Ladies and gentlemen, thank you for standing by, welcome to Terna First Half 2020 Results Presentation. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question and answer session. To ask a question during the session, you will need to press star one on your telephone and wait for your name to be announced. I must advise you that this conference is being recorded today. Now, I would like to hand the conference over Omar Al Bayaty, Head of Investor Relations. Please go ahead.
Good afternoon, everyone, and thank you for joining Terna First Half 2020 Results Presentation. It's my pleasure to introduce you Terna CEO, Stefano Donnarumma. Stefano, the floor is yours.
Good afternoon, everybody. Welcome to the First Half 2020 Results Presentation. Last May, the AGM appointed the new Board of Directors with Valentina Bosetti as the Chairwoman and myself as the CEO. I found a very solid and healthy company with high competencies and know-how, which will continue to grow in a sustainable way as it has done in the recent years. In these first two months, I have met a very motivated management team and colleagues that I would like to thank for their support. Together, we will do our best for Terna and its stakeholders. I strongly believe Terna is a fundamental asset for the country, therefore, I am very proud to lead such a strategic company. We want to enhance Terna's central role in the energy transition while contributing to the Italian recovery through our investment, with a constant attention towards value creation and our stakeholders.
Now, before starting to analyze the figures, I would like to share with you a snapshot of the main achievements of the period. As shown in the chart regarding domestic regulated activities, we can confirm no relevant impact coming from the COVID-19 emergency, with the full restart of the main construction sites. Moreover, important steps forward have been done in terms of authorization procedures in order to accelerate our investment. Regarding the non-regulated, we consolidated Brugg Cables, for which the closing was signed at the end of February. Concerning international, our lines in operation in Brazil and Uruguay proceeded in line with the expectations. Finally, let me remind you that in June, we paid EUR 0.1653 per share as the final 2019 dividend. It is relevant to underline that during the COVID-19 emergencies, employees' health and safety have been a priority for Terna.
Indeed, Terna promptly introduced all the necessary measures to guarantee the continuity of the electricity service in full safety. This will be the case also in the future. We have started a progressive and safe reintroduction of our employees in the offices. After this introduction, let me start with the presentation with the latest trend of the electricity demand in Italy. Turning to the next slide. In the first six months of the year, due to the lockdown measures imposed by the COVID-19 health emergency, national demand was 144 TWh , 8.9% lower versus the same period of the last year, when national demand was about 158 TWh . Mind that in April, we registered the strongest decrease with a -17% compared to April last year, slightly recovering in May and June with the -10% and -15% respectively.
Let me also highlight that in the first six months of the year, renewable sources covered 40.5% of the demand, compared to the 35.5% in the corresponding period over the last year. Concerning national net total production, this is stood at 151 terawatt hours, with a strong increase registered in solar and hydro production, which grew by 9% and 8% respectively, versus the same period of last year, confirming the strong growth trend for renewables already highlighted in the past months. Despite the challenging situation on the electricity market caused by COVID-19, Terna was able to manage the grid, ensuring a high quality of service and security of supply for final users. Let's move to the main figures of the period.
In the first six months of the year, group revenues and EBITDA were up by 8% and 4% respectively, which means EUR 85 million and EUR 30 million higher than last year. Moreover, we reported a group net income of EUR 378 million, EUR 11 million higher versus last year. While group CapEx stood at EUR 428 million, 8% more than the first half of the last year, confirming the strong CapEx acceleration even in this complex scenario. To support this CapEx acceleration, our net debt stood at EUR 8.85 billion versus about EUR 8.3 billion at year-end last year, fully in line with our expectation and following usual seasonality effect. Now, I will leave the floor to Agostino Scornajenchi for a deeper analysis of the figures.
Thank you very much, Stefano. Good afternoon, everybody. Let's now start with revenues analysis at page eight. Total revenues in the first six months of 2020 increased by 7.8%, reaching EUR 1,183 million, up by EUR 85 million versus the same period of last year. The growth was mainly attributable to regulated activities, which contributed for more than EUR 20 million. Moreover, mind that from this quarter we consolidated the newly acquired Brugg Cables, a leading operator in the underground cable sector, for which the closing was signed at the end of February.
Let's now go into the details of the regulated and non-regulated revenues evolution. Moving to the next slide. Regulated revenues reached EUR 1,025 million, EUR 20 million better than last year. The increase reflects tariff evolution driven by our investment activities, while other regulated revenues increased by EUR 9 million, mainly as a consequence of higher revenues related to the quality of service.
