Elia Group SA (ELIAF) Q2 2024 Earnings Name Transcript

Elia Group SA (OTCPK:ELIAF) Q2 2024 Earnings Convention Name July 24, 2024 4:00 AM ET

Firm Members

Marleen Vanhecke – Head, Group Communication & Popularity
Catherine Vandenborre – Interim CEO, CFO
Marco Nix – CFO
Yannick Dekoninck – Head, Capital Markets
Stephanie Luyten – Head of Investor Relations

Convention Name Members

Thijs Berkelder – ABN AMRO Oddo
Temitope Sulaiman – Barclays
Bartlomiej Kubicki – Bernstein
Piotr Dzieciolowski – Citigroup
Olly Jeffery – Deutsche Financial institution
Mafalda Pombeiro – Goldman Sachs Group
Quirijn Mulder – ING
Juan Rodriguez – Kepler-Chevreux
Harrison Williams – Morgan Stanley

Marleen Vanhecke

Good morning. It is mid-July, so it is time to take a look on the first six months of the yr. This live-streamed occasion will cowl Elia Group’s half-year outcomes. We’re honored to have some new analysts becoming a member of us for immediately’s occasion, so welcome to you. And I’d additionally wish to introduce you to the Group’s CEO, Catherine Vandenborre; and the Group’s CFO, Marco Nix. Welcome to the each of you.

What are you able to anticipate from us over the subsequent hour or so, we are going to look again on the Group’s most essential occasions and achievements from the previous six months. Catherine Vandenborre will delve deeper into Elia Group’s progress. The extra initiatives we notice, the extra folks and supplies we’d like. And Catherine will clarify how Elia Group is approaching expertise administration and the tensions skilled throughout worldwide provide chains.

Marco Nix will then take us by means of the financials and the outlook for the remainder of the yr. And earlier than we will proceed, please learn by means of the disclaimer, which is on the display screen now. You should be aware of this data. And as at all times, the slides and the script will likely be made accessible later immediately.

Let’s begin off with some photos of the intense climate that Belgium has just lately skilled. Simply over two weeks in the past, a heavy storm toppled over 9 pylons within the Mechelen space. It additionally introduced down a number of conductors, most of which ended up in fields and a few of which fell on to round 15 houses. Fortunately, nobody was injured and the safety of provide was maintained, however the fabric injury value to the native space was in depth and the restore works will take months to finish.

Our ideas are with the area people that was affected by the storm. The following video explains how our staff in Belgium addressed the incident. Maintaining everybody protected was their foremost precedence.

[Presentation]

Marleen Vanhecke

A complete of 70 pylons had been bent over by the storm and fortunately no one was injured and the electrical energy provide was not interrupted. However these occasions make us instantly consider local weather adaptation. Catherine, how can we be sure that our crucial infrastructure is ready to proceed to ship safety of provide amidst these excessive climate circumstances?

Catherine Vandenborre

Sure. That is certainly a really related query on this context, Marleen. However first, I wish to thank our operational groups for the unimaginable work they’ve been enterprise over the previous weeks. Maintaining the lights on for the good thing about society is certainly what drives us. Safety of provide has by no means been in danger and so I’m very proud to have such motivated and devoted employees in our firm. The teamwork they’ve displayed has been distinctive.

Now to reply your query, Marleen, certainly, engaged on a danger preparedness plan in order that we will adapt our infrastructure so it stays immune to local weather change is excessive on our agenda. And each good plan begins with the identification of the dangers concerned. These dangers have all been mapped out and we have now additionally carried out an audit of their attainable affect on our crucial infrastructure. This evaluation can also be a part of our work on being much more carefully aligned with the European taxonomy for sustainable actions.

Final yr, we labored with an affiliation of German analysis institutes. They’ve particular fashions which assessed the affect of sure climate phenomena on our infrastructure. On prime of that, we’re additionally engaged on a danger preparedness plan on the European stage. Consistent with the European directive, we’re establishing collaboration with six different European international locations for the electrical energy sector. To provide you an instance of what this collaboration may work on, a heatwave in Europe or excessive drought may affect a number of international locations directly.

To conclude, we have now a number of procedures in place to handle the dangers. These procedures vary from disaster administration plans to operational procedures comparable to protection plans and restoration plans. The governance and danger portion of our newest built-in annual report features a climate-related disclosure part.

Marleen Vanhecke

Thanks, Catherine. Marco, let’s briefly revisit that local weather change audit that Catherine talked about. The group has carried this out final yr. May you share some insights from that report with us?

Marco Nix

For certain. There aren’t any present indications of a rise in excessive wind speeds. Which may come as a shock given the 2 incidents we have now simply skilled. These sorts of incidents have occurred prior to now, however they’re nonetheless very uncommon. What we do know is there may be an elevated danger of floods because of the heavy rains. Bear in mind the floods that we had in Belgium two years in the past. There has additionally been a slight enhance in warmth wave stress. Nonetheless, the typical indicators for chilly spells point out that the danger of those sooner or later is comparatively low.

Marleen Vanhecke

Sure. That is audit. However what concrete actions have been taken to guard our infrastructure towards the local weather change?

Marco Nix

When it comes to floods, we carried out an evaluation of substations that face the best danger. We’re transferring our crucial infrastructure to increased positions in a few of our substations. We’re additionally setting up extra partitions in a number of locations to stop water from getting into our buildings. We’re together with warmth pumps in our new substations. These can be utilized to chill our tools down throughout warmth waves, defending it from overheating.

Though we don’t anticipate a rise in excessive winds, we’re reinforcing a few of our pylons, significantly those who belong to the 380 KV spine. Each in Belgium and Germany, we’re enterprise a big funding program which includes the set up of recent conductors alongside the present corridors that may carry extra electrical energy. Stronger pylons are wanted for this.

Marleen Vanhecke

Sure. These are all examples of adaptation measures within the face of local weather change. However when an incident occurs and infrastructure is broken, restoration plans are wanted. And to be able to put these into motion, large-scale coaching and simulation workout routines are held. The video on display screen now reveals one in every of such coaching workout routines targeted on the development of an emergency pylon. By testing out completely different disaster situations, our groups within the discipline are ready to arrange and undertake restore works in a short time.

And coming again to Mechelen, the place we began. Elia is now engaged on the deployment of a backup line. And this includes the development of 5 momentary pylons and the backup line must be operational by mid-August. The opposite restoration work that must be carried out throughout the road that has been broken will take just a few months to finish.

Let’s transfer on to a different latest occasion. Final week, Elia Group introduced it’s investing EUR12.5 million in a global enterprise capital fund, which is managed by SET Enterprise. The fund helps digital innovation within the power sector. Catherine, that is the very first time that Elia Group is investing in a enterprise capital fund. What is the rationale behind this choice?

Catherine Vandenborre

Sure. We’re certainly taking part on this particular enterprise capital fund to achieve entry to an ecosystem of European startups, that are all engaged on the digitalization of the power sector. Over the subsequent 4 years, the fund will likely be invested progressively in European startups which are growing digital applied sciences and providers and are mature sufficient to be scaled up. The choice to spend money on the capital enterprise fund is a part of our general technique concerning digitalization.

As , we’re making digitalization a precedence with three aims. First, to make actions comparable to system administration and asset administration extra environment friendly. Second, to handle the growing complexity of our enterprise linked to integration of renewables. And third, to unlock flexibility, particularly on the consumption aspect. And so by collaborating with promising startups, we will likely be staying updated with the most recent developments and latest improvements. Additionally, we have now arrange a selected inner construction to unfold the information acquired by means of these startups into our group.

Marleen Vanhecke

Okay. Let’s now transfer on to latest political developments. The European Parliament has confirmed Ursula von der Leyen’s second time period because the EU Fee’s President. In her latest speech, by which she outlined her imaginative and prescient and plans because the Fee President, von der Leyen introduced a brand new Clear Industrial Deal, which clearly emphasizes the purpose of staying on the right track to satisfy the targets of the European Inexperienced Deal.

[Presentation]

Marleen Vanhecke

Moreover, von der Leyen emphasised the significance of finishing the Vitality Union and quicker allowing procedures. Catherine, that sounds fairly promising for our enterprise, I’d say.

Catherine Vandenborre

Sure. Certainly, I feel we will say that the long-term targets of the Inexperienced Deal should not being questioned. In fact, to keep up assist for the power transition, it is clear that the Fee will likely be extra targeted on competitiveness. My studying is that this confirms that the local weather agenda will greater than ever be seen as an funding agenda.

Marleen Vanhecke

Sure. What does it imply for Elia Group sooner or later?

