Monica Girardi: Good evening, ladies and gentlemen. A warm welcome to our Full Year 2021 Results Presentation, which will be hosted by our CEO, Francesco Starace' and our CFO, Alberto de Paoli. In this presentation, Francesco will provide some highlights of the period and we'll sum up [indiscernible] while Alberto will walk you through the operational and financial performance for the group. Following the presentation, we will have the usual Q&A session. We ask those connected to the webcast to send question only via email at investor.relations@enel.com.

Before we start, let me remind you that media is listening to both the presentation and the Q&A session. Thank you. And now, let me hand over to Francisco.

Francesco Starace: Thank you, Monica, and good evening, everybody. We are in the chart called key highlights of the year, chart number 2.

Let's start with the highlights of the period. The operating dynamics of 2021 showed a significant recovery of all industrial KPIs with a growth curve, which is now landing at a level back to pre-COVID-19. The recovery of the operating business performance and the contribution of the stewardship business model translated into strong financial results with both EBITDA and net ordinary income at the top of the range up by 7% and 8% respectively year-on-year. We have achieved a new record of additional renewable capacity, which picked up to 5,100 megawatts new build in 2021, 2,000 megawatts, more than 2020. In light of the results achieved and of our remarkable operating and financial delivery, we will propose to the next AGM, a guaranteed of EPS of €0.38 per share for 2021, which is a 6% increase versus 2020 number, and implies a 7% revenue yield at current price.

Let's now move to our positioning across the various businesses. And we are now on chart number 3. On generation, we have further strengthened in our position in renewables with a greener installed base, accounting for 53.4 gigawatts of renewable capacity. This huge renew asset base generated 118 terawatt hour output over the year, allowing us to reach 62% of emission free production in 2021. Our continued investment in grid digitalization resulted in 45 million smart meters installed with the efficient management of our networks to a platform operating business model that allowed us to increase the level service quality with SAIDI down by 6% versus 2020.

The increase in the rate of electrification of our client base has fueled the electricity sold and has driven in parallel growing needs of flexibility and value added services. Focuses on the progress we've made in renewables, we now move to Enel Green Power. This is Slide number 4. As we said, total renewable capacity represented 60% of our total installed base, exceeding the 53,000 megawatt benchmark. We added 5,100 megawatts of renewables this year, marking a step up in our delivery track record.

In this year impacted in particular, by tough logistic dynamics within the sector. We made further progress on coal closure. We shut down 1,100 megawatts in the Bay Area and almost 900 megawatts in Italy for a total of 2 gigawatts springing the cornerstone capacity now below 7 gigawatts. Thanks to a continued effort on the decarbonization renewable production accounts for more than 50% of our 230 terawatt hours total production. Over thinking once again the conventional generation notwithstanding the severe drought we faced in 2021 in many geographies.

CO2 specific emissions reached 227 grams per CO2 per kilowatt hour almost in line with last year due to the lack of idle resources and the 23% lower than the end of 2019. This acceleration is made possible thanks to our pipeline, which is depicted on chart number 5. As of today, the pipeline has reached more than 370 gigawatts. This has broadened the project's optionality and secure and has secured both flexibility of capital allocation and protection on returns. Mature pipeline is now worth around 100 gigawatts out of which around 46 are earmarked for the '22 to '24 period, 50 are already covering projects for the '25, '26 period.

Over the last 12 months, our mature pipeline grew by around 40 gigwatts. The mature and early stage pipeline dynamics positions us optimally for our growth prospects. With respect to 23 gigawatts that are targeted additions for the period '22 to '24. We now stand at over 50% of that target addressed with around 12,000 megawatts currently in execution. The future target is covered 4.8 times, but the related portion of mature pipeline.

This translates into negligible delivery risk and high confidence of achieving even more than this. Moving now to the operating achievements and global infrastructure and networks. You see in chat number six, that in 2021 volumes of electricity distributed increased by 5%, fully recovering the pandemic dynamics across all geographies of operation. This now stands at the level of electricity distributed in line with pre-COVID levels. Our effort to reach quality and efficient targets resulting to remarkable progress with SAIDI, this is down across all grades by around 6%.

Activities on networks remain centered on the digitalization of the networks with installation of 700,000 smart meters in 2021. At the end of last year, around 60% of our 75 million end users and digitize. Let's now take a closer look at customers on Slide number 7. Our position on customers has strengthened in the last 12 months both via our retail traditional operations as well as on services and platforms offered by Enel X. Around 1.7 million new customers have been added in the free market mainly in Europe.

Energy sold in the free market is up to 9% with volume increasing by both B2B and B2C segments driven by economic recovery. Looking at Enel X, the division performed extremely well with double-digit increase recorded in all product lines. More than 130,000 charging points have been added, reaching now the number of 319,000. Storage behind the meter has increased by more than 10 megawatts. 7.7 gigawatts of demand response capacity was offered globally.

Electric buses reached now more than 3.000 units in 2021. Then we move to shareholder remuneration on Slide number 8. The resiliency of the business model, the high standard operating performance and the managerial actions we have put in place, allowed us to deliver sound operating and financial results. Therefore, we would propose a dividend per share of €0.38 per share, up by 6% versus previous year, which implies as I said a 7% dividend yield of the current share price. For 2022, we confirmed the simple and predictable dividend policy presented in November 2021 with a guaranteed fixed dividend per share of €0.4 per share.

Now, I hand over to our Alberto, he will go through the details of the 2021 financial performance. Thank you. Alberto. Alberto

de Paoli: Thank you, Francisco. Good evening everybody.

And I'm now on Page 10 for financial results of the year. EBITDA stood at €19.2 billion up 7% in group net ordinary income came in at €5.6 billion increasing by 8% versus previous year, both at the top of the guidance range. I will say later some non-recurring items into the net income that are waiting on the performance. For now, let me just highlight that excluding the negative impact of liability management and operating and fiscal non-recurring items. Net income would have been up by 23%.

