Terna S.p.A. ($TRN)

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

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

Thank you, Stefano. Good afternoon, everyone. Let me start by giving you an overview of the key highlights of 2025. This year confirms we are on track with the execution of our plan while accelerating investments in maintaining financial strength. In March 2025, we updated our 20242028 industrial plan. Total investment now stands at EUR 17.7 billion higher compared with the previous version of our plan and with a consistent plus 177% versus the 2022 plan. Out of this amount, EUR 16.6 billion are allocated to regulated investments. As of today, this is Terna's largest investment program. At the beginning of last year, we also presented our national development plan. It foresees more than EUR 23 billion of investments between 2025 and 2034 -- once projects in this plan are completed, the transmission capacity between total and North Italy will increase from 16 to 39 gigawatts. Our execution remains strong. In 2025, we obtained authorizations for 38 projects representing around EUR 1 billion of investments. Overall, about 92% over the 2024-2028 plan is now. On procurement, 88% of the CapEx plan is already secured through contracts. Financially, we remain solid. In 2025, our long-term ratings were upgraded by both Modis and standard and pools, reflecting similar actions taken regarding the Republic of Italy. We issued EUR 1.5 billion of green bonds. Today, around 80% of our funding is raised through ESG-linked debt instruments. In January 2026, we issued an EUR 850 million hybrid green bond. We achieved a record low subordination premium below 60 basis points for a corporate hybrid in Europe. Operationally, in 2025, we delivered solid performance ahead of the guidance with EBITDA growing by 7% net income up 5%. Investments markedly accelerated by 31%, reaching EUR 3.5 billion. Let me briefly turn to the Italian electricity system. In 2025, the energy transition continues to move forward with around 7 gigawatts of new renewable capacity. We also launched the first auctions under the long-term scheme, Felix and Max. Moving now to the integration of renewables, installed wind and solar capacity reached 57 gigawatts at the end of 2025 with an increase of 7 gigawatts compared with the previous year. The pace remains aligned with the trajectory towards the 2030 National Energy and Climate Plan targets. On top of this, more than 22 gigawatts of renewable capacity has already been contracted to the long-term support schemes designed by the Italian government. These projects are expected to enter into operation over the coming years. Looking ahead, once the updated Ferric framework is approved at European level, the system will be on a credible and sustainable path to the 2030 targets. This will be supported by the capacity market make an innovative long-term storage procurement scheme managed by Terna on behalf of institutions and Terna investments. At the beginning of 2026 transmission level connection request stood at around 326 gigawatts. The reduction from last year is actually a positive signal showing a more consolidated pipeline and stronger project quality. Indeed, projects that have already secured a preliminary connection solution increased to 79 gigawatts in January 2026 compared with 52 megawatts at the end of 2024. This volume already exceeds the additional capacity required to meet the national 2030 targets. Overall, renewable deployment continues at scale with a progressively more mature pipeline. This brings us to storage. Next slide. The growth of renewables requires a parallel scale-up of storage. Battery storage increased from around 13 gigawatt hours in 2024 to almost 18 gigawatt hours in 2025. In recent years, storage capacity has increased mainly thanks to the development of a utility scale assets contracted to the capacity market scheme to guarantee system adequacy. In the coming years, storage capacity will continue to grow alongside the renewables supported by Max auctions. And this has already started. The format auction was held in September 2025. 10 gigawatt towers were awarded with delivery expected by 2028. The auction was significantly oversubscribed offers received, we are more than 4x higher than the auction demand. With the average awarded price 1/3 of the reserve premium. Similarly to renewables, we have around 300 gigawatts of a connection request from storage plants several gigawatts of projects, either with the clearance or ready to build. Already today, projects with the clearance exceeded by far, 2030 system needs. Summing up, this slide Max provides a highly innovative framework to support the development of storage technologies. Turning now to Italian electricity demand. In 2025, national electricity demand reached 311 terawatt towers broadly stable year-on-year. Renewables covered 41% of demand and 48% of domestic production photovoltaic generation exceeded 44 terawatt hours up more than 25% while hydroelectric production returned to more standard levels after the record seen in 2024. Net total production reached 268 terawatt hours, up 2% as a consequence of the reduction of a net import flows. In the first 2 months of 2026, demand has increased by 3.1% confirming the upward trend observed from last September. Looking forward, we expect that demand will increase driven by both electrification as well as the deployment of a data center. As of today, there are around 80 gigawatts of connection required from data centers, confirming that the canon electricity grid is considered reliable by investors. These connections require very high quality power supply redundancy in the grid and efficient utilization processes. Terna has started aligning grid planning with a deexpected expansion of digital infrastructure. Moving on to infrastructure development. Execution remains a key focus. Between 2023 and 2025, we obtained authorization to more than EUR 6 billion of projects. Today, around 92% of the 2024-2028 CapEx plan is authorized -- on procurement contracts signed over the same period amounted to approximately EUR 11.6 billion. 