75 million over the next year.

Thank you, Franceso. We still remain with 1 question. And the final one, still forward looking more on CapEx sales. The question is, how do you think about pace of CapEx beyond 2028? And when do you expect to present the new 10 years development plan?

On what concern, we expected investments beyond the plan arise. -- and focusing on the development segment, which is, by the way, the most important on the 1 that contributed the most to our total amount of CapEx. The biggest share of the latter national development plan the one we published in 2025 provides for investment of more than EUR 23 billion over to the case.

On top of this, era will, of course, continue to invent also on the security plan and on the renewal of the -- the new 10-year development plan will be presented in the first semester of 2027, and it will be -- it will include all the development projects foreseen in the period 2027, 2030.

Thank you, Francisco. So this was the last question of the Q&A. So we can conclude also the Q&A session. I want to thank our management, CEO, PasconoMonti; and CFO, Francisco Beccalli for attending the call. And obviously, for all of the analysts and investors that attended the call Investor Relations team is at your disposal for further questions or any clarification that you might need. Thank you.

Thanks, to everybody for attending the call. Bye.

Ladies and gentlemen, this concludes today's presentation. Thank you for joining us. You may now disconnect your lines. Have a great day.

Good afternoon, ladies and gentlemen, and welcome to Terna's Q1 2026 Consolidated Results Presentation. [Operator Instructions] Please be advised that today's conference is being recorded. I'd like to hand the conference over to our host, Stefano Gamberini, Head of Investor Relations. Please go ahead, sir.

Thanks a lot. Good afternoon, everyone, and welcome to Terna's First Quarter 2026 Results Presentation. The call will be hosted by our CFO, Francesco Beccali. And following the presentation, we will have the Q&A session. So we kindly ask you to send any questions you might have to our e-mail address, [email protected]. I leave the floor to Francesco, please.

Thank you, Stefano, and good afternoon, everyone. Let me start by sharing with you the key highlights of the first quarter of 2026. Regarding infrastructure, in Q1 2026, 10 projects aimed at developing the national transmission grid were authorized by the Ministry of Environment and Energy Security and the relevant regional authorities for a total value of approximately EUR 167 million. This confirms our ability to streamline internal processes and our constructive collaboration with the authorities, enabling shorter approval time lines.

In terms of execution, let me remind you that in early January '26, the installation of the first submarine cable of the Tyrrhenian Link western branch between Sicily and Sardinia was completed, reaching a record depth of 2,150 meters, below the sea level. In addition, in April, we completed the installation of the eastern section of the Tyrrhenia Link, making the conclusion of submarine works between Campania and Sicily. Finally, in line with the strategic refocusing outlined in the update of our 2024-'28 industrial plan, in February, we signed a binding agreement for the sale of 100% of Terna Peru, as part of the enhancement of our power transmission assets in South America. The transaction is valued at approximately USD 15 million with closing expected by the third quarter of 2026.

Coming to finance and confirming once again the group's strong commitment to a business model that reinforces sustainability as a strategic lever for value creation. In January, we issued an EUR 850 million hybrid green bond, achieving a record low subordination premium for corporate hybrid instruments in Europe, below 60 basis points.

In addition, in March, Terna signed an ESG-linked Credit Facility agreement for a total amount of EUR 100 million, the facility has a 5-year maturity with an interest rate also linked to Terna's performance against specific environmental, social and governance indicators.

On the ESG side, our continuous commitment to sustainability is also recognized externally by different institutional bodies. In the first quarter of 2026, Terna achieved the Top 1% distinction, the highest possible recognition in the Sustainability Yearbook 2026 of S&P Global based on the result of the 2025 Corporate Sustainability Assessment, where Terna ranked first worldwide.

In the same period, Standard Ethics, a leading international non-financial rating agency, confirmed Terna's EE+ corporate rating, corresponding to a very strong assessment, positioning the group in the top sustainable range and among the leaders in the utility sector.

We have also recently learned that MSCI has upgraded Terna's ESG rating to AAA, the highest possible level, thereby placing the company among the leaders in the utility sector. Moreover, Terna was confirmed in the main ESG indices in which its already included. The STOXX Global ESG Leaders Index, where the group has been listed since 2011. Euronext Sustainable Index and the MIB ESG Index, Italy's blue chip index dedicated to best practices in environmental, social and governance matters.

Let me now briefly touch on the evolution of the Italian electricity system. Since the beginning of the year, we have already seen encouraging progress. Starting with renewables, more than 1.6 gigawatts of new capacity have been installed over the last 3 months. Overall connection request remained broadly stable. But more importantly, projects that have been secured, preliminary connection solutions rose to about 84 gigawatt from 79 gigawatt at the end of December. Ready-to-build pipeline also adds up to around 12 gigawatts versus about 11 gigawatt at the end of last year.

Turning to storage, around 1 gigawatt-hour of new capacity was installed in the first quarter of the year. In addition, with the decree#95 of 27 of March 2026, the Italian Ministry of Environment and Energy Security approved Terna's proposal for a new MACSE auction for 2029 delivery. Approval of the auction volume up to 16 gigawatt-hour is expected shortly, and the auction is likely to take place by year-end. As of the storage pipeline, overall connection requests remained broadly in line with December level at around 300 gigawatt, while projects that have obtained preliminary authorization increased to around 63 gigawatts, up from 56 gigawatts at the end of December. Ready-to-build projects also increased, reaching around 8 gigawatts compared to 6.8 gigawatts in December.

Let's now turn to the overview of the electricity demand evolution moving to the next slide. As you can appreciate in this chart, in the first quarter of 2026 national electricity demand continued to confirm the upward trend observed since last September, reaching around 80 terawatt-hour, up 3% year-on-year. During the period, renewable sources covered about 36% of total demand, improving versus last year when the share was approximately 34%.

National net electricity production amounted to around 68 terawatt hour up 4.1% year-on-year and with renewables covering roughly 42% of domestic production from around 41% in the first quarter of 2025. The growth in renewable electricity generation was mainly driven by photovoltaic and wind, which increased their production by 19.2% and 26.3%, respectively. Given the data center deployments are expected to be a key long-term driver of electricity demand, let me briefly update you on data center connection request.

As of end March, data center connection request totaled around 83 gigawatt up by approximately 13 gigawatts compared with end 2025, confirming that Italy is increasingly perceived by investors as a reliable platform for energy-intensive digital infrastructure.

Turning now to the main figures of the period. In the first 3-months of 2026, the group achieved satisfactory results across P&L lines. Indeed, group revenues and EBITDA rose by 10% and 7%, respectively, equating to increase of EUR 87 million and EUR 46 million compared to the first 3-months of 2025. We also reported a group net income of EUR 277 million, broadly in line with the same period of last year, despite higher IRAP taxation introduced by the energy decree for 2026 and 2027. Adjusting the first quarter 2025 figures for this effect, net income is in the first quarter of 2026, would be up 4%. Group CapEx amounted to EUR 511 million, down 9% versus the first quarter of last year due to a different timing of investments.

At the end of March 2026, net debt stood at EUR 12.2 billion, approximately EUR 800 million lower than the value registered in 2025 year-end of about EUR 13 billion, mainly as a consequence of the EUR 850 million hybrid issuance accounted as equity. For a deep analysis of the first quarter figures, let's now turn to the next slide.

Revenues posted a significant increase of around 10% in the first quarter, reaching EUR 989 million. Regulated activities grew by 5% to EUR 795 million, while the most significant acceleration was driven by Non-Regulated activities, which rose by over 30% to EUR 194 million. Let me now take a closer look at the evolution of revenues turning to Slide #9.

Regulated revenues reached EUR 795 million, with an increase of 5% compared to the same period of last year. The growth was mainly driven by the higher RAB and the recognized depreciation from new assets entered onstream. A change in consolidation perimeter following the acquisition of part of Rome's high-voltage grid from Acea closed in September 2025, and only partially offset by lower fast-money component following the update of the notional capitalization rate for the 2026, '27 regulatory period. No change in revenues, however, arises from the WACC, which remains unchanged at 5.5%, in line with the previous period.

Non-Regulated revenues reached EUR 194 million, up 32% versus last year. The Equipment segment grew by around 20%, supported by a strong market environment and higher order intake with both Brugg Cables and Tamini Group as key contributors. Revenues for the Energy Services segment grew by EUR 25 million following also the acquisition of STE Energy in May 2025.

Now let's go through operating cost analysis. As you can see in this chart, total operating costs stood at around EUR 291 million, 17% higher than last year. In Regulated Activities, the cost base rose by 11%, mainly due to higher external and other costs. Labor was up by 4%, largely due to a higher average headcount. This increase was mostly offset by higher capitalization. Non-Regulated OpEx dynamics were mainly impacted by higher service costs related to the development of activities in the Energy Services and Equipment segment and higher raw material costs.