Non-regulated and international revenues reached EUR 158 million, about 7% higher than last year. This growth was mainly due to the integration of Brugg Cables and the higher contribution deriving from private interconnector projects. Let's go to operating cost analysis at page 10. As shown in the chart, total operating costs stood at EUR 307 million, 22% higher than the last year. The increase was mainly attributable to group consolidation and to Terna's volume dynamics, partially offset by lower costs related to quality of service. For a deeper analysis of the group OpEx components, let's turn to the next slide. Starting from regulated operational expenses, we reported EUR 197 million, substantially in line versus last year, despite the strong increase of our asset base. Non-regulated and international operating expenses amounted to EUR 111 million, EUR 49 million more than last year, mainly due to Brugg Cables' integration.
Net of this perimeter effect, non-regulated and international operational expenses registered an increase of about EUR 7 million, showing the cost dynamic fully under control. Let me now analyze the EBITDA, moving to the next slide. Considering the above-mentioned effects, group EBITDA reached EUR 876 million, EUR 30 million better than last year. We registered positive EBITDA contribution in both core regulated and non-regulated and international activities, which grew by EUR 14 million and EUR 16 million respectively versus last year. This increase was mainly attributable to higher regulated revenues, as well as to the contribution coming from Brugg Cables acquisition. Let's now have a look to the lower part of the profit and losses, turning to page 13. Depreciation and amortization amounted to EUR 302 million. The increase versus last year was mainly due to the impact of new assets becoming operational in the period.
EBIT reached EUR 574 million, EUR 16 million higher versus the first half of 2019. We reported net financial expenses at EUR 29 million, substantially in line with the same period of last year. Taxes stood at EUR 165 million, with a tax rate of 29% on average, almost in line with the same period of last year. The group net income reached EUR 378 million, EUR 11 million higher versus the same period of last year, despite a higher depreciation and amortization level linked to the mentioned acceleration of investments. Moving to capital expenditure analysis at page 14.
For the first six months of 2020, total CapEx amount to EUR 428 million, 8% higher than the same period of last year, despite the suspension of the main construction sites as a consequence of the restrictive measures linked to the COVID-19 emergency, confirming Terna's great ability to pursue its objectives despite the critical situation. Indeed, we invested about EUR 401 million in regulated activities. Among the main projects of the period, is worth mentioning the Naples aerial reconductoring, the realization of synchronous compensators, and asset renewal. Among CapEx categories, development CapEx stood at EUR 141 million, which means 35% of total regulated CapEx. Asset renewal and efficiency was EUR 191 million, so 48%, while defense CapEx was EUR 69 million, representing the residual 17%. Non-regulated other CapEx stood at EUR 27 million, which includes capitalized financial charges and other investments.
Regarding net debt and cash flow analysis, net debt at the end of the first six months of 2020 was EUR 8,846 million, EUR 588 million higher than 2019 year-end level, mainly as a consequence of the CapEx acceleration made on the national grid, the final 2019 dividend and taxes paid in June, and some regulatory pass-through items. Let me confirm that on the working capital side, we registered no relevant delays on cash settlement, thus no issue with bad debts. Moreover, the delta working capital increase shown in the chart was related to the increase of service market payments connected to the tariff evolution that will be reabsorbed in the coming months. Let's now make deeper analysis of our debt profile at page 16. Our debt management approach is aimed at keeping a high level of efficiency and a solid financial structure, prudentially mitigating any potential financial risk.
Indeed, at the end of the period, we registered a fixed over floating ratio on gross debt of about 8% at an average duration of 4.5 years. As a consequence of the proactive debt management activities delivered, cost of net debt at the end of the period remained in line with year-end 2019. Finally, let me just remind you about Terna's rating confirmation made by all the main rating agencies and the renewal of the EUR 8 billion EMTN bond program. Just a few days ago, we launched the new green bond addressed to institutional investors for a total amount of EUR 500 million and an actual cost equal to 0.78%, the lowest ever among Italian corporates for a green bond and for issues over 10 years, demonstrating Terna's leadership role in sustainable finance.
Now, before to start the Q&A session, let me leave the floor to Stefano for his closing remarks.
After having illustrated the strong set of results of the period, let me conclude my first results presentation as a chair with some closing remarks. Firstly, Terna's focus will continue to be domestic core activities to further reinforce and even increase Terna's leading role in the energy transition process in order to generate greater value for all stakeholders and for whole country. Thanks to our managerial effort, we will ensure that we maintain the company's low risk profile and preserve our solid financial structure. Despite restrictions imposed by COVID-19 emergency, we can confirm all our targets. I am sure that our strong commitment and enthusiasm will guide us into a future growth and allow us to face all forthcoming challenges.
Indeed, we are already working on the new strategic plan that we foresee to present in the last quarter of this year. Thank you for your attention. We are now ready to open the Q&A session.
