Ladies and gentlemen, thank you for standing by and welcome to Terna First Half twenty twenty Results Presentation. At this time, all participants are in a listen only mode. After the speakers' presentation, there will be a question and answer session. I must advise you that this conference is being recorded today. And now I would like to hand the conference over Omar al Vajati, Head of Investor Relations.
Please go ahead.
Good afternoon, everyone, and thank you for joining First Half twenty twenty Results Presentation. It's my pleasure to introduce you, Terna's CEO, Stefano Donnarumma. Stefano, the floor is yours. Good afternoon, everybody. Welcome to the first half twenty twenty results presentation.
Last May, the AGM appointed the new Board of Directors with Valentina Poceti as a childwoman and myself as a few. I found a very solid and healthy company with high competencies and the knowhow, which will continue to grow in a sustainable way as it has done in the recent years. In these first two months, I have missed a very motivated management team and colleagues that I would like to thank for their support. Together, we will do our best for and its stakeholders. I firmly believe Terma is a fundamental asset for the country and therefore I am very proud to lead such a strategic company.
We want to enhance Terma'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 and regulatory activities, we can confirm no relevant impact coming from the COVID emergency. With the fullest 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 Bruck cables for which the closing was signed at the February. Concerning international, our lines in operation in Brazil and Uruguay proceeded in line with expectations. Finally, let me remind you that in June, we paid €0.1653 per share as a final 2019 guidance. It is relevant to underline that during the COVID 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 servicing 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 first six months of the year due to the lockdown measures imposed by COVID emergency, national demand was 144 terawatt hours, 8.9% lower versus the same period of the last year, when national demand was about 158 terawatts hour.
Mind that in April, we adjusted the strongest decrease with a minus 17% compared to April, likely recovering in May and June with minus 10% and minus 15% respectively. Let me also highlight that in the first six months of the year, variable resources covered 40.5% of the demand compared to the 55.5% in the corresponding period over the last year. Concerning national net total production, this stood at 151 terawatt hours with a strong increase registered in solar and hydro production, which grew by 98% respectively versus the same period of last year confirming the strong growth trend for renewables already highlighted in the past month. Despite the challenging situation of on the electricity market caused by COVID, TENNA was able to manage the grid ensuring a nice quality of service and security of supply for panel users. Now 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 84% respectively, which means 85,000,000 and €13,000,000 higher than last year. Moreover, we reported a group net income of €378,000,000 €11,000,000 higher versus last year, while group CapEx stood at four twenty one sorry, four twenty eight million, 80% 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 €8,850,000,000 versus about €8,300,000,000 at year end last year fully in line with our expectation and following usual seasonality effect. Now I will leave the floor to Agostinos Konagendi for a deeper analysis of the future. Thank you very much, Stefano.
Good afternoon, everybody. Let's now start with revenues analysis at page eight. Total revenues in the 2020 increased by 7.8% reaching $1,183,000,000 dollars up by $85,000,000 versus the same period last year. The growth was mainly attributable to regulated activities, which contributed for more than €20,000,000 Moreover, mind that from this quarter, we consolidated the newly acquired Blue Cable, a leading operator in the underground cable sector, for which the closing was signed at the February. Let's now go into the details of the regulated and non regulated revenues evolution.
Moving to the next slide. Regulated revenues reached $1,025,200,000 better than last year. The increase reflects tariff evolution driven by our investment activities, while other regulated revenues increased by $9,000,000 mainly as a consequence of higher revenues related to the quality of service. Noted related and deformational revenues reached $158,000,000 about 70% higher than last year. This growth was mainly due to the integration of group cable and the higher contribution deriving from private interconnector projects.
Now, let's go through operating cost analysis on Page 10. As shown in the chart, total operating cost stood at $3.00 $7,000,000 22% higher than the last year. The increase was mainly attributable to group consolidation and to the negative 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 $197,000,000 substantially in line versus last year despite the strong increase of our asset base.