FFO reached €11.8 billion up 3% versus 2020 despite the impact of some temporary regulatory items, adopted to soften the energy crisis that affected the cash flow dynamics for around €1.7 billion. Moving now to an analysis of the period, I will kick off with the EBITDA evolution on Page 11. As said, ordinary EBITDA up 7% versus open the performance in blocks of analysis to make a clear comparison vis-à-vis last year. Starting with the operating growth in 2021, we experience the full recovery of the operating performance across all the businesses which worth €1.3 billion. In particular the lion's share of the braking zone is associated with global power generation where amongst other effects that will dictate later the development of new capacity contributed for around €300 million.

And then the progressive recovery in the level of electricity distributed in Latin, coupled with the quality and digitalization of networks in Europe contributed around €500 million. The uptake of beyond commodity service particular in Italy for €150 million and then a higher level of efficiencies in networks and renewables for €340 million, all these items relates to the €1.3 billion of operating growth. Then, we got on a stewardship business model, the €1.8 billion related to the open fiber stake disposal, and all this solid operating performance has been affected by €300 million of currency devaluation and negative dynamics for around €1.4 billion, out of which €1 billion were related to temporary headwinds. This €1 billion in particular is related to roughly €450 million for the severe growth in Chile and the gas shortage that consequently affected the price in Chile. And around €500 million linked to the exceptional energy prices, we are living since 2020.

In particular, €250 million are related to lower prices set in 2020, during the COVID-19 pandemic. And the remaining portion is associated with the standard increase in electricity prices cost during the last quarter of 2021 that increased the cost of supply though reducing the margin in retail business. The other negative dynamics that are not temporary includes some settlement on gas contracts and mainly the tariff adjustments in Europe, in Italy and Spain for around €300 million. Moving into deeper analysis, we are now on Slide 12 on global power generation, where the global power generation ordinary EBITDA stood at around €6.5 billion, down 6% year-on-year. Operating growth accounted for €370 million at a strong contribution of renewable new store capacity for around €500 million that has been partially set by a different profile of development of the U.S.

generation and around €100 million efficiency, mainly in European countries. Dealt non-recurring items impacted positively for €370 million then so the negative dynamics are related to the weaker geology in Chile, as already said before, the lower prices in Italy and Spain due to energy contract signed during the pandemic crisis as already outlined and the effect related to the settlement of previous years price adjustment on gas prices. So, the vast majority of the negative temporary dynamics -- the negative dynamics are temporary because are related to things that are now in the phase to be sold or so now fixed to a different level, then we can discuss a little bit this at point. Then moving on Page 13 and talking about infrastructure and network. Ordinary EBITDA for networks stood at €7.7 billion, and we have an operating growth here of roughly €750 million, mainly attributable to around €300 million with the investment deployed for digitalization of our grids and improved the quality of services in Europe mainly in Italy, which contributed to our regulated asset base.

Around €200 million users linked to the higher electricity distributed across all the Latin American countries, coupled with the effect of the asset revaluation, particularly in Brazil and around €250 million of efficiencies. These positive items were offset by a year-on-year on €450 million of non-recurring items occurred last year to the positive non-recurring. Around €300 million associated with tariffs adjustments in Spain, in Italy for the new regulatory parameters and lower previous year's regularization and then the currency devaluation in LATAM for €140 million. We also highlight that net of delta non-recurring in effects evaluation EBITDA would have increased by around 6%. Now we move on retail on Page 14.

EBITDA for the retail business came in at around €3.1 billion, while the slight decrease attributable to the evolution of the regulated markets. The group expanded its free market customer base by adding 1.7 million new clients over the last 12 months, on the back of the end of regulatory Romania and the increasing customer base both in Italy and Spain. Looking more closely at the EBITDA of the free and regulated market, free market EBITDA is flat year-on-year. Thanks to a better performance in Italy and Spain which compensated the negative EBITDA evolution in Romania. In Italy EBITDA increased by 3% year-on-year, driven by a 9% increase in volumes in both B2C and B2B segments which are now back to pre-COVID-19 levels.

In Iberia EBITDA is 5% versus previous year, mainly driven by a 24% increase in Italy margins in the B2B segment, as a consequence of the economic recovery of pandemic. In Romania, retail EBITDA decreased by more than €100 million mainly due to the higher cost of sourcing as a consequence of the energy crisis we experience. Regulated market EBITDA is down around €100 million on the back of the elimination of regulatory fee in Romania and the decrease of the regulated customer base. It was also to light that Enel X EBITDA increased by almost 2x versus 2020 reaching €300 million, driven by energy efficiency program and customer needs of energy flexibility services. In the next slide, we will show in detail the earning evolution during the period.

We are now on Page 15. Ordinary group net income came in at 5.6 billion up 8% on high EBITDA a reduction in minorities, which more than offset to the higher D&A, financial expenses and the normalization of the tax rate at 30% versus 20% in the previous year. Net of the non-recurring items such as tax reform and the liability management program, net income would have increased by 23%. For the single items, we recorded the negative impact on D&A of around €320 million due to the higher level of investments deployed during the year, which more than offset the reduction in bad debt accruals related to the COVID-19 impact recorded in 2020. Net financial charges increased by 24% versus previous year due to liability management program executed this year.

Net of these non-recording items net financial charges decreased by 6% versus last year was to highlight the financial expenses on debt remained stable versus previous year, thanks to our refinancing strategy that reduced by 20 basis points the cost of debt, leveraging on cheaper, sustainable instruments and hybrid. Taxes were up by around €290 million as a consequence of the increase in the nominal tax rate due to the government's tax reform in Argentina and Colombia and the adjustment on the deferred taxes in Iberia. Minority is decreased by 27% mainly reflecting the increase in Enel Americas stake and the higher contribution of Italian companies. Now moving to the cash flow of Slide 16, as said as opposed to that €11.8 billion, strongly affected by measures implemented by local governments to smoothen the impact of increasing prices in customer bills. The impact is around €1.7 billion.

