Elia Group SA/NV (ELI) Earnings Call Transcript & Summary

Good morning, and welcome to the half year results call of Elia Group. I'm Stephanie Luyten, Head of Investor Relations, M&A and financial partnerships and here with me are our Group CEO and CFO, Bernard Gustin, Marco Nix. Welcome both.

Good morning.

Before we start, please take a moment to read the disclaimer on screen. It contains the important information that we kindly ask you to review. As always, today's slides are available on our website, and the full script will also be published shortly after the live stream event ends. Bernard, if we take a step back from the numbers and look at the first half of the year, what are for you the most significant development of Elia Group.

Well, good morning, everyone, and thank you for joining us today. I'm pleased to report that the first half of 2026 has been another period of solid execution for Elia Group. Across Belgium and Germany, our teams continued to deliver strong operation and financial performance, while advancing 1 of Europe's largest electricity infrastructure investment programs. What stands out to me is our ability to combine growth with discipline. We continue to invest at scale, strengthened our capital structure, a tangible progress on key infrastructure projects and reinforce the foundations needed to support the energy transition and our long-term growth ambitions. These results reflect the commitment and expertise of our colleagues across the group who work every day to build the electricity system that Europe will need tomorrow. Before we discuss our financial and operational performance in more detail, it's worth taking a step back and looking at the broader context in which we operate. The world around us continues to evolve at fast pace. The energy landscape, technology, geopolitics, industrial demand and societal expectations are all changing very rapidly. So if we want to continue creating long-term value, we need to remain closely connected to those needs. Our role is not simply to build infrastructure. It is to understand where society is heading and ensure that the electricity system evolves with it. Increasingly, the energy transition is no longer viewed solely as a climate imperative. It has become a matter of competitiveness, energy, sovereignty and resilience. Europe's dependence on imported fossil fuels has repeatedly exposed to geopolitical shocks. This has driven up energy costs, weakened industrial competitiveness and highlighted the importance of strengthening energy security. And of course, the energy crisis demonstrated the strategic value of electrification and renewable energy integration. Both can help reduce reliance on imported fuels, and limit exposure to volatile global markets. Today, around 70% of AU electricity is already generated from homegrown clean energy sources. Yet the electrification of energy demand has remained stuck at 23% for more than a decade. So clearly, accelerating electrification across industry, transport and buildings is essential. Recognizing this, the European Commission is assessing an indicative electrification target of 46% by 2040. This could reduce the AU's fossil fuel import bill by EUR 260 billion a year. Achieving this ambition will require investment at scale. supported by stable and predictable market frameworks. Now last month, European Union Energy Ministers reached agreement on a common negotiating position for the European grid package. While the legislative process is ongoing, its direction is significant. The package reinforces many of the principles that Elia Group has advocated for years. coordinated infrastructure planning, accelerated permitting procedure, stronger interconnections and deeper cross-border cooperation. In short, Europe is increasingly recognizing that achieving its climate competitiveness and security of supply objectives requires not only renewable generation, but also the infrastructure capable of transporting clean electricity where it is needed. The message across Europe is becoming increasingly clear. The grid is not a consequence of the energy transition. The grid is a precondition for it. And that creates a substantial long-term opportunity for our group. At the same time, it would be misleading to suggest that the challenge is simply about building more infrastructure. The next phase of the energy transition is fundamentally about execution. Can we build the required infrastructure fast enough on permitting process keep pace and growing demand -- with growing demand. can supply chain deliver the required equipment, can society support infrastructure development at the scale required and the necessary capital be mobilized and current regulation provide sufficient predictability. These are not separated challenges there are all dimensions of the same execution challenge.

That's right, a supportive regulatory framework remains a critical enabler of our investment program. If we look first at Belgium, we have reached an important milestone at the end of June with a publication by the Belgian regulator of the final tariff methodology for the 2028-2031 period. Overall, we see this as a constructive outcome. The regulator has clearly opted for stability and continuity, preserving the key strength of the current framework and providing greater visibility through 2031. Importantly, the framework continues to offer strong incentives to deliver. In fact, the number of incentives increases from 16 to 18 with a stronger focus on efficient execution of our growing investment program. In particular, the new incentives encourage projects to be delivered on budget and supported timely reinforcement of the Belgian grid as electrification continues to accelerate. From a returns perspective, these incentives become even more meaningful and are expected to contribute around 2 percentage points to the return on equity. This ensures strong alignment between shareholder return and a broad set of societal objectives including efficient delivery of the critical infrastructure for society. Based on current assumptions and as highlighted on the slide, the framework supports an average post-tax regulatory return on equity of around 8%, including the fair remuneration component, incentives and the unchanged or premium. Overall, we believe this framework provides a good balance. It offers investors greater visibility while supporting the significant investment needed to strengthen Belgium's electricity systems for the years ahead.

