Good morning. This is the Chorus Call Conference Operator. Welcome, and thank you for joining the Snam First Half 2024 Consolidated Results Conference Call. As a reminder, all participants are in listen-only mode. After the presentation, there will be an opportunity to ask questions. Should anyone need assistance during the conference call, they may signal an operator by pressing Star and Zero on their telephone. At this time, I would like to turn the conference over to Ms. Francesca Pezzoli, Head of Investor Relations of Snam. Please go ahead, madam.
Good afternoon, ladies and gentlemen, and welcome to Snam H1 2024 Consolidated Results Conference Call. Today's presentation will be hosted by our CEO, Stefano Venier, and by our CFO, Luca Passa. In the presentation, Stefano will provide an overview of the key highlights of the period. Luca will walk you through the financial performance, then back to Stefano for closing remarks and finally, the Q&A session. Now I will hand over to Stefano.
Thank you, Francesca, and good afternoon. I start on slide 2. In the first half, we delivered strong growth with adjusted EBITDA up 16% year-on-year, at EUR 1,417 million, mainly thanks to the weighted average cost of capital uplift, the ROSS effects, and the RAB growth. The adjusted net income at EUR 691 million is up 11% year-on-year. Investments reached EUR 1,159 million, up 60% versus first half 2023, and the net debt at EUR 16.4 billion, with 2.5% average net cost of debt. Last week, we signed the agreement with Edison for the acquisition of Edison Stoccaggio. The deal will further strengthen our industrial and strategic position while creating the net profit. I will provide more details on the deal financials and rationale later on.
At the same time, we continue to extract value from our existing portfolio of associates and from our financing strategy. First, the new reference price methodology in Austria was approved after long negotiation and embed volume risk sterilization. It will bring back to profitability our Austrian associate, TAG, from 2025, providing visibility throughout next regulatory period that goes from 2025 to 2027. Second, Enagás, GRTgaz, and Teréga and our associate, Teréga, in cooperation with OGE, signed an agreement for the development of the BarMar H2 infrastructure that is part of the H2Med corridor. Moreover, we continue to optimize our cost of funding. We have issued EUR 1 billion sustainability credit line in May, replacing more expensive credit facilities.
We have obtained EUR 100 million from EIB, to support our subsidiary, Renovit, in the energy efficiency projects, and our board of directors today has approved the issuance of up to EUR 1.25 billion hybrid bond to finance Edison Stoccaggio acquisition and the relevant CapEx plan, while keeping the full financial flexibility. At global level, as you probably know, gas demand is up 3%, driven by industrial recovery, while in Italy, gas demand declined by 4.3%. This, along with a well-supplied market and historically high gas storage level in Europe, contributed to keep average gas prices 34% below last year. Italy has filed the European...
has filed to Europe, the climate and energy plan that envisages about 58 BCM of gas demand by 2030, of which 5 BCM or 9% biomethane, and a key role of H2 and CCS to reach the decarbonization target sets for 2030. We are keeping to present updated scenario by September, aligned with, the climate and energy plan, and we continue to contribute to the working groups set by the Italian Ministry of Energy and Environment, which has the target to release the H2 strategy and to define the carbon capture strategy framework by the next September. Moving now to page 3, we can highlight the, let's say, progressive deployment of our strategy. That is focused on becoming a Pan-European multi-molecule operator, leveraging on synergies between gas infrastructure and energy transition businesses.
Then, starting from the gas infrastructure, we can summarize that in 2020... The 2025 tariffs has been approved for transport, LNG, and recently, the storage. The storage level, as I mentioned, is at about 86%, well above the historical levels for this period of the year, and with 100% of the 12.4 BCM of storage capacity for the thermal year 2024-2025, already allocated, and we are on track to have the facilities full by the end of October. For the Adriatic Corridor, the backbone to strengthen the south and north capacity, the first phase works have started, and we are progressing with the Ravenna floating vessel terminal works, expected to be operational by the beginning of 2025....
The short-term milestone for the assigning of the REPowerEU grants to the Adriatic Line and export were met in time. The two projects have to be completed by the end of 2026. Let's now move on energy transition. The market test result to assess the hard-to-abate industry's appetite were supportive, and we will provide more details in the following pages. The pilot project for CO₂ capture and the sequestration in Ravenna is going to start soon. Several progress on SoutH2 Corridor, the Italian, Austrian, German TSOs met in Rome, the last eighteenth of July, and to define the project governance and the next steps, along with the three different governments.