Let me now analyze EBITDA moving to the next slide. Thanks to the acceleration in revenue, in the first quarter of 2026, group EBITDA reached EUR 698 million, 7% higher than the previous year. The increase was mainly attributable to regulated activities, which contributed for about EUR 26 million more versus last year, showing an EBITDA of EUR 652 million. Non-Regulated Activities EBITDA rose by approximately 80% to EUR 46 million, plus EUR 20 million versus last year. The increase was led by the Equipment business, reflecting both stronger market revenues and margin expansion. Energy Services also reported very strong acceleration, mainly thanks to the consolidation of STE Energy from May 2025.

Let's now have a look to the lower part of the P&L, turning to the next slide. D&A amounted to EUR 248 million. The increase versus last year was mainly due to the impact of new assets coming on stream during the period. As a consequence, EBIT reached EUR 450 million, up 4% versus the first quarter of last year. Net financial expenses were EUR 47 million, up EUR 8 million versus last year, mainly reflecting a higher average debt level in the first quarter of 2026 versus 2025, along with higher interest rates on new financings compared to the average cost of existing debt. The cost of debt in the first quarter 2026 was around 2.7%. Taxes stood at EUR 125 million, EUR 7 million higher versus last year, attributable to the higher profit before tax and to the temporary 2 percentage point increase in the IRAP tax rate for '26 and '27. Our tax rate was 31.1% versus 30.1% in the first quarter of 2025.

As a result, group net income reached EUR 277 million, broadly in line with the same period of last year, adjusting the first quarter of 2025 figures for higher IRAP tax introduced by the so-called energy decree, net income in the first quarter of 2026 would be up 4%.

Moving to CapEx analysis. In the first 3 months of 2026, total CapEx amounted to EUR 511 million, down compared to the same period of last year. Of this amount, approximately EUR 463 million were invested in the Regulated Activities. Among the main projects of the period, it is worth mentioning the Tyrrhenian Link, the Chiaramonte Gulfi-Ciminna power line, the Sa.Co.I.3 and the Adriatic Link. In addition, we should also consider the investments envisaged under our defense plan, which are essential to ensure grid resilience and security, including the installation of synchronous compensators, shunt reactors and damping register systems. As far as CapEx categories are concerned, development CapEx represented 57% of our total regulated CapEx. Defense CapEx stood at 10%, while asset renewal and efficiency was 33% of the total.

Non Regulated and Other CapEx reached EUR 49 million. This mainly included capitalized financial charges and other investments. Let me underline that the year-on-year decrease mainly reflects a different timing of investments with spending more concentrated in the second half of the year as well as a higher comparison base in early 2025.

Regarding net debt and cash flow analysis. Now turn to the next slide. At the end of March 2026, net debt stood at EUR 12.2 billion, around EUR 0.8 billion below the 2025 year-end level, reflecting our continued discipline in managing leverage. Cash flow generation was around EUR 510 million, enabling us to fund almost all the CapEx spending during the quarter. Let me also reiterate that our financial policy focuses on efficiency and on maintaining a solid, sustainable capital structure. In this context, net debt at the end of March includes the benefit of the EUR 850 million Hybrid Green Bond issued in January accounted as equity.

Let's now make a deeper analysis of our debt profile. Moving to Slide 15. At the end of March 2026, the fixed to floating ratio on gross debt stood at around 75%, with an average debt duration of approximately 6 years. In full alignment with the group strategy, Terna aims to position itself as one of the leading players in the sustainable finance market, an approach that was further confirmed in the first quarter of 2026. As of March 2026, senior green bonds issued under our two Euro Medium Term Notes programmes amounted to EUR 3.75 billion. These are complemented by 3 perpetual subordinated green hybrid bond issuances for a total of EUR 2.7 billion, including a third tranche issued in January 2026 of EUR 850 million just mentioned. This latest transaction represents Terna's first perpetual subordinated hybrid nonconvertible European Green Bond issued at a record low subordination premium for corporate hybrid instrument in Europe, below 60 basis points.

In addition, Terna can rely on a solid ESG-linked loan structure, including ESG-linked term loans for a total of EUR 2.6 billion as well as 3 ESG-linked revolving facilities key performance indicators for approximately EUR 4.3 billion. This is complemented by a EUR 2 billion commercial paper program providing further flexibility in shorter-termfunding.

Before we move to the Q&A, let me briefly highlight that in the current context of rising geopolitical tensions, the expansion of renewables is crucial to strengthening energy independence and helping stabilize electricity price level. The first quarter of 2026, the energy transition advanced further with around 1.6 gigawatts of new renewable capacity and 1 gigawatt-hour of new storages added. Key pipeline indicators also continue to improve, notably ready-to-build projects as well as ones that have already secured preliminary authorization. Regarding targets, given the strong performance delivered in the first 3 months, we confirm the full 2026 guidance shared in March. Thank you for your attention. We are now ready for the Q&A session.

Thanks, Francesco. Let's now open the Q&A section. Okay. We grouped some questions by topic. So let's start with the first one.

Can you quantify the contribution from output-based incentive in the first quarter.

In this quarter, there was no contribution coming from OBI. It will be recognized during the year when there will be the certainty in line with the accounting principles.

And what is the level of out-based incentive you expect for the full year and for the next years?

Well, as we already stated in March, for the current year, considering both dispatching and interzonal and including the potential grants incentive, we expect to book over EUR 200 million of incentives overall. For what concerns coming years, let me remind you that in the existing industrial plan update guidance, are based on OBI's assumption of about EUR 900 million cumulated. EUR 360 million more or less of which are accounted in 2024. Mostly of this amount, it refers to the existing output-based incentive framework and only a residual part is related to the new ROSS Integrale scheme. The higher performance that we registered in 2025 should be considered on top of this cumulated amount and not as an anticipation of incentives planned in following years. For any consideration regarding future periods though, including those beyond 2028, i.e., the end of the existing strategic plan, we believe it is appropriate to postpone a detailed discussion later on where we could have greater visibility on the ROSS Integrale incentive scheme, and we also expect to present the new investor plan of the company.

Now could you provide more color on the contribution from fast money in this first quarter and for the rest of the year?

Well, fast money contribution in 2026 grid fee is equal to about EUR 65 million. On the quarter, as the old components of the grid fee, the contribution is regularly split. So for this reason, the fast money impact in the first quarter is about EUR 15 million.

Now moving to regulation. What are your expectation for regulatory developments over the remainder of the year? Do you expect more details on how the full ROSS will work?

But one of the fourthcoming coming decisions, expected from ARERA relates for sure, the potential next steps on the ROSS regulation, which is aimed at further aligning the TSO objective with the overall interest of the whole system. The authority currently provides no information on when the consultation paper, on the ROSS incentive schemes will be presented. So given that the application of the schemes under the existing resolution is also envisaged for 2026 and 2027 period. It is possible that ARERA may open a public consultation process later this year.

Now moving to WACC. What is the mark-to-market 2027 WACC base based on? For what do you expect the regulator could change the bucket of peers?

From a mark-to-market perspective for 2027, the current -- let me remind and restate that the current geopolitical situation and the resulting volatility both in energy and financial markets, as well as in macroeconomic conditions suggest caution in extrapolating any short-term signals. We can express some potential outcomes only in the following months. As part of the consultation process for this interim update or for the whole WACC period renewal, ARERA could revise the current bucket of comparators in case recent trends in the interest rate spread or credit rating may persist. The regulator has not provided any indication today such changes are being considered.

Now moving to the CapEx. Could you explain why first quarter '26 CapEx were down 9% compared to the same period of last year?

The lower CapEx performance in the first quarter of 2026 versus the first quarter of last year reflects a different timing profile as we stated in the presentation, with investments more concentrated in the second half of the year and also a base effect due to spending anticipated in the first quarter of 2025. This is mainly reflected in different relevant mile stones in the Sa.Co.I.3 project for example and in the synchronous compensator plan, all included in the security plan. Nevertheless, let me be clear on the fact that we do confirm the full year investment guidance.

Could you comment on the 10 year project authorized in the first quarter '26 at least in addition to the EUR 17.7 billion CapEx plan. When are they expected?

Some of these projects are part of the 2024-'28 CapEX plan, only a remaining part concerns projects after the business plan horizon. Let me remind you that all these projects account for a total amount of EUR 167 million.

Now moving to the Non-Regulated activities growth. Should we consider a growth trend in the remaining part of the year similar to the first quarter?

Well, Stefano in the first quarter Non-Regulated activities recorded a very strong acceleration with EBITDA up by more than 80%. As we said, the increase was led both by the Equipment business, reflecting a very dynamic market and the Energy Services thanks to the consolidation of STE Energy. However, the trend of growth could not be taken as a reference for the full year results. In -- from this perspective, we remind you that we expect a low double-digit growth in Non-Regulated Activities EBITDA in 2026.

Could you comment on how the current geopolitical situation may impact Terna CapEx and earnings plan, you think the investment opportunities have improved following the Middle East conflict?