Excluding these effects, FFO would have reached €13.5 billion, increasing around €2 billion versus previous year with a cash conversion at around 70% compared to 64% in 2020. The dynamics underline the FFO evolution can be summarized the fall high EBITDA after provision, networking capital minus €0.10 billion, as said impacted by around 1.7 billion of regulatory items of measure implemented in Italy and Spain. Net of this effects working capital would have been positive, driven by the recovery of the negative movements recorded in 2020 due to COVID dynamics and in line with the CapEx of the last quarter of the year. Higher taxes paid mainly due to advanced settlement tax payments at the end of last year and higher financial charges paid related to the liability management program performed. Let's now take a look at the capital location evolution on Slide number 17, where you can see that we invested more than €13 million in the period an increase of 27% versus previous year.

In the ownership business model investments were almost entirely located to renewables and networks that totaled around 5.8 and 5.3 respectively with the remaining portion deployed on conventional generation and customers. From a geographical perspective around 70% was spent across Europe and U.S., which 6.7 in Europe and remaining 2.3 in North America, 3.7 were spent in LATAM. We have invested around €400 million through the stewardship business model focused primarily on renewables capacity managed through our joint ventures and Enel X. We also highlight that the full contribution of the new renewable capacity installed in 2021 will be visible in 2022 and we will generate around 500 million of EBITDA. I will now move on debt evolution of Slide number 18.

Net debt is equal to €52 billion that is below the 53 to 54 range announced back in November. Thanks to higher than expected FFO and better debt cash conversion. Net of the pure accounted effects of FX and leases, which accounted for around €0.7 billion and $2 billion, the net debt would've landed €49.3 with the following operated dynamics, negative free cash flow of €1.3 billion. As already commented, dividend paid for €5 billion, active portfolio management activities, mainly related to Enel Américas PTO for €0.8 billion. In the period, we accounted equity about €3.2 billion of hybrids, out of which 970 related to the change in the accounting treatment, following the consent solicitation process and around €2.2 billion of new hybrid issue in 2021.

Gross debt stands at €72 billion increasing by 22% versus December, as a consequence of the already mentioned an increase in the net debt. Then the increase in financial receivables associated with credits related to cash collateral payment, following the commodity prices scenario, and a higher level of cash to finance 2022 activities performed at the end of the next year. So, we issued more at the end of the year. And so, we add the cash of this issuance at the end of the year in cash. Before the closing remarks, I would like to highlight the soundness of our liquidity profile, a limited exposure to fluctuation in interest rates.

Our total liquidity at the end of December stood around €24 billion of which roughly €9 billion in cash on hand and remaining €15 billion in readily available committed credit lines, reducing refinancing risk. This level of liquidity covers 1.4x the debt maturing throughout the '22, '24 plan period amounting to €17 billion, net of short-term debt is routinely rolled over. Finally worth to mention that more than 84% of the 2021 long-term debt is or has been swapped into fixed rate, limiting the exposure to internet rate fluctuations. We consider the Group liquidity position as more than satisfactory to face the turbulence we are living, and we don't see any short-term risks that might impact the solidity of our balance sheet. Now, I'll hand over to Francisco for some closing remarks.

Francisco?

Francesco Starace: Thank you, Alberto. As you have seen 2021 was a year in which post-pandemic recovery forces coexisted with exogenous headwinds that have affected the business. We were however able to successfully navigate these turbulent quarters, confirming strong capabilities in delivery and a very strong financial solidity. Our business model already demonstrated in the past, It has a very high level of resiliency in tough environments. We believe we will continue to perform leveraging on our set of assets, people and expertise.

It is now clear to everybody how the role of utilities is pivotal to manage abrupt changes in the energy sector. Our strategy is built on that. It is built on maximizing the value creation from decarbonization and notification by tapping all opportunities across all segments of the value chain with a very short time to EBITDA investment cycle. We reiterate our commitment in paying a dividend based on a visible and simple policy, which will implicitly return a double-digit TSR to our shareholders. So thank you for your attention.

Let's now open to Q&A. Please Monica. A -

Monica Girardi: Thank you, Francesco. Thank you, Alberto. We received an exceptionally high number of questions.

So thank you to all of the analysts that send them to. We tried to pack them a little bit otherwise we will never stopping answering. So, I'll start from the most popular and then we'll go into the numbers of the full year. So a number of analysts are asking, in this context, the European Union has worked on a toolbox to tackle energy issues and announced the repower EU plan. Can you share your views around these? And what is your, in your view, the implication in the short and in the long-term? I think Francesco it's for you.

Francesco Starace: Thank you. All-in-all, we think that repower us quite a good plan, it makes a lot of sense. And by the way, it is totally in continuity with the previous direction, which European Union was going. If you want this crisis proved how right it was from the beginning to really try and decarbonize the economy of Europe, considering the fragility of its exposure to gas and other commodities. So, we think this package is good.

There basically five lines. One is the one to diversify the gas supply, increasing the number of suppliers and the optionality from the sourcing of gas standpoint. So, more pipes produce more LNG terminals and acceleration in domestic production, also production of biomethane. We think the second point, which is also quite important is increase in the share of renewables where gas is dominant, accelerating the development of solar rooftops in general of renewable plants that were already there. So I think that is definitely an acceleration that we're looking at in the package.

Another good part of the package is the effort on the energy saving and electrification of heating, in particular and the solution of homes that will cut further demand on gas by substituting it with decarbonized electricity. We think there is a trend to permitting and authorization of these investments namely renewables with fast tracks trying to be defined in the use of sandboxes to take the best examples and spread them around. I think there is a good effort also on what concerns the lack of potential interconnections in clinical links and the synchronization of grids. I just note here that the act of, the synchronization of Ukrainian grids that happened yesterday, actually. So in short, I think this is a good package.

In addition to that, I think it's to be noted that there is a discourse that started with this package on setting some caps on gas prices that are at the root of the present crisis that are largely unjustified, if you look at the dynamics of the importation contracts to the gas have. And I think that is a very encouraging bold thinking from the side of the commissioner and of the commission to really try and bring some clarity on the turbulence that today is basically affecting the energy sector.