Non regulated and informational operating expenses amounted to $111,000,000.49000000 dollars more than last year mainly due to BlueCable's integration. Net of this perimeter effect, non regulated and international operational expenses registered an increase of about €7,000,000 showing the cost dynamic fully under control. Let me now analyze EBITDA moving to the next slide. Considering the above mentioned effects, group EBITDA reached $876,000,000 $30,000,000 better than last year. For registered, all adjusted EBITDA contribution both from regulated and non regulated and international activities which grew by 14,000,000 and $16,000,000 respectively versus last year.
This increase was mainly attributable to higher regulated revenues as well as to the contribution coming from group cable 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 $3.00 $2,000,000 The increase versus last year was mainly due to the impact of new assets becoming operational in the period. As a consequence, EBIT reached $574,000,016 million dollars higher versus the 2019. We reported net financial expenses of $59,000,000 substantially in line with the same period of last year.
Taxes stood at $165,000,000 with a tax rate of 29% on average, almost in line with the same period of last year. Consequently, the group net income reached $378,000,000 $11,000,000 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 June of 2020, total CapEx amounted to 428000008% higher than the same period of last year despite the suspension of the main construction site as a consequence of the restrictive measures linked to the COVID-nineteen emergency and confirming Perna's capability to pursue its objective despite the critical situation. Indeed, we invested about $4.00 $1,000,000 in regulated activities.
Among the main projects of the period, it's worth mentioning the Naples area of rationalization, the evaluation of synchronous compensators and assets asset renewal. Among CapEx categories, the delta CapEx stood at $141,000,000 which means 35% of total related CapEx. Asset renewal and efficiency was $191,000,000 so 48%, while defense CapEx was $69,000,000 representing the residual 17%. Non regulated and other CapEx stood at $27,000,000 which includes capitalized financial charters and other investments. Regarding net debt and cash flow analysis, Net debt at the end of the first June 2020 was 8,846 million dollars $588,000,000 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. So 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 Atlas 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 achieving 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 four point five years. As a consequence of the proactive debt management activities delivered, cost of net debt at the end of the period remains in line with year end 2019. Finally, let me just remind you about Fairmont's rating confirmation made by all the main rating agencies and the renewal of the €8,000,000,000 EMTM bond program. Moreover, just a few days ago, we launched the new green bond, addressed to institutional investors, for a total amount of €500,000,000 and an actual cost equal to 0.78%, the lowest ever among Italian corporates for agreed bonds and for issues over ten years, demonstrating Therma's leadership role in sustainable time. And now, before to start the Q and 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 for 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 the whole company. Moreover, thanks to our managerial effort, we will ensure that we maintain the company's low risk profile and preserve our solid financial structure. Despite the restrictions imposed by COVID 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 and 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. And once again, please if you wish to ask a question, press Thank you so much.
So the first question will come from the line of Harry Webberd from Bank of America. Please go ahead.
Hi, good afternoon everyone. Thanks for taking my questions. I've got three. So firstly, on CapEx, I think you kind of alluded in the press release to an acceleration in CapEx and the revision to the long term plan. What kind of time frame could we have on that?
I mean, typically, you update the market in spring or into March time. But I guess things are moving very quickly with the crisis and, of course, with the European stimulus. I'm just interested to know if you are indeed going to raise your CapEx, how quickly could we get an update on that? And 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, Italy as well.
But you operate in a permit driven environment, and a lot of these permit and licensing decisions are taken very locally. So do you think the permitting process in Italy can keep up with the desire to raise investment? And 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? And then third question is just very broad based on the strategy. 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 have sort of avoided having massive adventures in The U. S. Or in Latin America or even in space for some of your peers. And I guess that purity of earnings is sort of showing insofar as you've had a very good earnings trajectory this year and there's not many things to worry about in your numbers. So I'm interested to know, do you think that, that sort of strict discipline on basically limiting your footprint in foreign markets is going to continue?
Or do you think there might be a change on that front?
So starting on CapEx acceleration. First my first consideration is that as you can as you may understand, during this spring, we had some difficulties to proceed on our CapEx activities regarding the stop of activities coming from the emergency COVID emergency. But our organization was able during the last two months to start again with all the activities and to accelerate And at 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 perspective of investments.
And 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 meetings in our country and for this kind of network and also by considering the meetings 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 short time shorter time to implement investments.
So it's an opportunity for them. 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 and low risk profile. But in the meantime, it's interesting to proceed with our program.