The Renovit backlog is stable at EUR 1.2 billion, and on biomethane, 8 plants won the tariff auctions, equivalent to about 18 megawatts, and we have been successful for 100% of the plants submitted. We will submit a further couple of projects at the end of August, and the rest by the end of the year. On the sustainability side, the CapEx aligned to EU taxonomy and SDGs represent respectively the 32% and 52% of the total H1 CapEx 2024. We continue then to reduce the scope one and two emissions, and the full year 2024 is foreseen being down 17% with respect to the 2022 levels.
MSCI has confirmed our AA rating, and we are engaging with current and potential shareholders on our first transition plan that will be published before the year-end, with the objective to align in a single document, this Snam climate and biodiversity strategy, key achievements, further targets, and key metrics, including physical and transition risk assessment. Finally, explaining how our assets will contribute in securing affordable energy along and beyond the transition to net zero. Let's now spend a few words on the Edison Stoccaggio acquisition on page 4. As you know, after the submission in June of a binding offer, last week, we have reached an agreement for the acquisition of the 100% stake of Edison Stoccaggio from Edison.
As known, the perimeter comprises three storage sites located nearby our facilities, with a total capacity of about 1.1 BCM, operating under a fully regulated regime. The enterprise value for the acquisition is equal to EUR 560 million, subject to adjustment at closing. The last update is until Q1 2025, following regulatory approval in details refers to antitrust and Golden Power authorizations. The agreement also provides for an earn-out mechanism based on the outcome of the administrative dispute with ARERA, relating to the past remuneration of the San Potito and Cotignola assets for an amount up to EUR 45 million, which is a full pass-through. The deal, the deal implies a premium on the 2024 RAB of about 12%. That is close to the one at which Snam is trading at the moment, and below recent comparable M&A transactions.
This acquisition was not envisioned in our strategic plan. To maintain the current financial flexibility, we have decided to finance the deal by issuing a hybrid bond, thus maximizing the net income accretion that is foreseen between 1.5%-2% already from the closing, while EPS contribution will be neutral to positive. The strategic rationale is sound, as Snam will consolidate its strategic role in securing Italian gas supply, increasing exposure to Italian regulated activity consistently with the investment strategy outlined last January, and exploiting operating efficiencies, leveraging on Stogit scale, asset proximity, and expertise, and know-how. The fit is strong, also looking at the asset carbon footprint, as Edison Stoccaggio plants have, are already equipped with electric compressors.
We have included about EUR 1.5 million of revenues and cost synergies equal to about 3% of the EBITDA in the valuation that we deem conservative, and we will work to extract further value from the deal. Let's now move on page 5 to have a snapshot on H2 and the carbon capture market test results. In the past months, we carried out a market test to assess the appetite for both H2 hydrogen and carbon capture in Italy and neighboring countries. More than 120 companies submitted the questionnaire. We have analyzed the data gathered, and the results are very supportive, pointing to an about 37 million of avoided emissions per year in Italy and 11 million in Austria and Germany by 2040, thanks to the use of hydrogen and the carbon capture.
With regard to hydrogen, about 80% of expected consumption will come from hard-to-abate sectors and power generation. By 2040, production hubs will emerge in south of Italy, but not, not enough to fully meet the projected demand. Therefore, Italy will play an important role as transit country from North Africa to north of Italy and Central Europe, as the SoutH2 Corridor encompass. As far as CCS is concerned, more than 60 non-binding expression of interest were submitted from 172 industrial sites in Italy, mostly concentrated in the Po Valley clusters and from some industrial districts in the southern part of Italy. Strong interest came from building materials, refining, steel, waste to energy, and power generation.
The results of the market test, along with the ongoing progress on the regulatory front and the strong institutional backing, are very supportive to our strategy and the PCI projects. Just mention the SoutH2 Corridor and the so-called Callisto for CCS, for carbon capture project in Ravenna, that is developed jointly with Eni. Now I'll turn to Luca for more details on the financial results.
Thanks, Stefano, and good afternoon, everyone. We are now on slide six to comment on first half 2024 EBITDA. EBITDA for the period was EUR 1,417 million, +16% versus last year or +EUR 196 million. The growth is mainly attributable to regulatory items for a total of around EUR 119 million, related to the WACC increase for around EUR 86 million, and ROSS effect, the fast and slow money, on transport for EUR 33 million. Regulated revenues change was driven by transport and storage revenues increased by around EUR 80 million. Recovery of the 2023 LNG extra revenues for EUR 29 million.