And driven eye on Germany, the regulatory consultation process is still ongoing. Linear continues to engage with stakeholders ahead of the final framework determination expected later this year. While the process is still at trough stage, the proposals already provide great visibility on a number of key principles. These include a harmonized framework for onshore and offshore activities, a unified return on equity across all assets, a cost-plus model with incentive mechanisms and a standardized approach to capital remuneration and cost of debt. Importantly, the regulator has adopted a comprehensive consultation process, and we remain actively engaged in the dialogue. The final methodology is expected to be determined in autumn 2026. While the key financial parameters, including return on equity and cost of debt are expected to be finalized during the year '27 ahead of the start of the new regulatory period. At this stage, it remains too early to draw definite conclusions, but we are encouraged by the constructive stakeholder engagement and the recognition of the significant investment needs required to support Germany's energy transition.

Well, let me now turn to a second challenge, which is procurement and supply chain resilience. The scale of infrastructure required across Europe is unprecedented. This puts increasing pressure on specialized equipment manufacturers, engineering resources and critical supply chains. Over recent years, we've witnessed substantial cost inflation in key technologies, particularly in HVDC infrastructure and offshore equipment. The Princess Elizabeth Energy Island illustrates both the opportunity and the challenge. The strategic importance of the project remains unchanged. It will serve as the world's first artificial energy island and become a cornerstone of Belgium's future offshore energy system. At the same time, unprecedented increases in the cost of HVDC technology have reward project optimization to ensure affordability while preserving the strategic objectives. Managing the supply chain realities has therefore become a strategic capability in its own rights. And at Elia Group, our scale increasingly provides an advantage. our infrastructure program spans Belgium, Germany, the North Sea and the Baltic sea allowing us to build long-term partnerships with suppliers and create visibility across the value chain. Example of this approach can be seen in recent contract award related to Land win 6, our ongoing offshore development and the broader offshore collaboration initiatives in which we play a leading role. These projects contribute not only to the energy transition, but also to the development of Europe's industrial supply chain. Land win 6 is indeed a project we are very proud of. And in many ways, it is far more than an energy infrastructure project. It's 1 of the largest industrial programs currently being developed in Europe. At a time when the continent is seeking to strengthen its competitiveness and strategic autonomy. projects of this scale drive investment, stimulate innovation and sustain entire industrial value chain. By bringing together manufacturers, engineers, construction companies and technology providers, land win 6 create high-value economic activity and skilled employment. Recent contract awards linked to the project are expected to support the creation of up 2,000 new jobs in the Rostock region, underlying its tangible economic impact across Mecklenburg, Western Pomerania. And at the same time, infrastructure that is needed for a climate-neutral future is being built. It's a powerful example of how the energy transition can also support an industrial renaissance in Europe. Now building out the grid through projects of this scale is essential because we are seeing a rapid increase in demand for grid access across both Belgium and Germany. But when people hear the word congestion, they often assume the grid is simply too small. In reality, the picture is more complex. Many connection requests are submitted long before projects are really ready to move forward. And as a result, requested capacity can significantly exceed the demand that will actually materialize. The challenge is, therefore, not to build more infrastructure it's also to ensure that available capacity is allocated efficiently. Building the grid for every theoretical scenario would be neither affordable nor efficient. Instead, we need a clearer view of future demand and mechanism that prioritize projects that are mature, credible and deliver the greatest value for society. That's why regulators and system operators across Europe are moving away from a purely first-come, first-served approach. Greater emphasis is being placed on project maturity smarter management and more flexible connection arrangements. And there, Germany is a very good example. While continuing its major grid expansion program, it introduced a maturity-based connection framework in 2026. Under this framework, projects are prioritized based on factors such as permitting progress, technical readiness, financial viability and system value. Additional reforms are also being considered to better align new generation project with grid development and reduce congestion costs. Ultimately, the objective is clear, not simply to build more grid but to ensure that scarce network capacity is used where it delivers the greatest benefit for consumers, the economy and the energy transition.

And that is exactly why, in our view, robust long-term planning is becoming increasingly important. As Bernard highlighted, the challenge is not simply to build more infrastructure but to ensure that investments are aligned with future system needs and deliver the greatest value for society. In both Germany and Belgium, these investment decisions are guided by formal group development planning processes that translate future energy scenarios into concrete infrastructure requirements. Let us briefly look at where these planning processes currently stand.

So starting with Germany, the current network development plan is built around 3 scenarios that reflect different assumptions on electrification, renewable development and the role of hydrogen. What is encouraging is that all 3 scenarios point towards significant growth in electricity demand. The real debate is, therefore, no longer whether electrification will happen. but rather how quickly it will happen and how much demand will ultimately materialize. This is exactly what the current network development plan process is trying to address. The 4 German TSOs have completed a comprehensive scenario analysis and submitted a second draft of the plan to the regulator bias earlier this year. The process attracted close to 1,000 stakeholder responses. These cover topics such as electrification, battery storage, hydrogen, flexible loads and offshore development. Depending on the final scenario pathway, the plan currently points to total grid investments between EUR 365 billion and EUR 392 billion through 2045. We are currently in the public consultation phase, which remains open until the end of August. After that, bears are will take over the review process and move towards confirmation of the final network development plan. We expect much greater clarity on the preferred pathway, resulting long-term investments needs during the second half of the year '26 or early '27.