Catherine Vandenborre

Sure. Funding in clear power infrastructure and applied sciences will likely be given precedence and will likely be scaled up. This may, after all, cowl nice infrastructures and investments in power effectivity measures and the digitalization of the power system. There may also be a give attention to decreasing administrative burdens, simplifying and accelerating tendering processes and at last accelerating the implementation of initiatives by means of quicker allowing procedures. So the political tips which were offered by von der Leyen communicate to the very coronary heart of our enterprise and we’re actually trying ahead to supporting the subsequent European Fee in its decision-making.

Marleen Vanhecke

Certainly. And through the first six months of this yr, Belgium held the presidency of the Council of the European Union. A number of of the occasions it organized, such because the casual Vitality Council, had been supported by Elia Group. Catherine, what’s your general evaluation of the affect of Belgium’s presidency on Elia Group?

Catherine Vandenborre

The Belgian presidency supplied Elia Group with many alternatives to have interaction with related European policymakers. We organized excursions of our Nationwide Management Heart and Nemo Hyperlink converter station. This allowed us to lift consciousness of Elia Group and its work and to share a few of our consideration factors with key stakeholders. This consists of, for instance, the significance of the connection that Europe shares with the U.Okay., significantly when it comes to power. In brief, the presidency was clearly targeted on electrical energy grids, on offshore growth and on worldwide collaboration.

Marleen Vanhecke

Sure. And talking of offshore growth, Elia Group and the Danish wind farmer developer Orsted printed a joint paper earlier this yr about hybrid interconnectors entitled Making Hybrids Occur. The paper was launched throughout this yr’s WindEurope convention in Bilbao in Spain. The paper outlines methods for overcoming the obstacles that are presently hindering the event of offshore hybrid initiatives in Europe. Catherine, why are these hybrid interconnectors throughout Europe so obligatory?

Catherine Vandenborre

Sure. Offshore hybrids are a key component for guaranteeing the success of Europe’s inexperienced transition. This has been confirmed by ENTSO-E research, which point out that by 2050, as much as 80 gigawatts of offshore wind capability might be related to 2 or extra markets. Offshore hybrids are key as a result of offshore wind potential isn’t unfold out equally throughout Europe.

Some international locations have a scarcity, like Belgium and Germany, while others, like Nordic international locations, have extra offshore renewable power than they will use. Hybrid interconnectors will due to this fact assist Europe to harness the complete potential of its seas on the lowest attainable value. Nonetheless, because the paper outlines, a number of boundaries lie in the way in which of their growth.

Marleen Vanhecke

Sure. Because the additional growth of offshore wind is essential for the subsequent part of Europe’s power transition, Elia Group is engaged on a brand new viewpoint which will likely be discover the topic in some depth and this will likely be printed mid-October. The viewpoints will likely be the advantages of offshore wind and can embrace proposals and proposals associated to planning and financing in addition to the strengthening of the provision chain. It is due to this fact one thing to look ahead to.

Marco, we simply coated a few of Elia Group’s venture highlights from the primary half of the yr, however what concerning the Group’s figures?

Marco Nix

Thanks, Marleen. It is essential to say that the Group had a document begin when it comes to investments. Elia Group invested EUR1.7 billion through the first half of the yr, of which EUR458 million in Belgium and EUR1.3 billion in Germany. We’re effectively on monitor and are delivering on our CapEx plan. The important thing drivers of this funding plan stay the reinforcement of the worldwide — inner spine and the connection of offshore wind to our grid in Belgium and Germany. We’re additionally persevering with to digitalize our operations.

When it comes to monetary consequence, Elia Group achieved a robust efficiency, resulting in a rise within the web revenue Elia share of 11.8% to EUR181.6 million. Turning to our nonfinancial KPIs. And on the first dimension of our sustainability program, ActNow, Elia Group has proven — has now developed its personal scope-free carbon accounting platform on the SAP Enterprise Know-how platform.

This permits for transparency concerning the carbon footprint of our funding actions and has enhanced the maturity stage of our scope-free information. We have now been moreover awarded for the innovation earlier this yr and extra essential, have achieved our group-level goal of a minimal of 60% spent.

For the seventh time in a row, Elia was acknowledged as a prime employer in Belgium. Its rating this yr rose to 90%. Elia made most progress when it comes to range and inclusion and wellbeing groups. 50Hertz has additionally demonstrated its enchantment as an employer in Germany, with over 200 people becoming a member of the corporate through the first half of the yr.

Lastly, we additionally acquired the boldness from our shareholders to have approved capital, permitting the Board of Administrators to extend the capital topic to sure circumstances. This gives us additional flexibility in structuring our future capital elevate.

Marleen Vanhecke

Sure. And the primary half of the yr was additionally fairly busy regarding financing actions. Marco, may you present us with an outline?

Marco Nix

Completely. As illustrated effectively on the slide, our groups have been very busy. All through this era, we efficiently carried out quite a few transactions, elevating a complete of EUR3.2 billion within the debt capital markets and securing new liquidity of EUR4.2 billion throughout the group. The proceeds from the inexperienced bonds issued by ETB and EuroGrid are allotted in direction of financing the CapEx applications and facilitating the power transition.

We additionally elevated the revolving credit score services, that are meant to strengthen and improve the liquidity profile of the group, thereby making our corporations extra resilient and sturdy. Lastly, the issuances by Elia Group are used to finance the group’s progress alternatives in energyRe Giga and EuroGrid. Total, these transactions spotlight the group’s means to safe funding for financing its progress. Additionally they underscore our dedication to diversify our credit score investor base, incorporating sustainability into our monetary technique and sustaining prudent monetary administration to the good thing about all stakeholders.

Marleen Vanhecke

Thanks, Marco. Let’s take a more in-depth look now on the document quantities when it comes to the implementation of our CapEx program. On the subsequent slide, you will see an outline of the previous yr and it is clear that the investments within the first six months of this yr have gotten off to a document begin. Catherine, what has been the affect of this on the group?

Catherine Vandenborre

Ship, ship, ship. That is our motto. It reveals that our bold funding program is in full swing. And it is truthful to say, Marleen, that there’s some stress on the group to ship its venture on time to a excessive customary of high quality and inside finances. However that progress did not occur in a single day.

We have now been capable of put together for it. On condition that the problem years we face will proceed to be important over the approaching years and provided that we need to maintain our additional progress manageable, we’re focusing closely on digitalization and innovation, attracting new and gifted folks to work for us, securing our provide chains and at last strengthening our monetary foundations.

Marleen Vanhecke

Sure. You talked about attracting new and gifted folks to the group. And this yr, the full workforce is predicted to extend to three,754 workers. By the top of the yr, a powerful 458 new workers ought to have joined us. 200 of them will work solely in Berlin. And to supply these newcomers with an acceptable workspace, our headquarters in Berlin are presently being expanded.

The topping off ceremony was held in April. And this marked a profitable completion of the shell building work. The brand new constructing must be able to host its first workers by subsequent summer season. And as soon as prepared, the brand new constructing may also host a baby daycare middle.

Sure. And let’s briefly revisit the variety of 458 new workers. Within the subsequent video, our heads of HR, Peter Michiels and Sylvia Borcherding, clarify how Elia Group is attaining this goal amidst a aggressive battle of gifted people.

[Presentation]

Marleen Vanhecke

And when it comes to all of the vacancies that wanted to be crammed through the first half of the yr, 1/3 was crammed in by inner folks transferring to a brand new place. 1/3, Catherine, that is so much.

Catherine Vandenborre

Sure, certainly. However that is a optimistic factor, I imagine. We’re massive buyers in folks. We’d like workers with excessive quantities of experience and we make investments strongly in coaching them by way of Elia Group’s academies. So in case you spend money on folks, you favor preserving them. Inside mobility is a vital a part of our retention coverage. At the moment, we have now a turnover fee of two%. In comparison with the market, that is very low and we need to maintain it like this.

Marleen Vanhecke

Certainly. And let’s zoom in now on our dwelling international locations. And we’ll kick off with Stefan Kapferer in Germany. A brand new document in renewable power integration was achieved through the first half of this yr, and a few of 50Hertz’s key initiatives are effectively underway.

[Presentation]

Marleen Vanhecke

With the overview of the previous six months in Belgium, let’s begin with an replace concerning the Princess Elisabeth Island, our flagship.

[Presentation]

Marleen Vanhecke

Sure, Frederic already referred to it. One present challenge, particularly through the summer season months, is adverse electrical energy costs. The following slide clearly demonstrates that through the first six months, extra adverse costs occurred over extra hours than they’ve carried out in earlier years. That is primarily because of the enhance in photo voltaic power. In its summer season outlook, Elia highlighted the issue of overproduction or incompressibility. Elia known as on market events to remain vigilant over the summer season months. Catherine, how did the market reply to this name for motion?

