Ladies and gentlemen, thank you for standing by, and welcome to nine months 2021 consolidated results. At this time, all participants are in listen-only mode. After the speaker presentation, there will be a question-and-answer session. To ask a question, you will need to press star one on your telephone. I would now like to hand the conference over to the CFO, Agostino Scornajenchi. Please go ahead, sir.
Good afternoon, everybody, and welcome to Terna's nine months 2021 result presentation. Before starting to analyze the figures, I would like to share with you a snapshot of the main latest achievement. As shown in the chart, we continue to be focused on the execution of 2021-2025 Industrial Plan presented last November, thus reinforcing our central role as director of the energy transition. Indeed, Terna continue to develop the national transition with moving ahead in all its main projects. We concluded the first consultation phase for the Tyrrhenian Link and Adriatic Link, and we started the second phase of consultation for the Tyrrhenian Link. In the meantime, we launched the purchasing program, thus we are well on track also on procurement. From a financial standpoint, we continue to enhance our financial track record.
In this regard, let me remind you about the agreement signed on the 13 of July with the European Investment Bank for a EUR 300 million loan to support the energy transition. In addition, at the end of October, Standard & Poor's rating agency raised Terna's outlook from stable to positive and affirmed long-term and short-term ratings BBB+ and A-2, respectively. Regarding non-regulated activities, it is worth mentioning the recent deal signed with LT. In detail, last October, Terna, through its subsidiary, Terna Energy Solutions, signed an agreement to acquire 75% of LT, one of the main Italian operators in the management and maintenance of solar infrastructures. LT is also active in the revamping and repowering of existing systems, as well as in the design, installation, and maintenance of safety system.
Moreover, as a demonstration of our ESG commitment, in the first nine months of the year, Terna was confirmed for the eleventh consecutive year [audio distortion] Global ESG Leader Sustainability Index. In addition, let me also remind you about the inclusion in the MIB 40 ESG , the first Italian blue-chip index dedicated to environmental, social, and governance best practices. After this brief introduction, let me now turn to the usual overview of the Italian electricity market, moving to the next slide. As you can appreciate from the chart number five, in the first nine months of 2021, national demand was 239 TWh, 6.2% higher versus the same period of 2020, when national demand was about 225 TWh.
As a confirmation of this recovery, it is important to underline that since March 2021, we have registered only positive monthly variation in national demand compared to last year, which was heavily impacted by COVID-19. Therefore, we can confirm that electricity demand returns stably to pre-COVID levels. Let me also highlight that in the first nine months of 2021, renewable sources covered about 37% of national demand and about 43% of national net total production, confirming the ongoing energy transition process. Regarding national net total production, this stood at 207 TWh with a strong increase in wind production, which grew by 5%. Now, let's move to the main figures of the period on page six.
In the first nine months of 2021, group revenues and EBITDA were up by 7% and 4%, respectively, versus last year, which means EUR 121 million and EUR 51 million higher. Moreover, we reported a group net income of EUR 580 million, EUR 11 million higher versus the same period of 2020. Group CapEx stood at EUR 925 million, 23% more versus nine months 2020, confirming the robust CapEx acceleration in line with the implementation of our industrial plan. To support this strong investment acceleration driven by an energy transition and system needs, our net debt stood at about EUR 9.6 billion versus about EUR 9.2 billion at 2020 year-end. Therefore, we're confirmed to be well on track to meet all 2021 communicated targets.
Now, let me make a deeper analysis of the figures, moving to slide eight. Let's start as usual with revenues analysis. Total revenues in the first nine months of 2021 increased by 6.8%, reaching EUR 1,902 million, up by EUR 121 million versus last year. As you can see in the chart, we registered positive contribution both from regulated and non-regulated activities from EUR 99 million and EUR 28 million respectively. For all the details, let's move to page nine. Regulated revenues reached EUR 1,644 million, EUR 99 million better than last year. This increase was mainly due to the investment acceleration made on Grid, driven by system needs. Non-regulated and international revenues reached EUR 258 million, quite almost 10% higher than last year.