Thank you so much. Ladies and gentlemen, we will now begin our question and answer session. If you wish to ask a question, please press star one on your telephone and wait for your name to be announced. If you wish to cancel your request, please press the hash key. Once again, please, if you wish to ask a question, press star one on your telephone and wait for your name to be announced. Thank you so much. The first question will come from the line of Harry Wyburd from Bank of America. Please go ahead.
Hi. Good afternoon, everyone. Thanks for taking my questions. I've got three. Firstly on CapEx, I think you kind of alluded in the press release to an acceleration in CapEx and the revision for the long-term plan. What kind of timeframe could we have on that? Typically, you update the market in spring or in sort of March time, but I guess things are moving very quickly with the crisis and of course, with the European stimulus. Just interested to know, if you are indeed going to raise your CapEx, how quickly could we get an update on that? Second question is just on the sort of mechanics of increasing your investment. Obviously, there's a big push from the top down, from Europe to increase investment, clearly from Italy as well.
You operate in a permit-driven environment and a lot of these permit and license and so on, decisions are taken very locally. Do you think the permitting process in Italy can keep up with the desire to raise investment? Will you be able to get the necessary permits to significantly ramp your CapEx any further, given that you've already ramped it significantly in the last couple of years? Third question, just very broad based on the strategy. I think under the previous CEO, there was quite a strict policy on international investment, and you're kind of unique now in that you're one of the only one out of your peers who've sort of avoided having massive adventures in the U.S. or in Latin America or even in space for some of your peers.
I guess that purity of earnings is sort of showing in so far as, you've had a very good earnings trajectory this year, and there's not many things to worry about in your numbers. I'm interested to know, do you think that sort of strict discipline on basically limiting your footprint in foreign markets is going to continue? Do you think there might be a change on that front? Thank you.
Starting on the CapEx acceleration. My first consideration is that, as you may understand, during this spring, we had some difficulties to proceed on our CapEx activities, regarding the stock activities coming from the emergency, COVID-19 emergency. Our organization was able, during the last month, to start again with all the activities and to accelerate week by week. As of the moment, we are more than 100% in terms of production activities, productivity of investments. My opinion is that, we will be able to arrive in the end of the year in line with the prospective of investments. I think that this opportunity for us to accelerate investments will be also used in the planning of the new program for investment.
Because the needs in our country and for this kind of network and, also, by considering the needs of the energy transition period, will allow us to consider also new investments and possible acceleration. Also related to this topic, it's important to consider the authorization process. In this period, as you probably know, in Italy, the government is working on simplification decree, and we consider this is an opportunity for us. We want to approach to the new planning also by considering a shorter time to implement investments. It's an opportunity for Terna. Regarding international activities, at this point, we are going on with the normal activities and program and process. There are some opportunities, but our position is in any case, to stay at a low capital level.
Low risk.
low risk profile. In the meantime, it's interesting to proceed with our program.
Very clear. Many thanks.
Thank you so much. The next question comes from the line of Enrico Bartoli from MainFirst. Please go ahead.
Hi. Good afternoon, sir. Thanks for taking my question. First of all, I want to wish good luck to Mr. Donnarumma for the new adventure. three questions on my side. First of all, on the non-regulated revenues. There was a very sharp increase in the contribution in the second quarter. You highlighted that this is partially due to the consolidation of Brugg Kabel. If you can give us some details about the contribution of Brugg to revenues and EBITDA and also elaborate, give some details about the evolution of the other non-regulated revenues in the quarter and if this trend can be assumed also for the next quarters. Second question is regarding the debt. Mr. Scornajenchi highlighted the success of the green bond.
If you can update us on the cost of debt that you expect for the full year, and if you think that the credit markets in this moment would provide additional opportunities for Terna to optimize the cost of debt. The last one is on the working capital, that evolution that you highlight in the presentation. I was wondering if this EUR 400 million increase in the first half is going to be partially reabsorbed during the second half. If you can provide some details on the evolution by this side as well. Thank you.
If I may step in.
Yes.
Thank you very much. Enrico, let me start from the first question you made about the integration of Brugg. We acquired this company, 90% stake of this company, Brugg Kabel. Again, it's a Swiss leading operator in underground cable sector, expert in design and development, let me say, manufacturing, installing.
Electrical cables and joints of all voltage level and accessories. You immediately understand the level of synergies that we can squeeze with the integration with Terna, that has an increasing need in term of installation of this type of infrastructure. Let me also highlight, the first of a kind, the integration of this sector between a TSO and a cable manufacturer. In terms of figures, the contribution from Brugg, of course, comes from the level of revenues. We are talking of a company with an average of EUR 100 million, more or less, of yearly total revenues. What you see in the first half 2020 figures is more or less 50% of this.
