Nine Months 2016 Gas Natural SDG SA Earnings Call

GAS.MC - Gas Natural SDG SA
Nine Months 2016 Gas Natural SDG SA Earnings Call
Nov 02, 2016 / 10:00AM GMT 

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Corporate Participants
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   *  Rafael Villaseca Marco
      Gas Natural SDG SA - CEO
   *  Carlos Alvarez Fernandez
      Gas Natural SDG SA - CFO

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Presentation
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Unidentified Company Representative   [1]
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 Good morning everyone. Welcome to the presentation of results of Gas Natural Fenosa for the first nine months of 2016. This presentation will be done by Mr. Villaseca, our CEO, our CFO, Mr. Carlos Alvarez and the Director for Strategy and Development, Mr. Antonio Basolas. After that we'll start the questions and answers session, and as before, it won't be possible -- we won't be taking questions over the phone. We'll start with the room, questions in the room, and we'll finish with questions that have been sent using the form that is available on the website.

 And to this effect, we beg those of you who use that form to send the questions throughout the presentation because when it finishes, it will no longer be possible to send in questions. I'll pass the floor to the CEO, Mr. Rafael Villaseca.

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 Rafael Villaseca Marco,  Gas Natural SDG SA - CEO   [2]
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 Good morning, welcome. Thank you for being here, both those of you who are physically present and those who are remotely present. We're going to start the presentation and we're going to start with the highlights of these past nine months, then we are going to have development of -- we're going to present the development of our strategic vision for 2016 to 2020, then we'll analyze the results for this period and we are going to refer especially to our strong financial discipline. And finally, I'll give you some conclusions and then we'll have a Q&A. Although, as in previous meetings, we've included an attachment with the details on the operating results, EBITDA and other details that we report usually.

 Let's go to the first point, the highlights are as follows. The net income has been EUR930 million, which if we adjust and we take into consideration the Quintero GDL (sic - see slide 5, "GNL") plant sale which went through on June 29 and which is going to be accounted for imminently. If that happens, the income would be EUR980 million, which is minus 10.4% as regards -- as compared to the previous year.

 The EBITDA is EUR3.64 billion, that is to say it's gone down, it's dropped by 6.8%. Net investments are EUR1.391 billion, that's 40.4% above last year. However, that includes the methane ship which, as you know, is accounted for as an investment but it hasn't entailed an outgoing flow of cash. So that if we look at the accounts, that would be the figure.

 Net debt, we're talking about EUR16.14 billion, and mainly this is because of the advance payment of the dividend which previously wasn't paid within the same period of time. And finally, we've got the interim dividend policy which is still current, with a payout of 70% and a minimum dividend of EUR1 per share. On September 27, the Company paid out in advance a total of EUR330 million. So, that's the interim dividend.

 I'll give you two conclusions here. We are in line to comply with our commitments as per the strategic plan and we are generating cash flow strongly, and that makes the new dividend plan feasible.

 If we look at our business performance, we can underscore the soundness of our model. In spite of the negative environment, it's resisting very well in terms of its overall lines of business in general. We're on track and the results that we had given you or indicated for this period are the same. The outlook is similar, the same, EBITDA of about EUR5 billion and an income of between EUR1.3 billion and EUR1.4 billion. So, we are still on track with that and we'll be in line with that for the coming months.

 Networks business is continuing to perform very well and grow strongly, both things, and we have to point out that in Latin America the gas networks have increased in local currency their EBITDA by 5% and electrical companies by 9%. So, in many cases and countries these increases have made up even for devaluations and exchange rates, which we'll refer to later.

 As regards growth, we have to say that in all our networks gas has grown -- gas supply points have grown by more than 3% and electricity more than 2%. So, activity continues to grow throughout all networks and also supply points.

 It's true, and we'll see that in Spain in gas, the EBITDA has not -- has shown some resistance, but that's due to things that I'll comment upon later. And we are doing everything rigorously and strictly to add value to the Company and the increased investments have to do with investments in networks that will generate future income in the form of EBITDA.

 The electricity business, in spite of the lower prices, especially pool prices, especially in Spain, are preserving income levels similar to those in the past and that is the result of the integrated business model that we have in electricity.