Very clear. Many thanks.
Thank you so much. And the next question comes from the line of Enrico Bartoli from MainFirst. Please go ahead.
Hi, good afternoon. Thanks for taking my question. First of all, I want to wish good luck to Mr. Donaruma for the new adventure. Three questions from 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 Broke cables. If you can give us some details about the contribution of Broke 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. Scognetti 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 like in the presentation. I was wondering if this EUR 400,000,000 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, Stefano, thank you very much. So let start from the first question you raised about the integration of group. So we acquired this company 9% take of this company through cable, again, is a Swiss leading operator in underground cable sector, expert in design and development, let's say, manufacturing, installing electrical cables and joints of all voltage level and accessories. So you immediately understand the level of synergies that we can squeeze with the integration with Turner that does an increasing need in terms of installation of this type Let me also highlight the first of a kind integration of the sector between a DSO and cable manufacturer.
In terms of figures, the contribution from group of course came from the We are talking of a company with an average of €100,000,000 more or less of yearly total revenues. So what you see in the first half twenty twenty figures is more or less 50% of this plus the fact that we also reassessed 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. Of course, will continue for the rest of the year.
And I would say that this integration was already included in the guidance we communicated to the market. Regarding the green bond and the evolution of net debt, I think that we can confirm what we already said. At the March, we have an average cost of debt of €1,400,000,000 on the business plan horizon that is confirmed. And for 2020, we expect something in the region of 1.2 Finally, regarding working capital evolution, it is a consequence no problem. It is a consequence of the evolution of the energy market in the particular framework of the COVID-nineteen emergency.
The cost of balance of ancillary services increased a lot in order to provide services and real time services, especially MST in a very complicated scenario. And as you know, this kind of cost are charged on term on a first stage and on a second stage, term on a rest is cost and also the payment to the system. So now we have a slight increase in working capital that will be 100% absorbed, let me say, between the end of the year and the first quarter of twenty twenty one.
Thank you.
Thank you so much. And the next question comes from the line of Stefano Gamberini from Equestazio. Please go ahead.
Good afternoon, everybody. A few questions, if I may. The first regarding the situation of renewables in Italy, the Minister of Economic Development underline some difficulties in the situation in terms of authorization for renewable. And now the rate is in the region of 500 megawatt per year versus 4,000 megawatt required by AU 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. The second, regarding the request from retailers, which are protecting 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? And the third, coming back on this simplification decree and the new rules that were introduced, you underline that there is a shortage period right now to get authorization. Is this significant and relevant for you?
And 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. Okay.
To first question, I can give you my impression. Then we will see if in our next strategic plan we will try to consider this aspect. Serna may have a role in terms of enabler of this revenue development. But it's really important to what's the plan 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. So we will see which kind of opportunity we can catch on this. Then I can give you also a short answer on simplification process. It's in line with what I said before, but in any case, we are also giving some suggestion to the person that inside the government has to decide on this topic like every companies are doing at the moment because what I can say is that in Italy at the moment regarding a great infrastructure and important investment planning, everybody feel necessary to simplify this process. It's important to start again with economy and with the production activities.
So I think that something will happen really in the next months and we are ready. We are ready. For the second question about the risk for I mean, I can give. Yes. Let me confirm that also from a financial standpoint, the level of resilience of Terma Group is impressive.
We expect on a monthly basis cash ins in the region of €160,000,000 €130,000,000 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 type is still quite low and this is what happened. So 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. So we have last question from the line of Sara Sine from Mediobanca.
Please go ahead.
Hi, good afternoon and 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. You elaborate on the rationale of these interventions and if they will bring any cost efficiencies?
And the second question is a general question is how do you see the development of hydrogen together with electricity networks and would Therma be interested in any international project? Many thanks.
Regarding underground cables, sure it will be a topic under plan also because it's a meaning of a better delivery and an opportunity for us. And regarding Belgium, I think it's speaking like an engineer, not like a CEO of Werner, 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. Terma is not also in the future is not the main player for this. But in any case, it's important for the system to stay in this game.
Thank you so much. So we have no further questions at the moment. So we can conclude the conference now.
Okay. Thank you to everybody for your attention and see you. Bye.