ERG S.p.A. (ERG) Earnings Call Transcript & Summary

Good afternoon. This is the Chorus Call conference operator. Welcome, and thank you for joining the ERG Second Quarter 2020 Results Conference Call. [Operator Instructions] At this time, I would like to turn the conference over to Mr. Luca Bettonte, CEO of ERG. Please go ahead, sir.

Good afternoon, everybody, and thanks for coming to this conference call on our second quarter results. As usual, here with me is Paolo Merli, Corporate General Manager and CFO. We start from the Chart #4, showing you the highlights for the quarter. I have to say that we posted good results despite of the seamless impact of COVID-19. In Q2, the overall scenario has been worsening. And I will not be surprised if this trend won't change in the following quarter. In my view, only from the fourth quarter, chance that this thing can get better, assuming anyhow no second significant wave of COVID-19. Let me then give you a general review about the main business drivers and trends in our industry in the second quarter. While Paolo will take you through a deeper and thorough analysis of the figures, also for the first half of this year. Talking about EBITDA, it came in at EUR 107 million, slightly lower than last year. We had a reduction in thermal generation set almost in full by better performance in wind and solar. The energy price trend as well as the demand of energy have been declining in all the countries we were exposed. In Italy, the energy consumption dropped to 13.6% in Q2 and national price, PUN, 51% with similar downward-oriented curves also in the other European nations relevant to us. The price for natural gas and of CO2 has also been decreasing, but at a slower pace than energy prices. That's squeezing the margin of CCGT that has turned out to be negative. On top of that thing is the power, water availability cut being very low, like in the first quarter. On the positive side, we've had a higher production in wind, both in Italy and abroad. But besides the higher green unit value and the effect of hedging of the energy sold, have brought a significant contribution to the overall operating margin. Net profit was even better than 2019. I'm now referring to both the second quarter and the first half. Lower EBITDA and higher depreciation were more than offset by the strong reduction of the cost of money and by the lower taxation. The former as a result of the ongoing liability management program, the latter thanks to the rules set forth by the Decreto Rilancio, has deferred and canceled the balance of the 2019 corporate income tax and plus a down payment of the first installment of the 2020 corporate income tax, in addition to the positive effect of ACE. Net profit for the first half at EUR 70 million versus EUR 68 million in 2019. As for the net debt, it did not change that much from the end of the previous year, up EUR 27 million. Main items to be underlined are the strong operating cash flow of some EUR 215 million, CapEx of about EUR 90 million and dividend distribution of some EUR 114 million. Flipping the page, as usual, every 6 months, we share with you a quick update of the business plan deployment. Here on Chart #5 and also on Chart #6 a snapshot of the ongoing operations. By and large, all is being carried on as per budget after taking into account the impact of COVID-19. As you remember, we forecast some 6-month delay on average during the webcast related to the Q1 results. Repowering, the latest news is the signature of the criteria the Minister of Environment for 3 Sicilian wind farms amounting to 218 megawatts that represented 53% of the repowerable megawatts in our business plan. Next step is the signature by the Minister of Fine Arts that is expected to follow shortly. These are very important steps of the overall authorization procedure, as they mark the conclusion of the processes and hypes bureaucratic level. Let me only highlight that in the second quarter on the 12th of June, we finalized the reblading of Greci 2 wind farm, a small one totaling just 2 megawatts. But gathered data in this initial period further confirm the significant upgrade in the range of 15%, 20% of the energy production. In the respect, it is important to bring to your attention some new rules being introduced by the so-called Decreto Semplificazioni. So it has just started its path to be converted into law that will be finalized by mid-September, but the actual version could be further amended. Anyhow, what counts much for us amid different other items has to do with the sum of the provisions set forth in Article 56. One, the procedure to authorize from an environmental standpoint the repowering of a wind farm to become differential. That means by making a comparison between the actual, say, pre-repowering layout with post-repowering layout. At present, the regulation envisages a comparison between the post-repowering layout with a theoretical greenfield. This should streamline and speed up the procedure. Number two, as for reblading, if the larger dimension of the rebladed WTG is less than 15% of the actual tower, the operator can start upgrading the tower seen out just as certified declaration for without any need of a specific authorization. And number three, as you may have noticed, broadly speaking, the actual version of Article 56 opens up the possibility for the wind farms that didn't adhere to the [indiscernible] decree to take part of the future auctions at certain conditions. In my opinion, for the time being, this provision represents the first month step forward to unleash a potential huge amount of investments in the country. So it still needs some amendments and integrations in order to have a concrete and significant impact on the Italian RES industry. Such amendment might what be introduced during the conversion period. And now as usual, I will hand you over to Paolo for his analysis.