 As regards wholesale gas, the wholesale gas business, we'll talk about this more in detail later, but I have to say that there's been a stabilization of margins which are lower than last year but this year are stabilizing. And that's a trend that we foresee and we even hope to see some improvement. We'll give you more details about this later.

 Now if we talk about the translation effect of exchange rates, especially Latin American exchange rates, on our EBITDA and our consolidated profit, we have to say that there's been a worsening as compared to last year of EUR117 million, mainly due to Latin American currencies. You see on the right those currencies that have been most affected, basically Colombian peso and the Brazilian and Mexican currencies.

 However, as you can see, this is a trend that seems to have remitted, come to a stop. In this next quarter or this quarter, it's going to be unappreciable and we believe that it will improve over the next quarters. Had we not borne this in mind in our results, the EBITDA would only have dropped by 3.8%. So, as regards this significant translation effect of the exchange rates on our EBITDA, we are optimistic. We've seen it in the last quarter and we hope it to continue in the next quarters.

 Now we have to say another very special thing that has happened this quarter, and that is the situation with the gas distribution tariffs in Argentina. As we said, the Government, the new Argentinian Government, at the end of March this year approved the new tariffs, provisional tariffs, to go into force as from April 1 and committed to definite tariffs in a maximum period of one year. And they honored that and on April 1 the tariffs went up significantly.

 But unfortunately the Supreme Court in Argentina annulled that increase as a result of a defect in the way that it was -- in the process of public information. Apparently, the tariffs were not reported publicly as they should have been. That has meant that in the last quarter, EUR27 million of our EBITDA which we had reported we've had to cancel out, and there's also been about almost EUR45 million that have not come into our EBITDA.

 But on the positive side, we have to say that on September 16, finally the Argentinian Government complied with the requirement of their legislation to report publicly and as from October 1 those tariffs are applicable. Therefore, that negative impact has disappeared.

 Now we've still got to solve compensation of the months going from April 1 to October 1, the amounts that we have returned and those that haven't come into our EBITDA, and that will be about EUR45 million. In accordance with our conversations with the authorities in Argentina, we expect to recover that before the end of this year.

 Now as regards Electricaribe, our Colombia subsidiary, of which we own 85%, they distribute electricity in the Caribbean and Colombian Caribbean of electricity. They supply -- distribute energy to 2.5 million customers in that area, and for a long time now there have been tensions in liquidity deriving from very significant fraud and bad debt problems that they have.

 At the end of the third quarter this bad debt amounted to almost EUR1.3 billion, which had piled up over the last few years, and 83% of that amount has already been methodically provisioned for each year and important amounts have been allocated to provisioning for that bad debt. So, in this year we've provisioned EUR150 million that would be within that EUR1.3 billion that I mentioned.

 On September 30 or as of September 30, the Company had losses of about EUR24 million against EUR14 million for last year. So, the cash flow of the Company is practically non-existent and continues to be so, even more so now, and they are -- their deficit is increasing and making things even worse for the Company.

 Gas Natural Fenosa, as a significant shareholder, the Colombian State Government also is involved in that company, has for many times pointed -- for a long time pointed out these problems and had conversations with the Colombian Government in order to find structural solutions for this problem which should include the creation of regulatory legal frameworks that provide legal safety and security in the face of fraud and bad debt, which is something that we can't really do anything about currently.

 We are confident that these conversations will allow us to continue our activities in an area which, it must be said, has high rates of growth and growth in demand, and if it was reasonable, we could turn round that business in that area.

 Now, I also have to point out that under the APPRI agreement between Colombia and Spain, the Company on July requested from the Colombian Government that they opened up the period of conversation, six-month period of conversations, to solve the tensions and problems that have been involved with this situation that we have been suffering in the area.

 This has had no impact on the funds and GNF has not really got any money that depends on this bad debt.

 If we look at the outlook for 2016, we have to point out some important things. There are two problems that have been important this year. If we talk about the problems, gas -- natural gas and the exchange rates that I referred to before. For the rest of the period, this year the gas margins have remained at levels of EUR1.7 per megawatt hour and we hope or expect that to continue to be the case throughout the year because there's stability right now and we are confident that it will improve over the next few quarters.