The current geopolitical situation in Middle East does not entail any direct impact on Terna. This is primarily due to our regulated nature, with a regulatory framework that provides strong visibility on returns and offers protection against inflation. In addition, our investment plan is focused on domestic infrastructure, which significantly limits our exposure to international volatility in general. That said, we do acknowledge that geopolitical tensions could have some indirect effects, particularly on the cost of certain key materials and on supply chain dynamics. For these reasons, we have already put in place mitigation measures and [indiscernible] project time line and preserving capital expendiuture discipline.

In conclusion, let me remind you that about 90% of our CapEx plan is covered by existing procurement contracts. Looking at the broader system level, the current scenario further reinforces the strategic relevance of the energy transition and of the grid development. It highlights the need to accelerate progress towards energy independence. In Italy, today, this can only be achieved by focusing on renewables and green grid investment.

Now about the IRAP tax expectation, do you think there is a risk of an extension beyond 2027?

For what concerns IRAP, the decree foresees the application of additional 2% taxation only for 2026 and '27, and this is the only financial impact on Terna current accounts.

Where do you expect net debt to land by year-end?

Considering the hybrid issuance and based on the guidance provided on CapEx and net profit, we expect an increase of net debt at the end of 2026 which would be slightly below the one registered in '25.

Okay. And are you planning any further hybrid bond issuance in the next 12 months?

Well, as always, let me state that our balance sheet is currently solid and does not require an increase in the outstanding hybrid component. At the same time though, the company maintains a flexible and opportunistic approach and at evaluating potential market opportunities.

Considering the significant volumes of investment envisaged for 2026, do you see a need of any action to better underpin your balance sheet solidity?

Let me be very clear on this point. Our financial position will remain solid also in 2026, also thanks to the hybrid issuance completed in January. In this respect, let me also reiterate that our CapEx plan through 2028 is fully sustainable from a financial standpoint. This has also been clearly confirmed by the rating upgrades that we received in 2025 from both Standard & Poor's and Moody's, following similar rating actions that occur to the Italian sovereign, and these decisions reaffirm the strength of our capital structure over the business plan horizon without the need for additional financial instruments. That said, if it will be required as of today, the range of flexibility tools that we could consider includes, on the one hand, the remaining hybrid issuance capacity as well as the possibility of securing additional public contributions to further strengthen the financial structure and also evaluating options to monetize our Non-Regulated Activities.

We have the last question remaining. What could we expect -- sorry, when could we expect Terna to publish an update of the business plan? It is realistic to expect it is already in H2 '26?

Well, according to our 2026 financial calendar, the new industrial plan is expected during the second half of the year. Any update on the date of the industrial plan presentation will be communicated to the market through an update of the financial calendar, also considering the renewal of the Board that is going to be formalized in the next assembly on May 12.

Very well. Thank you, Francesco. We completed our Q&A. So we think that we addressed all the main topics. And as always, the Investor Relations team is available for any follow-up or additional questions you may have. Thank you for joining our presentation and have a great evening.

Thanks, everyone. Bye-bye.

Good afternoon, ladies and gentlemen, and welcome to Terna's Full Year 2025 Consolidated Results Presentation. [Operator Instructions] Please be advised that today's conference is being recorded. I would like to hand the conference over to our host speaker today, Mr. Stefano Gamberini, Head of Investor Relations. Please go ahead, sir.

Thank you, and good afternoon, everyone, and welcome to Terna's Full Year 2025 Results Presentation. The call will be hosted by our CEO and General Manager, Giuseppina Di Foggia; and our CFO, Francesco Beccali. Following the presentation, we will have the Q&A session. So we kindly ask you to send any questions you might have to our e-mail address, [email protected]. Please Giuse.

Thank you, Stefano. Good afternoon, everyone. Let me start by giving you an overview of the key highlights of 2025. This year confirms we are on track with the execution of our plan while accelerating investments in maintaining financial strength.

In March 2025, we updated our 2024-2028 industrial plan. Total investment now stands at EUR 17.7 billion, 7% higher compared with the previous version of our plan and with a consistent plus 77% versus the 2022 plan. Out of this amount, EUR 16.6 billion are allocated to regulated investments.

As of today, this is Terna's largest investment program. At the beginning of last year, we also presented our national development plan. It foresees more than EUR 23 billion of investments between 2025 and 2034. Once projects in this plan are completed, the transmission capacity between Southern and Northern Italy will increase from 16 to 39 gigawatts.

Our execution remains strong. In 2025, we obtained authorizations for 38 projects representing around EUR 1 billion of investments. Overall, about 92% of the 2024-2028 plan is now authorized. On procurement, 88% of the CapEx plan is already secured through contracts. Financially, we remain solid.

In 2025, our long-term ratings were upgraded by both Moody's and Standard & Poor's, reflecting similar actions taken regarding the Republic of Italy. We issued EUR 1.5 billion of green bonds. Today, around 80% of our funding is raised through ESG-linked debt instruments. In January 2026, we issued an EUR 850 million hybrid green bond. We achieved a record low subordination premium below 60 basis points for a corporate hybrid in Europe.

Operationally, in 2025, we delivered solid performance ahead of guidance with EBITDA growing by 7% and net income up 5%. Investments markedly accelerated by 31%, reaching EUR 3.5 billion. Let me briefly turn to the Italian electricity system. In 2025, the energy transition continued to move forward with around 7 gigawatts of new renewable capacity stalled.

We also launched the first auctions under the long-term scheme FER X and MACSE. Moving now to the integration of renewables. Installed wind and solar capacity reached 57 gigawatts at the end of 2025 with an increase of 7 gigawatts compared with the previous year. The pace remains aligned with the trajectory towards the 2030 National Energy and Climate Plan target. On top of this, more than 22 gigawatts of renewable capacity have already been contracted through the long-term support schemes designed by the Italian government.

These projects are expected to enter into operation over the coming years. Looking ahead, once the updated FER X framework is approved at European level, the system will be on a credible and sustainable path to the 2030 targets. This will be supported by the capacity market, MACSE an innovative long-term storage procurement scheme managed by Terna on behalf of institutions and Terna's grid investments.

At the beginning of 2026, transmission level connection request stood at around 326 gigawatts. The reduction from last year is actually a positive signal showing a more consolidated pipeline and stronger project quality. Indeed, projects that have already secured preliminary connection solution increased to 79 gigawatts in January 2026 compared with 52 gigawatts at the end of 2024.

This volume already exceeds the additional capacity required to meet the national 2030 targets. Overall, renewable deployment continues at scale with a progressively more mature pipeline. This brings us to storage. Next slide. The growth of renewables requires a parallel scale-up of storage. Installed battery storage increased from around 13 gigawatt hours in 2024 to almost 18 gigawatt hours in 2025. In recent years, storage capacity have increased mainly thanks to the development of utility scale assets contracted through the capacity market scheme to guarantee system adequacy.

In the coming years, storage capacity will continue to grow alongside renewables supported by MACSE auctions. And this has already started. The FER, MACSE auction was held in September 2025. 10 gigawatt towers were awarded with delivery expected by 2028. The auction was significantly oversubscribed offers received. We are more than 4x higher than the auction demand with the average awarded price 1/3 of the reserve premium.

Similarly to renewables, we have around 300 gigawatts of connection requests from storage plants and several gigawatts of projects either with a clearance or ready to build. Already today, project with the clearance exceeded by far 2030 system needs. Summing up this slide, MACSE provides a highly innovative framework to support the development of storage technologies.

Turning now to Italian electricity demand. In 2025, national electricity demand reached 311 terawatt hours, broadly stable year-on-year. Renewables covered 41% of demand and 48% of domestic production. Photovoltaic generation exceeded 44 terawatt hours, up more than 25%, while hydroelectric production returned to more standard levels after the record seen in 2024.

Net total production reached 268 terawatt hours, up 2% as a consequence of the reduction of net import flows. In the first two months of 2026, demand has increased by 3.1%, confirming the upward trend observed from last September. Looking forward, we expect that demand will increase driven by both electrification as well as the deployment of data centers. As of today, there are around 80 gigawatts of connection requests from data centers confirming that the Italian electricity grid is considered reliable by investors.

These connections require very high-quality power supply, redundancy in the grid and efficient authorization processes. Terna has started aligning grid planning with this expected expansion of digital infrastructure. Moving on to infrastructure development. Execution remains a key focus. Between 2023 and 2025, we obtained authorization for more than EUR 6 billion of projects. Today, around 92% of the 2024-2028 CapEx plan is authorized on procurement contracts signed over the same period amount to approximately EUR 11.6 billion. 88% of our 2024-2028 CapEx plan is already secured by contracts.

This provides strong visibility on delivery. In the period 2023 to 2025, around EUR 5.5 billion of projects entered into operation. Looking now at our main projects. On the Tyrrhenian Link, we completed the installation of the first marine cables both on the Western and Eastern branches. For the Adriatic Link, construction sites for substations and underground cables were opened in 2025. Finally, Sa.Co.I.3 connecting Sardinia, Corsica and Tuscany advanced with the first phase of the overhead line in Corsica. Concluding authorization, procurement and constructions are progressing in parallel, significantly stepping up our execution.