Thanks, Luca, and good afternoon, everybody. I'll start, as usual, by commenting on the price scenario over the period, then I'll take you through results business by business, and finally, we'll give a look at the profit and loss and cash flow. So let's get started. So on Page #8, power demand in Italy was down 14% year-on-year in Q2. So quite huge drop, very much related to the lockdown. Yes, you can see the trends for the different sources covering that demand. Basically, only renewables posted a rising contributions whilst thermal generation, being basically the wind producer in the system, absorbed all the drop. Looking at our assets, hydro, unfortunately, was down 21% year-on-year versus the plus 3% international leverage -- international level, sorry. So unfortunately, unlike the north of the country, the dry season continued in Central Italy, again in 2020. And this -- there is nothing we can do about that. As regards wind, our production were up 2%, below the trend in the country. But I remind you that the country benefits from the new capacity additions year-on-year in the period. Solar, plus 2% year-on-year, slightly worse than national level, but basically for the same reasons. As far as the CCGT plant is concerned, volumes were down 11% year-on-year, slightly better than national level due to the specificity of the plant given its captive market towards the industrial site nearby. Now commenting electricity prices in Italy. The chart, I think, is self-explanatory, fairly weak price scenario in Italy, mainly as a consequence of the downturn in electricity demand and drop in gas prices very much associated to the lockdown. The all-in price for renewable from EUR 143 to EUR 124, went down less, given the higher value of incentive. As you know, it's calculated on the basis of last year's average national price. So if you want to see the glass half full, given the current trend, the value of incentive is expected to be even higher next year. But let's say, come back to the first half of this year. It's important to underline here that not all but a big part of the merchant effect was neutralized by the hedging actions taken over the period, according to our risk policies. Let's see now the clean spark spread for our CCGT. It collapsed, practically, from the EUR 13 positive to minus EUR 3 per megawatt hour. I think it's the lowest level in a quarter that they can recall, driven by lower gas prices, but more than offset by lower merchant prices, which squeezed completely the marginality. These numbers also reflect a decline of premium versus the national average price in Sicily from EUR 13 registered, say, in Q2 '19 to EUR 2 -- only EUR 2 in second quarter 2020, which is a very, very abnormal number for the local market. Nevertheless, the performance of the plant was quite solid anyway, as it benefited from the hedging against the spark spread and some positive reimbursements associated to insurance and settlements of the utility contracts in place with the industrial site. And above all, its captive market provides the plant with a very strong resilience against the merchant scenario. Let's see, to finish abroad in the graph at the bottom right of the chart. You can see here the average reference selling prices for our productions country by country. Yes, it's worth noting the significant downward trend in prices in Romania due to the weaker merchant price in the country, you know there is a green certificate mechanism. And in Bulgaria, which is given this trend to the higher production of the plant because the FIP mechanism in some way is inversely related to production. So not that bad in the end. Let's move to Page #9, commenting business by business and -- sorry, here I'll comment the EBITDA for the quarter in few words. EBITDA amounted to EUR 107 million, slightly down 3%. I think it's quite good performance considering the general context of the COVID-19 and the lockdown. In a nutshell, from left to right, slightly better results in wind in Italy thanks to recovering volumes, partly offset by a very weak price scenario, as already mentioned. Wind abroad, slightly down year-on-year. And better wind conditions were more than compensated by the poorer price scenario. Hydro, down again year-on-year on top of the price scenario, I would say, especially volumes remained well below historical average and even weaker than last year, which already was a week here. Contribution of solar is slightly up. And last but not least, CCGT, I said only slightly down, notwithstanding the very tough trading environment in Sicily. But let me here make a very general comment. During the quarter, the scenario, the price scenario was very, very weak across all the technologies, across all the countries due to the lockdown. But a good part of those effects, maybe not all, but a very good -- a big part of it were offset by the hedging carried out against the scenario. I go now segment by segment, starting with wind, Page #8 (sic) [ Page #10 ]. EBITDA in the quarter was 57%, up 3% year-on-year. As I mentioned, I want to repeat, slightly up in Italy, slightly down abroad, higher volumes, so was price scenario. Maybe the only comment I can make here is that you see abroad, the volumes were up 1%. It was not that good in the sense that we have consolidated new assets in France. And in particular, in France, production suffered on a like-for-like basis from poor wind conditions. Maybe a comment just to give evidence of the value of the hedging we put in place. The selling prices on average in Italy was broadly in line with last year, EUR 117 per megawatt hour as the lower match component, net of hedging, was compensated by the higher value of incentives. While abroad, the average selling price was slightly down, EUR 80 compared to EUR 84 in Q2 '19, but mainly hit by specific countries such as Romania and Bulgaria, which I think I've already commented at the very beginning of this review. So no more to say. Let's move on, on Page #11, commenting solar. EBITDA here was up 7%, mainly thanks to 2 effects. On one hand, higher production, plus 2%. And the fact that the average unitary revenues were slightly higher during the quarter as the lower merchant price was more than compensated by the hedging and the incentive mix because every plant enjoys a different Conto Energia scheme. So depends on which one is producing more, and the balance in this quarter was positive. So as a matter of fact, the average selling prices in this quarter for our solar portfolio was EUR 311 per megawatt hour against EUR 306 per megawatt hour in Q2 '19. This, once again, proves the resilience of our portfolio, even in a backdrop of extraordinary low merchant prices. So now Page #12, commenting on hydro. EBITDA for the quarter was EUR 16 million, down 21%, so a big drop, driven by weaker volumes. And I think