 As regards the electric business, our perspectives for EBITDA are good for the year, especially in view of the fact that our combined cycle plants are working way above the average in the industry, and bearing in mind the integrated electric value chain performance in Spain.

 We hope this stabilization in exchange rates, by the way, has a direct positive influence on this quarter and the next few quarters. In the last quarter of the year we must also remember that we are expecting positive events, like the recovery of the amounts in Argentina that I mentioned, the capital gains from asset sales that have been signed for, and other non-recurring effects that we expect in this last quarter of 2016, for instance the recent judgment passed by the Supreme Court on the social bonus.

 So, we are in line with the strategic vision and we expect to close the year with an EBITDA of about EUR5 billion and a net income in the range of EUR1.3 billion to EUR1.4 billion.

 Now, as regards the policy for shareholder remuneration, it's fully current; we're fully committed to it -- to the new policy for the 2016 to 2018 period which was announced on March 18 and ratified within the strategic plan. So, the payout will be 70% with a minimum dividend -- guaranteed dividend of EUR1 per share.

 In accordance with this policy, on September 27 we paid out EUR0.33 per share in cash. This is in accordance with the EUR1 per share. And that would account for EUR1.001 billion for 2016. And if we look at what our forecast income is, the payout would be between 71.5% and 77%.

 Our strong cash flow we think will support this attractive and sustainable policy of remuneration to our shareholders.

 If we look at the development of our strategy, we have to say that in addition to the problems that we had with the exchange rates and the situation of natural gas as a commodity in the world, we've been working on the three strategic lines that you're familiar with and that we presented in the strategic plans, networks, electricity and portfolio optimization.

 Now, if we begin with networks, we have continued what I would call a successful deployment of new capital into regulated businesses with good prospects, especially in Latin America, as I said before. So, we are convinced that the processes of investment that are ongoing now will reflect on the EBITDA. And as we've seen this year, in many countries they have -- growth has made up for the problems we've experienced as regards exchange rates.

 In terms of electricity, the Company continues to be very disciplined in its focus to get international projects basically in the renewable energy area, and we are firmly committed to achieve this in a naturally profitable way and add value above the cost in capital for the Company.

 And as regards the optimization of the portfolio, we have disinvested non-strategic assets, non-core assets, and acquired others. This is in line with our usual standard practice of reviewing our portfolio systematically. And we continue to develop the savings plan -- cost savings plan.

 As regards gas and distribution in Spain, it's important to point out that at the end of last year we signed for the acquisition of 250,000 LPG connection points with a potential of another 770,000. So, we were acquiring the ability to increase our supply points by 1 million. All that at a cost in terms of acquiring these LPG networks of EUR450 million.

 Finally, after a complex process when we submitted this plan to the authorities, the acquisition was approved and in September -- on September 30 53,000 points have been purchased and the rest will be done throughout the quarter as and when the conditions are finally current.

 Transformation of these supply points and their transfer to Gas Natural will take place between 2019 and 2020. This will increase the growth potential. We have to say too that this distribution activity in Spain has not grown in terms of EBITDA as we had expected because of atypical events last year, but especially because there's been a change of policy in the Government, as regards the period inspections. Instead of being every four (sic - "five") years, they will now be every four years. And that has created a specific problem in the last quarter of this year. We expect this effect to dilute -- to become diluted over the next few quarters.

 As regards distribution of electricity in Spain, well, there was an increase of 17% net terms; it reached a figure of EUR167 million, all of that in order to comply with the commitments in the investment plan that was sent to the authorities, and that justifies our tariffs. And within there, very significantly we have to talk about the meter replacement and digitalization plan.

 The recent approval of the regulated asset bases by the Ministry for Industry and Energy undoubtedly gives us a security -- gives a security for the period that goes up until December 31, 2019 because the financial return rate will be 6.9% for that period and there will be no doubts as to what the conditions are when it comes to operating with those assets. 30% was devoted to digitalization of meters, 40% to maintenance of the network, 20% to growth of the network and 10% to other concepts or other things.

 By this year we will have 2.7 million smart meters installed. That will be 65% of our total series of meters. And by 2018 we will have replaced 100% of them.