18% of our 2024-2028 CapEx plan is already secured by contract. This provides strong visibility on delivery. In the period 2023 to 2025, around EUR 5.5 billion of projects entered into operation. Looking now at our main project -- on the Tirreni, we completed the installation of the first marine cable booked on the Western and distal branches. For the availing constructural sites for substations and underground cables were opened in 2025. Finally, secondly, connecting Sardinia Corsican Tuscany advanced with the first phase of the overhead line in Corsica. Concluding authorization, procurement and construction are progressing in parallel, significantly stepping up our execution. Next slide, please. The changing generation mix is reducing system in Asia and short circuit power. As a result, the power system reacts faster and more sharply the disturbances, making it increasingly challenging to ensure supply, quality and security. What happened in the Baring Peninsula in April 2025, clearly elected these risks. The security plan 2025, 2028, provides, among other measures, a deployment plan for electrical equipment partially already in operation aimed at improving system ability and regulation. 27 increments condenses out of which 17 already in service. 25 reactors, with 16 already service. 25 stabilizing resistance -- the first 1 is sold in 2025 to announce dynamic stability. In a faster and more complex system, our robust security plan means anticipating risk and ensuring a resilient -- a resilient and reliable energy system. Moving on to digitalization. Next slide. In 2025, we invested more than EUR 600 million in digital transformation. Firstly, process digitalization, we significantly broadened the scope of process digitalization. At the same time, we ensure full compliance with the regulatory frame work requirements. Secondly, digital twin. By creating a real-time virtual replicas of our physical assets and systems, we announced our operational effectiveness covering over 60% of our operations. In the last few years, Terna has become a data-driven company. In 2025, we focused on integrating artificial intelligence into a wide range of fields from procurement to finance, dispatching to maintenance, legal to charts. We have fostered a shared understanding to a dedicated awareness program for all employees. In addition, we have made significant progress on infrastructure resilience and cybersecurity. We have accelerated the automation systems in our substations, ensuring full IT and telecom operability for critical assets. We have also strengthened business continuity announcing cybersecurity measures. Summing up the commitment to digital transformation is a key pillar of a terminal strategy to manage the system more efficiently, proactively and at scale. This brings us to innovation. In our approach, innovation focus is on anticipating in the emerging trends, developing high-impact solutions and technologies and supporting their industrial adoption. In 2025, we developed 100 innovation projects 70 now, but then have reached industrial validation and 65 are ongoing projects. In innovation culture, pillar isn't a setback, but a source of learning. That's why even when a product does move forward, it can generate sites that strengthen what comes next. Let me briefly highlight a few projects that have already reached industrial scale validation. Grid forming technologies support system stability in a context of increasing renewable energy penetration. Operational improvement projects enhance safety and electrical infrastructure maintenance efficiency. Terna works is an innovative hub, which simplifies the data collection during site inspection and allows real-time monitoring of agreed work. Our corporate venture capital investment during the year totaled EUR 8 million in innovative start. We also obtained 9 patents. All in all, innovation is a tested process aimed at delivering transformative impact. Turning now to sustainability, Terna is committing to reducing this CO2 emissions by 46% by 2030 compared to 29%. As of today, we have reduced Scope 1 into emissions by 31%. We are also committed to setting a net 0 target by 2050, according to the science-based target initiative guidelines. We reduced the leakage rate of SF6, the insulating gas used in a shipment by 27% compared with the last year. At the same time, 92% of the group's waste would recover. The Terna Foundation is fully operational, addressing electric education and energy poverty for adjust transition. We also continue to receive remarkable external ESG recognition. Terna is among the top 1% of electrical utilities worldwide as recognized in Standard and push global sustainability or book. We have been recognized as best-in-class by sustainably peaks and as a top employer -- by the top employers institute. As you can see in 2025, Terna conformed as a global leader in sustainability. Next slide, please, and our main results. In 2025, the group delivered strong results despite a demanding comparison with the 2024. Revenues reached EUR 4.0 billion, up 10%. EBITDA increased by 7% to EUR 2.75 billion. Net income reached EUR 1.11 billion, up 5%. CapEx amounted to EUR 3.5 billion, up 31%. A Net debt reached EUR 13 million, reflecting the higher investment level. We delivered solid performance while accelerating investment. Now I hand over the CFO, for a deeper look at the 2025 figures. Please Francesco.