RAB rise by EUR 8 million, related to the contribution of the RAB on storage, partially counterbalanced by the decrease of the RAB related to the default services. Higher allowed OpEx due to inflation, partially offset by the expected phase out of input-based incentives. Finally, Piombino FSRU started operation from July 2023 and contributed positively by EUR 32 million to EBITDA. The increase in regulatory fixed cost is mainly attributable to labor costs, mainly inflation, and the extension of the employees' health insurance. With regards to the energy transition businesses, the end of the Super Ecobonus incentive on energy efficiency, along with the consolidation of 8 MW of biomethane plants, drove to a slightly negative contribution, -EUR 4 million, in the first half 2024. Moving to slide 7.
Adjusted net income for the period was EUR 691 million, +11% compared to first half 2023, due to higher EBITDA by EUR 44 million, following a rising investment and EUR 12 million write-down on gas infrastructure. Net financial expenses higher by EUR 43 million, mainly as a result of higher net cost of debt, which moved from 1.7% to approximately 2.5% in first half 2024, as effect of the increase in interest rates, partially counterbalanced by the increase in capitalized interest and the increase in financial income related to the default service, and to the Eco Bonus. A substantially flat contribution from associates, which was the result of slightly lower international associates contribution, -EUR 2 million, flat contribution of Italian associates.
Finally, higher tax rate due to higher EBT, EBT and tax rate increase from 24.5% in first half 2023 to 26.8% in first half 2024, mainly as a result of the termination from 2024 of the so-called ACE Italian fiscal benefit, and the lower weight of associates contribution to EBT. Moving to slide 8. Our international associates positively contributed to group net income by EUR 111 million, almost in line with the same period of last year. In detail, TAP inflation-adjusted tariffs drove a slightly higher contribution compared to last year. In first half 2024, TAP covered 17% of Italian imports, recording a +6 increase in total volume of gas transported to Italy due to the higher short-term bookings. Works for the 1.2 BCM expansion, running from 2021 market test, are underway.
Sea Corridor benefits from the one-off release of a fiscal provision related to, to TTPC and a better product mix. With approximately 11 BCM transported towards Italy, it represents the main source of supply for Italy. Teréga performance already reflects new regulatory period, starting in 2024, in line with our expectation. DESFA lower contribution is the result of the lower option premium on LNG imports and on export towards Bulgaria, now closer to historical trends. DESFA is progressing on its ambitions, of EUR 1.3 billion CapEx plan that will support the domestic lignite phase out and the Southeastern Europe market development. ADNOC performance is in line with expectation. Interconnectors contribution remains in line with the yearly regulatory, adjusted by inflation. The capacity is almost 50% booked until 2026, thus providing medium-term visibility.
EMG performance benefits mostly from the recording of positive non-recurring items related to previous years. Moving to Austria, TAG year-on-year delta is due to the slight booking decrease. GCA performance has been impacted by lower bookings and higher revenues recorded in 2023 to recover previous year energy cost. As mentioned by Stefano, the new reference price methodology in Austria was approved and embed volume risk sterilization, providing visibility for the 2025/2027 period. However, it has also entailed a risk premium reversal of past revenues that impacted TAG for EUR 8 million and GCA for EUR 22 million, which is included as special items in our net income adjusted. You will find in the annex a brand-new detailed presentation of all our associates, including description of the business model and key financials.
This, along with the disclosure that we provide on a quarterly basis, will help you to better assess their value. Turning now to cash flow on slide number 9. Funds from operations for the period amounted to around EUR 1,124 million, bringing our EBITDA cash conversion to a very sound 80%, and were only partially absorbed by EUR 70 million of working capital.
This was driven by a broadly neutral impact from a regulatory working capital, with about -EUR 260 million absorption due to the balancing and settlement activity, of which about EUR 400 million related to a reduction in balancing item payables, approximately -EUR 270 million related to cash deposits decreased due to the gas price reduction, around EUR 120 million positive related to the default service receivables decrease, and about +EUR 190 million related to settlement activity. Partially, all this was counterbalanced by EUR 240 million positive tariff-related items, mainly driven by additional tariff components. Moreover, about -EUR 320 million of absorption, mainly driven by the energy efficiency trade payables decrease and another cash deposit reduction. Finally, about +EUR 270 million of tax payables temporary increase.