Catherine Vandenborre

The reply to this query is thus far, so good, Marleen. And so market events are certainly answerable for guaranteeing the steadiness between provide and demand of their respective areas. Elia gives them with all the knowledge they should be ready and meet their duties.

Market events are responding very effectively to a name and they’re avoiding overproduction. In the long term, the reply to those conditions comparable to this may, after all, be extra and automatic flexibility. The excellent news is that each the power sector and policymakers are conscious of the issue. So I see this as a wake-up name for extra flexibility.

Marleen Vanhecke

Sure. We have now supplied our viewers with updates about many matters thus far, Catherine, however there may be nonetheless one query lacking. What a couple of new Elia Group CEO?

Catherine Vandenborre

Sure. Certainly, and the method for locating a brand new CEO is ongoing and progressing effectively, however the nomination committee and the Board have not taken a choice but. We anticipate to have extra information to share with you after the summer season break. It goes with out saying that as quickly as a choice has been taken, we are going to announce the title of Elia Group’s new CEO, Marleen.

Marleen Vanhecke

Sure. So we have now to attend a little bit bit extra, we have now to be a little bit bit extra affected person. Fortunately, we do not have to attend for the figures, Marco, the monetary figures. It is your flip now. What are you able to inform concerning the Group’s outcomes?

Marco Nix

Certainly, Marleen, let me stroll by means of our half-year outcomes. Elia Group reported robust outcomes throughout all segments. The Group revenues quantity to EUR1.9 billion, a slight enhance in comparison with prior years. In Belgium, revenues elevated by round 16%, as revenues had been primarily impacted by the next regulated web revenue, elevated depreciations and elevated web monetary prices.

In Germany, revenues decreased by round 7%, primarily attributable to decrease power costs impacting revenues from incentive regulation and power revenues. This was partially offset by elevated revenues from offshore surcharge attributable to ongoing offshore investments. The rise in different revenue because of the increased employees ranges to handle the funding program added to that.

Elia Group’s web revenue rose by 9.6%, reaching EUR218.8 million. ETB’s revenue elevated by EUR15.5 million, primarily attributable to increased fare remuneration and efficiency incentives. In the meantime, 50Hertz transmission had a steady web revenue of EUR112.3 million, pushed by asset progress and better base-year revenues, though the decrease regulatory return on fairness on property previous to 2024.

The non-regulated phase and Nemo Hyperlink recorded a rise of EUR3.9 million because of the increased contribution of Nemo Hyperlink, regardless of increased prices incurred for WindGrid and the financing of the energyRe Giga transaction. Put up non-controlling curiosity and hybrid prices, the web revenue Elia Group share elevated by nearly 12% to EUR181.6 million, leading to a double-digit EPS progress per half-year.

Allow us to now flip to the funding of the Elia Group. Debt issuance, backed by operational money flows, remained the principle supply of funding in 2024. As of the top of June, our web debt excluding EEG was about EUR10.8 billion, indicating a 19.8% enhance from the yr’s finish. This enhance is essentially attributable to our first half investments of EUR1.7 billion.

Moreover, the Group’s funding in energyRe Giga was financed by means of debt, which pushed the Group’s value of debt up by 69 foundation factors to 2.8%. Our present excellent debt is primarily fastened fee, except EUR300 million time period mortgage that’s absolutely hedged at 3.5%. The credit standing of the Group stays unchanged at BBB flat with a steady outlook.

Marleen Vanhecke

Sure. That is for the Group. You have got talked about robust outcomes throughout the three segments. Allow us to possibly first zoom in on Belgium.

Marco Nix

Positive. We touched on the revenues earlier, so allow us to go straight to the web earnings. The adjusted web revenue in Belgium elevated by 18.7% to EUR98.6 million. First, the truthful remuneration elevated by EUR14.8 million, pushed by the elevated RAB, increased return on fairness and elevated fairness. As , a brand new regulatory interval began in Belgium with an essential change meaning our fairness remuneration now features a revaluation mechanism that’s linked to the typical 10-year Belgium authorities bond, the OLO.

The common 10-year OLO is predicted to be round 3%, surpassing the fastened 2.4% risk-free fee that was utilized through the previous regulatory interval. Second, ETB additionally noticed a rise in incentives, up EUR1.7 million, because of the stable operational efficiency. We additionally noticed increased capitalized borrowing prices, up by EUR3.9 million, from extra property beneath building. Nonetheless, this was barely offset by increased regulatory settlements and the reversal of provision for the influenceable incentive, down by EUR4.5 million from the 2023 saldi overview.

Marleen Vanhecke

Sure. You already talked about the growth of the asset base and in addition the issuance of a bond this yr. What has been the affect of this on ETB’s monetary place thus far?

Marco Nix

We start the yr by issuing a second inexperienced bond for ETB and strengthen our liquidity place with a brand new sustainability-linked RCF of EUR1.26 billion. ETB maintains a balanced debt maturity profile, with all excellent debt carrying a set coupon. The common value of debt elevated by 31 foundation factors to 2.3%. ETB’s liquidity state of affairs is stable, with each the sustainable RCF and industrial paper remaining absolutely undrawn as of the top of June. ETB’s credit standing remained unchanged at a BBB+ with a steady outlook.

Marleen Vanhecke

Okay. That was Belgium. Now let’s shift our focus to Germany. A brand new regulatory interval has began there. What has been the affect of this on the primary half of the yr?

Marco Nix

This era is characterised by an fairness renovation for brand new property, which is now linked to a base fee and a danger premium, whereas for investments made earlier than 2024 there’s a fastened fee established ex ante for the interval. For these property, the return on fairness post-tax is about at 4.13% and for investments as of January 1, 2024, present expectations are shut to five.7%. The consequence got here in flat year-over-year, amounting to EUR112.3 million. This was largely a results of a few key elements.

Firstly, there was a rise in base yr revenues of EUR22.2 million. This was because of the up to date value allowance that got here with the beginning of the brand new regulatory interval and is masking the EUR17.2 million increased prices we confronted. Secondly, the expansion in property led to the next funding remuneration of EUR10.1 million. However this has been offset by increased depreciations and monetary prices.

Allow us to take a look on the liquidity. In 2024, Eurogrid made additional steps in strengthening its liquidity place according to its funding plan by persevering with to faucet into the bond market. We issued a twin tranche of inexperienced bonds totaling to EUR1.5 billion. We additionally elevated our liquidity initially of the New 12 months by securing new revolving credit score services price EUR3 billion. Because of these transactions, the typical value of debt rose to 2.8%, which is a 79 bps enhance in comparison with the top of 2023. As of June 2024, Commonplace & Poor’s fee Eurogrid’s credit standing as a BBB flat with a steady outlook.

Marleen Vanhecke

Okay. Allow us to now shift to the third phase, the non-regulated phase and Nemo Hyperlink. What highlights are you able to share there with us?

Marco Nix

Stable outcomes additionally for our third phase, with the web revenue growing by EUR3.9 million, bringing it as much as EUR7.9 million. This primarily resulted from a number of key elements. Firstly, there was the next contribution from Nemo Hyperlink amounting to a rise of EUR11.5 million. With the beginning of a brand new 5-year evaluation interval, Nemo Hyperlink’s contribution was presently not restricted by its cumulative cap as this was the case in 2023, leading to the next web contribution for the group regardless of the decrease revenues. Nemo Hyperlink has operated at 100% capability because the begin of the yr.

Secondly, there was an elevated contribution from EGI because of the improved margin administration, which added EUR1.1 million. Nonetheless, these positive factors had been partially offset by just a few elements. There was the next value for the holding, which elevated by EUR8 million. This was primarily because of the increased funding prices related to the acquisition of energyRe Giga and the financing of the natural progress in Germany.

Lastly, WindGrid contributed negatively with a EUR2.5 million. This consists of the fairness pickup contribution from energyRe Giga, which presently has numerous initiatives beneath growth. Elia Group has entered the market with a time period mortgage and a senior bond to finance its natural progress in Germany and its funding in energyRe Giga.

As beforehand introduced, the Group intends to allocate EUR480 million of debt to fund the fairness contribution into Eurogrid. After these two transactions, the price of the holding for the money owed stands at 3.8%, with a weighted debt period of 5.9 years. Concerning liquidity, each the CP and the RCF industrial paper and revolving credit score facility had been fully undrawn on the finish of June.

Marleen Vanhecke

Sure. Final however not least, we nonetheless must cowl the outlook for 2024. What can we anticipate there?