Turning now to Belgium. The federal development plan is a key planning instrument for Belgium's energy transition. It is updated every 4 years and looks ahead over a 10-year horizon, providing a long-term view of the infrastructure required to support the country's evolving energy system. The new plan is being developed in a significantly more complex context than the previous addition published in 2022. In recent years, the energy debate has broadened considerably alongside decarbonization objectives, questions around security of supply, affordability, industrial competitiveness and energy sovereignity have become increasingly important in shaping energy policy choices. Against this backdrop, the plan seeks to define how Belgian electricity systems should evolve through a combination of electrification, low carbon generation, increased flexibility and stronger market integration, all supported by a robust and resilient transmission network. The draft plan was submitted to the care at the end of June. Its official advice on the draft development plan is expected to be pushed in late August or early September. A public consultation will follow later this year before the plan is submitted to the Federal Ministry of Energy in 2027 and ultimately approved. The German and Belgium planning exercise point in the same direction. The energy transition is no longer only a climate story. It is increasingly about competitiveness, affordability and energy security. And regardless of the scenario, the grid remains a critical enabler. That gives us the confidence that the infrastructure we are building today will remain highly relevant over the coming decades. But of course, identifying the need for infrastructure is only part of the challenge. As Bernard highlighted earlier, the next phase of the energy transition is ultimately about execution. The key question can be -- is can we deliver it on the ground. And that is where we have made significant progress during the first half of the year. Let me start perhaps with the Princess Elizabeth Ireland. During the first 6 months of the year, we have completed the fabrication of all Keystones and continued offshore installation activities. By the end of June, 19 of the 23 Kaons have already been successfully installed offshore. This marks another important step in the construction of the world's first artificial energy island. We also continue to advance the island electrical infrastructure manufacturing of the assay modules and offshore cables progressing according to plan. Let's have a look. [Presentation]

I'm always impressed by this video and shows that what we do is technology as its peak. Another major milestone was achieved on Ventas. Following several years of preparation, the environmental permits were granted in April, allowing us to move from planning into execution. With construction work starting this summer. As a reminder, Ventures will provide around 6 gigawatts of transmission capacity through a new 380-kilovolt corridor in West Flanders, and will play a critical role in integrating additional offshore renewable energy into Belgium's electricity system. Beyond Ventilus, we continued to reinforce the backbone of the Belgian transmission grid. During the first half of the year, we commissioned the Masanotti 380-kilowatt transmission line, started reinforcement works on the Vanacorridor and continued progress on the reinforcement between Mercato and Broger. We also reached an important permitting milestone on the Loni AshenGram project. Following the granting of the urban planning permit in May, construction activities are expected to begin in '27.

In addition to strengthening the transmission backbone, we're also investing in to support growing industrial demand and cross-border exchanges. Good progress continued on backend our new 380,150-kilovolt substation in the port of hand. Once operational, it will provide additional capacity to support industrial electrification in 1 of Belgium's most important economic regions. We also successfully commissioned the new Cano Mercator Transmission circuit as part of the Brabo 3 project, This represents another important step in completing the 380-kilovolt loop around the Port of Antwerp and further strengthening interconnection capacity with the Netherlands. Together, these projects demonstrate that Belgium energy transition is increasingly becoming visible through concrete infrastructure investments. But our execution challenge extends well beyond Germany -- well beyond Belgium. Germany is currently delivering 1 of the most ambitious grid expansion programs in Europe with major developments, both on onshore and offshore. Marco, can you walk us through some of the achievements of 50 hertz.