 We have to say also that GNF acquired 100% of Vayu Limited in July 2016. This gives gas and electricity to private and industrial customers and buys and resells energy from small operators. It operates in the UK and Ireland with shares of 15% in gas and 6% in electricity.

 Last year the Company had a net income of EUR2.7 million and it is of interest to our Group to have this base to develop marketing and trading operations which take us into markets where we are not present so much right now. And once we overcome certain problems that we have had administratively, we'll be growing in Ireland and the UK.

 As regards GPG and our investment in renewables, we have three items of good news. First of all, the award of the Crookwell II windfarm in Australia with a power of 90.4 megawatts (sic - see slide 17, "price of AUD90.4 per megawatt hour") with an estimated production of 304 gigawatts hour. Now, that will mean an investment of about EUR120 million and we expect it to be in operation by the second half of 2018, this windfarm in Australia.

 This is a very interesting project and we have another one for storing renewable energy in batteries to turn renewable energy into gas for a total of EUR8 million and a value however, in terms of technological investment, which is really, really significant.

 Secondly, we've got Chile. We were awarded a project to supply 158 gigawatts a year of electricity based on renewables. There'll be an investment here of $47.25 million (sic - see slide 17, "$47.25 per megawatt hour") and it will include significant facilities. We are going to begin by the third quarter of 2018 and we expect it to be in operation in 2020.

 In Brazil, we've bought two solar projects that are ready to be built with a capacity of 68 megawatts of peak power and a production of 154 gigawatts hour. The total investment will be about EUR85 million and it will start up -- we expect it to start up at the end of 2017 with a full EPC contract.

 It's important for you to know that with all these investments we have already reached 100% of our objective for investments in the strategic plan for 2018, and 30% of what we had set ourselves for 2020. So, the core of our interests in growth in that area have been complied with and we have to look forward to the future.

 And that means that we will have opportunities -- there are many good opportunities in the industry and the markets where we are and we're going to give priority to profitability levels and the ability to add value, both in terms of free cash flow and income profits above our costs -- capital costs. That's what we've done rigorously to date and more so now that we've covered that percentage of our plan, we're going to continue to do so.

 I'd now like to say that we continue to put in a lot of effort into optimizing our portfolio of assets and to do that we have carried out optimizations for a value above EUR1 billion. During the first fortnight in November we hope now to finalize the sale of our 20% of the regasification plant for liquid natural gas in Quintero in Chile for an amount of around EUR220 million (sic - see slide 18, "$200 million") with a capital gain of around EUR50 million.

 Also in Chile in the third quarter we have started to sell the petroleum liquid gas business for around EUR220 million, with a net capital gains of around EUR4 million, and this will streamline our portfolio because that really isn't a core business of that company.

 And finally, in the second quarter, as you already know, Union Fenosa Gas sold its stakes that it had in Spain in two regasification plants, 21% of the Mugardos plant and also the 42.5% in the Sagunto plant, which gave us capital gain. So, therefore we continue to optimize our portfolio and to identify all opportunities to get value from all our different investments.

 Now, I would like to add a comment about Chile, saying how satisfied we are for seeing how our business is going there, and especially for the perspective of all our businesses in Chile. We have carried out a very important restructuring of the natural gas business and now are concentrating on core business and simplifying the strategy.

 We have now separated the LPG and the natural gas activities into two companies. And we have now launched cross-public tender offers to such an extent that we have acquired the EUR306 million of capital that allowed us to increase the stake in the natural gas business, and at the same time as we sold or EUR220 million stakes in the GLP (sic - see slide 19, "LPG") business for a value of around EUR168 million, and of course deconsolidating the debt for EUR314 million, which means that the streamlining in Chile means that this favored existence of negative capital in use which means we could free off capital of around EUR702 million.

 In addition, this is contributing to simplifying the corporate structure of the holding and therefore making it streamlined because the corporate structure with regard to LPG has now gone due to this divestment. And so then we will now be talking about the streamlining of the cost structure for our investments in Chile.

 In addition, we also sold Enagas, our stake of 20% in Quintero for around $200 million because this was a non-core asset, taking into account that we maintain the right to use the plant for regasification in the present and in the future. The company that we've sold will be producing certain net capital gains for EUR50 million. In a few days' time we will be completing this transaction.