Marco Nix

Certainly, primarily based on a robust efficiency within the first half yr, we have now revised the complete yr web revenue vary steering upwards. We venture that by the top of 2024, the web revenue share of Elia Group will vary between EUR355 million and EUR395 million. This factors in direction of an adjusted return on fairness of between 7% and eight%. Analyzing the completely different segments, in Belgium we goal for a web revenue between EUR200 million and EUR220 million, factoring in a Belgium 10-year OLO of round 3%. We plan to speculate roughly EUR1.4 billion.

In Germany, we goal for a web revenue between EUR260 million and EUR290 million, factoring in a base fee of two.79% for regulatory return on fairness, whereas investing roughly EUR3.3 billion. The non-regulated phase and Nemo Hyperlink is predicted to report a loss to the Group’s end in a variety between minus EUR30 million and minus EUR35 million.

Whereas Nemo Hyperlink is predicted to contribute round EUR30 million revenue, relying on the provision of the interconnector, the operational actions and venture funding of the holding and the opposite non-regulated actions like WindGrid and energyRe Giga will doubtless end in a loss ranging between minus EUR40 million and minus EUR45 million.

Lastly, the Group secured its funding for the German CapEx plan and different funding wants, pointing in direction of a funding value of round minus EUR20 million. As typical, this steering don’t contemplate any potential M&A transactions.

So in a abstract, a robust first half yr with stable outcomes led us to carry up the web revenue steering in direction of year-end. That is primarily based on the ramp-up of the CapEx initiatives within the first half yr, the proactive funding of this CapEx plan and the robust operational efficiency regardless of some challenges. All of those elements contribute to our confidence in attaining these targets.

Marleen Vanhecke

Thanks, Marco. Earlier than we transfer on to the Q&A, Catherine, I wish to invite you to share some closing ideas with us. What would be the factors of focus within the second half of this yr?

Catherine Vandenborre

We have now outlined 5 factors of focus. CapEx supply stays the principle focus, together with the strengthening of our monetary foundations. Expertise administration and provide chains are essential areas of focus when it comes to attaining our ambition. And eventually, digitalization to unlock the flexibleness within the system is essential.

Additionally, after the election, we are going to spend money on constructing relationships with the brand new policymakers at Belgium and European stage. Our new research on the longer term power combine in Belgium and the way forward for offshore growth will definitely be attention-grabbing areas to discover and talk about with them.

Marleen Vanhecke

Sure. Certainly, the second half of the yr is presenting itself as busy, however attention-grabbing, as at all times, I’d say. I recommend we now transfer on to the Q&A bit. In a second, we’ll do a place change as a result of Yannick Dekoninck, Head of Capital Markets, will take my place through the Q&A session. Stephanie Luyten, our Head of Investor Relations, will information us by means of this Q&A session. Stephanie, may you already share the primary query with us, please?

Query-and-Reply Session

A – Stephanie Luyten

Sure. Good morning, Marleen. [Operator Instructions] We’ll go in an alphabetical order and begin with ABN AMRO. Thijs, please go forward together with your first query.

Thijs Berkelder

Congrats. Nice presentation regardless of, for instance, all the issues you counted with the storms. My first query is totally on web debt. Web debt on the first half was barely increased than consensus. Are you able to, once more, give steering for the place you anticipate to finish the yr? Beforehand you mentioned round EUR13 billion. Is it now extra more likely to turn into EUR13.5 billion or EUR14 billion? And relate to that, are you able to additionally possibly give steering on what we must always anticipate from the EEG money within the coming months?

I’ve seen the massive debates in Germany on the best way to fund the TSOs. Is that this stage of round, for instance, EUR500 million now the extent we must always search for? And possibly closing query for now. I am lacking on this press launch or on this presentation a repeat in your required fairness for the approaching years in addition to on the anticipated timing of that fairness elevate. Is it busy altering or is it nonetheless because it was earlier than?

Yannick Dekoninck

Thanks, Thijs. I suggest that I take the query on web debt after which give the ground to Marco for EEG and fairness. So certainly, Thijs, for the top of yr, we anticipate to finish the web debt of round EUR13.3 billion, so fairly near the indication we have now supplied throughout our Capital Markets Day. In your query on the EEG, Marco?

Marco Nix

Sure. Joyful to take it. Not too long ago, authorities selected an additional finances in 2024 and on the finances on 2025 already and each embrace a major lift-up of the quantities foreseen for the EEG funding. So that’s one thing we nonetheless can rely on, that the distinction between the market worth and the sub-venture scheme will likely be equalized by the federal government, that means that when it comes to projection in direction of year-end, the mechanism which we presently have in place, which features a slight liquidity hall, will proceed as it’s immediately.

So your indication that there’s a form of surplus on the finish of yr is one which we’re counting on, because the mechanism has not been modified and the funds can be found to a level. Moreover, on the web debt, Yannick already identified that probably each entities will keep lively on the debt market, so each ETB and Eurogrid, whereas we’re confirming that we’re not tapping into fairness market in 2024.

So that’s nonetheless legitimate. As we just lately achieved the authorization, we at the moment are engaged on with the Board of Administrators on a concrete plan, as there are a number of features to think about. One is, after all, the deployment of the capital as effectivity is one thing which is a big driver, which we’re following, after all. Market capability is one other one, momentum too and all these features are thought of within the plan. So it is too early now to announce how we’re going to faucet the market.

Stephanie Luyten

Thanks very a lot. I feel, Thijs, that solutions your entire questions. If it is okay, then let’s transfer on to Barclays. Temi, please go forward.

Temitope Sulaiman

Congrats in your robust set of outcomes this morning. I’ve bought two questions, please, one on steering and I feel you partly answered the second on capital elevate. On steering, simply on Germany, it appears to be like like your assumptions for CapEx and base charges are the identical from the CM deal earlier this yr. Is it truthful to imagine the step-up within the web revenue majorly comes from incentives, or are there different issues to form of take into consideration on that aspect?

And simply on the capital elevate, I hear you are still trying on the plans and occupied with numerous issues. Is it — do you’ve gotten an thought of timing as to once you would have accomplished that course of? Will you perceive nothing that motive itself is not occurring this yr, however as to once you would have accomplished the method of pondering by means of your choices, when do you suppose that could be?

Marco Nix

Effectively, possibly to choose up the steering on Germany. It is truthful that we elevated primarily the steering in Germany, which comes from two foremost elements. On one hand, as we identified, the robust operational efficiency is slightly sturdy, one thing we depend on and we do see, regardless that we incorporate already some quantities for the storm damages, that we’re persevering with to outperform the bottom yr revenues in that regards. Moreover, down the street, the effectiveness of the brand new employees employed and the charging to the funding applications is one thing contributing to that efficiency as effectively. In order that’s one of many fundaments.

And the second is when it comes to the CapEx, that we’re optimizing the schedules to some extent that may profit from sure optimization, specifically in relation to the commissioning states in a number of initiatives, as that is contributing to the outcomes considerably as being quick in commissioning is a profit for each money technology and earnings.

Catherine Vandenborre

When it comes to capital enhance, I’ll take it this time. So mainly, the reply is not any change right here as in comparison with what we have now mentioned prior to now. No change when it comes to timing. Like Marco talked about, you in all probability have seen within the press that we have now the authorizations when it comes to approved capital, however that there’s additionally a date on this authorization, which makes that on the earliest a capital enhance may happen in 2025, which is confirming what we mentioned prior to now when it comes to timing.

When it comes to quantities, no change right here is neither. We’re nonetheless considering over the 5 years, maybe one thing between EUR4 billion to EUR4.5 billion in fairness or equity-linked devices, like we mentioned within the Capital Market Day. We’ll take into accounts, after all, profitability, which is a vital component, understanding that these funds should be invested within the funding base that will likely be constructed over the 5 years’ time interval. And we may also, like Marco simply mentioned, contemplate the market capability. In the mean time that we imagine there’s something extra concrete we will inform the market about, we are going to do.

Stephanie Luyten

Thanks, Temi, on your questions. Let’s now go to Bernstein. Bartlomiej, it is as much as you.

Bartlomiej Kubicki

Just some very brief ones, technical ones. On the storms and general the local weather change, what are the regulatory mechanisms guaranteeing that you’re getting again all the prices incurred through the storms? I imply, are there regulatory mechanisms guaranteeing that you’re getting again 100%? Or are there mechanisms like insurance coverage funds, which make you mainly even on any, let’s name it local weather change impacts in your outcomes?