Absolutely. 50Hertz continued to make substantial progress on a range of strategic projects. These projects are strengthening energy security, enabling the integration of renewable energy at scale and laying the foundations for climate neutral economy. And importantly, this progress was evident both onshore and offshore. An important milestone was reached with Austrian free, the grid connection project for the wind anger offshore wind farm. The offshore platform was successfully installed in abiotic sea around 40 kilometers northeast of the Island Dugan. Once operationally, the platform will collect electricity from the 300-megawatt winter anchor wind farm transform it to 220 kilovolts and transmitted to the new tostitosubstation onshore. This is an important step, not only because swine is progressing towards completion. but also because this is the first offshore platform in embolic Sea for which 50Hertz is fully responsible for construction and operation. It therefore marks another step in the development of our offshore capabilities. It also demonstrates our ability to deliver complex infrastructure and challenging marine environments. At the same time, we continue to advance the next generation of offshore connections. For Osten, 4 application documents were submitted for the remaining route sections. This means that all sections of the project are now undergoing approval. Osten 4 will be the first 2-gigawatt high-voltage direct current offshore grid connection in the German bodes. Once completed, it will connect offshore wind generation Northeast of Rugen to the transmission grid via the steel substation. This is a significant step up in scale compared with earlier Baltic offshore connections and reflects the increasing maturity and ambition of Germany's offshore wind expansion. We also reached a major milestone in the North Sea. In June, 50Hertz awarded EUR 1 billion contract for the construction of a 2-gigawatt offshore converter system for the North Sea Connector 2 program. This is particularly important because for the very first time, offshore converter platforms of this new 2 gigawatt standard will be built predominantly in Germany. North Sea Connector 2 comprises the offshore good connection line with 6, as Bernard pointed out, and the DC-Link DC32, as part of the North Ostling. Beyond the project itself, this is also an industrial milestone. It supports the development of offshore manufacturing capabilities in Germany. It also strengthens the European supply chain for critical energy infrastructure. As Bernard mentioned earlier, supply chain resilience is becoming a strategic capability in its own right. Projects like this show how grid investments can also contribute to industrial value creation, skilled deployment and technological expertise in Europe. Cross-border corporation also remained a key theme for 50Hertz and therefore, the group during the first half of the year. In January, Germany and Denmark reached an agreement on the Bornholm Energy Island project. This is the first of its kind hybrid offshore interconnector that will connect offshore wind generation in abiotic sea with both the Danish and the German electricity system. The project is expected to connect 3 gigawatts of offshore wind capacity and will combine renewable integration with cross-border electricity exchange.

Another example of this cross-border approach is the Baltic German power link. In February, Germany, the Latvia and Lithuania signed a joint declaration of intent to explore a new hybrid electricity connection in the Baltic Sea. The project would connect Germany with the Baltic countries through an approximately 600 kilometers submarine cable and could integrate around 2 gigawatts of offshore wind capacity. the transmission system operators involved have been tasked with developing a technical and economic implementation concept. A decision on the next steps is expected later this year. While still at an early stage, the project underlines the growing importance of the Baltic sea as a strategic energy region and the role of interconnections in strengthening European security of supply. This is exactly what disciplined execution at scale means for us. It is not only about delivering individual project but about building the infrastructure, capabilities and partnerships that Europe will need for a more electrified, resilient and interconnected energy system. Alongside our focus on grid development, digitalization and AI, we continue to place a strong emphasis on proactively securing the financial resources needed to deliver our investment program and to support our long-term growth ambitions. At the same time, we continue to assess opportunities where we can lever our expertise and partnerships in support of Europe's evolving energy infrastructure needs. And this brings me to an important development that we announced this morning our planned investment in Project Tahoe, a subsea interconnector that will connect the U.K. and Germany through wind grid our group project developer. Tarjun is a 1.4-gigawatt HVDC interconnector designed to facilitate cross-border electricity exchanges, strengthened security of supply and support the integration of renewable energy across European markets. As a regulated transmission assets, it is progressing through the relevant regulatory approvals processes in both countries. What makes this opportunity particularly attractive for us is the partnership structure? CPP investments will be the majority investor and provide most of the capital while wind grid will participate as a minority strategic partner with a 25% look-through stake. This allows us to contribute our transmission expertise while maintaining a disciplined approach to capital allocation, wins share of the project expected -- of the project equity is expected to amount to approximately GBP 200 million over the construction period, which is expected to last until the mid-30s. The majority of the project funding is expected to come through project financing, resulting in a measured capital commitment for Elia Group within the context of our broader investment program. In addition to the financial discipline of the structure, the transaction further strengthens our partnership with CPP Investments. a long-term partner that shares our conviction in the critical role of transmission infrastructure in the energy transition. Bernard, perhaps you can elaborate how Tecon fits within the overall strategy of Elia Group.

Yes. Thank you, Stephanie. From a group perspective, Tacon is a very good example of how we can leverage the capabilities we've built over decades as a transmission system operator, beyond our core regulated business in Belgium and Germany. While our primary focus remains the successful delivery of the unprecedented investment programs in our home market, we also see selective opportunities to apply our expertise in developing, building and operating transmission infrastructure in areas that are closely aligned with our core competence. . And Tarkan fits that framework particularly well. It is a regulated transmission asset. It supports European market integration and the energy transition. and it allows us to participate alongside a trusted long-term partner through a structure that preserves our financial flexibility. Importantly, this is not about pursuing growth for growth. It's about being selective and investing in opportunities where we can create value through our expertise while maintaining a disciplined approach to risk and capital allocation. More broadly, the transaction illustrates our strategy of combining strong execution in our regulated business with targeted partnerships that allows us to support Europe's energy transition beyond our existing footprint. Together with CPP investments, we are able to participate in attractive infrastructure opportunities while keeping our focus firmly on delivering the substantial investment programs that lie ahead in Belgium and Germany. This balanced approach enables us to create long-term value for all stakeholders while supporting the development of the infrastructure needed for a decarbonized European energy system.