it's fair to say that production was really disappointing, especially when considering that even last year was weak. So a very dry season continued in Central and Southern Italy while in the North, encountered the opposite conditions, as we commented during the scenario part of the review. So a level of production, which is well below our budget, well below the historical average, and even below last year level, which were already extraordinary poor. And this, unfortunately, continued again in July, but more or less, we keep seeing more or less the same numbers for the full year, as Luca will explain to you later on. As far as prices, yes, the comment is practically the same. The weaker merchant price was more than offset, in this case, by the higher level of incentives and the hedging. And in this case, also based on the higher modulation, the plant was able to perform in a more volatile price environment. As such, unitary revenues were EUR 115 per megawatt hour, higher than EUR 102 registered in Q2 '19. So the underperformance, you want to have just one single message, was entirely to do with the lack water. One positive piece of news is that our water reservoirs at the end of the quarter were and still are filled with an equivalent amount of energy, in excess of 100 gigawatt hour of energy. So moving on, I'm now on Page #13, commenting CCGT results. EBITDA in the quarter was EUR 15 million, down 12% year-on-year, but I think we can firmly say these results are very, very solid, given the trading environment out there in the quarter. Again, the scenario was mostly offset by the hedging. And the results also benefited from some insurance reimbursements in the period and some settlements related to site contracts. The spark spread, I already commented, was hit but a much lower premium in Sicily. And I think this is important to underline because it's an abnormal situation. Let me move on, on Page #14, commenting on investments. Let me here focus on the first half, which is more, say, representative of what we are doing. We invested EUR 86 million versus EUR 307 million invested over the same period last year. But I remind you, last year, we had EUR 218 million of M&A CapEx with the acquisition of Andromeda, the solar portfolio, and Polaris, the wind portfolio in France. So let's focus just on what we invested in the first half 2020, which is EUR 44 million in M&A, which includes the Trinity acquisition in France, EUR 42 million; EUR 2 million for the acquisition of Laszki projects in Poland, which is now under construction. We invested also in the semester EUR 24 million organically in wind development in initiatives, especially for the development in U.K., where we have started the construction of 200 megawatts and in Poland, where we are building up the Laszki wind farm. About EUR 9 million were invested ahead of the so-called CAR 2. So CAR means cogeneration -- high level cogeneration, and namely, this EUR 9 million were invested for the refurbishment with a new and more efficient steam to bind for module 1 of our CCGT plan. According to which investments, say, we expect to renew the eligibility of the module for another wave of white certificates as of 2023. And last but not least, EUR 9 million, as usual, were invested for maintenance across all our technology, which brings to the usual guidance of EUR 18 million, EUR 20 million maintenance CapEx for a full year. Let's now move onto financials, commenting profit and loss on Page #16. This is profit and loss on a recurring basis. So let me again remind you that these figures are shown on an adjusted basis, so without including the effects of IFRS 16 and 9, as we believe this gives you a representation that is more consistent with our cash profile. In any case, all the related effects are reported and explained in our profit and loss statements. That said, let us continue. I've already commented on EBITDA, so going down and looking at Q2. High depreciation reflects the new wind assets in France and Germany. Net financial expenses, EUR 12 million, 20% lower year-on-year. So we continued the trend of lowering our cost of debt. And this mainly reflected the swap of Project finance with corporate debt, in particular, the clean bond issued last year in May. And the liability, the consequent liability program carried out following the issuance of green bond. Taxes, I think here, it's important to comment because you see the tax rate was just 12% during the quarter, 19% during the semester, and in particular in the quarter, 12% against 33% in Q2 '19. This reflects a couple of items, say, the tax breaks on ACE, which I remind you was abolished at the end -- at the very beginning of '19 and then reintroduced in the fourth quarter of '19. So this effect should anyway reverse in the second part of the year. But in the quarter, we enjoyed, say, the benefits on a like -- on a year-on-year basis. In addition, in the quarter, we benefited from some tax breaks of about EUR 2 million related to IRAP as referred to the Decreto Rilancio, which gave exactly the opportunity not to pay, say, the first account of the IRAP for 2020. So this effect, a similar effect should be seen also in the second half of the year. Minority, as usual, referred to the 21.5% stake in Andromeda, held by Soles Montalto, our partner in solar. And most important, as a result of all I've said, adjusted net profit bottom line amounted to EUR 16 million in Q2 versus EUR 14 million. So here, the good news is that bottom line is up despite lower EBITDA. And this is true for the quarter and for the semester. So let's move to my last chart. I'm on Page #17, commenting cash flow statement here, focusing on the first half. The debt -- the net debt closed at EUR 1.503 billion, up by EUR 27 million from the end of 2019, and leverage was at 46% at the end of the period. So touching on all the items from left to right, but I have already substantially commented everything: EBITDA, EUR 263 million; the investments we made over the period; a negative working capital, which is typical for this period of the year and mainly related to the timing of cash-in of incentives, which are stronger in the year and so this effect should reverse in some way in the fourth quarter. Financial charges, EUR 25 million over the semester; dividends paid in the period in May; and other items for EUR 16 million, mainly refer to cash flow hedge and taxes. Let me here comment that this number, especially for taxes, includes EUR 12 million paid as a substitute tax for the exemption of goodwill stemming from the merger of Andromeda and its controlling sub-holding, which would translate into a tax asset we will benefit from in the next 5 years. So all these effects led to the net debt I've already commented. I hope I have touched everything. I'll now hand you over to Luca for his final remarks.