Secondly, if we have a look at your procurement, you spoke so much about this, however may you really inform us how a lot of your FY 2024, FY 2028 marketing strategy is already procured? And consequently additionally, if there may be any CapEx overrun, would it not be 100% mirrored in your RAB or you’re really operating a danger of underperforming in your CapEx?

And possibly final query on this capital enhance, not asking concerning the timing, however asking about your pondering, if there was a strategic or industrial participant wanting to have interaction in you as a minority participant, would you contemplate this or is it one thing you’re completely excluding?

Marco Nix

Okay. Let’s begin so as, you elevate the questions and with the storm damages, it is truthful to say that there is no such thing as a clear reply on that one, as partly we probably will endure from that. As specifically in Germany, we already embedded sure prices, which we probably want to hold. On the opposite aspect, on the substitute, we’re comparatively assured that these prices will likely be thought of as throughout the asset base, as we’re normally capitalizing an enormous portion of that replacements. So there’s a combined reply in that regard.

So moreover, down the street, the insurance coverage fee is one thing which probably we take a look at in Belgium. As in Germany, these outdated traces should not insured anymore, because the guide worth is zero on these traces and we determined a few years in the past to not insure anymore. Combined reply as effectively. So there will likely be one thing we have to carry throughout the system. On the opposite aspect, we do have some buckets the place we will allocate the fee to and are assured that there’s a protection related to that, so.

Catherine Vandenborre

Possibly if I can add for Belgium, since you described the state of affairs primarily for Germany. So for Belgium, the traces in query had been insured. And so primarily based on the present insurance coverage coverage, we’ll first need to do all the things we will to get better these quantities from the insurance coverage firm. Second, in case of recent investments to be carried out and after the deduction of the fee of the insurance coverage corporations, these will enter the hub. And the fee that we will do in urgency are seen as OpEx prices and are, for instance, getting into within the quantity of the OpEx prices like they had been talked about prior to now in the meanwhile of the primary steering. So we do not anticipate for Belgium a robust affect on the profitability of the corporate after this occasion. That is for the primary query.

Marco Nix

Then possibly we choose up the CapEx overrun as presently — so long as we may give proof that these prices are market-based and that is one of many foremost the reason why we’re utilizing public tender procedures on that one. All the prices are thought of within the RAB, so there is not any minimize on that one as there is not any finances logic. So it is a consideration within the RAB and the idea of the remuneration and the depreciation will enhance by these prices. That is the state of affairs the place we’re each in Belgium and in Germany on the CapEx aspect.

On the procurement, I feel the dedication is growing year-by-year. So normally, the frontier is, after all, a lot increased dedicated and we at the moment are getting into into extra commitments over the yr. To date, the full disclosure, which we have now made by finish of final yr was round EUR12 billion on the EUR30 billion CapEx program and that is additional growing. However, after all, it is transferring on a regular basis by one yr, and with the land win as an example, the dedication goes up considerably, understanding that not all of those prices, as an example, will happen within the 5-years’ horizon.

So it is a little bit bit exhausting to say how a lot of the EUR3 billion will likely be affecting the 5 years’ horizon, however taking the truth that till 2030, 2032 this venture shall be completed, you possibly can assume that a good portion will likely be added to our commitments. And that was one of many main causes to extend the liquidity, so the revolving credit score services, as this must be backed from the ranking standpoint by accessible liquidity. So then the query on — do you need to…

Catherine Vandenborre

The query of an [indiscernible], so in case that we’d spend extra on the funding that was initially budgeted, I feel on this one, first we have to show to each regulators that we’re appearing in an expert approach, in order that we do all the things attainable to purchase at market circumstances, which we’re doing by definition by organizing tenders after we contract for supplies, but additionally for works by third events and supplied, after all, that we will show this — the fee linked to the funding, the quantity that we pay to suppliers, will certainly enter the regulated asset base in each laws.

In fact, with the growing quantities, we will anticipate the next scrutiny from the completely different regulators. We are able to anticipate to need to justify all the things. However as a precept within the regulation, it’s extremely clear that the funding that we have to do for the good thing about your complete society, that these investments are getting into the regulated asset base. That is on your query on attainable overrun, so coated within the regulatory mechanism.

After which the final query on attainable minority investor. I’d reply that at this stage and having in thoughts the 5-years’ time horizon, we do not exclude any situation. I am, after all, not saying something for the brief time period. However in case you have a look at the state of affairs over the 5 years, that is a situation that we’re not clearly excluding.

Stephanie Luyten

Thanks very a lot. I feel let’s now transfer to Citi. Piotr.

Piotr Dzieciolowski

I’ve a few questions round your elevating capital technique. So firstly, I wished to ask you concerning the tenet. We have seen that the transaction with the German authorities failed and probably the asset might find yourself out there. Would that change your technique as a result of basically you compete for a similar pool of capital? So — and due to this fact, are you 100% certain that 2025 is the primary time you are going to elevate capital? And why do you lock your self into this timing? So that might be on the tenet.

And second, is there a constraint across the timing of your capital enhance associated to the funds of your foremost shareholder? And might you give a little bit of readability on the state of affairs on this entrance? And eventually, a small technical query. So that you gave us steering on the year-end web debt, however what’s the form of the financing fee you anticipate on this EUR13.3 billion debt?

Catherine Vandenborre

So thanks on your query. The final one, in case you may repeat the primary and the second query, we have now clearly understood, however the final query was not fully clear to us within the room.

Piotr Dzieciolowski

Sure, I simply wished to grasp what’s the financing fee you anticipate on the EUR13.3 billion web debt, how a lot it can enhance farther from present stage?

Catherine Vandenborre

Are you able to begin with this one after which…

Marco Nix

Sure. I feel that general, at group stage in our press launch, we have now indicated what’s presently our common value of debt. I feel that is fairly clearly talked about as effectively. We nonetheless must do some financing this yr in a comparatively restricted measurement on the stage of ETB, however we additionally want to come back again later this yr at Eurogrid.

Now after we have a look at the present lease charges we’re available on the market, contemplating that ETB is rated a BBB plus ranking, we expect a fee which is within the magnitude of the three.5% for Eurogrid because it’s rated BBB. We anticipate that will probably be barely increased, though we nonetheless want to find out what could be the maturity at which we’re issuing and in order that may also be thought of relying available on the market circumstances.

Catherine Vandenborre

On the query on the capital enhance. So in your first query, there have been two components. It was a component on the timing and it was a component on, for instance, tenets affect when it comes to capital enhance that we will do. When it comes to timing, I feel the one assertion that we gave is that there will likely be no capital enhance in 2024. That is one thing that we affirm as soon as once more immediately. That is one thing additionally that you’ve got seen in all probability within the provisions for the approved capital the place the primary date by which we may do a capital elevate is within the yr 2025.

Can we have a look at evolution concerning the tenet file? In fact, when it’s good to go into the marketplace for elevating capital, it’s good to have a look at the surroundings and what’s coming round of you. We’re doing that, after all. That being mentioned, we imagine that the profile of Elia Group is barely completely different, fairly a little bit bit extra diversified when it comes to regulatory dangers, whereas we acknowledge on the identical time that there are large wants for capital in each corporations and in different TSOs as effectively. And that is one thing that we have to take into accounts after we begin reflecting on the proper timing and the correct amount for doing the capital enhance.

When it comes to foremost shareholders, so the PBT, to call them, they continue to be very dedicated to the technique of the corporate. That is one thing that we’re repeating and that they’re confirming each after [indiscernible]. They’re additionally very dedicated to subscribe to capital enhance. In order that’s one thing that we mentioned prior to now and that we affirm for the second that there will likely be an operation out there.

Stephanie Luyten

Thanks, Piotr, on your questions. Let’s now transfer to Degroof. [Chad] (ph), please go forward. Are there any questions from the aspect of Degroof? If not, we will transfer to Deutsche Financial institution. Possibly, Olly, please go forward.

Olly Jeffery

Two questions for me, please. The primary one remains to be specializing in the potential capital elevate. The primary a part of that’s, does the incoming new CEO, whoever which may be, will which have any bearing on when the timing of the elevate occurs? The second query across the fairness elevate is, how is your pondering when it comes to would you slightly — we spoke about beforehand how your capital — your CapEx plans enhance materially in direction of the top of the plan.

And so then ideally, you may look to lift probably in two tranches, one initially of the plan and maybe a bigger quantity on the finish of the plan, given the CapEx phasing. Is that the proper approach we must always give it some thought, or is that also up for debate? After which the final query I’ve is on for Eurogrid, how a lot fairness are you planning to push down and inject into that enterprise this yr? In case you can present any element there, that might be useful.