Thanks, Julie. So let's start as usual with revenue lines. In 2025, total revenues increased by 10%, reaching EUR 430 million. up by EUR 353 million versus last year. The growth was attributable both to regulated and nonregulated activities, which contributed from EUR 182 million and EUR 170 million, respectively. For a clearer view, let me take a closer look at the evolution of revenues turning to the next slide. Resented revenues reached EUR 3.279 billion with an increase of 6% compared to the previous year. Such growth was mainly driven by the increase in VAT. The early recognition in tariff of depreciation related to CapEx capital expenditure carried out starting from 2024. And the first money component set on the conventional capitalization rate defined under the Ross application. These factors more than offset the WACC reduction from 5.1% to 5.5% in 2025 and the lower ARPU-based incentives contribution versus last year. Nonregulated revenues reached EUR 754 million, recording a strong year-on-year growth of 29%. This performance was mainly driven by the higher contribution from the equipment segment that includes Tamini and Brocade as well as from the Energy Solutions segment, thanks to the increased volume of orders intake. Now let's go through operating cost analysis. As you can see in the chart, total operating costs stood at around EUR 1.3 billion, 15% higher numbers than last year. The regulated activities cost trend is mainly driven by the increase in labor and external costs, partially offset by higher capitalization. Excluding the IP effect, the regulated operating expenses grew at a rate below 5%, reflecting the higher level of capitalization. Non-related dynamics were primarily related to the growing activities in Energy Services, Tamini and Bupa. This growth was mainly driven by higher business activities and cost for materials and procurement. As of the end of 2025, the group's workforce amounted to 7117 employees, an increase of 797 compared with 31st of December 2024. This increase is directly linked to the need to support the execution of the ambitious investment plan outlined in the update of the 2024-2028 industrial plan and the expansion of nonregulated activities. Regarding EBITDA, further analysis on to the next slide. Thanks to the acceleration of revenue. In 2025, group EBITDA reached EUR 2.8 billion, 7% higher than the previous year. The improvement was mainly attributable to regulated activities, which contributed for more -- for about EUR 150 million more versus last year, showing an EBITDA above EUR 2.6 billion. From nonregulated activities increased by more than 30% to EUR 140 million. Thanks to a very dynamic market, this growth is mainly attributable to the Equipment segment, driven both by higher market revenues and improved margins. The other businesses, such as the Energy Solutions, connectivity and private interconnector segment also contributed to the improvement in results. Let's now look to the lower part of the P&L, turning to the next slide. D&A amounted to EUR 961 million. The increase versus last year's figure was mainly due to the impact of new assets becoming operational in the period. Net of lower impairment charges recorded during the period. As a consequence, EBIT reached EUR 1.790 billion 7% higher versus 2024. We have reported net financial expenses at EUR 1.280 billion. The increase versus last year was mainly attributable to the new financing raised during first 25 and lower financial income in the period, partially mitigated by higher capitalized financial expenses. The cost of debt was around 2.7% in the year. Taxes stood at EUR 495 million, EUR 40 million higher versus last year, and our tax rate was at 30.8%. As a result, group net income reached EUR 1.1 billion, 5% higher versus last year. Finally, let me remind you that under the dividend policy we announced in March last year, starting from 2025, the DPS is set at the higher of 2 levels, a 4% annual growth based on the 2023 DPS of EUR 33.96 per share and EUR 0.92 per share paid as 2024 dividend, which effectively represents the floor for Terna dividend policy. As a result, the proposed dividend for 2025 is EUR 39.6 per share, fully in line with our policy. Moving now to CapEx in 2025, total CapEx amounted to EUR 3.5 billion, about 31% higher than last year, demonstrating there's ability to consistently deliver on its commitments. Indeed, we invested about EUR 3.3 billion in regulated