Net investments for the period amount to EUR 1,122 million, and in the first half, are fully funded by the FFO generation. Other outflows were related to the payment of the dividend for EUR 937 million, resulting in a change in net debt of about EUR 1,082 million. Moving to slide 10, the change in net debt, as I said, amount to about EUR 1,100 million, resulting in EUR 16,352 million of net debt at the end of the period. The average net cost of debt move to 2.5%, while the fixed to floating ratio stands at about 70%-30%. Sustainable finance and committed financing is up to about 83%, thanks to the recent funding executed.
In terms of financing, during the second quarter, we secured EUR 750 million FRN bond, which was swapped to fixed rate, and EUR 1 billion sustainability-linked RCF line, which together replaced the EUR 1.8 billion preexisting RCF line guaranteed by SACE, the Italian ECA. EUR 100 million of sustainability-linked banking facilities, and EUR 100 million of EIB financing to support energy efficiency initiatives promoted by Renovit on public and private buildings and industrial activities. The financing is in line with the objectives of the REPowerEU. Financing needs for 2024 are almost covered. Based on the current forward curve, we expect the average cost of net debt for the year to remain stable at 2.5%, which is slightly better than what we forecasted for the year. And now let me hand over to Stefano for the closing remarks.
Thank you. Thank you again, Luca, for this very detailed explanation of the different components of our results. In conclusion, we have delivered a solid growth in H1, and we are confident to reach our full year guidance that was recently upgraded in May. The CapEx will reach EUR 3 billion, driven by gas infrastructure, investments which include, among others, the start of the Adriatic Line that started to be accounted, in Q4 of this year, and the mooring and connection investments for the second floating vessel in Ravenna. Those works will be completed by year-end. The tariff RAB is up around 6% year-on-year at EUR 23.8 billion.
The EBITDA in excess of EUR 2.75 billion, driven by the weighted average cost of capital uplift and the deflator impact, regulatory effects on transportation and the RAB growth, as we mentioned, for the first half. The adjusted net income guidance at approximately EUR 1.023 billion, up 5% year-on-year. And the net debt is expected at EUR 17.5 billion, including EUR 400 million of working capital absorption and the cash out for the increase in stake in the Adriatic LNG.... So let me say in conclusion, that visibility is high as regulation is set, tariffs has been approved, investment are approved, and policies are evolving in line with our strategy.
While we progress in delivering our strategy to become a real pan-European multi-molecular infrastructure, we continue to look for value creation opportunities also through M&A, like the Edison Stoccaggio deal, and we aim at keeping a solid balance sheet to retain financial flexibility even after the recently announced acquisition. So then, thank you very much for your attention and the time spent with us, and we are now available to take all your questions.
This is the Chorus Call conference operator. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touchtone telephone. To remove yourself from the question queue, please press star and two. Please pick up the receiver when asking questions. We ask participants to ask only two questions before returning to the queue. Management will take participants two questions before answering. Anyone who has a question may press star and one at this time. We will pause for a moment as callers join the queue. The first pair of questions is from Jose Ruiz with Barclays. Please go ahead.
Yeah, good afternoon, everyone, and thanks for the presentation. Just two questions. The first one is, if you could provide us the mark to market of, WACC, for the observation period. I know there are two months left, but if you could, share with us what calculations you're getting. And secondly, I heard, and I think I'm right, that the Verbund, wrote off some of the stake in GCA, Gas Connect Austria. Is something you would be considering? Thank you.
Okay, Jose, good afternoon. Regarding the mark to market of WACC, yes, you're right, only two months observation are left currently on transport, which is the main one. The mark to market points to a 5.5% WACC for the next regulatory period, which is similar when we announced the first quarter results, and is twenty basis point lower vis-à-vis our assumption in business plan. As I mentioned, when we present the first quarter results, clearly, we expect to offset this WACC decrease vis-à-vis our expectation by a lower cost of debt, because clearly this is impacted by lower interest rates. When it comes to GCA, yes, you're right. Verbund, which is the majority shareholder of GCA, took an impairment on GCA.