Catherine Vandenborre

So I’ll take your first two questions, trying on the staff, as a result of possibly you need to reply a few of them as effectively, however I’ll — after which I’ll certainly — you possibly can complement afterwards and take the final one. So when it comes to capital enhance, I feel that the quantities and the sequencing of the capital enhance are actually pushed by the funding of the CapEx plan, slightly than on issues linked to at least one particular person.

In fact, a brand new CEO will have a look at the state of affairs, will perceive and have to grasp all the things. However actually, I feel that the drivers behind the capital enhance are very a lot linked to technique of the corporate and are very a lot linked to the funding program that we have now each in Germany and in Belgium. So I do not anticipate a fabric affect linked to that.

Second component — second query that you simply raised was about, for instance, in case you do a capital enhance, is it one thing that possibly you’ll do in a single shot? Is it one thing that you’ll unfold a little bit bit over the interval? So like we mentioned, it is not one thing on which we have now taken a agency choice immediately. I feel it was Marco’s first assertion. That being mentioned, there are certainly numerous issues that are fairly excessive on the agenda and particularly two issues that had been already named.

The primary one is profitability. And just like the profitability is linked to the investments and so the timing by which these investments are carried out. And the second is market capability. So ranging from the present market worth, market capitalization that we have now, what’s market capability from the market? In order that will likely be considered. And as soon as once more, as soon as there may be clear and concrete data to say, we are going to include this data. Then if it is okay for you, I’ll give the ground to Marco.

Marco Nix

Sure. On Eurogrid, the query on the capital injection this yr, I feel in the midst of the presentation, we named the quantity which has been raised by way of the debt issuance of the Elia Group this yr, the place EUR480 million are foreseen to push down into fairness of Eurogrid. And in case you take the 20% portion of KfW on prime of that, you are ending up with EUR600 million. And as we bought affirmation that German authorities and KfW is following that, that is the dimensions you possibly can anticipate as an injection within the German phase this yr.

Stephanie Luyten

Thanks, Olly. I see now that Degroof managed to get his headset working. So [Gert] (ph), please go forward.

Unidentified Analyst

So I simply have one query. It is concerning the VC funding did weeks in the past. So I actually need to perceive really what is the ambition with the VC portfolio of Elia? What do you anticipate to focus on when it comes to 5 as an example?

Catherine Vandenborre

Sure. So first component when it comes to ambition is to get entry to new applied sciences, new providers, new developments surrounding digitalization of the electrical energy market and so growing the chance to unlock the flexibleness. So managing in numerous methods primarily consumption of electrical energy. You already know that is one thing that we have now already mentioned prior to now, that with the rise of renewable out there on the technology web site, there may be actually a necessity for managing the electrical energy system in numerous approach, balancing the system in numerous approach. And in that context, ensuring that consumption is made rather more priceless than what it’s immediately, immediately is completely key.

And the way in which to go there may be by growing the digitalization within the electrical energy system. So growing connectivity, information seize, algorithm and constructing an ecosystem that may result in unlocking this flexibility. That is what we need to do. We need to stay forward of all technological developments. We have now constructed a really particular construction to be sure that the information that we will achieve by means of the participation to numerous committee throughout the fund, that this information is introduced again throughout the whole group with numerous individuals who have been recognized and who’re answerable for bringing this data again.

However so first is to be sure that we have now all the required information to optimize the flexibleness and the unlocking of the flexibleness within the system. The second component, after all, is that by doing this, we stay knowledgeable about the very best startups that are lively on this market. And we will extra simply do numerous contracts with these startups or presumably, in an extra take, small participation as a way to be sure that these developments linked to unlocking the flexibleness, that these developments are accelerated.

Stephanie Luyten

Thanks, Gert, on your query. Let’s now — you’ve gotten a follow-up query?

Unidentified Analyst

Sure. Simply my second query was concerning the anticipated goal measurement sooner or later within the VC portfolio of Elia. So immediately it is EUR12.5 million invested as a primary funding in VC. However what do you anticipate sooner or later? Do you see like different investments or…

Catherine Vandenborre

No, it is not one thing — so in the interim, let’s first construct the reference to these startups. Let’s first be sure that we will certainly profit from the information which are developed by these startups and convey it again throughout the firm.

Let’s first be sure that we certainly do numerous operational contracts to assist the unlocking of the flexibleness. After which we are going to reassess the place. However within the subsequent three years, you possibly can contemplate that the quantity that we have now and the funding that we have now carried out is the one one that we are going to do.

Stephanie Luyten

Thanks, Catherine. Let’s now transfer to Goldman Sachs, Mafalda. Do you’ve gotten any questions for the staff?

Mafalda Pombeiro

I’ve two fast questions, if I’ll, on Germany regulation. The primary one could be simply to substantiate if there’s any parameter that’s nonetheless pending on this aspect? And if that’s the case, what could be the timeline to — for it to be absolutely finalized? And the second is whether or not you, Elia, has any expectations of partaking in additional discussions a couple of potential overview of the ROE for the present property? I am asking this as a result of a few of your friends appeared prior to now eager to have interaction in additional discussions and wish to perceive what’s your stance right here?

Marco Nix

Possibly I choose it up and Yannick, you possibly can add on. So for the offshore scheme, the ultimate willpower of the return fee is excellent. Nonetheless, there is a session operating. It consists of the identical fee which we already offered and we don’t anticipate that that is topic of a change. So it can embrace the 4.13% publish for property previous to 2024 and the 5.7% spherical for the brand new property.

That primarily tackling the second query. We, after all, are in dialogue with the regulator, however thus far there is no such thing as a actual motion in that regards. We claimed towards that within the highest court docket of Dusseldorf and probably we’re ending up in a choice on the highest court docket in Karlsruhe. Nonetheless, this isn’t being seen in the interim as I feel the negotiation is being scheduled starting of subsequent yr. So it is nonetheless operating, however we do not anticipate speedy motion of the [indiscernible] on the return charges.

What remains to be open for the electrical energy sector is the overall productiveness issue to be set, however that is of minor significance for the German entity as normally each the speed is comparatively small. It has been 0.9% final time. That is one thing we nonetheless apply in the interim, however we anticipate taking the mechanism under consideration that the quantity is not going to be increased than it has been the case earlier than, so.

Yannick Dekoninck

However I feel it’s extremely full, Marco, and we affirm additionally, Mafalda, that for Belgium all the things is fastened, so no adjustments are anticipated there.

Stephanie Luyten

Thanks, Marco, Yannick. Let’s now go to ING. Quirijn, do you’ve gotten a query for us?

Quirijn Mulder

In your CapEx plans. So is it appropriate that we will anticipate an replace on the finish of, let me say, the third quarter someplace once you report that, is that appropriate? And what about, let me say, a second Nemo Hyperlink? Is there any development to say there in a non-regulatory enterprise?

Stephanie Luyten

May you be extra exact in your final query? What’s it precisely?

Quirijn Mulder

I feel there was consideration of a second line between Belgium and U.Okay., so possibly that is a little bit bit additional off. In order that was my query. And I’ve one other query afterward.

Marco Nix

Can we need to begin with…

Catherine Vandenborre

With Nautilus then? So Nautilus is certainly a venture that we have now within the pipe for a brand new connection between the U.Okay. and Belgium. It has been a primary session of the venture purchase of GEM that ended, I feel it was in March or April this yr.

Based mostly on the result of this session, we have now reworked numerous matters, like, for instance, the touchdown of the connection factors on the U.Okay. aspect, simply to present one instance. And there may be presently, as we communicate, a second session that runs, primarily based on which we anticipate to have all of the suggestions of the market by the top of the yr on the newest.

So mainly, we’re persevering with to work on this interconnection, which stays fairly key for a rustic like Belgium. Like I mentioned through the presentation, Belgium is a rustic which is brief in renewable power. We have now a shortage when it comes to renewable power. So it is extraordinarily essential to interconnect the nation with others that are lengthy when it comes to renewable power. That is one thing which stays very excessive on the agenda. That was on your second query.

Marco Nix

When it comes to CapEx replace. I feel we don’t see any motive to deviate from the follow which we have now carried out prior to now. So I feel it is proper to anticipate some updates on that in reference to the quarter three figures. As we do see that the ramp up of the CapEx program is progressing in accordance to the plan, that is one thing which we are going to contemplate within the announcement which we’re going to make then in the midst of the Q3 figures with an outlook to the years forward of, sure.

Quirijn Mulder

My different query is about energyRe Giga. How is the development there? I feel they had been going to ship a venture sooner — or let me say, fairly quickly, I feel 2026. Are you able to replace us on that growth there?