activities. Among the main projects of the period, it is worth mentioning that the links, the are -- we have areas lite Calmont gold fishing in a power line and the modernization in the locations which hosted the winter mimics in 2026. Moreover, we should also consider the investments and leaders under our defense plan, which are essential to ensure grid resilience and security, including the installation of synchro compensators, sharp reactors and dumping register system. As far as CapEx categories are concerned, development CapEx represented 60% in line with 24 of our total regulated CapEx. Deferred CapEx stood at 13%, while asset renewal and efficiency was 27%. Nonregulated and other CapEx reached EUR 193 million. This mainly included capitalized financial charges and other investments. Beyond our technical investment, let me remind that last September, we completed the acquisition from Acer of part of, covering 481 kilometers of line and 3 primary substations. This transaction supports more efficient network operations, particularly across the room metropolitan area. Now regarding net debt and cash flow analysis. Let's turn to the next slide. The net debt at the end of 2025 was around EUR 1.8 billion higher than 2024 year-end levels, primarily due to the CapEx acceleration made on the national grid and the dividend payment. Cash flow generation for the period amounted to approximately EUR 2.5 billion driven by around EUR 2.1 billion of operating cash flow and around EUR 436 million from working capital and other items. Thanks to our solid cash flow generation, we were able to cover more than 70% of CapEx spending in the period, and we estimate to reach an FFO debt ratio of around 14% in 2025. Let me give you a deeper analysis on our debt profile. Moving to Slide 22. The group's finance market is make an efficient criteria and the achievements and preservation of a solid and sustainable financial structure. With the aim of mitigating potential financial risk. Diversification funding service balance between short and medium long-term instruments as well as the proactive debt management and the hallmark of the adopted financial strategy. At the end of December 2025, we registered a fixed floating ratio on gross debt of around 78% with an average duration of approximately 6 years. This solid financial structure was further vitalized during the year by Moody's and Standard & Poor, which respectively upgraded Terna's long-term ratings to BAA1 and following a similar action on the Republic. Now turning to our sustainable financing profile, which represents a core pillar of Terna's capital strategy that lot at the lending line. Terna is the Italian leader in green bond issuance and 1 of the reference issuers in the European sustainable debt market. Today, around 80% of our funding is raised through ESG debt instruments. Our outstanding rebound, including hybrid, amount to EUR 6.5 billion, along side by EUR 4.7 billion of EB financing and EUR 2.5 billion of ESG-linked loan. These diversified structure ensures loan maturities competitive pricing and strong alignment with our regulated investment plan. 2025 marked several important milestones. We secured long-term institutional financing to support the aggressive in projects. We successfully launched our first European green bond with very strong delever. We updated our Greenbelt framework in line with evolving new standard and received the highest possible external assessment. Addition, it needs to be mentioned that in early 2026, we further strengthened our capital structure with green bond issued a record low subordination premium lab. This achievement confirms the robustness of our funding plan and reinforce Terna's positioning as a benchmark issuer in sustainable capital markets. Moving now to 2026 guidance. First, 2026, we expect revenues of approximately EUR 4.41 billion, and EBITDA of EUR 2.93 billion, representing a yearly increase of around 9% and 7%, respectively. This growth is expected to translate into higher group net income rising from EUR 1.11 billion to more than EUR 1.2 billion in 2026. This net profit guidance includes the impact of about EUR 40 million of higher era accession related to the recent energy decree. Excluding this effect, we expect the underlying 2025 net profit growth of around 5% to continue in 2026. In terms of capital expenditures, we plan to invest EUR 4.2 billion. Now I leave the floor to our CEO for the closing remarks.