And this also underlines the importance of maintaining a disciplined financial approach as we continue to execute on our investment program and pursue selected growth opportunities. Let me take you through the key financing transactions completed during the first half and how they support the group's financial position. We continue to execute our funding tool kit in a disciplined way. The key milestone was the issuance of a EUR 900 million hybrid bond. This provides attractive non-dilutive equity like funding with 50% equity credit from Standard & Poor's and further strengthen our capital structure. In parallel, we reinforce our liquidity position by signing more than 2 billion of revolving credit facilities across the group. This enhances financial flexibility and supports the delivery of our substantial investment program. We also continued to diversify our funding sources through additional debt financing initiatives, including in the augur such note issuance at 50Hertz. At the same time, the group's strong liquidity position allows us to repay early the 300 billion term loan maturing in '27. Overall, these transactions further derisk our funding profile. support our credit metrics and ensure we remain well positioned to fund the next phase of our growth. If you look at the group's debt position, net debt excluding EG increased by only EUR 0.5 billion to EUR 14.6 billion. This moderate increase reflects the strength of our funding profile. We continue to execute our investment program while maintaining balance sheet discipline. During the first half of the year, we invested around EUR 1.9 billion across Belgium and Germany. This was funded through a combination of operating cash flow, proceeds from the '25 equity raise and disciplined use of that funding. Our financing profile remains robust with an average cost of debt of 3%. Furthermore, our debt portfolio is entirely fixed rated providing protection against interest rate volatility, while our BBB rating with stable outlook from S&P supports continued access to capital markets. Please note that the hybrid bonds are not reported as net debt as they are accounted for in equity. Let me now take a moment to elaborate on some of the headline figures for the first half of the year. It was another period of solid execution for Elia Group. Across Belgium and Germany, we continue to deliver on our investment program while maintaining strong operational and financial performance. As I just mentioned, CapEx reached EUR 1.9 billion, reflecting continued progress across our infrastructure portfolio. While investment spending is naturally weighted towards the second half of the year, as it has constantly been the case in previous years, the underlying execution of our program remains on track. At the same time, net profit Elia Group share increased to almost EUR 349 million. We also continue to strengthen our organization, welcoming more than 330 new during the first half of the year. And we made further progress on our sustainability emissions through our sustainability program at now. Let us now take a more detailed look at the financials for the first half of the year. The adjusted profit for the period increased by 26% to almost EUR 411 million, reflecting strong performance across all segments. Belgium and Germany continued to benefit from asset growth and higher underlying returns driven by increased interest rates, while the contribution from our international and holding activities also improved. Our third segment previously referred to as the nonregulated and among segment has been renamed international and holding activities and will be presented as such going forward. Profit for the period amounted to almost EUR 420 million. This includes a EUR 9 million positive one-off item related to the fiscal year '23 after Elia Group successfully challenged the discretionary tax treatment that had previously applied when combining the group contribution regime with the dividend received deduction regime for that year. After noncontrolling interest and hybrid remuneration, including the newly issued hybrid net profit attributable to Elia Group shareholders reached EUR 348.7 million.

If we turn to the profit evolution in Belgium, adjusted net profit increased by 25.8% to 163 million. The main driver was the higher fare remuneration, up by 21 million. This reflects the continued growth of our asset base, the full year benefit of the 1 billion equity injection completed last year and higher regulated returns driven by the higher Belgium risk-free rate. We also saw a positive contribution from incentives, reflecting again another solid operational performance over the first half of the year. While the growing level of assets under construction led to higher capitalized borrowing costs. In addition, the regulatory review of the SALT 2025 resulted in lower rejections. All these positive effects were partially offset by the one-off tariff coverage of the costs linked to the capital increase that benefited last year's results. Overall, the results demonstrate the continued strength of the Belgium regulatory framework and our stability and ability to translate sustained investment growth into earnings growth. Moving now to Germany. Adjusted profit for the period increased by almost 21% to EUR 250.8 million. This growth was mainly driven by the continued expansion of the regulated asset base with the execution of the investment program. In addition, the higher equity remuneration rate compared to last year provided further support to earnings. These positive drivers were partially offset by higher depreciation and operating expenses, both consistent with the business undergoing substantial growth. Financing costs also increased as additional debt was raised to support the investment program, although this effect was partially mitigated by the capitalization of borrowing costs on assets under construction. Overall, the message remains unchanged. Continued investment and asset growth are translating into higher earnings and demonstrate the strength of the German growth platform. And finally, turning to our international and holding activities. The adjusted net loss improved significantly, decreasing by EUR 8.6 million to minus EUR 3.2 million. The main driver was a stronger contribution from the Holdings segment, which improved by EUR 11.5 million, following the hybrid issuance and the group's strong liquidity position, the EUR 300 million term loan maturing in 2027 was repaid early. This resulted in lower net financing costs, while the cost of the hybrid are accounted for in equity. The holding also benefited from a 6.8 million tax deduction following last year change in law with regard to group contribution, while operating costs increased further. The positive evolution was partially offset by higher project development expenses at wind grid reflecting continued work on future growth opportunities. Nemo Link continued to perform very strongly operationally. maintaining 100% availability, while its financial contribution was marginally lower due to the regulatory cap mechanism and lower power price spreads. As a result, the adjusted profit for the period amounted to a small loss of 3.2 million. Profit for the period, however, reached 5.7 million benefiting from a 9 million positive one-off tax item linked to a successful claim on the fiscal year 2023 tax declaration following changes in the Belgium tax law. Marco, let me now hand back over to you for the outlook for the remainder of the year.