Thanks, Paolo. Chart #19 now. We have made, again, a qualitative analysis of the business environment in the so-called new normal way of life under COVID-19 influence. In order to strengthen the existing projections for the full year. We've gone over the key elements of the scenario and of our operating performance. As usual, including in the projections July's actual results. As for the latter, they were bad due to low wind and water availability, along with low energy price. In general terms, anyhow, we see that the energy price curve gets steeper going forward across Europe, but at a slower pace than expected. In details, we see a slower recovery over the next quarter, while there should be an acceleration in the fourth quarter. At present, for instance, the forward curve proposes a price above EUR 50 per megawatt hour in Italy in the first month of 2021. Let me drink a bit. As for the production, we factored in the actual results as at the end of July and confirm the budget projection for the months to come. Based on the above analysis and take into account that we had already sold most of 2020 FCST production in previous year, we confirmed the guidance to year-end. As for EBITDA, let me just bring up the final outcome -- that the final outcome could be in the lower half of the range. EBITDA then would come in between EUR 480 million, EUR 500 million. And in power in Italy, we should post the worse result versus last year, due mainly to the loss of production already accounted for at the end of July. The outcome from abroad, on the contrary, is expected to be better thanks to a larger production on a like-for-like asset base, plus also a wider asset base. As for solar power, chances are that we have a slightly better result stemming from a larger production. Hydro power posted results slightly lower than last year, combining the persistently low availability of water, along with lower energy prices. Thermal power, we posted lower results too, together with the clean spark spread despite of hedging and a lower contribution from white certificates as the plant is phasing out from the initial 10 years of the cogenerative generation. CapEx foreseen in the range of EUR 150 million, EUR 180 million. We keep confirming there is a delay of about 6 months on average in deploying our CapEx plan, which represents, by natural, delay that will be recovered in the months afterwards. This delay is mainly referred to the U.K. assets under construction due to TSO's lower pace to finish their works. Let me remind that such longer time frame, as it affects assets that will be up and running by 2021, 2022, it doesn't imply any reduction in 2020 EBITDA. And net financial position is seen between EUR 1.35 billion and EUR 1.43 billion. No significant change is to be underlined. Lower EBITDA versus last year is offset by better net working capital dynamics and lower cash-out from tax standpoint. And now we are ready to take your questions.