Thank you, Francesco. Let me close with the 3 final considerations. First, our role in the system continues to grow. In the current context of rising geopolitical tensions, expanding renewables is key to energy independence and more stable electricity prices. And this requires continued investment in the transmission grid. Renewable sales store installations are in line with the trajectory towards the 2030 national target. Looking ahead, we see a robust pipeline of request for connection with more than 22 gigawatts of new renewable capacity already contracted. Thanks to capacity market options, system adequacy is under control. Electricity demand is growing more slowly than expected, but electrification and new consumption from data centers are coming through strongly in the near term. In this context, the transmission grid is becoming increasingly important in the role of the Tier is key to enabling the energy transition. Second, execution. With the EUR 17.7 billion of investments in our industrial plan, high level of authorized projects and strong procurement coverage, we are delivering with the discipline and visibility. We are progressing on major infrastructure projects also thanks to EUR 3.5 billion of investments during the year. Our anticipatory investments in security and grid resilience are what set our approach apart internationally. Digitalization and innovation are fully integrated into our strategy, and we are recognized as a global sustainability leaders. Finally, financial results. Over the past few years, we have combined accelerating investments with a steady growth in earnings and dividends. in 2025, results grew by 5% despite a tough comparison with the 2024. We expect this trend to continue in 2026 before the impact of additional Era and Italian regional staff come through. We have maintained the financial discipline and achieved breaking upgrades. These reflect the strength of our regulated model and our focus on execution. In conclusion, looking ahead, our priorities remain clear: deliver the plan support system security and flexibility, maintain a sound financial balance and create sustainable and predictable value. Thank you for your attention.

