Thank you. Good afternoon, ladies and gentlemen, and welcome to Terna's first half 2026 results presentation.

The call will be hosted by our CEO and General Manager, Pasqualino Monti, and our CFO, Francesco Beccali. 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 to our email address: [email protected].

Thank you, and now let me hand over to our CEO, Mr. Monti.

Thank you, Fabrizio, and good afternoon. We start with some opening remarks on the first half of 2026.

Solid execution in the development of our grid infrastructure is the main priority. We have achieved relevant progress on the Tyrrhenian Link with the completion of submarine cable installation on the eastern section, and we are on track on all the major development milestones of our Industrial Plan.

Terna continues to play its key role in the Italian electricity system, enabling renewables integration and ensuring grid security. Over the first 6 months of the year, we have integrated around 3.4 GW of the renewable capacity and more than 1 GWh of storage.

As the energy transition continues to gain momentum, grid lines guaranteed to connection requests show visible growth, up by 1.2 times for renewables and by 1.4 times 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 by 2027, ARERA will update the current regulatory 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.

Now let me hand over to our CFO, Francesco Beccali.

Thank you, Pasqualino, and good afternoon, everybody. The group delivered another solid set of results in the first half of the year.

Performance improved across all our key financial indicators, showing once again the solidity of our business model. I will deep dive later in the presentation on the main drivers.

We continued to accelerate investments to support the energy transition and the development of the electricity system while maintaining a disciplined and sustainable financial profile. Let's start with capex, turning to the next slide.

In the period, capex amounted to €1.6 billion, marking a 20% increase compared to the same period of last year. Out of this amount, around €1.5 billion was invested in regulated activities, with 60% devoted to development, almost 30% for asset renewal and efficiency, and the rest for defense capex.

Among the main projects of the period, our investment efforts mainly focus on the Tyrrhenian Link, the Sa.Co.I.3, the interconnection Italy and Tunisia, the Chiaramonte Gulfi-Ciminna power line, and the so-called Adriatic Link. On defense, investments totaled around €172 million, in line with our Defense Plan, with the aim of ensuring grid resilience and security through the installation of synchronous compensators, shunt reactors, and damping resistors systems.

Non-regulated and other capex reached around €116 million, of which about €41 million of non-regulated investments and €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 process.

Let us now move to the main figures of the P&L, turning to the slide number 7. Let's start with our revenues performance.

In the first half of 2026, group revenues increased by around 12%, reaching €2.1 billion, an improvement of approximately €219 million compared to the same period of last year. Regulated revenues reached €1.66 billion, with an increase of 4% vis-a-vis previous year.

The growth was mainly driven by higher output-based incentives, the RAB increase, and the recognized depreciation from new assets entered onstream, and also all of this partially offset by a lower pass-through component following the update of the notional capitalization rate for the 2026-2027 regulatory period, and lower revenues recognized during the period compared with the first half of 2025, which included the estimated settlement of the tariff decoupling mechanism. Let me remind that in the first half of 2025, we booked €17 million one-off related to previous years' deflation recognition following the shift to HICP for RAB revaluation.

Net of this effect, revenues in the first half of '26 would have increased by 13%. Non-regulated revenues reached €451 million, up 50% year-on-year.

The improvement reflects the higher contribution from the Energy Services segment, following also the consolidation of STE Energy in the second part of 2025, and also the contribution from the Equipment segment, supported by a strong market environment and higher order intake, with both Brugg Cables and Tamini Group as key contributors. Now let's go through operating costs analysis.

Total operating costs came in €647 million, up 21% year-on-year, marking an increase of around €112 million compared to the first half of 2025. In the regulated segment, the cost base increased by 3%, mainly reflecting higher headcount cost and increased external services and other operating expenses.

This increase was largely offset by higher capitalizations. As for non-regulated activities, the evolution of operating costs 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 on the following slide. Group EBITDA reached around €1.5 billion in the first half of 2026, up 8% year-on-year, corresponding to an increase of approximately €107 million.

The increase was mainly driven by regulated activities, recording an EBITDA of €1.4 billion, up by €60 million versus previous year. Non-regulated activities recorded a strong performance, with EBITDA increasing by around 81% to €106 million.

This translated into an EBITDA margin of 24%, compared with 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 represents the foundation for the achievement of our full-year guidance, which we see well within reach.

Let's now take a closer look at the rest of the P&L, turning to the next slide. D&A amounted to €506 million.

The increase versus last year was mainly due to the impact of new assets coming onstream during the period. As a result, EBIT reached €961 million, up 5% year-on-year.

Net financial expenses were €94 million, up by around €17 million versus last year, mainly reflecting the higher average cost of debt compared with the first half of 2025. Taxes stood at €274 million, €25 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 2026 and 2027.