Currently, we only recorded in the first half for the reversal of the risk premium in total for our share. In total, 100% was EUR 190 million, which is what actually Verbund recorded. We recorded our share, which is EUR 22 million, in basically special items, adjusting basically now net income adjusted. Our current book value for GCA is EUR 112 million. We will run the impairment test once we have the business plan finalized on the new regulation, which currently is not done yet. But let me say that, having already taken, you know, this impact, this is a mitigant in the sense that we expect the impairment test to be neutral.
Thank you very much. Very clear.
Okay, we'll take questions one at a time. The next question is from Javier Suarez with Mediobanca. Please go ahead.
Hi, good afternoon. Two questions related to the Edison deal. So, the question is, you can elaborate on the synergies, the operational synergies that you're expecting to extract from the acquisition of this asset and how important this is for the stability of the overall Italian system and for the operations of Snam. And, related to this question, and among the options that you are considering to finance this deal, obviously you are considering the issuance of hybrids. And the question is, taking into consideration that the closure of the deal is going to be during the first quarter 2025, the issue of new hybrids is going to be after the completion of the Edison deal, or we could see hybrid issues during the second half of 2024.
Many thanks.
Okay, thanks, Javier. I'll take the second question first. Clearly, on the financing of the deal, as we mentioned, and you recorded perfectly, we are thinking of issuing a hybrid. You know that from signing to closing, we need to complete both antitrust as well as the Golden Power approval. So we will see whether we're gonna be in a position to actually anticipate the financing towards the closing or not, but it will depends on our basically discussion with both, you know, the antitrust as well as the government for the Golden Power rules. With respect to the questions about what is the strategic role those assets can have in the existing storage Snam portfolio, I think it's important to consider a couple of things.
First, the location of those assets that are very nearby, the ones that we manage. So they are located in the corridors used also for our assets. I think the coordinated management of these additional three sites will provide benefits to the overall security and availability of the storage capacity. Of course, as you know, these assets requires from time to time maintenance activities and the coordination and the best, let's say, settlement of these, let's say, maintenance plans can give and guarantee the adequate storage capacity available.
The second, I think we, we will have opportunities to, exploit some of the flexibility in allocating the capacity, in selling the capacity, in the reverse flow mechanism and all that stuff that help to guarantee a fulfillment of the storages at the end of the thermal season at very high level. That is now guaranteeing, the full completion and the full use of the available capacity by the end of October, on one side, and on the other side, of course, lower demand during summer period. That means, let's say, more competitive prices. So I think that from the operational side and also from the security of the Italian system, this can provide a tangible contribution.
In terms of synergies, of course, first comes the part related to, let's say, the cost synergies, to coordinate and exploit the economies of scale, the practices, know-how, and the way how we do manage the largest asset portfolio we have. And on the other side, as I mentioned, the potential revenue synergies driven by the more flexible approach in the use and the allocation of capacity. The total amount that we have been considering, as I mentioned during my presentation, ranges in on about EUR 1.52 million per year. That makes accumulated impact over the period of use of these assets, up to EUR 37 million.
The next question is from Stefano Gamberini with Equita SIM. Please go ahead.
Good afternoon, everybody, and thanks for taking my two questions. The first, regarding, the slide number 6. Could you repeat, if there is a one-off, among the revenues? If, I understood correctly, there is something in the region of, EUR 30 million of LNG premium related to 2022 and 2023. And on the other side, regarding the OpEx, I would like to understand if the capitalized costs increased during this year due to the higher CapEx that you have. The second question is regarding your approach, regarding the financing, of, the acquisition of Edison through the issue of a hybrid bond. So this means that you increase your cost of capital, and you issue more than double of the price you paid.
So this means that you are increasing your flexibility, that if I remember well, was in the region of EUR 2 billion, and so this means that this will increase more. Why you do not choose to dispose part of your associates that are in the region of EUR 4 billion, in the meantime, in this moment, and you prefer to, we can say, increase the capacity for further future growth and where this growth should arise? Thanks a lot.
Thanks, Stefano, for your question. So on the first one, yes, we recover in revenues, basically 2023 LNG extra revenues for EUR 29 million, which is clearly a one-off. When it comes to cost, you know, basically the increase, which is EUR 14 million, as I said, is mainly attributable to labor cost, which is driven by inflation, in order to basically align, you know, our collective contracts with the new inflation, and to the extensions of employee health insurance, which is actually a management decision. We do not have an increase in capitalization of cost, if that was the question. On question number three, we asked authorization for our additions up to EUR 1.25 billion. It doesn't mean we're gonna utilize all the authorization.