[Operator Instructions] The first question is from Sara Piccinini with Mediobanca.

I have 3. The first one is on the simplification decree. Obviously, this could be subject through modifications, but I would like to ask the following. One, regarding the possibility of repowering to participate to auctions. Do you see any opposition so far that may try that this rule is not approved? And the second is, even if the VIA authorization considered could be significantly accelerated, what happen if this is not respected after 6 months because of problems in the public administration? I mean is the authorization approved with a consent? So this would be the first question. The second is about your -- the green new deal and the -- all the sources that will come from the recovery fund that obviously gives a lot of opportunity for operators such as you. So is there any upside for your investment plan? And where do you see the opportunity? Would you prefer to proceed with greenfield projects? Or are you looking at accelerating the cost through M&A? And in which geographies are you looking at the moment? And the final question is on your hedging policies. So you say that most of the production in terms for 2020, can you please be more specific on how much is the production in terms of 2020 and 2021, and also at which price?

Okay. Say, as for the Decreto Semplificazioni, I'm not sure that I've got your question, but I heard the word opposition to the approval of the decree or the amendment of the decree. I don't think that there should be -- there shouldn't be any position. Not the right time. That's...

I can repeat if you want the question [Indiscernible]. So it's just to -- is this rule about the possibility to participate in auction, even if you not adhere to the [indiscernible] decree. If there is any risk that any opposition to that, that this may not be approved. That's the first 2 questions.

Yes, yes. No. So I've got your question the way that you posed it. So opposition, it's not a matter of opposition. It's a matter of saying, in that discussion among the different, say, authorities that are taking part to convert loan. On my side, I can just tell you that there's, as always, the likelihood that these amendments that should improve the existing, say, base, the existing wording are -- will be, say, passed and put into the decree. That's -- it's quite simple. And by saying that, I'm also answering your second question about the green deal. So green deal or even better recovery fund, the investment in renewables is a -- are a big opportunity or also something that is essential for the state members in order to have the right to get relevant amount of the funds of the recoveries. So repowering represents a way of investing massively in the country and should be part of the plan that the Italian government could present and bring to the European Union attention in order to take part properly to the recovery fund distribution at the end of the day. So answering, say, straightforward way, I don't see any opposition as far as I know. That's a discussion because anyhow, it's a big change in Italian regulation as for the authorization of the investment. But at the end of the day, it's worth doing that for many reasons. So I don't see any, say, not opposition, but I don't see any reason why it shouldn't be allowed. What I deem is simply that in 2013, when this [indiscernible] decree was issued, I could also talk that they did a good job because at the time, there were some needs from the regulator standpoint that justified the introduction of such a decree. Now based on the evolution of the industry, based on the needs for lens that we have in the country in order to install new capacity, it's not sure that we got them. Based on the recovery fund, there are many reasons why it should be amended. We have -- we, let's say, Elettricità Futura is talking to the, let's say, right regulators, to all the relevant authorities. And they already presented the specific amendments, specific, say, addition to the existing wording. So wait and see. But I'm really positive oriented there. I don't see any opposition. At the same time, I couldn't understand why it shouldn't be amended in the right way. Can you please say again the second question about the tacit consent or something like that? I didn't go the point.

Yes. Yes, sure. It's about the acceleration on the authorization. You say that there is also a big improvement in the VIA authorization. But obviously, it's a job that was the public administration has to do. So it is -- so the law is saying that you need to accelerate, but if the public administration will get a lot of time to do all the procedure, what happens that after 6 months, in any case, you obtained the authorization? Or you still have to wait for the public administration. So it is actually is delaying your -- the CapEx.