Thank you, Stephanie. Following the first year half -- following the solid first half year performance, were, of course, reiterating our full year guidance and continue to expect the net profit Elia group share to range between EUR 690 million and EUR 740 million. This guidance includes the hybrid costs. For Belgium, the higher OLO rates observed over recent months support our expectations to deliver adjusted net profit towards the upper end of the EUR 290 million to EUR 320 million guidance range. We also remain on track to invest around EUR 1.7 billion in the medium good in '26. In Germany, we expect adjusted net profit to range between EUR 585 million and EUR 625 million based on a regulatory equity return base rate of 3%. Full year investments are now expected to amount to around EUR 4.8 billion. compared to our previous outlook. And as mentioned earlier, this reflects a modest reduction driven by product-facing effects, optimized payment schedules and procurement efficiencies across several major offshore projects. Importantly, the underlying investment program and long-term growth trajectory remain unchanged. Finally, turning to our international holding activities. We now expect this segment to contribute around breakeven to adjusted net profit in '26 compared with our previous expectation of a loss between EUR 10 million and EUR 30 million. This improved outlook is mainly driven by lower holding financing costs and a stronger contribution from Nemo Link subject to continued availability, Nemo Link alone is expected to contribute around EUR 30 million this year.. Before we conclude, I would like to say 1 last thing. we have talked today about investments, infrastructure, digitalization and growth, but none of it happens without people. In particular, I would like to thank our colleagues in the field. the technicians, operators and project teams who are out there every day, making sure the system runs safely and reliably while building the grid of tomorrow. With the exceptional temperature we are experiencing across Europe this week, that's not always an easy job. Yet they continue to show up with professionalism, commitment and a strong sense of responsibility. Electricity is 1 of those things people rarely think about when it works. It's simply there. And that's exactly how it should be. But behind that reliability are thousands of people working together across Belgium and Germany, often out of site, but never without impact. That's why I'm generally proud of what we achieved in the first half of this year. Not only the projects we deliver or the milestones we reach, but the way our teams continue to make things happen every single day. So my sincere thanks to all our employees, partners and stakeholders. The month ahead will bring challenges but also tremendous opportunities. And if the first half of the year has shown us anything is that we are stronger when we work together. Thank you.

Thank you, Bernard. In the meantime, Jan de Koning, Head of Corporate Finance has joined us. So I suggest, we can start now with our Q&A. Let's see, we have a first question coming from UBS.

Three questions, if I may. The first 1 is, Marco, on the 2026 CapEx, you treatment by EUR 300 million for a number of reasons how much of EUR 300 million is moved into '27, '28, how much is basically gone because you deliver CapEx cheaper than you anticipated. Question number 2 is on the 50Hertz EBITDA in H1. It looks a bit lower. When I look historically because historically, you were closer to 50%. If I take roughly EUR 700 million of H1 and compared it to consensus, I get closer to 40%. So can you please help us understand what happened in H1 and the last 1 is on the ongoing regulatory review in Germany. there haven't been any milestones since May, I think, but can you please comment on any talks with the regulator, any takeaways from the workshops that you attended since May? And where do you see the largest pushback from the regulator?