Plus, the fact that we also reassess the value of the price, we acquired the company at a very competitive price, so we also performed the first stage of PPA, of purchase price allocation process, with a slightly positive contribution in our accounts. This of course will continue for the rest of the year, let me say that this integration was already included in the guidance we communicated to the market. Regarding the green bond and the evolution of the net debt, I think that we can confirm what we already said at the end of March. We have an average cost of debt of 1.4% on the business plan horizon. That is confirmed. For 2020, we expect something in the region of 1.2%. Finally, regarding working capital evolution, it is a consequence of the evolution of the energy market in the particular framework of the COVID-19 emergency.
The cost of ancillary services increased a lot in order to provide services and real-time services, especially MSD, in a very complicated scenario. As you know, this kind of cost are charged on Terna on a first stage, and on a second stage, Terna invests this cost and also the payment to the system. Now we have a slight increase in working capital that will be 100% resolved, let me say, between the end of the year and the first quarter of 2021.
Thank you.
Thank you so much. As a reminder, please, if you wish to ask a question, press star one on your telephone and the hash key to cancel your request. Once again, please, if you wish to ask a question, press star one on your telephone and wait for your name to be announced. The next question comes from the line of Stefano Gamberini from Equita SIM. Please go ahead.
Good afternoon, everybody. A few questions, if I may. Regarding the situation of renewables in Italy. The Minister of Economic Development underlined some difficulties in the situation in terms of authorization for renewables. Now the rate is in the region of 500 MW per year versus 4,000 MW required by EU targets. Could you help us understand if the situation is changing in some ways, also after the publication of the simplification decree, or how you can stimulate this new installment of renewables, also to justify the acceleration of your future CapEx in connection? Regarding the request from retailers, which are protesting against the rules which force them to pay taxes and fees for the networks, even for the unpaid bills. Do you see some risk of intervention from the regulator in the second part of the year?
The third, coming back on this simplification decree and the new rules that were introduced, you underlined that there is a shortage period right now to get authorization. Is this significant and relevant for you? In particular, I'm interested to understand if we can expect some step ahead in the authorization of the new interconnector between Italy, Sicily and Sardinia that should arrive at the end of your business plan. Many thanks.
To the first question, I can give you my impression, we will see if in our next strategic plan, we will try to consider this aspect. Terna may have a role in terms of enabler of this renewables development. It's really important to well define with the authorities, which is the new approach on authorization. You are right, it's important. My opinion is that it's important to create a critical mass in Italy on this topic. We will see which kind of opportunity we can catch on this. I can give you also a short answer on simplification process. It's in line with what I said before, in any case, we are also giving some suggestion t o the person that inside the government has to decide on this topic, like every company are doing it at the moment.
What I can say is that in Italy at the moment, regarding great infrastructure and important investment planning, everybody feel necessary to simplify this process. It's important to start again with economy and with production activities. I think that something will happen really in the next months, and we are ready. For the second question about the risk for our earnings, I can Yes.
Let me confirm that also from a financial standpoint, the level of resilience of Terna Group is impressive. We expect, on a monthly basis, cash ins in the region of EUR 160 million, EUR 130 million. That has been paid on time, even in a very complicated scenario.
Let me remind you that the energy authority issued a specific resolution at the beginning of the emergency, confirming that the transmission tariff is due by law. This is what happened. We have not registered any kind of delay in the cash ins from the distributor, and we do not expect any kind of delay, even in the coming months.
Okay. Thank you so much. Bear with me one second, please. Thank you so much. We have a last question from the line of Sara Piccinini from Mediobanca. Please go ahead.
Hi. Good afternoon, thanks for taking my questions. I have two. The first one is on your CapEx. We have seen some interventions in the last two months regarding the rationalization of the network with new underground cables. Can you elaborate on the rationale of these interventions and if they will bring any cost efficiencies? The second question is a general question, is, how do you see the development of hydrogen together with electricity networks, and would Terna be interested in any international project? Many thanks.
Regarding underground cables, sure it will be a topic on the plan also because it's a need of the territory and an opportunity for us. Regarding hydrogen, I think, speaking like an engineer, not like a CEO of Terna, it's clear that it's an interesting opportunity for energy market, storage market and so on. I think it's absolutely necessary to stay in this game. Terna, also in the future, is not the main player for this. In any case, it's important for the system to stay in the game.
Thank you so much. We have no further questions at the moment, so we will conclude the conference now.
Okay. Thank you to everybody for your attention, and see you. Bye