Say, as long as the regulation stays as it is, for sure. We have to fly with us or we are wait for. What then is important is that let me bring to your attention that I see a quite positive evolution of the regulation. Also in this first draft of the Article 56, that's what counts much for us. But in general times, we are looking at the Decreto Semplificazioni, for sure, for sure. If you look at -- where you also go your mind to one of the last analysis made by wind Europe. They made an analysis of each national green plan. And they made a comparison between -- among the different plants. And the executive summary, from which you can easily understand that the main problem has to do with permitting all across Europe. If I take what is written -- has been written so far in the Decreto Semplificazioni, I see that there's a willingness of improving and accelerating the permitting procedure. For instance, if you take the approval for an environmental standpoint of -- in the process of the approval from an environmental standpoint of repowerable asset, so far, and it's still the case because we have to wait the conversion to launch the decree. So far, if you have to, say, reblade a -- if you want to reblade a wind farm, the authorization -- the authority made a comparison between the new wind farm you propose them to install and a sort of theoretical greenfield on the land where you are repowering. Now in the decree, it's written that it should be changed in the sense that they should compare the new one with what is already installed. And so it should facilitate to get the approval and at the same time, it should accelerate losses to get the approval. And that's -- and it makes sense because you are getting your asset volume. And now it's not right, it's not the appropriate what -- the way that they give you the authorization and the comparison that they made. So in the decree, there are many positive news. The decree is still, let's say, a draft, let me call it this way, because it's under the conversion process. But the signals I see, they are almost all positive in that direction. So far, we have to wait. But now that's August, maybe that everybody takes a break, then the decree should be approved in the Parliament mid-September of 24th -- on the 24th of September. Then with time, we'll see the outcome -- final outcome, and I think that at the end of the day will be positive. As for the hedging, so far, looking at the 2020 renewable energy source generation, we've hedged some 17% of the production, while it is at 55% referring to 2021. And price, the hedging level is, say, in between EUR 55 to EUR 60 per megawatt hour.

The next question is from Roberto Letizia with Equita SIM.

Yes. I have some questions. I would like to stay a little bit on the decree and the possibility to participate into the tender. In connection with the step ahead you did in the authorization procedure for with regards to 3 Sicilian plants, I was wondering if the decree is finally approved within the nature of time with no significant modifications. So let's say that this is quite fair. Would you be able to participate in the tenure already in the first auctions at the end of the year? Or will it take longer for you, for at least these 3 plants, which have got already a VIA to get into that? Or in case you cannot, when do you expect for these 3 plants to reasonably be available to participate in the tenders? Staying also on this, you mentioned the discussion and the possible changes or modification. But what actually would you expect in terms of amendment to this law? So do you think they will discuss on the possibility to participate as residual offers or change in the cutting on the price for the assets? What is the level of discussions that you are actually monitoring for this decree? The second question is more technical one. So you've got some benefits on the fiscal level. So what's the expectation for the full year tax rate considering the fiscal measure implemented this year? And actually, also in 2021, also taking into consideration the fiscal benefits on the Andromeda operation that you just mentioned. I would like to understand if there is space to do some more -- something more on the debt side, considering the bond conditions -- the bond market conditions are really favorable and the new measure on green bond, the sustainable bond, the massive request from the market may actually accept other placements as allowing you to make additional steps into the reduction of the cost debt. And the last one, it's more general, and pardon me if it takes me a little bit, but actually, the environment is really fantastic and the stars seem really aligned. You get everything on the table. You got the political sustain. You got the European economic push. You got the green deal. You got the ESG push. You got the social attention. You've got appraisal of coal. You've got the technology improvement. You have the price, or at least on the forward curve. And you've got now the possibility to participate with the -- also with the repowering. And the final stage, you've got the oil industry that is probably green-passed, basically, and they are pushing to move into the renewables. So the stars are aligned. But that means actually that the speed of development of the industry will accelerate a lot, thus requiring you to move as much fast as you can on the authorization, on the pipeline and on the construction. Otherwise, you risk to miss the 2-, 3-year big step-up that you are going to face on. Starting from that consideration, isn't this the best time to capitalize the company, both at equity and bond level to face this acceleration of the market and not lose the time on the ground? I know it's a more difficult and general question, but it's crucial because really, the industry is picking up, and I don't want to see the company positioned to lose the grounds because they don't have enough cash or equity, which is actually really available in the market for the market condition today.