So it's already a long list of questions, but all of them valid. Maybe to CapEx, it's indeed the fact that several reasons led us to the revision of the guidance. As a rule of pump, I would name it like this, 1/4 round of the reduction is affecting this year due to savings and the other 3/4 are more for the next years to come, not only push back into the next year or the year after, it was really, in particular, in connection with Len6 the announcement kind of rescheduling, which is being allocated over longer term. So it's not simply a shift from 1 year to the other. So from that perspective, you potentially need to spread it a little bit over a longer period. Regarding the EBITDA at 50Hertz is indeed right that in the past, we often saw higher results in the first half compared to the second half due to the ramp-up of the operational costs, which play less and less a role to be fair. On 1 hand, it's still a valid track. But we are prudent in the consideration of FX from commissioning. And as we have a huge commissioning expected end of the year on an Austrian free project, that's something which is not reflected in the current results, not proportionally but will affect the year-end results once we are able to commission. But even though we are good on track and quite confident that we will reach it. The recognition of that effect, the so-called hockey stick effect will be happening once we are able to commission technically that asset. Last but not least, on regulatory side, it's indeed right that there's no official announcement between the last publication and the public consultation and next step. However, we are in constant talks to the regulator, discussing several kind of designs, in particular on the VAC model, that's still work in progress. Like you can imagine the kind of underlying rates, how it is being reflected in the VAC model, the cost of debt considerations, whether there's a rating consideration or not. These are elements which are up and running as we talk. However, 1 big item is still outstanding, and that was the discussion on incentives, and there's likely that beat launch process in the course of the month of September. which is usually a public consultation. And that will be for our understanding the next visibility step then in that kind of discussion before a kind of fixing at year-end of the framework is going to happen. So hopefully, that gives you a little bit more color on the 3 items.

I see the next question is coming from Oddo des.

Great performance in Belgium, thanks to the return of the project or the acceleration in Energy Island project probably. But coming back on Germany, can you further specify the delay in CapEx? You explained now, it's primarily Lanvin 6 related. It's not also oint-3 related. And can you further clarify when you then exactly expect commissioning of course, win 3 to happen, is there somewhere in November, December, And that's the key reason why you are cautious in your recognition of the project in H1 already. Then can you maybe give an update on your U.S. investments? What is happening there? What is the progress there? And certainly, can you maybe give an update on what is expected from the second interconnector between Belgium and the U.K.

Okay. Maybe I'll pick 1 first. So on -- it's indeed the fact that we can confirm that ostelf will be commissioned end of the year. So you named November, December, we hope for to do it a little bit earlier to derisk a little bit that midnight effect, but that was the main reason not to consider it for the time being. KB has been laid, a connected platform is installed. So installation work is finished, but commissioning testing is starting. And usually, it takes 6 weeks, maybe more depending on the findings there. So from that perspective, we are prudent in that guidance at this stage and the consideration in the figures. But yes, the CapEx revision has mainly been caused by the question on Lineman 6 and the shift in the yards in laundering free as well. So as likely with the announcement on Lonmin 6we will go with the Lanvin free projects to the to the yard in Rostock as well. So that will be a shift from the Spanish yard to the German yards. And there are some savings connected to debt, but on the other hand, some rescheduling as well that was the main reason for this program. I would name it like this caused by this program, which led us to the revision of the guidance on the CapEx numbers.

Well, on the U.S., as you know, we are basically following 3 projects at the moment, plus continuing our activities over Energy giga. The 2 projects that are onshore are so green and clean fast New York, and there is 1 offshore project, which is called leading light wind. I think we continue to very closely monitor the development of these underlying projects. And at the moment, at least on the 2 onshore project, it's premature to provide an updated fair value assessment at this stage because not a lot has changed. And as you know, in the United States, there is a big share coming up with the midterm. So we will see much clearer after that period. However, I was reading no later than yesterday in the handers breath that the green energy is booming in the U.S. despite what we might think because, of course, the AI-related needs are very important. And of course, the quickest way to build up generation is via renewable. So while we think that -- and there is a clear federal government approach against the renewable, there are still a lot of developments happening on that side, which I think can be comforting. On leading light wind, which is the offshore project, as you know, it's a project that was subject to a potential reimbursement of the lease acquisition costs of that project. We have a rather small stake in that project. And at the moment, we are still trying to assess the consequence if this reimbursed process would happen because, on the 1 hand, where we have to see how it's -- what are the proceeds with it, knowing that we have a very small stake in there. Energy has only 12.5% and I remind you, we have 25% of Energy. And secondly, you know that while there are negotiations with the federal state, there are also individual states that basically see this process of reimbursement. So I think it's too early to draw conclusions at the moment. But as you can imagine, we are following that very closely. On the Princess Elizabeth Island and the DC part, so the Nautilus interconnector. But I think on our side, as we said, we've worked on a renewed basically design that allows to have substantial savings versus what we had initially planned while keeping the main aspects of the project. And now we are, of course, waiting for -- it must be part of the federal development plan. And so we are waiting for the government and the regulator to confirm the project. I must say I'm prudently but rather optimistic that the project will happen because it's a key project for Belgium energy strategy. And as I commented during the video, I think, as Europeans, we must be very proud that those type of projects, boom or Princess Elizabeth high happen because it's really high technology. It's the future of Europe. And as Elia Group, we are very proud to be part of those 2 projects that are really flagship project for Europe.

The following question is from Morgan Stanley ahead.