This growth was mainly reflected in the greater contribution coming from Tamini Group, and higher revenues from connectivity services and energy solutions. The EUR 6 million decrease in international revenues was mainly due to the slowdown of activities on construction sites in Brazil, caused by COVID-19, and already mentioned in first half 2021. Now, let's go through operating cost analysis. As illustrated in the chart of page 10, total operating costs stood at EUR 528 million, 15.4% higher versus last year. The increase broadly reflects the business acceleration pursued in the period. Indeed, on non-regulated side, the increase was mainly due to Tamini Group, while regarding regulated, the increase was mainly related to higher volume costs linked to the growth of our asset base. Let me now analyze the EBITDA, moving to next slide.
Well, considering all the previously mentioned dynamics, first nine months 2021 group EBITDA reached EUR 1,374 million, 4% higher versus 2020. The increase was mainly attributable to higher regulated contribution of about EUR 67 million versus last year, showing an EBITDA of EUR 1,327 million in the first nine months of 2021. Let me remind you that in September 2020, non-regulated activities were positively impacted by the one-off related to Brugg acquisition. It was EUR 560 million. Therefore, net of this one-off, non-regulated and international contribution would be almost in line with last year, with a relevant increase coming from non-regulated activities. Let's now have a look at the lower part of the profit statement to the next slide. Depreciation and amortization amounted to EUR 491 million.
The increase versus last year was mainly due to the impact of new assets becoming operational in the period. As a consequence, EBIT reached EUR 883 million, 2% more versus the first nine months of 2020. We reported net financial expenses at EUR 68 million, in line with the same period of last year. Taxes stood at EUR 232 million, EUR 9 million higher versus last year, due to lower income not relevant for tax purposes registered in the period. Consequently, tax rates stood at 28.5%, slightly higher versus last year. As a result, group net income reached EUR 580 million, EUR 11 million higher versus the same period of last year. Let's now move to CapEx analysis at page 13.
In the first nine months of 2021, total CapEx amounted to EUR 925 million, 23% higher than last year, showing a robust acceleration to enable the ongoing energy transition process and to support the decarbonization path. Indeed, we invested about EUR 882 million in regulated activities. Among the main projects of the period, it is worth mentioning the Paternò-Pantano-Priolo in eastern Sicily, the interconnection between Italy and France, the rationalization of Turin's metropolitan area. Moreover, let me underline the investment in stabilization devices, such as synchronous compensators, mainly located in southern Italy, that will enhance the grid stability. Among CapEx categories, development CapEx represented 37% of total CapEx. Defense stood at 18%, while asset renewal and efficiency was 45%. Non-regulated and other CapEx stood at EUR 43 million. That includes capitalized financial charges and other investments.
Regarding net debt and cash flow analysis, we turn to page 14. Net debt at the end of September 2021 was EUR 9,573 million, EUR 400 million higher than 2020 year-end level. Let me say that we generated an operating cash flow of EUR 1,020 million, thanks to which we were able to more than cover the CapEx spending over the period. Now, let's make a deeper analysis of our debt profile, moving to page 15. Our prudent and proactive debt management structure is aimed at keeping our vast and diversified financial structure. Indeed, at the end of these nine months, we registered a fixed over floating ratio gross debt of about 9% and an average duration of about five years.
In line with our strategy of combining sustainability and growth to promote the energy transition, last July, Terna signed an agreement for a EUR 300 million loan with the European Investment Bank at very competitive conditions, represented by a 22-year loan to strengthen, develop the national transmission grid, supporting the 2021-2025 Industrial Plan. Moreover, as already mentioned, just a few days ago, Standard & Poor Global Ratings raised Terna's outlook from stable to positive and affirmed the company's long-term and short-term ratings respectively at BBB+ and A-2. Regarding shareholder remuneration, in line with our dividend policy, on 24th of November , we will pay the 2021 interim dividend of EUR 0.0982 per share, as decided in today's Board of Directors.