Monica Girardi: Okay and the other one for you, Francesco. Do you see areas of upside downside for now vis-à-vis the current assumption coming from this package?

Francesco Starace: Okay, so let me first talk about the downside, which is quite obviously a concern for most of the observers. The downside has to do with the potential windfall profit taxes that have been aired back and forth and/or potential caps on energy costs on energy prices.

We have successfully demonstrated in both Italy and Spain that the policy, the commercial policy we have, which basically is all about selling our energy forward, maximum two years, from one to two years in the past, and now forward even more, has basically prevented us from getting any windfall profit from the huge jumps in marginal system prices on the poles of these two countries. So, we have nothing to fear on windfall taxes or windfall profits go backs and no matter what kind of methodology is used. We think it is not convenient, extremely easy to say that we have none. And in fact, we have basically insulated all our customers from this huge price increases, thanks to this policy. On the second part, which is the cap of on prices for future pricing, I think that is definitely going to be an issue.

But I think it has more upside or downside for us at this moment, provided that the real root cause of all this is tackled. And that's why we're encouraged to see the discourse moving clearly on the field of gas. That is the reason why there is this havoc on the electricity, and on the agenda, the energy supply to the industry in Europe. And that is totally unjustified if you look at the dynamics of the industry and also the volatility that DDS is today demonstrating. So we think that is an upside because if there would be a gas price set up, then our policy of long-term contracting and serving our customers with reasonable sustainable profits will definitely be further strengthened.

So that is the upside we see, if regulation perhaps for a temporary moment would be implemented in Europe.

Monica Girardi: Okay, another popular one for you, Francesco. Do you think this set of measures we open to new phase of government intervention?

Francesco Starace: Yes, I think they are going to be, well they have already been there government intervention survivors nature. I mean, we've seen that in the early part of the late part of 2021 in both Spain and Italy. However, because this intervention did not tackle the wrinkles of all this turbulence, which was gas, they were not fully resolving the issue because they didn't really tackle the reason of all this.

So I think they will be further intervention. This time finally addressing the real problem, which is the unreasonable volatility of gas prices and the fragility of the system that results from that. In that, yes, I think there will be some intervention and I think, in that case, fully integrated companies that will have had like we saw a wise policy of fully translating the advantages of this integrated position to their large customer basis will have an advantage going forward.

Monica Girardi: Okay. Another set of really popular question, which I think more for you Alberto.

The energy factor is in a special phase, and you have a degree of exposure to commodity dynamics. How a sudden increase of electricity prices might affect Enel's financial in the short and in medium-term?
Alberto

de Paoli: Well, I would say, first of all that so for how our hedging policies that we have followed, so since the beginning, so we have no major impact on prices, because we are not benefiting of this rise in pricing. We do think that our integrated position will be for us good in the medium-term, because it will allow us to offer competitive price to customers while stabilizing our stream of revenues. And so, making has to have normal profit and pushing the electrification of consumption, so in this case, increasing our overall gross margin through this way. In the short-term, it's clear that, now as Francisco has said, we are trying now to participate because the needed intervention in a very short-term market would not end up in being a long-term associated factor.

Monica Girardi: Okay. Another one, what's your exposure to Russian gas? How a sudden increasing gas prices may affect Enel's financial in the short and in the medium-term?
Alberto

de Paoli: Well, first of all, let me underline this point. We have zero supplies of gas from Russia. Our gas needs in Europe. Second, the overall gap needs in Europe are covered more than 90% from our long-term contracted supply gas.

And third point is that 50% of these needs are covered by energy contractor and in particular energy from the U.S. that represents roughly 75% of our total energy contracted volume. This as you can see provides ample flexibility and potential value creation over medium-term.

Monica Girardi: Okay. Another one on commodities like, Alberto.

How revamp of core production in Italy may affect Enel's financial in the short and medium-term?
Alberto

de Paoli: Well, first of all, also here to be clear that, we will be no revamping of close coal facilities. So the only way to increase, if needed coal production would be the active coal plants that we have in Italy. And it will be mainly driven by request for the system operators looking for solution to potential shortage of gas. This clearly will have to be in case of this increase will not at economical level, it has to be compensated with compensation measure that will be so discussed and define along the time and the needs. So, we don't see a major impact economically in but an increase in production about for sure we are not seeking any kind of loss because of this.

Monica Girardi: Francesco, one for you, what are you planning to do with Russian aspects?

Francesco Starace: Okay. So first of all, let's see what they are. First of all, this is an activity we have in Russia since quite some time. It is self-contained within the country. It is ring fenced for what concern the rest of our operations.

It is a limited portion of our financial accounting for less than 1% of our EBITDA in '21. And in the plan '22 to '24, we have about 240 million earmarked for investments in this part of the world and compared with 42 billion of overall group investment. So it's not a real material position. We have decided that in these present circumstances we cannot deploy more growth in Russia. And we are also exploring various scenarios for what concern the future of the existing assets that are basically three large combined cycle power plants with a total of 5,300 megawatts and two wind farms.

The potential scenarios include all the possibilities that are now being analyzed under the legal system that has been established in Russia recently after the sanctions have been put in place. All our employees are safe. We have no crisis and no difficulties at the moment. But clearly, this is a situation that we would like to have a decision about in the few months.

Monica Girardi: Thank you.

Francesco. We move to CFO. Back again to you Alberto, 2022 EBITDA guidance. Can you walk us through the moving parts that can get you -- that can get out to the 2022 EBITDA target range, considering the 1.7 billion from open fiber and the 600 million of non-recurring items that you booked us for '20, in 2021?
Alberto

de Paoli: Well, first of all, we have a composite growth in 2022. But take in account to that said, we are -- we suffered roughly €1 billion of negative every temporary headwind in 2021.

That we may consider that apart. The relevant part of this headwind maybe so recovered in 2022 and is the first step of growth that you can add from so the math that says 16.8. Then we have the lion's share of related to the renewable growth. Because you have -- we have all the capacity deployed in 2021 that works roughly €500 million that would be so full growth in 2022. And then, we have the growth related to the 2022 development that is more or less in the same range.