Next slide, please. The changing generation mix is reducing system in Asia and short circuit power. As a result, the power system reacts faster and more sharply to disturbances, making it increasingly challenging to ensure supply, quality and security. What happened in the Bering and Peninsula in April 2025 clearly highlighted these risks. The security plan 2025-2028 provides, among other measures, a deployment plan for electrical equipment partially already in operation aimed at improving system stability and regulation, 27 synchronous condensers out of which 17 already in service, 25 reactors with 16 already in service, 25 stabilizing resistors, the first one installed in 2025 to enhance dynamic stability.

In a faster and more complex system, a robust security plan means anticipating risk and ensuring a resilient and reliable energy system. Moving on to digitalization. Next slide. In 2025, we invested more than EUR 600 million in digital transformation. Firstly, process digitalization. We significantly broadened the scope of process digitalization.

At the same time, we ensure full compliance with the regulatory framework requirements. Secondly, Digital Twin. By creating a real-time virtual replica of our physical assets and systems, we enhanced our operational effectiveness covering over 60% of our operations. In the last two years, Terna has become a data-driven company.

In 2025, we focused on integrating artificial intelligence into a wide range of fields from procurement to finance, dispatching to maintenance, legal to HR. We have fostered a shared understanding to a dedicated awareness program for all employees. In addition, we have made significant progress on infrastructure resilience and cybersecurity.

We have accelerated the automation systems in our substations, ensuring full IT and telecom operability for critical assets. We have also strengthened business continuity announcing cybersecurity measures. Summing up, the commitment to digital transformation is a key pillar of Terna's strategy to manage the system more efficiently, proactively and at scale.

This brings us to innovation. In our approach, innovation focuses on anticipating and emerging trends, developing high-impact solutions and technologies and supporting their industrial adoption. In 2025, we developed 100 innovation projects, 17 of them have reached industrial validation and 65 are ongoing projects. In innovation culture, tailor isn't a setback, but a source of learning. That's why even when a project does move forward, it can generate insights that strengthen what comes next. Let me briefly highlight a few projects that have already reached industrial scale validation.

Grid forming technologies support system stability in a context of increasing renewable energy penetration. Operational improvement projects enhance safety and electrical infrastructure maintenance efficiency. Terna's [ works ] is an innovative hub, which simplifies data collection during site inspections and allows for real-time monitoring of grid works. Our corporate venture capital investment during the year totaled EUR 8 million in innovative startups.

We also obtained 9 patents. All in all, innovation is a [indiscernible] process aimed at delivering transformative impact. Turning now to sustainability. Terna is committing to reducing the CO2 emissions by 46% by 2030 compared to [ 29th ] levels. As of today, we have reduced Scope 1 and 2 emissions by 31%. We are also committed to setting a net zero target by 2050 according to the science-based target initiative guidelines.

We reduced the leakage rate of SF6, the insulating gas used in 9 voltage equipment by 27% compared with the last year. At the same time, 92% of the group's waste was recovered. The Terna Foundation is fully operational, addressing electric education and energy poverty for a just transition. We also continue to receive remarkable external ESG recognition. Terna is among the top 1% of electric utilities worldwide as recognized in Standard & Poor's Global Sustainability Yearbook. We have been recognized as best-in-class by Sustainalytics and as a top employer by the Top Employers Institute. As you can see in 2025, Terna has been confirmed as a global leader in sustainability.

Next slide, please, and our main results. In 2025, the group delivered strong results despite a demanding comparison with 2024. Revenues reached EUR 4.0 billion, up 10%. EBITDA increased by 7% to EUR 2.75 billion. Net income reached EUR 1.11 billion, up 5%. CapEx amounted to EUR 3.5 billion, up 31%. Net debt reached EUR 13 billion, reflecting the higher investment level. We delivered solid performance while accelerating investments. Now I'll hand over the CFO for a deeper look at the 2025 figures. Please, Francesco.

Thanks, Guise. Let's start as usual with revenue analysis. In 2025, total revenues increased by 10%, reaching EUR 4,033 billion, up by EUR 353 million versus last year. The growth was attributable both to regulated and nonregulated activities, which contributed for EUR 182 million and EUR 170 million, respectively. For a clearer view, let me take a closer look at the evolution of revenues turning to the next slide.

Regulated revenues reached EUR 3.279 billion with an increase of 6% compared to the previous year. Such growth was mainly driven by the increase in WACC, the early recognition in tariff of depreciation related to capital expenditure carried out starting from 2024 and the [ money ] component set on the conventional capitalization rate defined under the ROSS application. These factors more than offset the WACC reduction from [ 5.10% ] to 5.5% in 2025 and the lower out-based incentives contribution versus last year.

Nonregulated revenues reached EUR 764 million, recording a strong year-on-year growth of 29%. This performance was mainly driven by the higher contribution from the Equipment segment that includes Tamini and Brugg Cables as well as from the Energy Solutions segment, thanks to the increased volume of orders intake.

Now let's go through operating cost analysis. As you can see in the chart, total operating costs stood at around EUR 1.3 billion, 15% higher than last year. The regulated activities cost trend is mainly driven by the increase in labor and external costs, partially offset by higher capitalization.

Excluding the IFRS effect, the regulated operating expenses grew at a rate below 5%, reflecting the higher level of capitalization. Nonregulated OpEx dynamics were primarily related to the growing activities in energy services, Tamini and Brugg. This growth was mainly driven by higher business activities and costs for materials and procurement.

As of the end of 2025, the group's workforce amounted to 7,117 employees, an increase of 797 compared with 31st of December 2024. This increase is directly linked to the need to support the execution of the ambitious investment plan outlined in the update of the '24-'28 industrial plan and the expansion of nonregulated activities.

Regarding EBITDA, further analysis on to the next slide. Thanks to the acceleration in revenues. In 2025, group EBITDA reached EUR 2.8 billion, 7% higher than the previous year. The improvement was mainly attributable to regulated activities, which contributed for about EUR 150 million more versus last year, showing an EBITDA above EUR 2.6 billion.

EBITDA from nonregulated activities increased by more than 30% to EUR 140 million. Thanks to a very dynamic market, this growth is mainly attributable to the Equipment segment, driven both by higher market revenues and improved margins. The other businesses such as the Energy Solutions, Connectivity and private interconnector segment also contributed to the improvement in results.

Let's now have a look to the lower part of the P&L, turning to the next slide. D&A amounted to EUR 961 million. The increase versus last year figure was mainly due to the impact of new assets becoming operational in the period, net of lower impairment charges recorded during the period. As a consequence, EBIT reached EUR 1.790 billion, 7% higher versus 2024. We reported net financial expenses at EUR 182 million. The increase versus last year was mainly attributable to the new financing raised during 2025 and lower financial income in the period, partially mitigated by higher capitalized financial expenses.

The cost of debt was around 2.7% in the year. Taxes stood at EUR 495 million, EUR 40 million higher versus last year, and our tax rate was at 30.8%. As a result, group net income reached EUR 1.1 billion, 5% higher versus last year. Finally, let me remind you that under the dividend policy we announced in March last year, starting from 2025, the DPS is set at higher of two levels, the 4% annual growth based on the 2023 DPS of [indiscernible] per share and the EUR [ 0.5962 ] per share paid as the 2024 dividend, which effectively represents the floor for Terna's dividend policy.

As a result, the proposed dividend for 2025 is EUR 0.3962 per share, fully in line with our policy. Moving now to CapEx analysis. In 2025, total CapEx amounted to EUR 3.5 billion, about 31% higher than last year, demonstrating Terna's ability to consistently deliver on its commitments. Indeed, we invested about EUR 3.3 billion in regulated activities. Among the main projects of the period, it is worth mentioning the Tyrrhenian Link, the Sa.Co.I.3 , the Adriatic Link, the [indiscernible] power line and the modernization of the high-voltage grid in the locations which hosted the Winter Olympics in 2026. Moreover, we should also consider the investment envisage under our defense plan, which are essential to ensure grid resilience and security, including the installation of synchronous compensators, shunt reactors and dumping resistor systems. As far as CapEx categories are concerned, development CapEx represented 60%, in line with 2024 of our total regulated CapEx.

Defense CapEx stood at 13%, while asset renewal efficiency was 27%. Nonregulated and other CapEx reached EUR 193 million. This mainly included capitalized financial charges and other investments. Beyond our technical investments, let me remind you that last September, we completed the acquisition from [indiscernible] of high-voltage grid covering 481 kilometers of line and 3 primary substations.

This transaction supports more efficient network operations, particularly across the Rome metropolitan area. Now regarding net debt and cash flow analysis, let's turn to the next slide. The net debt at the end of 2025 was EUR 13 billion, around EUR 1.8 billion higher than 2024 year-end levels, primarily due to the CapEx acceleration made on the national grid and the dividend payment.

Cash flow generation for the period amounted to approximately EUR 2.5 billion, driven by around EUR 2.1 billion of operating cash flow and around EUR 436 million from working capital and other items. Thanks to our solid cash flow generation, we were able to cover more than 70% of CapEx spending in the period, and we estimate to reach an FFO to net debt ratio of around 14% in 2025. Let me give you a deeper analysis on our debt profile moving to Slide 22. The group's financial management is based on efficient criteria and the achievements and preservation of a solid and sustainable financial structure with the aim of mitigating potential financial risk.