Catherine Vandenborre

Sure. So when it comes to initiatives carried out by energyRe, I’d say it is progressing in accordance with the plan. So what we introduced is that a number of the initiatives that had been within the portfolio of the corporate could be anticipated to be accomplished and commissioned in 2026 and that is nonetheless one thing that we have now within the plan. Simply as a reminder, there have been three massive initiatives within the portfolio of energyRe.

Two out of the three are associated to transmission line and one is — sorry, onshore transmission line and one is regarding offshore. And so what was within the plan was the commissioning and so the sell-down of very small initiatives linked to the onshore transmission funding. So progressing in accordance with the plan.

For the offshore half, after all, we have now this upcoming election within the U.S., which have pushed each actors lively within the offshore growth to decelerate a little bit bit the bills and the OpEx. And that is additionally one thing that we have now carried out. So we’re trying fastidiously on the state of affairs there and we’re managing the spending on the offshore venture, which is within the portfolio, the one with the smallest worth. However, we’re progressing when it comes to authorization on this venture as effectively.

We acquired, I feel it was in April or Could, so a little bit bit earlier, the PPAs on this venture known as Main Gentle Wind. So on the web site of the revenues, we have now some readability. The costs linked to the PPAs will likely be topic to inflation and a particular inflation bearing in mind additionally the price of materials till the commissioning of the venture. However for the remainder of the bills to be carried out, we’re, after all, cautious like another actors lively within the offshore enterprise in the interim within the U.S.

Stephanie Luyten

Thanks, Quirijn, on your questions. Let’s now transfer to KBC, Wim.

Wim Lewi

I’ve bought three questions. I am going to begin with one for Marco or Yannick on the capital enhance. So on the Capital Markets Day, you defined that you might additionally resort to equity-like merchandise to finance. Possibly you may give some extra perception. Like have you considered which choice, what sort of merchandise that might be, speaking about hybrids or convertibles. And possibly in case you may give some perception on how that call course of would work. So in 2025, which approach, relying on markets circumstances, you might go?

Yannick Dekoninck

Effectively, I feel that intimately we included, we mentioned that equity-linked devices might be a part of the capital elevate. I feel there the authorization that we have now in place additionally permits us, for instance, to make use of a convertible bond. So a hybrid or a convertible bond might be a part of our technique.

However like Marco already mentioned, we’re nonetheless trying immediately at what are the very best choices, contemplating on the one hand the market capability that we see within the fairness, but additionally what are the very best realization of that fairness, contemplating the expansion of our CapEx plan. So immediately, we can’t clearly provide you with steering how it could be structured as such, however these choices like a hybrid or a convertible might be a part of the structuring.

Wim Lewi

Okay. And I’ve bought two smaller questions for Catherine, if I’ll. Catherine, you talked about that the elections in Belgium resulted in a possible change in coalition. Are you able to elaborate a little bit bit on what meaning for Elia? And likewise, this morning, I learn within the newspaper that there’s already stress on the CEO of the Port of Antwerp, which very effectively. Is there any relation between the elections and the brand new CEO at Elia? Is there something that, for instance, you must seek the advice of or that you must await sure positions to be put in place?

Catherine Vandenborre

Okay. So on the primary component, so the results of the election in Belgium have led to a middle peak, for instance, illustration or at the very least forces are extra middle peak than what they’ve been prior to now. You already know that Belgium is a rustic the place we have now, on the one hand, federal authorities after which alternatively, numerous regional governments.

As we communicate, there may be already one regional authorities in Wallonia and discussions are ongoing on the different ranges, so the federal stage and the regional stage for doing governments, however expectations are certainly that it could be extra middle peak than what it was prior to now.

What could be or might be the implications for Elia? I feel that power coverage is, after all, crucial to any authorities. Prior to now, it was very a lot pushed by the willingness to cut back CO2 emissions, however what we have now seen within the latest years, the final two years, after the battle in Ukraine, is that the electrical energy change years and that the power agenda turns into additionally pushed by willingness to make sure competitiveness for the business and turning into extra impartial from Russian fuel than it was prior to now.

And so all in all, I do not anticipate affect, if it is behind your query, on the funding plan that we have now printed final yr, in November final yr, as a result of all the things which is included on this plan will, after all, on the one hand, reinforce the independence when it comes to safety of provide and alternatively, contribute to the competitiveness on the business. On the longer run, however there I’m after 2035, you may anticipate and that is one thing that we’re already seeing immediately within the newspapers, you may anticipate some dialogue on what is the splendid power combine for Belgium, nevertheless it’s actually within the very long term as a result of that selections that we take immediately will likely be carried out, taken under consideration all of the allowing, ordering of supplies and so forth at greatest in 10 years from now.

So after 2035, you possibly can anticipate, as soon as once more, discussions on greatest power combine and it is that context that we are going to publish the blueprint that I discussed through the presentation, which has the intention to actually assess numerous choices, completely different choices with the fee linked to all these choices. So for certain, an attention-grabbing learn within the context of recent governments.

In your second query on the attainable hyperlink between the election and the appointment of the CEO, I’m very clear it is fully disconnected. So there’s a course of which has been initiated by the Board of Administrators and the nomination committee primarily based on which a headhunter, well-known with an excellent status has been recognized and chosen. This headhunter is conducting first number of candidates that are then proposed to the Board of Administrators and so there is no such thing as a hyperlink with the outcomes of the election, neither with the timing of the formation of a authorities.

Wim Lewi

That is clear. If I’ll, only one final on the flexibleness theme, which you careworn and in addition the image you confirmed on the adverse power costs because of the solar energy. You say, okay, we have to discover options. Clearly, you may need some concepts on that. Is there something you possibly can share? Is it about batteries? Is it about dynamic pricing or something that you simply…

Catherine Vandenborre

Sure. All of that. All of that and in addition making the consumption extra versatile. So like typically in a sector, there is no such thing as a one answer that matches all. It’s essential work on a distinct answer. So presently what we see is that with the large investments in photo voltaic panels which have occurred on the final month, there’s a enormous manufacturing of photo voltaic power in the summertime that’s mixed with nuclear models and that may exceed — in the meanwhile that the consumption is low and so particularly within the weekend, that may exceed the sum of the consumption plus the export capability that we have now.

In order we communicate, it is a risk. So it is not but a state of affairs that has occurred on the final weeks or final days, though in April at one second, we had been very near a state of affairs the place we had an excessive amount of of manufacturing in comparison with the consumption and the export capability. So there are on the brief time period numerous, for instance, options which were carried out and there are answers for the long run.

On the brief time period, the options which have been carried out are very a lot linked to the administration of the consumption, however typically this photo voltaic capability is related on the stage of distribution and never on the stage of transmission. And so we should be involved and to contact the distribution system operators in order that they will take actions to keep away from an extra of manufacturing of photo voltaic capability at sure moments of the time. And that is what has been agreed upon between TSOs and DSOs. That is for the brief time period.

In fact, for the longer run, we need to work on, for instance, market-based options, not solely options the place you ask clients to interrupt the consumption or turbines to interrupt the technology, however actually market-based options. And people market-based are, after all, storage. That is one component.

It is, after all, ensuring that the second of the consumption is routinely adjusted primarily based on worth indicators, displaying that the power may be very low-cost at sure moments of the time, so that there’s some flexibility within the consumption that’s organized. And in order that’s a part of the options we’re engaged on along with an ecosystem, after all. It is not one thing that we’re doing alone.

Stephanie Luyten

Thanks, Wim. Let’s now transfer to Kepler Cheuvreux. Juan, do you’ve gotten any questions left for the staff?

Juan Rodriguez

Sure, I’ve really two follow-up questions, if I’ll. The primary one is on the feedback you made available on the market capability consideration of the fairness financing. There’s a clear fairness overhang that’s weighted in your share worth efficiency and due to this fact, in your market cap. So how is the Group this danger? And will the Group, in that sense, speed up the funding to take away or cut back this uncertainty from the market? So that’s the first query.

And the second is on the highest administration roles. Are you able to please present on the place can we anticipate an replace over the ultimate choice of this CEO place and due to this fact, the CFO as effectively?

Marco Nix

We need to begin with CEO?

Catherine Vandenborre

I’ll begin then with the final query. So when it comes to when can we anticipate an replace, I’ll say after the summer season break, so doubtless in September, we can provide you with an replace on the title of the brand new CEO. The purpose of the Board of Administrators, like I used to be saying, was actually, as from the start and remains to be immediately to onboard the brand new CEO by the top of the yr on the newest.