Lastly, regarding the adjustment of weighted average cost of capital, in the next few days, we expect the second consultation document by the Italian authority, while the final resolution is expected by year end. Consequently, let me remind you that the new index of industrial plan will be presented in the first month of 2022. Thank you very much for your attention. We are now ready for the question- and- answer session. Thank you.
We are ready for the Q&A. If the operator can switch off the first one, please.
Our first question comes from the line of James Brand, please go ahead.
Okay, James, you can proceed with your question.
Oh, sorry, I didn't hear you say my name. Good afternoon. I just had a question on the funding actually, on the EIB debt, because normally it's pretty good to issue EIB debt. The rates are normally very favorable. I guess there's two parts to the question. Firstly, what rates did you get on the EUR 300 million that you issued? Secondly, do you think this is a one-off to be able to access EIB debt? Or do you think you might be in a position where you can continue to access significant amounts of EIB debt year after year? Thank you.
[audio distortion].
Sorry, James, if I may correct the funding. You're asking us about the funding, regarding our last...
The EIB.
EIB.
The EIB, yes. Okay, regarding EIB, the conditions behind that loan are undisclosed. What I can say is that they are extremely competitive and below the official statement we released on the bond that we concluded only a few weeks before. Just for the sake of clarity, it was 0.374% for a seven-year duration.
Okay, brilliant. Do you think you might be in a position where you can continue to raise meaningful amounts of EIB debt year after year, or should we view this as a one-off?
Sorry. Sorry, James, the line was a little bit noisy. Can you kindly repeat your question slowly?
Sorry. I was just asking whether you thought you could continue to raise significant amounts of EIB funding in the future, or whether we should view the EUR 300 million that you raised this year as a one-off?
We do consider EIB an excellent counterparty, and we have an outstanding relation with them. We consider them a valuable partner also for the future. They are extremely supportive in the financing of our activities, especially in the framework of energy transition. I am more assured that we will have additional deals that we will strike with them.
Thank you very much.
We have the next question coming from the line of Sara Piccinini from Mediobanca. Please ask your question.
Hi, good afternoon, and thanks for taking my questions. The first question is on the good news that you received on the Tyrrhenian Link. So this obviously accelerate the process for the development of the cable, but what do you think about the delays in the investment in renewable energies and what could be done to accelerate the process so to help the system to actually deploy renewable energies and then transfer this energy through the Tyrrhenian Link? If you think that offshore energy could be a solution to accelerate the process. The second question is on the regulation. Is there any update on the next regulatory document of ARERA? Should we expect that for this week?
Also, what do you expect for the implementation of TOTEX that will now start the consultation process? Last question is about the cost inflation. You said that on the Tyrrhenian Link you already had made a procurement, so you should be protected on that. In general, would you expect in the future some of the higher commodity prices that we see today to reflect also on the CapEx for your raw materials for your cables? Many thanks.
Thank you very much, Sara, for your question. First of all, Tyrrhenian Link, indeed, it was an excellent news, the fact that now we have the formal launch of the authorization process of this really relevant infrastructure. Let me remind you that we are talking of a total investment cost of around EUR 4 billion, of which EUR 1.9 billion are included in the 2021-2025 Industrial Plan. It is pretty important. It is an ambitious plan. We always say that, I am sure you remember this, that we ask to the government, to the institution, a sort of fast track of authorization, given that normally the time needed for the authorization is longer. Things are moving as expected. I think that this is really an excellent news. It is a strategic plan.
There is the connection, strategic connection between the mainland, Sicily and Sardinia. You know, there is already an open discussion about the energy future of Sardinia. I think that this will be one of the main important, maybe the most important enabling factor for the energy sustainability of the island. Regarding your second question on offshore. Offshore, for sure, is an interesting element that is popping up more and more. We have a lot of requests. We have already received a lot of connection requests coming from private entrepreneurs and private operators. Today, we do not include costs related to the connection of offshore wind in our business plan. They are for the moment out of our forecast.