Diversification of funding sources, balance between short and medium long-term instruments as well as the proactive debt management are the hallmarks of the adopted financial strategy. At the end of December 2025, we registered a fixed floating ratio on gross debt of around 78% with an average duration of approximately 6 years.

This solid financial structure was further recognized during the year by Moody's and Standard & Poor's Global Ratings, which respectively upgraded Terna's long-term ratings to Baa1 and A- following a similar action on the Republic of Italy. Now turning to our sustainable financing profile, which represents a core pillar of Terna's capital strategy, let's have a look at the next slide. Terna is the Italian leader in green bond issuance and one of the reference issuers in the European sustainable debt market.

Today, around 80% of our funding is raised through ESG debt instruments. Our outstanding green bonds, including hybrids, amounts to EUR 6.5 billion, alongside by EUR 4.7 billion of EB financing and EUR 2.5 billion of ESG-linked loans. These diversified structures ensures loan maturity, competitive pricing and strong alignment with our regulated investment plan. 2025 marked several important milestones. We secured long-term institutional financing to support the Adriatic Green project. We successfully launched our first European green bond with very strong demand.

We updated our green bond framework in line with evolving EU standards and received the highest possible external assessment. Additionally, it needs to be mentioned that in early 2026, we further strengthened our capital structure with the hybrid green bond issued at a record low subordination premium level.

These achievements confirm the robustness of our funding platform and reinforce Terna's positioning as a benchmark issuer in sustainable capital markets. Moving on to 2026 guidance now. For 2026, we expect revenues of approximately EUR 4.41 billion and EBITDA of EUR 2.93 billion, representing a yearly increase of around 9% and 7%, respectively. This growth is expected to translate into higher group net income, rising from EUR 1.11 billion in 2025 to more than EUR 1.12 billion in 2026. This net profit guidance includes the impact of about EUR 40 million of higher IRAP taxation related to the recent energy decree. Excluding this effect, we expect the underlying 2025 net profit growth of around 5% to continue in 2026. In terms of capital expenses, we plan to invest EUR 4.2 billion. Now I leave the floor to our CEO for the closing remarks. Giuse?

Thank you, Francesco. Let me close with 3 final considerations. First, our role in the system continues to grow. In the current context of rising geopolitical tensions, expanding renewables is key to energy independence and more stable electricity prices. And this requires continued investment in the transmission grid.

Renewables and storage installations are in line with the trajectory towards 2030 national targets. Looking ahead, we see a robust pipeline of request for connection with more than 22 gigawatts of new renewable capacity already contracted. Thanks to capacity market auctions, system adequacy is under control. Electricity demand is growing more slowly than expected, but electrification and new consumption from data centers are coming through strongly in the near term.

In this context, the transmission grid is becoming increasingly important and the role of the TSO is key to enabling the energy transition. Second, execution. With the EUR 17.7 billion of investments in our industrial plan, a high level of authorized projects and strong procurement coverage, we are delivering with discipline and visibility. We are progressing on major infrastructure projects, also thanks to EUR 3.5 billion of investments during the year.

Our anticipatory investments in security and grid resilience are what set our approach apart internationally. Digitalization and innovation are fully integrated into our strategy, and we are recognized as a global sustainability leader. Finally, financial results. Over the past three years, we have combined accelerating investments with a steady growth in earnings and dividends. In 2025, results grew by 5% despite a tough comparison with 2024.

We expect this trend to continue in 2026 before the impact of additional ERAP and Italian regional tax come through. We have maintained financial discipline and achieved rating upgrades. This reflects the strength of our regulated model and our focus on execution. In conclusion, looking ahead, our priorities remain clear: deliver the plan, support system security and flexibility, maintain a sound financial balance and create sustainable and predictable value. Thank you for your attention.

Thank you, Guise and Francesco. Let's now open the Q&A section. Okay. Guise, could you comment on how the current geopolitical situation may impact Terna and the Italian electricity system.

Well, let me start saying that the current geopolitical situation in the Middle East has no direct impact on Terna. Our business is regulated, and this gives us strong visibility on returns. It also protects us against inflation. And in addition, our investment plan focuses on domestic infrastructure, which limits the exposure to international volatility.

There may be some indirect effects mainly on the cost of key materials and supply chain dynamics -- and for this reason, we are already applying a mitigation strategies to preserve both time lines and capital expenditure discipline. Let me also recall that our regulatory framework protects us from increases in raw material prices.

Since these are recognized in the regulated asset base. Looking at the broader system level, the current scenario further reinforces the strategic relevance of the energy transition and of grid development. It shows the need to accelerate progress towards energy independence.

In Italy, today, this can only be achieved by focusing on renewable said investments. So overall, to conclude, we do not expect a material impact on term fundamentals -- and if anything, today's context further underlines the need for energy independence and the central role of electricity grid.

A follow-up on this. What is your view on the impact generated by the conflict in the electricity bill and which could be the potential solution?

Well, as I mentioned earlier, accelerating the installation of renewables is the only midterm solution to increase Italy's energy independence. More renewables mean less dependence on imported energy and commodities business stabilize and potentially reduce electricity prices for consumers.

Replacing gas generation with a cost-efficient renewable generation secured by long-term contracts, such as contracts for difference, produces two main effects. The first one is the, I would say, electricity price [indiscernible]. The [ puna ] decreases becomes less volatile and less dependent on the price of gas. We are already seeing this effect.

Since 2023, the number of hours in which the [ Puna ] price fell below EUR 30 per megawatt hour has increased, rising from 57 hours in 2023 to 195 hours in 2025. On 25 May 2025, the [ Puna ] was 0 for 6 consecutive hours. The second effect. The second effect, contract for difference reduce volatility in electricity builds up.

The guarantee stable revenues for generators, a more predictable procurement cost consumers regardless of fluctuations in the spot price for gas and electricity. According to GSE, Italy's Energy Services operator, the FER X auctions held in 2025 will generate benefits of roughly EUR 450 million per year.

Thanks to the development of renewables in the medium term, only around 1/3 of the electricity deal will depend on the volatile price of the fossil fuels. Today, that share is around 2/3. Finally, to conclude, it is worth calling that transmission cost already represent a limited component of the electricity bill. Terna share is around 4% of the bill and underline this 4% because it's lower than the EU average more than offset by the benefits generated for this system.

Very well. Now about renewables development target. What is your updated scenario.

Let me start by clarifying an important point. As regards the achievement of the 2030 National Energy and Climate Plan targets, -- we can rely on detailed forecast that reflect recent trends as well as the authorization already issued results of the auctions already held. Annual renewable installations are progressing consistently with the NECP trajectory.

This trajectory remains the benchmark for the pace and scale of renewable deployment in Italy. It also confirms that the annual installation rate is increasing. As of December 2025, we recorded 57 gigawatts of solar and wind capacity with about 15 gigawatts installed in the last 2 years, an additional 22 gigawatts of new renewable capacity to be connected to medium voltage and high voltage networks have already been authorized and contracted to auctions and others things.

And in addition, in recent years, about 2 to 3 gigawatts per year have been connected to low-voltage networks. And finally, we expect a new FER X auction in 2026, like similar insight to the previous one. These projections are aligned with the targets defined in the Italian National Energy and Climate Plan which foresees 107 gigawatts of wind and solar capacity installed by 2030. So to conclude, all this confirms that the targets are reached.

Now still on renewables. When can we expect the EU to approve the final FER X incentive scheme? And what is the real bottleneck for accelerating the installation of renewables.

The approval of the final FER X scheme by the European Commission is expected in the coming months. The auction calendar and the volumes to be auctioned will be defined once the scheme receives formal approval. The most recent major policy measure is the, the government decree issued on 20 February 2026 to address rising energy costs while also tackling structural issues in the Italian electricity system.

Alongside measures designed to support households and businesses, the decree introduces provisions to facilitate the integration of new renewable power plants. In particular, referring to the Article 7. The Article 7 deals with the virtual saturation of the grid, which in recent years has slowed down new connections. The decree revises how available grid capacity is calculated and accelerate the reallocation of grid connections that were reserved, but not used within the required time frame, thereby freeing up capacity for new investments.

And at the same time, the grid operator is required to provide more transparent and updated information while additional simplifications are introduced to speed up project integration. To conclude in summary, there are no real bottlenecks and the rough 15 gigawatts of new renewable capacity sold over the last two years proves this. But this decree should produce several positive effects. First, it will accelerate connection processes, simplify administrative procedures and also enable more efficient grid planning and implementation. This will also allow a more efficient allocation of capital.

Can you elaborate more regarding data center development would it impact your investment plan for development of the grid?

As I mentioned before during the presentation, grid connection request linked to the percent development has experienced a strong growth in recent years. The volumes requested are now almost 100x the currently sold capacity. And today, requests amount to around 80 gigawatts.