Okay. Stars are aligned and I've got a crystal ball and they also -- and magic wand. So let me answer you from your last question. Say, everything is like you have just underlined. I think we got everything to take part of this game, but we must be down-to-earth in the sense that I'm referring to what I've just mentioned while answering to your colleague, relating to the analysis made by wind Europe. There's a lot of work that should be done by the single state members. Because what do they have shared with the European Union is quite positive in terms of, let's say, announcements. We want to get that result. But looking at -- and in details to what is written terms of how we can get this result, there's a lot of jobs to be done. I was referring previously to the permit, the permitting procedures, and then I was also referring to the way the auctions are depicted, applied and the like. What I'm sure that also under this -- to obtain the money from the recovery fund, I'm referring not just to Italy, but to the -- all the member states, they have to reanalyze and repropose in full this national energy plans. And so we will see -- by that time, we will see what they will have introduced in order to answer the European Union, in order to address these matters in the right way. So everything is aligned, but on a pragmatic standpoint, some have still to be done in that direction. As for ERG, we are working in the right direction, in my opinion. And we are developing our pipeline. We are looking for further megawatts to be installed, greenfield and also M&A, as usual. And if in the new version of these environmental plans made by the member states, we will see a real improvement. In the end, everything will speed up. Are we ready to, say, jump on this train? Yes. Because it's what we have been doing so far. If you look at the speed there, we've been growing in the next -- over the last 5 years. We are quite in line with all the other peers in terms of number of megawatts installed every year. If you look at what we are doing in terms of geographical diversification, in this first 6 months of the year, the power produced by our wind fleet abroad was higher than what we produced in Italy. So it means that we are making more power outside of Italy, and that's what we are aiming at in terms of diversification. And when you have, in the end, good projects is -- it's never a matter of finding the money to do the process -- to do the project. Because either through equity injection or through, say, bond issue, and you may have noticed that the Board has given me the, say, power to issue in the next 12 months, another green bond. It is never a problem. It's important to say, a little bit of opportunity in the sense go out in the market and when is the best moment to do that. But I think we know how to do. So everything is aligned, but there's still a lot of job has to be done at the member state level as for the environmental plan and climate plan. And -- but from a financial standpoint, we got everything in the right place because the lever is under control. We got investment-grade rating just confirmed also through the COVID-19 impact from Fitch, that's also increased largely the hydro for us to raise new fund. So -- but what is important is to see what -- how the NIOC will be amended and improved by the single member state. As for the Decreto Semplificazioni, what is important is that they have to clarify that all the wind farms that didn't adhere to the [indiscernible] regardless whether or not they are still benefiting from the incentivized schemes, they have the right to take part to the tender process. That's the main, say, amendment they have to -- that has to be introduced. It's quite clear to everybody, everybody who is working on the subject both -- on both, say, Elettricità Futura side and authorities side. We have been a lot of discussions. We've shared our view. And let me say that I'm positive oriented in the sense that my expectation is to see this amendment to pass and to allow the country to unleash a huge amount of investment also under the recovery fund umbrella. As for taking part to the auctions, if we -- if the decree is approved the way that we would like to be, please consider that we've got the signature from the Minister of the Environment as for the Decreto VIA. Now relating to the 3 Sicilian projects amounting to some 220 megawatts after repowering. Now these decrees are on the Minister of Finance table, and he should sign them, say, shortly because at the end of the day, it should be something that shouldn't be requested and put under any discussion because of the authorization that we needed to get this point were well obtained. But we have still to get the Autorizzazione Unica at regional level. So we've finalized the authorization process at central level, and then we have to go to the Sicilian region to get, let's say, the Autorizzazione Unica. We have already a process, that process. And we've got more than half of the 28 different opinions that you needed to get to the Autorizzazione Unica finalized and approved. So today, my expectation based on our experience and based also on the impact from COVID-19 is that we should get this Autorizzazione Unica signed and approved in the first quarter of next year, which is in line with our business plan. If we were faster, good, we'll be in a better position. We'll be in a position to take part of the auctions if it's really going to be signed. Because on my end, it's important to have the decree, the Decreto Semplificazioni approved the way that we like it to be. On the other hand, we don't know that -- whether or not there will be, say, some other specific rules to be, say, approved in addition in order to get -- to allow the power wind farm to take part of the auction. Someone is telling that we should have specific auctions for the renewable -- the repowerable assets. Someone else is saying that, "But we don't like it, and I don't think that should stay as is." We'll take part of the auction just for the residual amount of what will have been given -- assigned to the new wind farms. Because at the end of the day, it shouldn't change the -- the feature shouldn't help the regulator to, say, squeeze the price of energy because the auction wouldn't be competitive that much by that. And that's something that everybody, say, is aware of. So I don't know. For sure, we shouldn't be in a position to take part to any auction in 2020. Maybe that we could take part to some auction in 2021, but wait and see which kind of auction because it is another item under discussion. If we applied the [ Red 2 ] in the European regulation, there shouldn't be any question about that in a sense that if you go to Germany or France, there's just an auction for everybody who likes to take place regardless you're talking about you repowerable assets or anyone. So that's where we are. Please consider that the Decreto Semplificazioni has been drafted just, let's say, it was drafted just a week ago. So we've just begun the conversion process, and that does work. Many regulators are aligned like yourself, and Elettricità Futura and one of the Vice President with a specific, say, duty to look after the wind industry in the country are important processor. There's a lot of good reason to do that. In Italy, there's a lot of reason to do in order to approach properly the European Union under the recovery fund umbrella. So be a bit patient because of waiting. As for the 2 technical questions, I'll let the technical man, let's say, Paolo, sorry I'm talking with you...