Generally, when you insert a new capital layer in our capital structure, we don't have to be to match exactly what is actually the acquisition cost of the assets, even because the assets we require for the CapEx, you know, going forward. The reason behind it is clearly to maintain the existing financial flexibility of the company. Bear in mind that we will update our industrial plan in January next year, and clearly we see basically organic opportunities to increase our investment. Therefore, we want to maintain that kind of flexibility. Let me also add that in terms of efficiency, hybrids at the moment are very efficient, being just slightly above, you know, cost of debt.
You, as you know, they are recorded in the equity from an accounting perspective. Actually, it's one of the best, I would say, period in terms of, the differential between, you know, vanilla debt and, and hybrids, and are very efficient because also they are tax deductible. So from a blended, cost, actually the increasing cost is very marginal.
We also made a certain assessment about options, with respect to, the thing, for instance, the possible disposal that you mentioned, and we thought that this could be the best, the most, the most efficient way to finance this type of acquisition. Because-
... as you know, when you have to sell is not the best time for selling and to get the best return.
Okay, maybe, maybe thanks.
The next question is from Marcin Wojtal with Bank of America. Please go ahead.
Yes, thank you so much for taking my questions. So firstly, I wanted to ask you about inflation indexation of your regulatory asset base. My understanding is that the index that has been historically used for the indexation is slightly negative at the moment. So what could we expect for 2025? Is the regulator going to use the same index, or they are perhaps going to use a different approach? And when do you expect to have clarity on this, please?
And secondly, related to the acquisition of Edison Stoccaggio, could you just clarify, I think you mentioned that, but could you just clarify that a net income accretion of 1.5%-2%, does it include the issuance of the hybrid bond to fund it, or this is just a standalone acquisition without considering the funding? Thank you.
As far as the first question is concerned, let me say. Let me anticipate that we do expect by the end of this week, the authority will release a consulting document to, let's say, put on discussion what should be or could be the best indicator for the inflation going forward. As you properly said, the deflator that has been used so far showed a certain, let's say, decoupling with respect to the inflation rate, and so then also emphasizing a sort of, let's say, mismatch with respect to the other parameters that are used for the remuneration of our activities. I'm referring to the conversion of the weighted average cost of capital from nominal to real. Therefore, we raised, I mean, all the regulated operator raised the point to the authority.
We had the first discussions with them, and then the authority, with the endorsement of the board, will release a consulting document. So we do expect that some changes will come up from this process, and we hope they are gonna be applied from 2025 onward. And let me add, but even if this change didn't happen, basically, we can absorb, you know, the current deflator index effect for 2025, based on, you know, positive items that come, that are coming still from some regulatory items, which is a higher OpEx inflation for about EUR 12 million expected in 2025.
Better cash money effect versus estimate for about EUR 20 million, and better allowable depreciation on investment on fully depreciated asset for about EUR 15 million. So even if the change didn't happen, but we think it's gonna happen, clearly we can, let me say, mitigate, offset, this effect. When it comes to the acquisition of Edison, the calculation of accretion to net income of 1.5%-2%, starting from the closing of the acquisition, clearly entails the financing through the issuance of hybrid bonds. You know that hybrids are accretive to net income, while they actually are deducted when it comes to EPS calculation, and therefore, we gave a guidance of EPS to being neutral to positive from the closing of the transaction.
The next question is from Bartek Kubicki with Bernstein. Please go ahead.
Good afternoon, thank you for taking my questions. Just I would like to push on those two topics we already discussed. Firstly, on Edison, and maybe two sub small questions to this one. Firstly, do you see any sort of organic expansion opportunities within Edison assets so that they will add to your business plan in the future? And secondly, on this one, if you claim you can get some OpEx efficiencies, do you think the regulator in the next regulatory period will simply adjust the amount of OpEx to those efficiencies so that there will be only a short-term effect of a better cost, cost performance?
And secondly, on the Austrian assets, as there is some kind of a framework already from 2025 to take place, are you able to guide us on the Austrian associates' contribution to your net income next year? At least if you cannot do it on the sort of absolute number, maybe relative to your business plan, please. Thank you.