For this reason, the centers are expected to become one of the main drivers of electricity demand growth in the mid to long term. The key challenge is grid planning -- these facilities need extremely high-quality power supply, redundancy in the network and efficient authorization processes.

Without early coordination, effective network planning becomes difficult, which could lead to delays and higher costs. In Italy, we have already started aligning grid planning with this expected expansion and the strong interest in developing a data center project in Italy conforms both the reliability of Terna as a system operator and also the credibility of our long-term development plan.

Okay. Now a change topic about regulation. Could you elaborate about next expected decisions from new ARERA Board in 2026, please?

Yes. One of the next decision from ARERA will concern future steps on the regulation -- the goal is to further align the objectives with the system interest, I mean, price reduction, power system security service continuity -- at this stage, the authority has not given any indications on when a consultation paper on these incentive schemes might be published. However, since the application of these schemes under resolution, 390, 2025 is also envisaged for the 2026 -- 2027 period, it is possible that ARERA may launch a public consultation later this year.

And the final question for you, just about nonregulated business, 2025 EBITDA contribution -- what are the growth drivers behind this acceleration compared to the previous year.

Our market-based strategy is delivering results. By focusing on businesses closely linked to energy transition, such as equipment manufacturing and Energy Solutions, we are seeing tangible growth.

In 2025, a very dynamic market environment led to a 29% increase in revenues with a strong contribution from our industrial activities. Tamini recorded revenue growth of 54%, while Brugg grew by 14%, with the margins expanding significantly for both companies. And as you said, we also performed very well with the revenues up 50%, exceeding EUR 260 million. These activities are more exposed to macroeconomic fluctuations and geopolitical risks. However, our exposure to Middle Eastern countries is limited to a few tens of millions of euros, so no problem. And looking ahead, we currently expect to conform double-digit growth in our regulated activities also in 2026.

I think that probably the next questions are for Francesco. Could you give some color about out-of-base incentives accounted in 2025?

Sure. First of all, let me remind you that the current year marks the first implementation of the new incentive scheme aimed at reducing dispatching costs and which covers the 2025-2030 period. For the first three period from 2025 to '27, Terna will receive a premium linked to the overall dispatching cost reduction compared to the 2023 actual MSD cost, increased by an extra component lump sum, which is related to the newly installed new renewable capacity. In addition, there are further out-based incentives that will be recognized through mechanism related to increased transmission capacity and efficiency in investment costs. After reaching an almost record level in 2024, [ OBI ] declined by over EUR 200 million in '25, reaching a level slightly below the planned average amount for the period 2025 and 2028.

Okay. And now what is the expected level of out-of-base incentive for 2026?

Well, OBI in 2026 will remain mainly linked to mechanism for reducing dispatching market cost. For 2026, considering both dispatching and interzonal and including also the potential grant incentives, we expect to book over EUR 200 million of incentives overall.

Thank you. Now with why net debt in 2025 was better than consensus. Could you describe the dynamics of net working capital in 2025 and your expectations for 2026?

Well, net debt in '25 came in better than consensus, mainly due to the stronger cash generation and due to a temporary positive contribution from net working capital. The latter was mainly driven by higher CapEx-related payables following the acceleration of investments in the fourth quarter as well as the collection of certain deposits from market operators, which are partly offset by the cash out for the acquisition of the high-voltage assets from Acea that we realized this year. Let me highlight finally that we expect part of this working capital benefit to unwind in 2026.

And could you give a guidance on 2026 net debt? Do you see any risk for your financial solidity in 2026?

If you consider on the one hand, the [ issuance ] completed in January and on the other hand, the guidance we just provided on CapEx and net profit, we can expect an increase of net debt at the end of '26, slightly below the one registered in 2025. This confirms that our financial position remains extremely solid also for 2026. In this sense, let me also underline once again that our CapEx plan to 2028 is fully sustainable on a financial standpoint as confirmed by rating upgrades received in 2025.

These actions confirm on one hand, the strength of our capital structure in the business plan horizon without the need of additional instruments. Anyway, let me also remind that the range of flexibility tools we could evaluate are the remaining additional capacity, which is still around EUR 1.5 billion as well as seeking additional contributions to strengthen the financial structure and considering options to monetize our nonregulated activities.

Now what is your expected value for WACC in 2026? What is the mark-to-market. 2027 WACC based on forward and you expect the regulator could change the basket of peers or taxation parameters.

Well, for 2028, our industrial plan update assumptions are based on WACC at 5.5%. This reflects a prudent long-term approach, also considering that ARERA is expected to consult on its proposals for the WACC framework ahead of the next regulatory period, which could modify also the current calculation methodology from 2028 onwards.

From a mark-to-market perspective, for 2027, the current geopolitical situation and resulting volatility, both in energy and financial markets as well as in macroeconomic conditions suggest caution in extrapolating any short-term signals. We can express on potential outcomes only in the following months. On top of that, let me add that as part of the consultation process, ARERA could indeed revise the current basket of comparables in case recent trends in interest rate spread and credit ratings persist. Nevertheless, the regulator has not provided any indication to date that such changes are being considered.

Okay. And about taxation, do you think there is a risk of an extension beyond 2027?

What concerns IRA -- let me remind you that the decree foresees the application of additional 2% taxation only for 2026 and 2027, and this is the only financial impact on term accounts.

Okay. And as a final question, could you remind us the main pillars that drive your investments this year? And what could be a reasonable annual level of investments for -- then beyond your plan horizon.

Our CapEx guidance for 2026 is fully consistent with the trajectory we have outlined in our strategic plan, which foresees EUR 17.7 billion of cumulated investments between 2024 and 2028. The further CapEx acceleration in 2026 is mainly driven by system needs, increasing transport capacity and I would say, the scheduling of our biggest project execution. Finally, for what concerns is that the expected investments beyond the horizon on the development segment which is the biggest share of our investment plan.

Latest national development plan provides for investments of more than EUR 23 billion over the decade of which about EUR 14 billion are expected to come from 2029 and 2034. On top of this, Terna will, of course, continue to invest also in the security and the renewal category.

Very well -- so I think that this last question, concludes our Q&A section. We think we have addressed all the key topics. And as always, the Investor Relations team is available for any follow-up or additional question you may have. Thank you, everybody, for joining this presentation and enjoy your evening.

Thank you very much.

Thank you. Bye-bye.

Good afternoon, ladies and gentlemen, and welcome to Terna's 9 Months 2025 Consolidated Results Presentation. [Operator Instructions] Please be advised that today's conference is being recorded.

I would like to hand the conference over to our host speaker today, Mr. Stefano Gamberini, Head of Investor Relations. Please go ahead, sir.

Thank you very much. Good afternoon, everyone, and welcome to the presentation of Terna's 9 month results 2025. This call will be hosted by our CFO, Francesco Beccali. Following the presentation, there will be the Q&A session. So we kindly ask you to send your question to our e-mail address, [email protected]. Please, Francesco.

Thank you, Stefano, and good afternoon, everyone. Before moving at the figures, I'd like to take a moment to highlight some of our most recent achievements. Let's start with grid development, where we have made significant progress across multiple fronts in the past few months.

Starting with the Tyrrhenian Link, one of the flagship projects in our 2024-'28 Industrial Plan. Let me remind you that before the summer, we completed the laying of the first submarine cable of the eastern section. And on September 16 Terna and Nexans began the first installation phase of the western section, connecting Sicily and Sardinia. Once completed, it will set a world record for the deepest high-voltage subsea cable installation, reaching 2,150 meters below sea level. This project will also represent a significant step towards Italy's urbanization target.

On October 21, the Ministry of Environment and Energy Security formally launched the authorization process for the Central Link project, which plans to rebuild the 220-kilowatt backbone between Umbria and Tuscany, a crucial step to enhance transmission capacity, grid robustness and renewable integration. Shortly after on October 27, the Ministry initiated the authorization procedure for the Sardinian Link, a project to reconstruct and modernize Sardinia's grid infrastructure, strengthening the island transmission capacity and ensuring a more stable and resilient electricity system. These projects are included in the development plan and are scheduled beyond the business plan horizon.

A distinctive feature of both the Central and Sardinian Links will be the use of Terna's proprietary 5 phases technology in their construction, an innovative design that represents a major step forward in the evolution of transmission infrastructure. These new pilots are lighter, more environmental integrated and capable of increasing transport capacity while reducing electric and magnetic fields, contributing to a more efficient and sustainable growth of the grid.

Moreover, with regard to the authorization update, we signed a 5-year memorandum of understanding with the Marche region to enhance the planning of new infrastructure and the ministry kicked off the approval process for overhauling in the city of Ferrara's electricity grid.

Lastly, in September, Terna completed the acquisition of part of the high-voltage [ Rome ] from Acea for EUR 227 million, an operations aimed at strengthening the continuity and security of the electricity transmission service. These acquisitions will also allow for more effective decision-making for renewal and development investments across the Central Italy Transmission Network, while having only a limited impact on Terna's financial leverage and remaining neutral for our credit rating. Beyond infrastructure development, we have also made important progress on the procurement front. Let's move to the next slide.