Marco Nix

With regard of the fairness elevate, I feel we talked about all of the features already. And naturally, beside market capacities, we mentioned that the market circumstances are one thing to think about as effectively and overhang is a part of the circumstances which we’re contemplating, understanding that, after all, all the opposite features like profitability are essential ones too.

So due to this fact, we are going to make up our plans and persevering with that what we have already got acknowledged, that we’re fastidiously elaborating our choices to come back with a plan, which is then possible to cowl all these features which we talked about. There may be none superior to others.

Stephanie Luyten

Thanks, Juan. And let’s now transfer to Morgan Stanley. Harry, do you’ve gotten some questions for the staff left?

Harrison Williams

Sure. Most of mine have been requested, however possibly two hopefully faster ones. Firstly, you had an attention-grabbing part on procurement within the presentation and also you talked about some property and actions that you simply suppose are extra susceptible to bottlenecks or aggressive pressures. In case you can simply elaborate on which property these could be? In order that’s the primary.

After which the second, on Nemo, the EUR30 million form of information for the complete yr appears considerably conservative, given the power in H1. Simply questioning in case you can present any extra coloration on that? Is {that a} conservative estimate primarily based on a traditional yr? If we due to this fact noticed a repeat of H1, would we see a a lot increased quantity? Just a few coloration there could be nice.

Marco Nix

Sure. Possibly to start out with the procurement after which Yannick can take over the Nemo Hyperlink query then. To be blunt, it is roughly all the standard electrical tools which we’re speaking about, beginning with crucial one is, after all, transformation property, shunt reactor, HVDC parts, cables that are sq. out there and the place we have now actually a decent provider market and we’re engaged on one hand extending the provider base horizontally. However, after all, going specifically within the massive ones, like the massive offshore connections, down into the sub-supplier set to unlock the potential to get delivered there and to make our greatest that there’s an environment friendly answer popping out of it.

So to reply your query, it is fairly a broad set of issues which we have to consider, as we do see typically in comparatively small tools items shortage, whereas in larger ones we do not, however we do see the opposite approach round in different particular property as effectively. And [indiscernible] I discussed, it is actually uncommon items, sure.

Yannick Dekoninck

After which to sort out your query on Nemo Hyperlink, certainly Nemo Hyperlink had a really robust contribution over the primary half pushed by 100% availability of the interconnector. Now in case you have a look at the second half of the yr, there are some deliberate upkeep. So there will likely be some outages of the cable. But in addition, we have to look how the results of Nemo Hyperlink will evolve in comparison with the 5-year evaluation interval, understanding that if the revenues are above the cap, that then the allowed revenues will likely be restricted. And so these components have considered within the steering that we have now given of EUR30 million for the remaining of the yr.

Stephanie Luyten

I see that Bartlomiej has yet another follow-up query. Bartlomiej, please go forward.

Harrison Williams

Sure, I do. Only one factor on this steering in Germany and what you talked about, that partially it comes from stronger operational efficiency. I simply marvel two issues right here, whether or not that is one thing sustainable, so consequently may result in increased earnings sooner or later as effectively? So no matter component of ROE outperformance we’re assuming right here, we must always improve it all through the curve?

And likewise whether or not that is an affect of inflation indexation of OpEx in Germany, as everyone knows that the FY 2022 or 2022 inflation has an affect on allowed OpEx in 2024. It was I feel at round 6%. So consequently, there may have been fairly excessive OpEx allowance upward indexation and thus the operational efficiency.

Marco Nix

You named just a few of the objects, after all. Inflation changes is a part of the story, that is true and that is one thing we’re benefiting if we’re managing to keep up the prices under the rise of this inflation. And presently, adjustment is at 3%, as we normally have a two years time delay. And it is certainly the truth that the upper inflation will likely be relevant subsequent yr and the yr after, which we confronted the earlier years, that is one thing we’re benefiting from.

Nonetheless, when it comes to return fee, taking the full quantity in comparison with the asset remuneration under consideration, it is not going to play a serious function. It would assist us to outperform the regulatory scheme, that is true. If that is pushing up by 0.5% return fee, I’d doubt on that one. So I feel that is not marginal, nevertheless it’s neglectable in comparison with the extent of the CapEx program.

Stephanie Luyten

Thanks, Bartlomiej. After which I’ve acquired just a few questions in writing from our analysts at BNP Exane who could not be a part of, so I’ll learn them out. So the primary query is linked to the OLO and the place can we see the 10-year OLO going for the top of the yr? And if we may give some indication of the sensitivity when it comes to web revenue and the identical could be relevant for the bottom fee in Germany?

A second query is linked to the CapEx execution. And if we see that there might be any dangers of falling under the introduced steering? After which a final one is on allowing. We have now made fairly some progress in Germany in allowing. Can we give an replace on the allowing in Belgium?

Yannick Dekoninck

So I’ll possibly take the query on the OLO. So the OLO, as talked about within the steering, we foresee an OLO of round 3% on common for the yr. In case you have a look at the primary six months of the yr, we had been round 2.96%, so I feel we’re fairly assured there in our steering. When it comes to affect, 10 foundation factors in 2024 on ETB, a web revenue affect of round EUR1 million on the web consequence. If we glance then in Germany, in Germany we think about a base fee of two.79%. In case you have a look at the primary six months of the yr, we had been across the 2.7% that Marco has indicated there.

Marco Nix

It is the opposite approach round. Sensitivity in Belgium is a little bit increased than in Germany. It is EUR2 million in Belgium and EUR1 million in Germany on 10 foundation factors. So CapEx execution. So after all, we do see a robust ramp-up within the first half yr. We by no means spent that a lot cash and we by no means progressed that effectively on the initiatives.

So understanding that, after all, our profile is back-loaded in the midst of the yr and there is a longer solution to go when it comes to complete spending as we anticipate a complete of EUR4.7 billion to be spent over the yr. However we do see ourselves effectively on monitor in that regards in order that there are nonetheless some dangers to be managed, little question on that, however we do see them beneath management in order that we will affirm the steering which we have now given when it comes to CapEx spending over the yr.

When it comes to permissions in Belgium, I’d say it is fairly near the massive flagship initiatives the place there’s ongoing debate. Nonetheless, we assume in our CapEx outlook which we have now given a number of the debates, a number of the discussions and the instances related to that. So it is primarily based on greatest estimate, not on absolute best, the time line there. And that is one thing we do see nonetheless having some room for enchancment, little question on that. Nonetheless, at the very least for the primary spine, we’re progressing. For Boucle du Hainaut, I do not know whether or not you’ve gotten different information there, so…

Catherine Vandenborre

So I feel what you mentioned is totally true. If you wish to examine the state of affairs in Germany and in Belgium as a common assertion, I feel we will say that we have now not seen in Belgium the kind of measures which were taken in Germany and which allowed for, for instance, a robust push of allowing procedures in numerous initiatives. So we stay engaged on allowing prefer it has at all times been carried out. However there was no administrative actions which were carried out as a way to ease or as a way to speed up the allowing. That is one component.

That being mentioned, many of the massive efforts are devoted in direction of these three massive initiatives which are contributing on roughly 60% of the funding plan in Belgium and that are the islands, that are Ventilus and that are Boucle du Hainaut. On the island, we have now already acquired a venture which are obligatory and we’re progressing like you’ve gotten seen within the movies. We’re progressing fairly effectively in constructing the primary steps of the island.

On Ventilus, we acquired a little bit bit earlier this yr an essential — or we went to an essential step within the allowing course of. So we acquired what we known as the group and that is one thing which was foreseen in the meanwhile that we acquired it within the plan. So now the efforts are certainly targeted on Boucle du Hainaut, the place the brand new power minister on the Walloon stage should take numerous selections within the subsequent month.

In the intervening time, the file is being checked out by the administration and we’re in dialog with the administration. And naturally, we are going to begin a dialog with the consultant of the minister in Wallonia as quickly as the vacation interval is behind us.

Stephanie Luyten

Thanks, Catherine. Thanks, Marco. Thanks, Yannick, for answering all of our questions. I feel that brings our Q&A session to an finish. In case you would have any additional follow-up questions, the place to achieve the IR staff. We’re at all times glad to arrange a follow-up name. And with that, I hand it again over to the studio to Marleen.

Marleen Vanhecke

Okay. Thanks, Stephanie. If there is no such thing as a additional questions, I recommend we carry this presentation to an in depth. Thanks, Yannick, Stephanie, Catherine and Marco on your contributions. I thank additionally to our colleagues behind the scenes, Helen, Catherine and Maryline. We would additionally wish to thank the Director, Jan van Hulleand the entire technical staff who was right here within the studio immediately. Girls and gents, thanks for becoming a member of us and luxuriate in your summer season break.