Our tax rate was 31.6% vis-a-vis 29.3% in the first half of 2025. As a result, group net income reached €591 million, 1% higher versus last year.

Adjusting first half 2025 figures for higher IRAP tax introduced by the so-called Energy Decree, net income in the first half of 2026 would have been up 4%, highlighting the underlying strength of the group's performance. Moving now to cash flow and net debt evolution.

At the end of June 2026, net debt stood at €12.6 billion, around €0.5 billion below the 2025 year-end level, reflecting our disciplined financial management. This figure also continued to benefit from the €850 million European green hybrid bond issued in January, which is accounted for as equity.

Cash flow generation was around €1.7 billion, enabling us to fully fund our investment program while maintaining a sound financial position. Looking at our debt profile, around 72% of gross debt was at fixed rate at the end of June, while the average debt maturity stood at approximately 6 years, 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 an €850 million European green hybrid bond, which received orders of more than €7 billion, almost 9 times the amount offered.

The transaction represented the first Green Bond Standard hybrid issuance in the Italian market and achieved the lowest subordination premium ever recorded for a euro-denominated corporate hybrid bond in Europe, below 60 basis points, confirming the strong confidence investors place in Terna's credit profile. In addition, we continued to expand our sustainability-linked funding framework through the signing in March of a new €100 million ESG-linked credit facility with financing conditions linked to specific ESG targets.

Finally, in June, we increased the size of our EMTN program from €4 billion to €6 billion, further enhancing our financial flexibility and strengthening our access to international capital markets. Overall, our funding structure remains well-diversified and fully aligned with the group strategy, providing the financial flexibility needed to support our investment ambition.

Now some closing remarks. 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 with important milestones 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 management.

Building on this strong set of results, and thanks to the high level of visibility we have for the rest of the year, we can fully confirm our 2026 guidance. Thank you for your attention.

We are now ready for the Q&A session.

Thank you, Francesco. We can open the Q&A session.

As always, we have received questions from the analysts, I want to start by thanking all of the analysts for sending beforehand 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 OBIs. 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, Fabrizio. In the first half of the year, we recognized approximately €76 million of output-based incentives, consisting of €43 million of interzonal incentives accrued in previous years following the verification of the usual clawback conditions, and €33 million related to the MSD incentive schemes for the 2025 performance.

The latter figure reflects the final outcome of ARERA's regulatory assessment, which confirmed a higher incentive amount than the prudential estimates recognized at the year-end of 2025, validating the assumptions and calculations previously submitted by Terna to the authority.

Excellent. Then the second one, the second part of the questions on the OBIs, is if the CFO, if he could remind what was the guidance for OBIs for full year 2026.

What I can tell you is that output-based incentives in '26 will remain mainly linked to the mechanism for reducing dispatching service market costs. For the full 2026, considering both dispatching and interzonal and including also potential grid resilience incentives, we expect to book more or less €200 million euros of incentives overall.

Excellent. Then we switch a bit more to the regulatory side of things.

The question is, when do you expect ARERA to make substantial progress with its consultation and publications on the ROSS system for electricity transmission?

We see mainly two big regulatory milestones coming up. The first one concerns eventual steps ahead regarding ROSS radiation to further align the TSO's objective with the system's interest.

As of today, a consultation paper on these incentive schemes has not been published yet. The second one will regard the next regulatory period, which will start, as in 2028.

Therefore, the relative consultation process will likely be held during 2027.

Okay. The next one, still on regulation, more on a technical aspect, what is the mark-to-market for 2027 WACC?

Do you expect the regulator to change the basket of peers or the taxation parameter?

From a mark-to-market perspective for 2027 and looking to the regasification services, which is the most sensitive to potential trigger, current estimates under the existing formula would point to lower WACC level. However, the geopolitical situation and the resulting volatility, as well as macroeconomic conditions, suggest caution.

As part of the consultation process, on the other hand, ARERA could revise the current basket of comparables in case recent trends in interest rates, spreads, and credit ratings persist. However, let me point out that the regulator, as of today, has not provided any indication today that such changes are being considered.

In our estimates, excluding France in any case from the basket of comparables, current mark-to-market values remain around to the threshold and could trigger a WACC update. We are still on the edge.

However, we could be more precise on the final potential outcome only closer to the end of the observation period due to the volatility that we were mentioning before, when values will be almost crystallized and we will have more visibility on the crucial elements for the calculation of some parameters, such as the basket of comparables for the country risk

premium. Thank you, Francesco.

Now we change 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 rotation or some other solution to decrease the 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 solid and our capex plan to 2028 is fully sustainable under a financial standpoint, as was confirmed by the rating upgrades that we received in 2025 from both Standard & Poor's and Moody's, consequently to a similar rating action that happened on the sovereign. Having said that, we remain firmly committed to preserving a strong risk profile and credit standing, and we are ready to take any measures that may be needed to uphold that commitment.