We continue to effectively manage potential supply chain risk through timing and efficient mitigation actions. As of today, around 88% of our 2024-'28 CapEx plan is already covered by procurement contracts, up from more than 80% in March. All major projects, including the Tyrrhenian, Adriatic and SACOI 3 Links are fully contracted. For the ELMED Interconnection between Italy and Tunisia, the [ camel ] portion is already secured, while tenders for the converter stations are currently underway. The residual and sourced portion of planned procurement contracts primarily relates to projects scheduled for the latter part of the period, which procurement will naturally be finalized over time.

Turning now to regulation. A few days ago, ARERA published Resolution 476 of 2025, verifying whether the conditions for the applications of the trigger mechanism for 2026 were met. As the variation in market parameters of the formula remained below the 30 basis point threshold defined in the regulatory framework, the current WACC of 5.5% for electricity transmission will remain unchanged in 2026.

As regards to ROSS mechanism, the regulator published in August, the Resolution 390 of 2025 launching the experimental phase of ROSS Integrale mechanism for 2026 and 2027 period. In October, Terna submitted to ARERA its 2026-2027 business plan and proposals for incentives linked due to operational and performance efficiency. The business plan will be the reference for the [indiscernible] mechanism and for the new incentive penalty mechanisms introduced by the regulator for the accuracy of CapEx.

Still on the regulatory side, in October, ARERA also published resolutions 440, recognized Terna EUR 93 million of output-based incentives for additional interzonal transmission capacity and investment efficiency. Finally, regarding shareholder remuneration, today, the Board of Directors approved the 2025 interim dividend at EUR 11.92 per share, flat compared to last year interim dividend. Please note that the new dividend policy communicated to the market in March set a minimum dividend per share equal to the 2024 dividend for the entire duration of the 2024-'28 business plan.

Now let me briefly give you the usual overview of the Italian electricity market, turning to the next slide. As you can see from the chart, in the first 9 months of 2025, national demand was about 233 terawatt hour, recording a negligible contraction of 1.2% in comparison with the same period of last year when national demand was about 236 terawatt hour. Over the period, renewable sources covered about 43% of national demand, in line with the level registered last year. For what concerns national net total production, this stood at 201 terawatt hour, up by 1% compared to the same period of 2024. In the period, renewable sources accounted for about 50% of the national net total production, essentially in line with the level recorded in the same period of last year when renewable energy sources covered about 51% of net total production.

To conclude, let me highlight the remarkable increase in photovoltaic production, which grew by 23% versus the first 9 months of last year, compensating the reduction in hydro generation. With renewables continuing to play a major role in Italy's power mix, flexibility becomes crucial. So before moving to the financial results of the company, let's turn the storage to storage and the progress made under the MACSE mechanism moving to the next slide.

As you know, storage is the next frontier of the energy transition, essential to ensure flexibility and the system increasingly powered by renewables. As of September 30, Italy's total electrochemical storage capacity stood at 17.4 gigawatts hour, mostly small-scale systems, of which around 4.4 gigawatt hours were installed since December 2024. While small-scale installations still represent the majority, we are now witnessing a sharp acceleration in large-scale battery projects. In September, we successfully held the first auction under the MACSE framework. The auction awarded a total of 10 gigawatt hour of storage capacity, fully covering the demand. Results confirmed strong market interest in the [ mechanism ] with bids exceeding demand by more than 4x and average clearing prices around 65% lower than the reserve premium. Around EUR 30,000 per megawatt hour a year compared to a cap of 37,000 units.

The contracted facilities are expected to enter into operation by 2028, alongside renewable plants from the FER X auctions, helping to balance the system and reduce reliance on fossil fuels for power generation, in line with the national decarbonization objectives. On this, the first auction the so-called transitional FER X closed in September with final rankings expected by December 11. It saw strong participation awarding up to 12 gigawatts of wind and solar capacity to be commissioned by 2028. The second FER X auction, which focused on resilient photovoltaic system was held in October and offered an additional capacity of almost 2 gigawatts. The final rankings are expected by the end of December. Overall, these results mark a major step forward in Italy's energy transition.

Now let's move to the main figures of the period as Slide #8. In the first 9 months of 2025, group revenues and EBITDA increased by 9% and 7%, respectively, versus last year, increasing by approximately EUR 235 million and EUR 134 million compared to the first 9 months of 2024. We also reported a group net income of EUR 853 million with a growth of 5% compared to the same period of last year. Group CapEx reached around EUR 2.1 billion, marking an increase of approximately 23% versus the first 9 months of last year and setting a new record in Terna's history. This confirms once again our effort to accelerate investments to serve system needs. To support this CapEx acceleration, at the end of September 2025, net debt stood at EUR 11.7 billion, slightly higher compared to the value recorded at 2024 year-end of about EUR 11.2 billion.

Now let's have a closer look at the results moving forward. Let's start, as usual, with revenues analysis. In the first 9 months of 2025, total revenues increased by 9%, reaching EUR 2.882 billion, up by EUR 235 million versus last year. The growth was attributable both to regulated and nonregulated activities which contributed for EUR 135 million and EUR 99 million, respectively.

Let's now take a closer look at the evolution of revenues, turning to the next slide. Regulated revenues reached EUR 2.357 billion with an increase of more than 6% versus previous year. The growth was mainly driven by the RAB growth deriving from the recognition in tariff of 2024 capital expenditure, including the update and revaluation of capital cost parameter. The early recognition in tariff of depreciation related to 2024 capital expenditure 1 year in advance compared to the previous regulatory framework. And the fast-money component set on the conventional capitalization rate defined under the ROSS application. These factors more than offset the weighted average cost of capital reduction from 5.8% to 5.5% in 2025 and the lower output-based incentives contribution versus last year.

Non-regulated revenues reached EUR 525 million, recording a double-digit increase of 23% in comparison with the same period of last year. The improvement mainly reflects the higher contribution from the Equipment segment, which includes Tamini and Brugg Cables and from the Energy Services segment.

Now let's go to operating cost analysis. As you can see in this chart, total operating costs stood at EUR 856 million, 13% higher than last year. The regulated activities cost increase is mainly driven by the rise in the headcount and the higher average cost of labor, partially offset by higher capitalization. The non-regulated activities were primarily impacted by higher costs for materials and services related to the development of activities, mainly in the Energy Services segment and Equipment segment. This increase were driven by higher volume of activities reflected also in revenues growth.

Regarding EBITDA, moving to the next slide. Thanks to the acceleration in revenues, 9 months 2025 group EBITDA reached EUR 2.026 billion, 7% higher than the same period of last year. The improvement was mainly attributable to regulated activities, which contributed for about EUR 99 million more versus the first 9 months of the previous year, showing an EBITDA of EUR 1,923 million. EBITDA from non regulated activities increased by 51% to EUR 103 million, mainly driven by a stronger contribution from the Equipment segment with improving margins from both the Tamini and Brugg Cables groups as well as better results from the Energy Services.

Let's now have a look to the lower part of the P&L, turning to the next slide. D&A amounted to EUR 679 million. The rise versus last year's figure was mainly related to the entry into service of new infrastructure. As a consequence, the EBIT reached EUR 1.348 billion, 7% higher versus the first 9 months of 2024. The net financial expenses amounted to EUR 132 million. The slight, year-on-year increase of EUR 27 million is mainly due to the draw donw of new financing and the lower financial income resulting from cash investments, partially offset by higher capitalized financial charges.

Taxes stood at EUR 362 million, EUR 24 million higher versus last year, essential due to improved results. Our tax rate was 29.8% compared to 29.4% in the 9 months of 2024. As a result, group net income reached EUR 853 million, marking a 5% growth versus the same period of last year.

Moving now to CapEx analysis. In the first 9 months of 2025, total CapEx reached around EUR 2.1 billion up by 23% year-on-year, confirming the solid CapEx acceleration in line with planned targets. We invested about EUR 1.972 billion in regulated activities. Among the main projects of the period, it is worth mentioning the Tyrrhenian Link, the Adriatic Link, SACOI 3, the modernization of the high-voltage grid in the locations due to the Winter Olympics in 2026 and the Chiaramonte Gulfi–Ciminna power line. Moreover, we should consider the investments planned under the defense plan, which play a crucial role in reinforcing the resilience of the National Transmission System through the installation of synchronous compensators, shunt reactors and dumping resistor systems.

Among CapEx categories, development CapEx represented 57% of total regulated investments. Defence CapEx stood at 13%, while Asset Renewal & Efficiency was at 30%. Non-regulated and other CapEx stood at EUR 115 million. This includes capitalized financial charges and other investments.

Turning to the next slide. Cash flow generation for the period amounted to around EUR 2.2 billion. This was the result of around EUR 1.5 billion of operating cash flow and around EUR 700 million of working capital and other items. Net debt at the end of September 2025 was about EUR 11.7 billion, around EUR 500 million higher than 2024 year-end level, primarily due to the CapEx acceleration and the dividend payment.