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

Well, let me start saying that the current geopolitical situation in the Middle East has no direct impact on Terna. Our business is regulated, and this gives us strong visibility on returns it also protects us against inflation. And in addition, our investment plan focuses on domestic infrastructure, which limits the exposure to international volatility. There may be some indirect effects mainly on the cost of key materials and supply chain dynamics -- and for this reason, we are already applying a mitigation strategies to preserve both time lines and capital expenditure discipline. Let me also recall that our regulatory framework protects us from increases in raw material prices. Since these are recognized in the regulated asset base. Looking at the broader system level, the current scenario further reinforces the strategic relevance of the energy transition and of grid development. It shows the need to accelerate progress towards energy independence. In Italy, today, this can only be achieved by focusing on renewable said investments. So overall, to conclude, we do not expect a material impact on term fundamentals -- and if anything, today's context further underlines the need for energy independence and the central role of electricity grid.

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

Well, as I mentioned earlier, accelerating the installation of renewables is the only midterm solution to increase Italy's energy independence. -- more renewables mean less dependence on imported energy and commodities business stabilize and potentially reduce electricity prices for consumers. . Replacing gas generation with a cost-efficient renewable generation secured by long-term contracts, such as contracts for difference, produces 2 main effects. The first 1 is the, I would say, electricity price Petro Nico. The puna decreases becomes less volatile and less dependent on the price of gas. We are already seeing this effect. Since 2023, the number of hours in which the Puna price fell below EUR 30 per megawatt hour has increased, rising from 57 hours in 2023 to 195 hours in 2025. On 25 May 2025, the Puna was 0 for 6 consecutive hours. The second effect. The second effect, contract for difference reduce volatility in electricity builds up. The guarantee stable revenues for generators, a more predictable procurement cost consumers regardless of fluctuations in the spot price for gas and electricity. According to GS, Italy's Energy Services operator the Felix auctions held in 2025 will generate benefits of roughly EUR 450 million per year. Thanks to the development of renewables in the medium term, only around 1/3 of the electricity deal will depend on the volatile price. Today, that share is around 2/3. Finally, to conclude, it is worth calling that transmission cost already represent a limited component of the electricity bill. Terna share is around 4% of the bill and underline this 4% because it's lower than the EU average more than offset by the benefits generated for this item.

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

Let me start by clarifying an important point. As regulated the achievement of the 2030 National Energy and Climate Plan targets we can rely on the PL forecast that reflect recent trends as well as the authorization or review results of the auctions already held. Annual renewable installations are progressing consistently with the NEP trajectory. This trajectory remains the benchmark for the pace and scale of renewable deployment in Italy. It also confirms that the annual installation rate is increasing. As of December 2025, we recorded 57 gigawatts of solar and wind capacity, with about 15 gigawatts installed in the last 2 years, an additional 22 gigawatts of new renewable capacity to be connected to medium voltage and voltage networks have already been authorized and contracted to auctions and other schemes. And in addition, in recent years, about 2 to 3 gigawatts per year have been connected to low voltage networks. And finally, we expect a new Felix auction in 2026, lucky similar insights to the present one. These projections are aligned with the targets defined in the Italian National Energy and Climate Plan which foresees 107 gigawatts of wind and solar capacity installed by 2030. So to conclude, all these confirms that the targets are reached.

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

The approval of the final Felix scheme by the European Commission is expected in the coming months. The auction calendar and the volumes to the auction will be defined once the skim received formal approval. The most recent major policy measure is the elaborate, the government decrease should on 20 February, 2026 to address rising energy costs, while also tackling structural issues in the Italian electricity system. Alongside measures the time to support households and businesses the decree introduces provisions to facilitate the integration of renewable power plants. In particular, referring to the Article 7, the Artical 7 deals with saturation of the grid, which in recent years has slowed down new connections. The decree revises how available the capacity calculated and accelerate the reallocation of grid connections that were reserved but not used within the required time frame. They're buying a freeing up capacity for new investments. And at the same time, the grid operator is required to provide more transparent and updated information while additional simplifications are introduced to speed up project integration. To conclude, in summary, there are no real bottlenecks. And the rough 15 gigawatts of new renewable capacity sold over the last 2 years prove this. But this decree should produce several positive effects. First, it will accelerate connection processes, simplify administrative procedures and also enable more efficient grid planning and implementation. This will also allow a more efficient allocation of capital.

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

As I mentioned before during the presentation, grid connection request linked to the percent development has experienced a strong growth in recent years. The volumes requested are now almost 100x the currently sold capacity. And today, requests amount to around 80 gigawatts. For this reason, the centers are expected to become 1 of the main drivers of electricity demand growth in the mid to long term. The key challenge is grid planning -- these facilities need extremely high-quality power supply, redundancy in the network and efficient authorization processes. Without early coordination, effective network planning becomes difficult, which could lead to delays and higher costs. In Italy, we have already started aligning grid planning with this expected expansion and the strong interest in developing a data center project in Italy conforms both the reliability of Terna as a system operator and also the credibility of our long-term development plan.