Okay, thank you. Thank you for the question. With respect to the Edison assets, of course, we should consider that so far we have looked at those assets from the outside-in perspective. We haven't been able in the position to really analyze the way how they are run—they were running the assets, if there are some optimization that can be done. We count on that. We count on the fact that one of the three assets is very, let me quote, "young," in the sense that has to stabilize his performance. I'm referring to San Potito Cotignola. Of course, we are also eager to transfer the know-how we have on the asset management into those three assets. So we are confident we can enhance the performance. We are also confident we can optimize the storage capacity available.
We, as we said, we have been, let's say, on the safe side, very conservative in estimating the synergies. Of course, those you are mentioning, can come and will come, I think. The second part of the question was about, if there is some, let's say, additional capacity that can be extracted. Apart from the operational side, there is always the theme of, getting the authorization, to run the assets on overpressure conditions. That is something we obtained recently for two assets of the Snam portfolio. That is another, opportunity that we will explore.
Okay, on the Austrian assets, what I can say as of today is, while TAG was envisaged in our current business plan, contributing on a single digit, with the new regulation, we contribute on the high double-digit net income contribution for our share. While GCA, which was neutral in our estimates in the current business plan, with the new regulation, will be in the mid-single digit net income contribution.
Thank you very much.
The next question is from Alberto D'Antonio with Exane BNP. Please go ahead.
Hi, thank you so much for taking my call. My questions, could you elaborate if you have, after the Edison acquisition, any M&A on the desk or any potential divestment on your non-core assets? And my second question will be, if you could repeat the relative contribution to your strategic plan from the Austrian assets, please, because I didn't catch it very well. Thank you.
Okay. On the second question, as I said, TAG is high double digit, so close to EUR 20 million, I think, on contribution, which is almost double what we expect in our current business plan. While for GCA, mid-single digit, the EUR 4-5 million, I think, on contribution. And that's for the Austrian, basically, associates. Let me add on that side, I mean, let me add on that side, that these numbers are those who comes from applying straightforward the new regulatory framework. We have two other aspects that has to be, let's say, analyzed in more detail and will be part of the updated business plan that Luca mentioned with respect to TAG and GCA. Because, of course, given this new framework, we need to set up a new business plan also with respect to operating costs and all that stuff.
So it's something we will work on. That is only, let's say, on the, as of today situation and, let's say, one-to-one implementation of the new regulation. And that is, I think, important. The second aspect, there are some aspects of this new regulatory framework that didn't work so well for us, so we appealed as GCA on a couple of items, and we will see if we will get, let's say, a positive return on that appealing. When it comes to the first question, any other M&A after, you know, basically, we are in the closing of Adriatic LNG increase, our stake to 30%. Again, antitrust, Golden Power, Edison Stoccaggio, antitrust, and Golden Power.
Then, as you know, we have a portfolio of associates where we consider basically opportunities, you know, that we run basically some market test for potential interest around our stake in Interconnector U.K., which is something that if, let me say, there will be some interest on valuation, which is attractive to us, it's something we might consider, but that's what we have on the table as of now.
As a reminder, if you wish to register for a question, please press star and one on your telephone. Our next question is from Emanuele Oggioni with Kepler Cheuvreux. Please go ahead.
Good evening, and thank you for the presentation and for taking my two questions. The first one is still on associates. If you can guide us on the final contribution for 2024. It seems that year to date, compared with the expectation at the beginning of the year, the delivery is slightly better than as expected, indeed. The second question is still on the guidance on the financial charges and the cost of debt, because also in this case, the delivery in H1 was better than expected. Thank you.
Okay. On financial charges, Emanuele, basically, what we expect for financial charges is around EUR 300 million at the end of the year, which assume an average cost of debt of 2.5%, which is exactly what we recorded in the first half. And that is based on, I would say, financial charges on basically our debt for around EUR 420 million. And then we have positives around capitalization for about EUR 40 million, interest on defaults for about EUR 40 million, and the eco bonus, which is a positive for about EUR 50 million. So those are, you know, the elements for our financial charges expected at year-end.
When it comes to expectation of the contribution of our associates, we expect EUR 260 million, more or less, of contribution towards the year-end, which includes one hundred and seventy for our international and about EUR 90 million, which is flat, vis-à-vis 2023 for our Italian associates.
Thank you.
Ms. Pizzoli, gentlemen, there are no more questions registered at this time. Do you perhaps have any closing remarks?
Oh, no. I just want to thank all of you for taking part of this conference call, and for those who still have to do the summer break, enjoy your break. Thank you.