Then, we had -- we have the asset from [indiscernible] that was roughly €150 million and this is the overall impact of generation and then we have networks €200 million because of [indiscernible] increase, roughly €400 million coming from customer sales combination of retail analytics activities. And we will have roughly €400 million related to our stewardship business models. This is what is giving us numbers of growth that we have in our targets. Clearly, we have now to monitor the situation where we see some positive and negative contribution that right now also combining themselves in neutral impact not giving at this time so any major sign off on the target, so the source of reaching the target announced.

Monica Girardi: And CEO, back to plan assumptions.

Are you still trying to reach your electric mobility business and the grid service company? Are you confident to be able to do this in this current environment?

Francesco Starace: Yes, I think we will succeed. Actually, I think this these are two businesses that are very special extremely driven by the new large evolution of electrification business across the world. They see not that that linked to the present crisis of gas prices but actually quite the contrary being pushed by the necessary measures that behind getting out of this. So to make it short, we think we are going to do that. Whether then it's going to be a listing or a private placement followed by listing or private placement, as such, we will find out during the next month.

But the preparation work and activities that aimed to these are according to schedule and we don't see at least the first time. We don't see a lack of interest the contrary. We see a lot of interest in particular for the EV charging business, which is really hot at this point in time.

Monica Girardi: Okay. Francesco, stay on and other one group repositioning can currents uncertainty, a global level change the strategy or timing of LATAM restructuring and possible acquisition in the U.S.

analysis is also asking if you're still looking at India?

Francesco Starace: Okay. On the timing of Latin America, we are proceeding. Actually, what happens in Russia and Ukraine clearly is affecting the world, but I will say minor way what's going on in South America. So, our progress is according to our plans, and we think we will continue to strive to simplify the assets and make it more simple to understand what our intentions are in Latin America. On the U.S.

distinct I think we have continued to scalp the market. We think that some potential acquisition might be a good idea. Clearly, it's a question of time. It's a question of value. We don't want to rush it, we don't want to make mistakes, but we are determined.

So I think there are no impacts from our side because of what's going on in between Ukraine and Russia at this point. On India, India is a good place for renewable energy investment at this point. We are as you know, progressing we have just connected to large plants this month, but nothing is to say I mean, this is not this no new developments. There are no particular big news to tell. We just continue to grow organically our pipeline in the part of the world.

Monica Girardi: Okay. Another one on regulation. Can you comment on the regulatory situation in Romania, what is the projected impact for your business? What action you are putting in place? I think, CEO, this is for you.

Francesco Starace: I think the case of Romania is still open. I mean, the government clearly is struggling to, let's say, contain the price hikes that are resulting from the gas and the gas situation.

Clearly, this is having an impact by the way because of the system that the government has chosen to act, upon which is work on the price levels at free market level, which is really difficult understand. On the distribution side due to the particular situation on the regulatory side increase of energy prices and the tariff cap of maximum 7% increase year-on-year are affecting all the distributors, mostly on financial terms. We proposed several measures including the elimination of the tariff cap in order to and being able to acquire energy from existing producers. We have lateral contracts that are recognized set price, which is by the way quite high €90 per megawatt hour. And a state budget compensation and capitalization of remaining losses for a period of 5 years with a state guarantee.

We think that, the new ordinance that will be issued by the government in March will indicate how some of these measures can be accepted. We are quite encouraged. On the windfall tax side, is applied only on revenues with a sales price that exceed €90 per megawatt tower. This was introduced by November '21. We have of course recorded.

We think there is an encouraging sign that the government might change the law, applying corrections that will minimize the impact for the sector. Overall, we think this is what we have to say. I think the appraisal of the impact largely depends on the next weeks. So, I think we will have to wait until we have a real settled situation before throwing out figures that can be widely different from the tools that we emerge after a few weeks.

Monica Girardi: Okay, CEO, another one for you.

You have a fixed dividend of €0.40 per share for 2022. Is there any risk to the dividend payment?

Francesco Starace: The dividends we project are basically underpinned by the results we have in the year, and the results in 2022 are quite, I mean, not predictable, but they are quite in our control. So, we don't see -- even in this present turbulence, we don't see the reason why we should not be able to pay this dividend. Now, if we had an increased turbulence or a prolonged crisis way past the next weeks something that can go on for months, we would still have the capability to pay the dividend. Don't forget that, we also have a flexibility in capital allocation that are quite unmatched in the industry, that gives us the confidence that if the worst, worst, worst scenario happen, we can still sustain the dividend policy at the expense of capital allocation during the year.

We don't think this will happen, but it's still something we can do. So, at this point, we don't see any reason to change this policy given even turbulence situation we are facing.

Monica Girardi: Okay. We move to another set of questions that pertain more to business. So, Francesco, another one for you.

Additional capacity came in at the record level, targets for '22 is in excess of 6,000 megawatts. Can we expect an updated for 2022 to delivery? Is there any risk or some current geopolitical environment or any opportunity?

Francesco Starace: Let's see that when we define the 2022 targets, we already knew the delivery of 5,100 megawatts was there because that was basically November. So, we have that number quite clearly in front of us. I don't think you can say that we can be short of 6,000. This would be an increase of about a thousand megawatts.

Don't forget this year we increased by 2,000 megawatts. So I think this is a reasonably realistic target given the situation. Even considering say the extension of the logistics difficulties that we experience in 2021. For the same reason, I think, it is quite unlikely that we will be feeling the number by large. Okay, this can be short or long, maybe 100 megawatts or 200 megawatts, but I think that number is rock solid at this point, one on the upside and on the downside too.

Monica Girardi: Okay. Alberto one, there's no question around the new renewable capacity that has been most in Tier 1 country, if you can provide more color around the countries?
Alberto

de Paoli: Well, development plan 2022, we have roughly 2.5 gigawatts in North America, United States, 1.9 in Latin America, mainly Chile and Brazil are the main countries of development, 900 U.S. and Spain and then the remaining 15% between Italy and some Tier 2 countries like India and Morocco.