If we should consider them, it will be relevant upside because you can easily imagine that the cost of this kind of connection is pretty high. Up to date, there is no impact, if any, we will have possibly. Let me say that is a little bit maybe too early to comment on this because we are at the beginning of the discussion. It will be a first of a kind in Italy, so I think that we will have more time in the future to comment about that. Third question, updating process of the WACC. Well, let me say, I think that today is the worst day to comment on it, given that we are expecting something new coming between tomorrow and the end of the week.
Honestly, I can only confirm that we have received the first document that described the methodologies, the processes and the variables with a very wide range. We have participated to a consultation process. We agree with the approach proposed by the authority based on continuity of the regulatory principles, the concept of graduality. We know that on one side we have seen a reduction of the cost of corporate debt, but also we assisted to a period that was all out of standard periods because the observation period started in November 2020 and ended in November 2021, was a period in which the fluctuation of interest rates was not a market fluctuation, but was something related to decision coming from central government. I think that all the elements are in the hand of the authority to take their final decision.
The final decision will not arrive this week. It's something that we'll understand with the publication of the final resolution that historically comes up normally at the end of December. What we can expect is that in any case, reasonable and gradual impacts will be compensated with our managerial action. Let me also add that the regulator has shown a consistent track record that has been always proven and considered reasonable. They were always able to catch the historical moment. I have no doubt that this will be the case also for the future. Application of TOTEX, nothing new. I expect that principle will be introduced starting from 2024 onward. On this, I confirm what I said several times.
We have not any relevant concern about the application of TOTEX. The application of TOTEX will be a sort of access to a profit-sharing respect to the general level of benefits that we will provide to the system. We are not in the position to imagine which will be the formula, the mechanism that the authority will introduce, but we already have the order of magnitude of such benefits. We do operate already in line with the methodology designed by the authority. We are already obliged to present a cost benefit analysis for each project that we include in the development plan. We do consider that the level of benefits is huge. We expect that we will confirm the same principle of continuity with the current tariff structure that we have today.
Final question was about inflation. That's for sure, there is. It's an interesting matter now, and there is of course an impact on price of raw materials. I think that this impact we can divide a short-term impact on cash, but it will be quite marginal. We have, as you know better than me, a huge flexibility. In the midterm, I do expect a neutral or a positive input, because inflation will affect our RAB in the mid long term. At the end of the process, will provide us additional remuneration. Regarding price evolution, not concerned at all. Let me say there is something regarding availability, of course, and this is something that we are analyzing and monitoring quite strictly on the non-regulated side.
We have to purchase aluminum, we have to purchase copper for Brugg activity, for Tamini activity, and we reinforced a lot the anticipation of the purchasing process in order to secure the manufacturing process of our affiliates.
Very clear. Many thanks.
Thank you for your question. As a reminder, if you wish to ask a question, please press star one on your telephone keypad. We have the next question from the line of Stefano Gamberini from Equita SIM. Please go ahead. Your line is open.
Good afternoon, everybody. Two quick questions. Regarding the trend of cost on one side, if you can give us, sort of guidance for the full year, both on regulated and unregulated costs. The second regarding then non-regulated activities, you underline that, in the nine months, the EBITDA should be in line with, nine months 2020, excluding one-offs. However, what do you expect, for the full year and the progression, that we could expect on 2022? Or do you see some risk related to the, procurement activity in Brugg and Tamini? The second, regarding the trend of, CapEx. In the nine months, these were up 20.23%, if I'm not wrong. You confirmed the EUR 1.4 billion of CapEx for the full year.
Could we expect a further acceleration in 2022, even excluding clearly the investment for Tyrrhenian Link or Adriatic Link that will arrive later on? Thanks a lot.