The first 1 is just on the on the net profit guidance for 2026. So obviously, you have increased your divisional indication for the other division. You're indicating you will be in the upper end of the range in Belgium. So I was just wondering as a result of these 2 changes, why didn't you increase your guidance at the group level as well? Are there any negatives in other parts of the business that maybe have been missing? Or is it just that you're being conservative at this stage? So that's the first question. The second 1 is just on Germany, given you have less CapEx for the year, I imagine that can have a bit of an impact on your allowed revenues for the year. So -- and here, you didn't change the guidance on net profit in Germany. So I was wondering if there was an offset in there on the positive side to offset that impact.

Maybe I'll start and then let Janik to complement on that one. So the profit for the shareholder, which we're guiding on is including the cost of the hybrids and the better performance of the operating entities gives us some flexibility in approaching the market on the hybrid side. And we took momentum to derisk the funding while executing on our tool kit. what has some costs, but the headroom has been used to lock in favorable cost for the future. So on behalf of that year. So from that perspective, we took the momentum with the higher range of profit to be achieved in operations and launched the hybrid issuance, which is now, of course, something we need to pay for, and that is reflected in the profit which is then left for the shareholders. So that's maybe the comparison between both. On the German CapEx, we must admit that the EUR 200 million revision doesn't play a big role to be honest, in the results itself usually, you get remunerated only for half of that over the year and then 40% on that 1 with a rate of 6%. So this few millions usually is something which has been offset by the higher underlying return rate at all. So from that perspective, we are confident to stay within the guidance as this is something which could be absorbed by the evolutions in the business itself?

And just as a quick follow-up on the first question. because you're referring to the cost of the hybrid. But if I remember well, when you presented the guidance initially, you already had a bit of a delta between your -- the sum of your division or target and the net profit for shareholders. So I thought the cost of the hybrid was already or at least some sort of financing measures was already included in the initial guidance.

That's right, but the timing was a different 1 to be fair. So as we were relatively cash long at the end of the year. So from a liquidity perspective, there was no need to approach the market. and that was indeed a more opportunistic move in spring this year. As we saw quite still favorable conditions before the windows are going to close, and that's why we entered the market from a liquidity perspective and from a store perspective, something later the year would have been more economically being favorable in that regard. So that's the mismatch you may refer to.

The next question comes from ING. Derik?

Following the previous question. If I add the different components on your updated guidance and also appreciating the comments on the hybrids. But still I arrive at the higher end around EUR 740 million any way I look at it. So maybe clarifying -- maybe that requires some further clarification if I'm missing something in the composition of the guidance. And then the more recurring question, I think, is the midterm outlook for your CapEx now that the network development plans, there's becoming some more clarity in Germany, maybe also in Belgium. So being at a EUR 6.5 billion run rate on CapEx as it is in the current plan. you're getting close to that also in this year. What -- also for modeling purposes beyond '28, what is a fair assumption going forward? And I hope you can share some insights here.

Maybe on your question on the guidance. It's true that if you can, the 3 segments that you will end up higher, but you shouldn't remember to forget to take out the 20% that is linked to KFW obviously so you should take that out. And then you have now the hybrid cost is around on an annual basis, EUR 57 million. So that's where you should come out in the guidance.

Okay. Yes.

On a good development plan. As we stated it's still ongoing. And there are a couple of legislative procedures, in particular, in Germany, running, which set a theme for 1 or the other part, in particular, with an eye on the big DC links, whether they are being executed via overhead line or fully underground cables, which play a significant role in the difference of the costs connected to that one. And of course, the offshore scenario to be chosen is 1 of the elements which are essential for building up our plans. That being said, we stated several times that the CapEx will not go down from that perspective. If you make the maths on the previous plan, or the Kung plan, which is running 24 to 28 with a total CapEx of EUR 31.6 billion, which we announced. Then there are EUR 7.5 billion left to be executed in the next 2 years to come. and likely that this number will not be lower on the plan, which we are announcing beginning of next year. So from that perspective, we are not giving that clear guidance right on a new CapEx plan for the time being, as there are too many very significant unknown items outstanding. However, we can confirm that the group will further grow in the future.

And we hope to be able to announce something at the latest -- at the Q4 results next year. Then we can go now to the next question from Citi, Piotr.

Piotr Dzieciolowski from Citi. So I wanted to ask you about this, smaller CapEx in Germany. Is it a one-off? Or there is some real across into the future periods. You said some of it is some cost savings on the CapEx level. So how does this -- would that -- shall we extrapolate it into the future periods as well? And then on the grid development CapEx plan, in that future period. I wanted to ask you, do you see a scenario that the CapEx runs really higher, so accelerates from EUR 7.5 billion so that you would have to go back to the current equity, you have to like raise equity or use more hybrids or because the way I think about it if the CapEx stays flat, the whole structure of Elia slowly starts to degear kind of if it's vice 28 and the CapEx stays flat, the incremental the 7.5 billion vessels that kind of a growing base becomes smaller, better than to finance. So how do you think that playing out in beyond '28?