Monica Girardi: And other one for Alberto, do you see an impact on projects under development from procurement dynamics?
Alberto

de Paoli: Well, it means, so the cost of projects. So for 2022, we have almost hedged all the capacity we are developing.

So, we see -- we are very minimal cost variance, because of the situation. Related to some delays that may occur on the overall development purchase costs, so we have -- we see a range of value very, very real range in the target we have. So, some project may be delayed, but not more than two or three months and not in a very big size.

Monica Girardi: Francesco, a quite popular one for you, potential issues on gas supplies from different start on coal fired generation. Any change in your strategy.

What is the expected level of coal capacity to be recognition in 2022 and the impact on the coal projectory for 2023 and beyond?

Francesco Starace: No, we don't have change in our strategy at all. In fact, we think, we will be decommissioning another 1.7 gigawatts of capacity in '22 basically both in Chile and Spain. I think what we can maybe find is, if this crisis of gas gets worse no particular push to keep core in function in Spain because they don't -- they will not be sure to gas, they have no connection with Russia at all. Probably maybe a little bit of conservative assumption that could be pushed by the Chilean government and they would be concerned about their energy supply from LNG. But other than that, no, we don't have any plans or see any difficulties in continuing this trend.

Obviously, if a government doesn't allow you to take a power plant off, it doesn't actually mean that the power plant produces. It can be just in standby waiting for the government to decide whether it's worth the risk or not. As far as production is concerned, if you want, the major potential increase of coal consumption could be from Italy, if the Russian gas supply would be interrupted for some reason, and therefore, an increase in the production of existing power plants, they wonder that the Commission there's no way that they can be started, and the business in power plant could maybe have marginally an increase in the coal production, but we're talking really about marginal figures at this point.

Monica Girardi: Okay. But I think there are a couple for you.

One is on the deal on hydro you've announced, the purchase of an hydro plant from ERG and of CCGT. Can you share what's the rationale of the transaction, what's the expected normalized contribution? And if we can assume the EBITDA contribution is an upside versus the plan?
Alberto

de Paoli: Well, we completed the deal with ERG. There was a package of the two plants, the hydro and the CCGT ones. Then so the execution of the deal followed the two different paths, but at the end, so, it was only one transaction. Rationale for the hydro is clear.

So it's hydro --so we are in Italy, we are short of energy. So everything that is related to renewable energy that it can be managed for us is relevant. CCGT is because it was and it is linked in package with hydro. Worth to say that while for the hydro plant we got all the approval, so the Antitrust approval, the CCGT plant will need to have a full clean authorization from Antitrust to be completed. All-in-all, so the contribution is around -- for the hydro plant is around €100 million, €110 million and this is already in the 2022 targets and for the gas plant is -- now it's just really difficult to say what will be the final impact but it is not meaningful and it is not today in the budget numbers, in the target numbers.

Monica Girardi: Okay. Another one, I think in Italy you were recently awarded 12.9 gigawatts in a capacity auction. What is the expected contribution and when will we see this in the P&L? Was that including Europe plant target?
Alberto

de Paoli: Okay. Let me sort of put under the spotlight this plant is tendered but it is important to underline the results. So, first of all, the tender has been launched for two things.

One is the yearly capacity, existing capacity for capacity market; and the second is for the new capacity. On the existing capacity, we have been awarded 10.4 gigawatt of capacity, plus 1 gigawatts of following capacity. More important is the 1.5 gigawatts of new capacity that we have been awarded. And let me underline that it's relevant because 1 gigawatt of this capacity, our base, so -- are related to storage and this -- and we won a capacity contract for 15 years for this 1 gigawatt of storage capacity. Spread over work of this new capacity is ranging around 250 basis point over work.

And nominal contribution is -- for 2024 is roughly €500 million between the existing capacity and the new one. And the new one is roughly €200 million, and this is valid for 15 years. So, this €200 million was not included in the previous business plan, while the €300 million of existing capacity is.

Monica Girardi: Okay. Alberto, we still stay with you.

Resources availability, can you give us an update on hydro laterals for Europe and LATAM?
Alberto

de Paoli: Well, Europe, so now we have look into the first two months, and it's particularly low in Europe. Resources are down around 30%, Italy and Spain, compared with an average historical values. In Latin America, Chile and Argentina are recovering, not fully recovering, but are recovering from the extreme situation of the last year. Colombia is experiencing high resource levels, plus 11% versus historical level. And Brazil is more a patchwork.

So, you have some zone with a higher level of rainfall; other, not. But I remember you that Brazil has a regulation that will balance all the different zones and this balancing is netting every kind of shortage of production, because of rains.

Monica Girardi: Okay. Alberto, a few question on Networks. Are there any major regulatory events in 2022? Do you see any risk across your network operations coming from changes in regulation?
Alberto

de Paoli: We don't have any relevant regulatory changes expected in 2022.

In Europe, everything related to work happened last year in Spain and also in Italy. So, it's something that now is only in the application phase. I think the most important aspect that we are waiting for in 2022 are all the P&R tenders that now are starting in Italy to happen and also in Spain and other countries. And mainly we are -- we will apply for the next tenders in Italy. I remember you, that's also a formal primality for the investments that we will deploy under the P&R scheme will be -- now will be set, so because there are investments that are -- will not flow into RAB.

So, sort of premium of the investment we will deliver is now something that is already defined and will be applied to these investments. In South America, we don't have relevant regulatory events in 2022, out of which -- so, we still are waiting for a setting of the [MIST] tariff indexation in Argentina now. It’s three years ago, waiting for.So every time is good to define and set this problem. And other legal action and adoption of some legal regulations that are happening here and there,we have received some positive news in terms of financial aids to distributors and also some recognition of past losses and other regulatory items.

Monica Girardi: Okay.