Regarding your first question, we are not going to provide any guidance for our level of OpEx. Let me say that we are exactly in line with expectation, and we are still moving toward the path of efficiency that we already announced a few years ago. The ratio between the asset base and the total cost is going to be reduced with respect to the past. We are still on that path. Of course, we have an increase in absolute terms that is less and less, let me say, proportional to the increase of our asset base. This is the consequence of an increasing level of digitization in our operation and maintenance activities, and also is a consequence of the massive reorganization process that the company put in place to accelerate the CapEx process.
Let me say that this was a company that was spending EUR 600 million-EUR 700 million per year only a few years ago. Now we are firmly above EUR 1 billion. The guidance that I confirm for 2021 is EUR 1.4 billion. We are doing that more or less with the same size in term of FTE, so I think that this is the most important sign of efficiency that we can show to you. Regarding, let me say, general efficiency, we confirm EUR 1.84 billion of EBITDA for 2021. We have, as you have seen, we have an excellent year regulated business side. We have a very good year on the regulated side.
We have some delays in the realization of TPs of the international sector, especially in Brazil, but we do consider this guidance fully achievable. Further potential acceleration of CapEx. This is something that we will discuss more in detail the moment we will present the new business plan and the guidance for 2022. What can I say today is that we are accelerating. We are at the beginning, let me say, of the acceleration process, so it's a little bit early to anticipate, but I do expect a sort of continuity in the size of investment that we have to provide in the coming years.
Many thanks.
Thank you for your question. We have the next question from Roberto Ranieri from Intesa Sanpaolo. Please go ahead. Your line is open.
Yes. Thank you for taking my question. Good afternoon, everyone. Three questions, if I may. Some of them are follow-ups. The EBITDA decline in the non-regulated and the international activities, the -EUR 16 million decline. Are there any one-off items or items which could have some recovery in the next quarters or so basically and specifically which are the main drivers which led to this EBITDA decline? My second question is on the renewables sector as a whole. We understand that the simplifications, the decree on simplifications, is not doing its path, is not working very well.
I'm wondering if there are some actions from the government which could be given and made in order to accelerate the authorization process for the onshore wind and solar. My third question is cost inflation again. In particular on the supply chain also, cost inflation and delays. Are you suffering from these kind of problems at the time? Brugg, the Brugg acquisition could, we imagine that Brugg acquisition could accelerate and cover some of the problems in the supply chain, or Brugg itself is also suffering these kind of issues.
Thank you very much.
Well, regarding the mentioned EBITDA decline, it is not a decline. I think that you are referring to page 11, and I said during my speech, the decrease was only, let me say, nominal, given that you remember that last year we have accounted a relevant value increase, post acquisition increase coming from Brugg. The total amount at the end level was something in the region of between EUR 80 million and EUR 90 million, respect to what we paid. It was additional value respect to the value we paid. So if you exclude this impact, the regarding non-regulated activities, 2021 is an excellent year. Things are moving quite well. There is a pretty interesting increase of the order intake of Tamini. There is a pretty interesting increase in the order intake of Brugg.
Let me continue on these aspects. I will address also your third question, and I will come back on renewables in a few minutes. Well, let me say this. If you look to Tamini and Brugg, we are talking about an unregulated market, so it is important that these activities will generate profit. This profit is important for us, but it's not, let me say, strategic for how our general profitability. If Brugg and Tamini will perform an excellent year, we will have EUR 10 million, EUR 20 million of contribution. That is important. They will perform a bad year, they will consume EUR 10 million, EUR 20 million.
Nothing will change, of course, from data level, because we are talking of a group that will show EUR 1.8 billion, even more, at the end of 2021. For sure, if we spend money on non-regulated side, we want to be profitable, and this is what we do. There is something that is more and more important. We are investing in non-regulated business because they are part of our regulated profile. We do invest money in Brugg because Brugg produce cables, and we do consider cables a strategic asset for the development of the future grid. Cables have been always considered as a sort of exception in the electricity system. Now they are not anymore an exception.