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

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

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

Our market-based strategy is delivering results. By focusing on businesses closely linked to energy transition, such as equipment manufacturing and Energy Solutions, we are seeing tangible growth. In 2025, a very dynamic market environment led to a 29% increase in revenues with a strong contribution from our industrial activities. Tamini recorded revenue growth of 54%, while Brooke grew by 14%, with the margins expanding significantly for both companies. And as you said, we also performed very well with the revenues up 50%, exceeding EUR 260 million. These activities are more exposed to macroeconomic fluctuations and geopolitical risks. However, Our exposure to Middle Eastern countries is limited to a few tens of millions of euros, no problem. And looking ahead, we currently expect to conform double-digit growth in our regulated activities also in 2026.

I think that probably the next question Francesco. Could you give some color about out-of-base intensives accounted in 2025?

Sure. First of all, let me remind you that the current year marked the first implementation of the new incentive team after reducing dispatching costs and which covers the 2025, 2030 period. From the first period of 2025 to '27, Terna will receive premium linked to the overall dispatching cost reduction compared to the 2023 as per MSD cost increased by an extra component, a lump sum, which is related to the newly installed community of renewable capacity. In addition, at our first half base incentives that will be recognized through mechanisms related to increased transmission capacity and efficiency in investment costs. . After reaching an almost record level in 2024, OBIs declined by over EUR 200 million in '25, reaching a level slightly below the planned average amount for the period 2025 2028.

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

Well, OBI in 2026 will remain mainly linked to mechanism for reducing dispatching market cost. For 36, considering both dispatching and interzonal and including also the potential grant incentives, we expect to book over EUR 200 million of incentives overall. .

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

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

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

If you consider on the 1 hand, the aggradations completed in January. And on the other hand, the guidance that we just provided on CapEx and net profit we can expect an increase of net debt at the end of '26, slightly below the 1 registered in 2025. This confirms that our financial position remains extremely solid also for 2026. In this sense, let me also underline once again that our CapEx plan to 2028 is fully sustainable under the financial standpoint as confirmed by a rating upgrade received in 2025. These actions confirmed on 1 end, the strength of our capital structure in the business plan horizon with on the need of additional instruments. Anyway, let me also remind that the range of flexibility tools with good value are the remaining additional capacity, which is still around EUR 1.5 billion as well as seeking additional public contributions to strengthen the financial structure and considering options to monetize our nonregulated activities.

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

Well, for 2028, our industrial plan update assumptions are based on WACC at 5.5%. This reflects a prudent long-term approach -- also considering that ARERA is expected to consult on its proposals for the WACC framework ahead of the next inventory period, which could modify also the current calculation methodology from 2028 onward. . From last market perspective for 2027, the current geopolitical situation and resulting volatility both in energy and financial markets as well as in macroeconomic conditions suggest caution in extrapolating any short-term signals. We can express on potential outcomes only in the following months. On top of that, let me add that as part of the capitation process, ARERA food indeed revised the current basket of comparable in case recent trends in interest rate spread and credit ratings persistent. Nevertheless, the regulator has not provided any indication to date that such changes are being considered.

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

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

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

Our CapEx guidance for 2026 is fully consistent with the trajectory we have outlined in our visit plan, which foresees EUR 17.7 billion of cumulated investments between 2024 and 2028. The further CapEx acceleration in 2026 is mainly driven by system needs, increasing transport capacity and I would say, the scheduling of our biggest project execution. Finally, for what concerns is that the expected investments beyond the horizon on the Development segment which is the biggest share of our investment plan. Latest national development plan provides for investments of more than EUR 23 billion over the decade of which about EUR 14 billion are expected to come from 202 and 203. On top of this, Terna will, of course, continue to invest also in the security and the renewal category.

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

Thank you very much.