Alberto, can you provide us with the top RAB level for the full year 2021 and the breakdown between countries. What is the growth in RAB expected for 2022 in Europe and in LATAM?
Alberto

de Paoli: RAB 2021 is equal to €43 billion, with Europe €32 billion and LATAM €12 billion. Now, we expect for this year, RAB reach €44.5 billion increasing €1.1 billion. In Europe, the main increase will be in Italy and also in Romania. And while in Latin America, we will have the big increase coming from -- is almost a little bit split between Brazil, Chile and Colombia.

Monica Girardi: Okay. One question on customer. Customer in the power-free market in Italy went up to significantly. Can you provide more color on this trend? Sorry, not in Italy, in Europe. Alberto

de Paoli: Well, yes.

The customer business is doing very well. Also in the last part of last year, and also in this first quarter is very stronger, the take of customers, the increase in consumption. And last year, we increased 1.7 million customers on our free markets and across all countries, Romania, because of the end of regulated markets, Italy and [Iberia]. So the main of this increase has been observed in the last quarter and -- on last year. And that means that our commercial offer and our stability is something that is now appreciated by the customers.

And that's why we are getting so big this year of the new acquisition of the market.

Monica Girardi: Okay. On financials, regulatory measure in Italy and Spain impacted the cash flow in 2021. What is your expectation for 2022? How much will you be able to recover and is there an additional impact as we flow into the cash flow for this year?
Alberto

de Paoli: So, we closed the year with an impact on the overall measure of €1.72 billion last year. And clearly, the expectation is there a normalization of the situation mainly in the second half of this year, may at the end.

So, restore this impact and having this improvement in the working capital. It is something that is for sure will not happen in the first quarter, because we know that for the deepening of the crisis, other measures are added, but also the stable solution that will reduce the gas prices and through this way will reduce the energy prices, is now also under discussion. And we think so, we will await some resolution coming in the next days. If this will work and so if it will be so -- starting from the gas prices, we think that it will, we can think that a normalized situation could be the situation that we may have in the second half of the year. And through this way, we think that everything -- may be not every but so the vast majority of this problem can be solved within the here.

In this case, we see a clear positive impact on our working capital.

Monica Girardi: Okay. Alberto, net debtevolution, two-fold here.Net debt that went up by almost €10 billion considering regulations and conversion of hybrid and now you are around 3x net debt to EBITDA. What's your expectation on net debt for 2022?
Alberto

de Paoli: Well let me say that we -- out of what I have just said on -- so the situation we were and we are in line, what are our financial plan, taking account to say that roughly €2 billion out of these €10 billion are accounting impacts to our leasing. And so the fluctuation of debt on FX and accounting impact because our debt as said and everything we say is fully fixed.

So it's only -- so the way in which we accounted it, but at right price. So we have a fixed debt. Having said that, we have invested a lot as said, because the investments in this space are needed to position the Company along the energy transition. But we have plenty of way -- if situation will not come back to normal or will worsen, we have plenty of strength to manage the situation. First of all as said, we are working with €20 billion of liquidity available.

And second, as we said, our development program is made in a way that we are not committed for more than 18 months. So, every time we may change, we may increase or reduce the speed of development to comply with our financial strategy and that is to stay at the level as we said, not to increase our debt and our ratio for more than 3x. So right now, we are looking at the situation, but we are ready to manage all our aspects to manage also the financial situation.

Monica Girardi: Okay. Another one on debt.

Why the impact of FX on net debt is negative despite the general depreciation of currencies against euro?
Alberto

de Paoli: Well, as I said and I will stress it, it's only an accounting effect. So having said that, it is I think clear, there is not a financial effect. It relates on the fact that, if the local currency against the euro compared to the dollar, so the euro driven by the dollars. So, the relative movements of the currencies to the dollar and the dollar through the euro is impacting the way in which we account the debt.

Monica Girardi: Okay.

Any risks to -- the cost of debt will not be in line with planned assumptions?
Alberto

de Paoli: Well, I think you know that, we ran last year an €8 billion liability program, refinancing this debt with the years before the natural expiring. And we have also issued at the very beginning of this year in a different situation, a big tranche of the refinancing we did in the year. So, we don't have almost very, very receivable refinancing need for this year. The debt is fixed. So I would say that we don't have any kind of impact from the current situation on the overall cost around debt.

Monica Girardi: Financial receivables. Can you give us more color on the evolution of financial receivables that are up by €3.5 billion over the period?
Alberto

de Paoli: Well, financial receivables are really -- did on the hedge accounting, so that's a problem of the marginal calls. The time in which you have to put cash collateral for your margin calls, you have on one side to put cash. And on the other side, you have some financial accretives related to this cash. So this is a temporary situation, and this is variable because every day it is changing, because of the changes in the gas prices and energy prices.

And on the other side, the situation will be reabsorbed completely at the time in which the hedges will come to maturity. And so, will disappear from credits and cash will come back

Monica Girardi: Alberto, how do you consider your liquidity position at the moment?
Alberto

de Paoli: Stronger.

Monica Girardi: Okay. Really quick answer. Okay.

I'm actually now going through a number of follow-ups that I received during this first part, which are a little bit a mixed box of things. So I'll try to go in order. Francesco, I think there are a number of follow-up on the EU repower and what might come with that. So given the high portion of gas-fired power production in Italy,what can the Italian government do to keep power prices under control?

Francesco Starace: I think the easiest way to do that is to keep under control the gas prices, because that is actually what drives very simply the prices of electricity in Italy. Without that, this will be impossible.

And I think the government has clearly understood that and is trying to find a clever way of doing that, which in Italy is, by the way, not that difficult, because we don't have a high level, a high volume of gas indexed to TTF in the input side. And TTF is used internally to benchmark the gas that is traded within different players, but it is not the driver of gas prices in Italy on the input side.

Monica Girardi: Okay. Another one, I think sort of related to that. Do you see a risk of intervention on your margin and supply or any decision that can grow back earnings from your supply business?

Francesco Starace: The margins we have in our supply business are not that high if you look at the cost of generating that we're facing at this moment.