If you consider the 10-year development plan, more than 60%, 550 new installation will be realized through underground or submarine cable. You can easily imagine how it's important to have now colleagues coming from other cultures, coming from other countries, that will have in their hand the knowledge, the skills to analyze, to discuss, to be counterpart of our external provider. It was not the case until today. Until a few years ago, we did not have any access on strategic industrial and engineering information about cable infrastructure, and the same was on transformers. Now, in a framework of energy transition, we will see an increasing importance of these elements of our grid. Have the knowledge, have additional skill of this is more important than EBITDA. We have also EBITDA impact.
While we are talking, we have concluded the first part of the procurement process for the Tyrrhenian Link. You remember that when you realize new infrastructure, we have to provide anticipated authorization process. This is what we did for Tyrrhenian Link, and also anticipated procurement process. You can easily imagine how it was important to have, for the first time, cable expert in the table of negotiation with Prysmian and Nexans. We are extremely happy for the outcome of this negotiation. Now we have, let me say, an additional negotiation power and additional knowledge that will protect development of the company in the coming years. This is the key. This is the strategic rationale of our investment in non-regulated activity, especially on the industrial side. Your second question about renewables.
Nothing new, with the exception that we continue to see massive increase of the requests for connection. We already received, in 2021, something more than 150,000 MW of additional connection. Of course, we expect that the scrap rate will be in any case higher. We do not expect that all these projects will see the light. This is a signal of the fact that the private market, private operator are pushing a lot to invest in renewables. As usual, the key element here is the authorization process. I think that this is an element that is already at the first point of the agenda of the government.
As you have seen also on Tyrrhenian Link side, when you want to do things, it is possible to do things. We do expect that the government will take action to facilitate the authorization process.
Thank you very much. Very clear.
Thank you for your question. As a reminder, if you wish to ask a question, please press star one on your telephone. The next question is from Enrico Bartoli from Stifel. Please go ahead.
Hi. Good afternoon. Thanks for taking my questions. A couple left. One is related to the Adriatic Link. You mentioned that the first phase of the authorization has been completed. If you have any visibility on when the second phase will start, similarly to what has been announced recently on the Tyrrhenian Link. On the Tyrrhenian Link, you provided some, let's say, granularity on the expected years for the start of operation of the asset in 2025-2028.
Would it be fair to say that the contribution to EBITDA in the target of the current business plan from this project is still limited considering the treatment of work in progress, and then most of the contribution will be after 2028 when the project is completed. The very last one is related to the business plan update, if you have already decided on any date, any period when you plan to update the current business plan. Thank you.
Well, regarding Adriatic Link, we are talking about more or less EUR 1 billion, EUR 0.9 billion to be precise, total investment cost that will start a little bit later than Tyrrhenian Link. Strategic project, and in line with what I said before, fully in cable technology. The authorization process is just at the beginning, but we do not see any issue for the moment. Second question was related to the Tyrrhenian Link. Tyrrhenian Link will start operation in 2025. Let me say that the expected commissioning date on the first link is in 2025. The full project will be completed in 2028. You can consider that you will see relevant investment in 2024 and 2025, so you will see a first tariff impact starting from 2025.
Given that, the remuneration of work in progress related to the project will be based on the investment spent in 2024. We do expect that 2024 will be the first year in which you will see relevant amount. Regarding your last question on business plan, I do expect to receive the consultation document of the authority in the coming days. We do expect to receive the final resolution by the end of the year. Let's imagine that you can consider that, at the end of the first quarter. By the end of the first quarter of 2022, as usual, we will update our business plan.
We are not in the position to confirm any date for the moment, but more or less in the same time frame, maybe one week later, we will respect the presentation of the year-end financial account. We will communicate on this.
Thank you.
Thank you for your question. There are no more questions. I will hand back the conference over to the CFO.
I really thank you for your time. I do apologize for some connection issue at the beginning of the Q&A. Thank you again, and see you in the year-end presentation. Goodbye.