Thank you. Roberto, I'll try to answer the questions -- or questions about the tax rate for the full year. And the last one was about the opportunity for the issuance of a new green bond. So starting from the tax rate, let me see -- let me say that the one you saw for the first half is sustainable for the full year. Because in this year, we had in the first half, we had the benefit from the cancellation of part of IRAP, which will be seen even in the second half of the year for the same extent. Then for the second half of the year, we will still have the ACE tax break as it was in the first half and consider the third element lower in the tax rate in the first half was the recoverability of the carryforward losses in financial charges that has been accelerated by the issuance of the green bond and the contextual, say, liability management program we performed in 2019 that became, say, effective from this point of view, in 2020, allowing the company to accelerate the recoverability of these carryforward losses. All these effects combined brought the tax rate below 20% in the first half and say, you can consider this 20% as a guidance also for the full year. About the green bond, say, over the last Board of Directors, the beginning of July, and we made public that we -- the Board ruled in favor of the extension and the renewal of euro medium-term note, up to EUR 2 billion. And in today's Board, the directors ruled in favor of authorizing a new issuance for a green bond up to EUR 500 million. And this, as you said, is more an opportunity instead of a necessity for the group, especially over the last few months, we have seen in the market a window of opportunity reopening. So we are fully ready to capture, say, reap the benefits of this market condition, if those market conditions will be confirmed, say, in the second part of the year. And aim is what you said, so lowering the financial charges going forward and make our debt structure even stronger than today.

Can I ask you briefly, really briefly, if you believe that generally, if condition continues this way for your new emissions, are you below initial budget expectation with regards to interest rate charges? And by how much would you say?

Say, absolutely. Right now, I don't say anything secret. If you take our green bond is listed, and you see the performance of our green bond on the screens are even better than some peers, maybe for all the reasons you mentioned, we are ESG, we are green, we are blah, blah. And right now, the yield to market of our green bond is below 1%, well below 1%. Consider that last year we placed it at 1.8%, 1.9%. So it's -- after the value it was 1 year ago. So this created a huge opportunity, of course in case this condition will be confirmed in September, October, when it is. Because in August, as usual, the market is going to take a rest. So we are ready to do it at an exceptional conditions. So...

The new one that you consider as an opportunity, will that close down expenses -- existing debt? Or will you pay for it?

The idea is, as usual, to issue -- to raise new money, fresh money at a cost which should be in line with the numbers I've just said and close down prepay, say, other project finance with a double effect. On one hand, lowering the financial charges because the project financing, we have, say, elected for being prepaid are the one more expensive, say. And on the other hand, this will further reduce the structural subordination of the group, improving our merit of credit and supporting our investment-grade rating. So I think it's not a secret that if you see the numbers in the first half, it's true that on one hand, we had a slightly lower EBITDA, but bottom line, the net profit was even higher than last year. It's not because of the lower taxes, but also EUR 7 million of lower financial charges compared to the first half of '19.

No, that's exactly the point. So last time you did it, actually, you generate the EUR 10 million benefits on the P&L on a yearly base. Is that something that could probably achieve with the new placements?