So we don't see that that's all a risk. What we think is maybe an opportunity on the same tune to finally -- and the regulated tariff. Given the fact that today, the regulated tariff for the first time since its inception, is the most expensive price on the market, because it is fully reflecting the volatility of that gas prices are driving on the electricity pool. So I think it's a great opportunity for this government to end the regulated tariff, if they wish to do so this year as the law foresees, by the way.

Monica Girardi: Okay.

Another one which is still in this kind of basket. So, do you think there is a risk an introduction of a cap to electricity price? And what is European risk within the integrated chain of selling electricity at a fixed price?

Francesco Starace: As I said before, I see no risk. And I think by the way, this is one of the measures that explicitly the toolbox that you have will have proved out, because it has been proven over decades of experience of capping prices at the retailer and is the worst possible mistake regulator can make. So I don't see that risk at all. I think it is as I said an opportunity to cap the regulated tariff increases provided that the gas price is kept and the regulated tariff is abolished.

That means that for example for these people, I am talking about 12 million customers, they will be safe exits from spiral of increasing tariff system with soft landing into a free market for the first time since the beginning of the regulated tariff.

Monica Girardi: Okay. A little bit outside this range. Are you considering introducing green hydrogen in Europe or in Chile, thanks your additional renewable penetration?

Francesco Starace: In Chile we are now already starting up pilot plants with Siemens and Porsche based on wind farms, feeding hydrolytic converter and for generating hydrogen from hydrolysis. And we have projects in Spain and in Italy to generate hydrogen through hydrolysis in an attempt to find an economical way to produce green hydrogen, which as we know today is still not competitive price wise with the gray carbon intensity hydrogen that the industry is using.

So I think in the next two, three years, we'll find out if this economic equilibrium is finally possible to reach or even reached.And from thereon, we will be able to speculate about the business case. Today, what we're trying to do is find the cost equilibrium, and based on that, then later develop a business case.

Monica Girardi: We have one which is composed of two parts. So I’ll just ask you the first part, and then we will see if the second is needed.Will you consider directly investing in gas infrastructure in Italy?

Francesco Starace: In?

Monica Girardi: Italy. Gas infrastructure?

Francesco Starace: I think probably the question is referring to the gasifier.

We have a project that we have developed a long time ago and is fully permitted for a regasification facility of about 8 of -- exactly actually 8 billion cubic meters of gas a year. We have fully permitted this facility, but have not invested in it. We will probably be able to offer this permitted project to any investor that is interested in doing that. If necessary, we will then step in partially as an investor to facilitate the early phases of this investment. But certainly this is not our strategy and we will not be either consolidating or be remaining full owners or long-term owners of this infrastructure.

As we have done in Chile in the past, we will perhaps finish the construction and then sell the part of ownership we have, retaining some regasification capacity if we see that fitting our strategy in the next 10 years, but certainly not becoming an investor long-term and this restructure is not our business case, not our business strategy.

Monica Girardi: Okay. There was a follow-up on the toolbox. This is asking, if we expect Italy and Spain might adopt additional windfall taxes? So they're asking again.

Francesco Starace: So they have been saying that since a long time.

We think probably making the calculation and finding that at the end of the day, the potential revenues they would gather from taxing this particular small renewable sector, renewable power plant sector is not that high and does not probably justify the political price they would have to pay. But that's something I can speculate about. Windfall taxes on renewable capacities that are not committed to long-term customers is relatively small portion of the revenues of the system. And I think, for us, it's a known point because we don't have any of that. But I think overall in this instance, it's -- the discourse is wildly out of proportion with actual revenues that such a thing would be able to corral and the damages on the credibility of the financial investors in a moment in which investment in renewables is needed would be tremendous.

So, I'm not particularly concerned about it. But I think it's kind of maybe more symbolic than real in terms of impact.

Monica Girardi: Okay. Thank you. So we move to Alberto.

Shall we expect a revision in 2022 debt, given currency strength? What's the impact on the current mark-to-market of currencies on our debt basically?
Alberto

de Paoli: Well, the mark-to-market today, our debt is, today we have roughly €700 million of debt increase because of FX. There is not -- so the level of debt we have it right priced. That is right inline what we have presented at the end of 2021.

Monica Girardi: Okay. Another one on financials 2021.

Capitalized cost has moved from €2.4 billion to €3.1 billion. Can you elaborate on these to which division they refer? Are you expecting similar numbers in the coming years?
Alberto

de Paoli: The main increasing of capitalized cost is related to the investments in distribution, because here we have the vast majority of cost capitalization in terms of human cost, and it is related to the increased investment that we are experiencing in this business line. We think that after the rise related for the same rise in the overall investment, we will stay at this level in the coming years.

Monica Girardi: Okay. But you actually gave us the impact on the debt of currency evolution, in particular in Latin American currencies, given the recovery against euro.

Can you give us what's on mark-to-market the potential 2022 EBITDA positive contribution?
Alberto

de Paoli: Right now, mark-to-market of currencies is positive in the range of €300 million, €400 million.

Monica Girardi: Okay. I just -- I think the one that we basically was left over is the -- on usage of gas in Europe for both retail supply and use in gas power generation, how much this is committed to -- firmly committed to customer, mass supply with no force majeure or gas power generation already sold forward?
Alberto

de Paoli: We use roughly 12 billion cubic meters for our activities in Europe for 2022 and in the coming years. Roughly we use, say 4 billion or 5 billion cubic meter for our thermal production and 9 billion cubic meters for our retail activities. As I said before, we have an almost perfect balance between, as I said, we have 90% of these needs that are covered by our long-term contracts, as I already said before.

Monica Girardi: Okay. I think we went through all of the questions that were referring to our address. If anything was not answered, I do apologize. I -- we will make sure to answer after the call promptly. So thank you to all of the people connected.

Thank you, CEO. Thank you, CFO.And see you next week on road showand with this call the 5th of May for the first quarter. Thank you. Alberto

de Paoli: Bye everybody.

Francesco Starace: Bye.

Thank you.