Looking ahead, when we will update our Industrial Plan to reflect a revised capex curve, we will then reassess the financial instruments required to confirm the financial soundness of the company.

Excellent. 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 non-regulated business for the first half in terms of EBITDA, obviously compared to the same period of previous year.

As shown during the presentation, non-regulated business performance driven by, on the one hand, the acceleration in both Energy Services segment, which accounted for €54 million of EBITDA, and both Equipment segment, €43 million of total contribution. Most of this acceleration is related to the organic growth, mainly increased marginality of all the businesses.

Only a residual part of EBITDA, we're talking about €10 million out of €106 million of total EBITDA, is linked to perimeter effect following the consolidation of STE in the Energy Services business. In general, looking into non-regulated activities at higher level, they should not be considered as standalone businesses, but they are closely linked to and complementary also to our regulated core business.

They are increasingly becoming an industrial platform through which we can participate in key segments of the energy transition value chain, while strengthening our execution capabilities and industrial know-how. This is also a message we want the market to better appreciate, because the growth of our market-based activities does not change Terna's risk profile.

On the contrary, it reinforces our core business by creating industrial synergies and enhancing skills and supporting the execution of our investment program. Looking ahead, we will continue to evaluate growth opportunities, including M&A, small M&A possibly, but we will remain highly selective and disciplined.

We will only consider transactions that are fully aligned with our core competencies, offer tangible industrial synergies, and generate appropriate economic returns for our shareholders.

Thank you, Francesco. Now we switch more to some financial dynamics, and analyst is asking on working capital dynamics 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 items 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 2026, we received about €300 million of grants.

In this context, let me also remind that according to the new regulation, we are entitled to receive financial incentives between 5% and 15% of the overall grant value. Looking ahead instead, we expect net working capital at year-end to remain broadly consistent with the current trajectory and with the execution of our investment plan, while continuing to be mainly influenced by the evolution of pass-through items and regulated receivables, which are very difficult 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 what concerns procurement, let me start by saying that we are well on track, given that about 92% of the projects included in the 2024-2028 Industrial Plan are covered by contracts awarded. If we talk about geopolitical tensions, those may have some indirect effects on the cost of key materials and on supply chain dynamics.

For these reasons, we are already implementing mitigation strategies to preserve both timelines and capital expenditures discipline. It is also important to remember that our regulatory framework provides protection against increases in raw material prices, since these are recognized in the RAB, in the regulated asset base of scope.

Clear. I think that given the message on strategy that was given at the beginning of the presentation, we focused the Q&A only on the operating and financial aspects of the semester, although we have received two questions which are more forward-looking, and I think we can stay on these two questions still with you, Francesco.

The first one is, can you provide a view about the EU proposal on electrification target and the potential implications for Terna?

Sure. Let me start by highlighting that it is only a policy document so far, and that there are still no binding targets, either at the EU level or at national level.

Having said that, the Electrification Action Plan, which indicates 46% from the current 22% as the European 2040 target for electrification of final energy consumption, further confirms, in my view, the importance of electrification to strengthen the Union's energy autonomy and counter tensions on energy prices, as well as the Commission's determination to continue in this direction. This makes it essential to continue with a robust investment plan in transmission networks that we expect the regulators of individual countries will have to support.

To this extent, it is worth noting that electricity transmission costs in Italy is among the lowest in Europe. Coming back to the document, the Commission indicates that an accelerated energy transition with electrification at its core could reduce imports of gas by more than 70% and of crude oil by more than 40% by 2040.

The EU could save up to €260 billion per year by 2040 on its fossil fuel import bill, a possible reduction by 2040 of gas imports by more than 70% and crude oil imports by more than 40%, savings on the European fossil import bill of up to €260 billion per year, and a reduction in electricity generation costs of about 20%. This document confirms, in my view, the EIB's commitment to mobilize more than €75 billion over the next 5 years.

Thank you, Francesco. We still remain with one question, the final one, still forward-looking, more on capex, though.

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?

For what concerns the expected investments beyond the plan horizon, and focusing on the development segment, which is, by the way, the the most important one, the one which contributed the most to our total amount of capex, the biggest share of our the the latest National Development Plan, the one published in 2025, provides for investments of more than €23 billion over the decade. On top of this, Terna will, of course, continue to invest also on the Security Plan and on the renewal of the grid.

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 2027-2036.

Thank you, Francesco. This was the last question of the Q&A, we can conclude also the Q&A session.

I want to thank our management, CEO Pasqualino Monti and CFO Francesco Beccali, for attending the call, and obviously for all of the analysts and investors that attended the call. The Investor Relations team is at your disposal for further questions or any clarification that you might need.

Thank you.

Thanks, Fabrizio, and thanks to everybody for attending the call. Bye.