Let's now make a deeper analysis of our debt profile, moving to Slide 17. At the end of September 2025, we registered a fixed floating ratio on gross debt of around 83%, with an average duration of approximately 6 years. Consistent with Terna's strategic approach of aligning capital allocation with sustainability goals to enhance long-term value, as of the end of September, Terna's sustainable financing portfolio included EUR 3.75 billion in senior green bonds and EUR 1.85 billion in perpetual subordinated hybrid green bond.

On this, let me remind you about the successful launch of the first European green bond with a total nominal amount of EUR 750 million made in July. This bonds, which received a very favorable market response will pay an annual coupon of 3%. In addition, Terna can rely on EUR 2 billion in an ESG-linked term loans, 3 ESG-linked revolving credit facilities for a total of approximately EUR 4.300 billion and a EUR 2 billion Commercial Paper Program dedicated to the issuance of short-term conventional or ESG notes.

To conclude, as already communicated to the market in July, the European Investment Bank Terna, Intesa Sanpaolo and SACE have signed agreements totaling EUR 1.5 billion to support the development and construction of the Adriatic Link, the submarine power cable linking the Italian regions of Marche and Abruzzo.

Thank you for your attention. Let me now conclude this presentation with some closing remarks. First of all, I would like to emphasize that we remain strongly focused on executing our industrial plan. As highlighted during the presentation, alongside delivering a solid set of results we continue to make tangible progress across all our main projects, while keeping a disciplined approach on the procurement front despite a still challenging environment. All of this confirms once again our ability to deliver on our commitment.

At the same time, the broader energy transition continues to advance rapidly. The recent FER X and MACSE auctions have shown clear evidence of this progress with over 12 gigawatts of new renewable capacity awarded under the FER X scheme and 10 gigawatt hour of storage capacity contracted in the first MACSE auction, both at competitive prices well below the respective caps. These results confirm the market's strong momentum and the soundness of the regulatory framework supporting the transition.

To conclude, we firmly confirm our full year 2025 guidance. We expect to achieve revenues of EUR 4.03 billion and EBITDA of EUR 2.7 billion and a net profit of EUR 1.08 billion. In terms of investment, the group has set a target of approximately EUR 3.4 billion for 2025.

Thank you for your attention. We are now ready for the Q&A session.

Thank you, Francesco. Now we are ready to start with the Q&A session. Francesco, we received many questions regarding the press rumor about potential sale of transmission grid stake. Could you comment about it?

Despite we do not use to comment on press rumors, let me be clear on this point. At current stage, this is not an option on our table. We constantly analyze all the possible instruments available to finance the development and maintenance of the National Transmission Grid and the results of these analysis are always reflected in the decision set out in Industrial Plan. In this sense, let me confirm what we have been stating since we presented the update of our plan back in March.

Our CapEx plan to 2028 is fully sustainable under a financial standpoint. The upgrade of our rating to A- for Standard & Poor's and the revision of the outlook to positive from stable by Moody's registered in April are for further confirmation of our financial solidity. As of today, the range of flexibility tools we could evaluate are the remaining hybrid issuance capacity, which is worth more than EUR 2 million as well as seeking additional public contributions to strengthen the financial structure and considering options to valorize and monetize our nonregulated activities.

Now move about output-based incentive. What is the number of OBIs accounted in the 9 months 2025? Is your expectation for the full year confirm?

In the 9 months revenues, there is no contribution coming from the output-based incentives related to dispatch and services market efficiency incentives. This will be recognized in the last quarter when we will have full visibility and certainty in line with the accounting principle.

In the 9 months, we have instead registered EUR 16 million relative to the interest incentives. With reference to the full year, our expectations reflect the update in the performance estimated for 2025, which allow us to reach and possibly exceed the guidance already provided after the first quarter of 2025 of more than EUR 50 million of OBI's contribution.

Thank you. Still about guidance. Why are you not increasing the guidance for full year despite you are already at around 80% on full year net income guidance?

Well, the strong results we registered in the first 9 months increased the visibility and the reliability of the guidance we communicated back in March. However, as I've just underlined in the previous answer, we still miss full visibility on some elements, such for example, dispatching incentives for which we need to wait the end of the year to determine the early performance with full certainty.

Let me remind that this is the first year of the new dispatching incentive framework renewal. So all the incentives we will account for this in 2025, will depend on 2025 performance.

Given our Resolution 440/2025 on interzonal incentives recognized to Terna, do you upgrade guidance on OBIs?

As we have already stated in the presentation, we wish to highlight that this around EUR 93 million of interzonal incentives improved the visibility on EUR 900 million guidance of total OBI for the 2024-2028 period. As we always reported, these interzonal incentives will be accounted for over 3 years, starting by next one. In the first half of 2025, we have already registered EUR 16 million of interzonal incentives recognized from previous years. We did not disclose the breakdown of our OBI guidance among the different mechanisms. However, let me remind you that the overall amount mostly refers to existing output-based incentive framework with a bigger contribution from the dispatching service and for a residual part relative to instead the ROSS Integrale schemes back loaded.

Okay. Can you comment on the ROSS Integrale expected incentives and potential time line?

The last resolution published by ARERA basically confirms ARERA's focus on the need to incentivize companies to deliver strategic high-value energy infrastructure in an efficient way. ARERA allows companies to submit proposals for new reward-only output-based incentives as part of the business plan, which will be subject to the regulatory scrutiny and approval. We do not rule out the possibility the regulator will issue new incentives before the end of the current regulatory period.

Okay. Now on data centers. Do you see any significant acceleration in data center projects?

In Italy, the connection request to the grid associated with the construction of data centers have experienced strong and continuous growth in recent years. As of the 31st of October of this year, the total high-voltage connection request reached approximately 64 gigawatt with around 378 active requests. Geographically, around 80% of connection requests are concentrated in northern parts of Italy, especially in Lombardy around Milan, confirming the region as the primary hub for data center development.

For this reason, data center will represent one of the drivers together with the electrification of domestic consumption and electricity mobility, underlying the expected increase in power demand in future years.

Now could you please provide an update of authorization and procurement status over Industrial Plan horizon?

Sure. The procurement process for our investments is progressing in line with Industrial Plan. Projects currently still in the authorization phase with expected completion beyond the plan horizon are not strategic and have a limited impact on total CapEx. The authorization processes for major projects planned after 2028 will be launched in due course.

As of today, all our main HVDC projects included in the current plan, have received the necessary authorizations and around 92% of the projects in the plan have completed the approval process. Moreover, we are actively working to complete all the authorization procedures according to the planned implementation time line, both for 2030 and for the longer-term horizon towards 2024.

On procurement, we are fully aware of the potential supply chain shortages and bottlenecks affecting the industry. To manage this risk, we have taken several steps to ensure continuity. Thanks in part to the support of Brugg Cables and Tamini transformers around 88% of 2024-'28 CapEx is already covered by existing procurement contracts, up from the 80% in March.

Very well. Now moving to the working capital. Could you give a bit of color on the dynamics in 9 months '25 and your expectation for year-end working capital figure?

In the third quarter, the working capital and other item reports a decrease of about EUR 700 million compared to the end of 2024. This variation has a positive impact, obviously, on our cash flow. This result is mainly attributable on the one hand, to an increase of about EUR 390 million in net pass-through energy payables mainly due to higher debt from the essential plant for the security and electricity system, the so-called [indiscernible] and the capacity market, partially offset by higher credit from the cost of procurement of procuring resources on dispatching market services.

On top of that, we have to take account of the increase in other net liabilities, essentially due to the increase in security deposits received from operators participating in the capacity market and the higher planned subsidies received from third parties.

Then we also have to take into account the decrease of about EUR 156 million in the receivables resulting from regulated activities attributable to the collection of the previous year's dispatching market efficiency incentive, partially offset by the higher receivables attributable to the transmission revenues due to the tariff update set by ARERA Resolution 579 of 2024.

Finally, this amount includes also the effect of the closing of the acquisition of high-voltage grid portion from Acea. Regarding working capital forecast for year-end, due to the ordinary seasonality, let me remind that we expect a significant reduction in working capital liabilities, pending payment resolutions from ARERA.

Thank you. Finally, about regulation. When do you expect new Board of ARERA? Do you see any risk of ARERA changing approach towards the energy transition and thus support for investment in the electricity networks?

Well, as we always say, the rationale underlying the energy transition in Italy is very strong because it basically allows to reduce the dependence of the country from imported energy and commodities. The energy transition could not go ahead without investment and we play a central role in such process. We understand that the new Board of ARERA should be appointed before the end of the year, and we do not expect a significant change in ARERA's approach towards the energy transition. Law 481 establishes that commissioners must be choosing among people of outstanding competence. We are confident that what we mentioned -- we just mentioned represents good rationale to prevent regulatory risk.

Many thanks, Francesco.

Thank you.

So the Q&A section is now over. As always, the Investor Relations team is available to answer any follow-up questions you might have. Thank you, everybody, for your participation, and have a nice evening.

Thank you, everybody. Nice evening.