 Well, as I've said, we're very satisfied of this divestment, not just because of the financial parameters but also from an operational standpoint. The results, despite the fact this had a negative impact of the Chilean peso, but they are better than expected, taking into account especially the revaluation of the Chilean currency over the last few months.

 There is a new regulation that has been approved for the electricity transmission which will contribute to the development of the transmission in Chile, which means the Company will get possibilities to grow. And also, we're talking -- we see that this new law will be very positive for us.

 Likewise, this new gas law is going through a parliamentary process and we hope that it will be finalized by the end and approved before the end of the year so that we will have the instrument that will allow us to fulfil one of our political obligations, which would be the gasification of the country.

 Our gas companies in Chile, especially Metrogas, are ready to finalize this gasification plan. They have requested specific areas for activity and they have prepared the technical programs and the trading programs to launch this gasification plan that, to a certain extent, has been contemplated by the Chilean administration and that we have worked on for the last 12 months.

 It's very important also to talk about our efficiency plan. Our objective, as you know, to the year 2018, was to have savings and improve our EBITDA by EUR220 million in savings, as we've said. So far in this nine months we have achieved EUR61 million in savings, so we are in line with achieving the EUR70 million that were envisaged by the end of the year.

 We have a firm commitment to fulfil this timetable in line with, as we've already mentioned on former occasions. In parallel, there is a program for recurring savings and CapEx which affects the activities that are part of this recurrent CapEx, which are the gas and electricity networks.

 Also, we are working to launch and to have our ideas ready for our efficiency plan, which will be going from the years 2019 and 2020, because 2020 will be start of the strategic plan at the end of year 2018.

 Now let's concentrate on our results. Very quickly I would just like to say that our EBITDA, 52% is related to gas activity and 48% is related to electricity business. Taking into account this profile, 75%, which is very important, corresponds to regulated or contracted or almost regulated business. That would include the Maghreb pipeline and also the activities at (inaudible) power which in general terms are PPAs that do not have any risks involved. And the remaining 25% are related to non-regulated activities.

 It's very clear to observe the better performance over these three quarters for regulated business compared to the non-regulated business. According to geographies, as you can see, the 55% was in Spain and 45% was outside Spain. So, the EBITDA in Spain is still flat and the international has gone down, as you can see.

 If we analyze the EBITDA that we have achieved over the first nine months of this year, EUR3.9 billion (sic - see slide 24, "EUR3.6 billion"), and we compare it with the same period last year, EUR3907 million, we can see that there are three major reasons that are behind this negative result.

 The first one I've already said has been the currency translation effect which has affected EUR117 million, and the second one is that the natural gas business -- and we're now referring to the supply and trading -- had a negative impact of EUR192 million, which I will explain later on. And the other activities also had a positive contribution of EUR42 million.

 So therefore, if we were to discount the exchange rate translation, therefore the difference would only be minus 3.8%. And so all other activities are being positive and it now seems that the currency translation effect has not only bottomed out, it seems to be improving. So, we think that as from now the train -- the currency translation effects could be similar to the ones we've had before.

 So now we're talking about the gas business. The infrastructure and the supply and the trading represent 70% (sic - see slide 25, "17%") of our EBITDA, and as part of this chapter, the business for supply and trading is 11% of our EBITDA. 54% of such EBITDA -- we're talking about the EUR619 million of the business for gas -- 54% is generated in Spain and 46% abroad.

 The infrastructure business is mainly related to our infrastructures, the pipeline in the Maghreb between Algeria and Spain, through Morocco and the Straits of Gibraltar. And so we said the supply and trading has been affected, which is normal, by the commodity prices, taking into account the LNG world prices. So, they have maintained pretty stable with a reduction of around 1%.

 If we now see the evolution of the margins, this is very important to highlight that the wholesale natural gas market, which is the one that has been the most affected by the situation, especially of the natural gas in the world. So now we can see this has been pretty stable throughout the year at EUR1.7 megawatts hour.

 This clearly indicates that the market is stabilizing and we're convinced that these volumes should continue over the next few months.

 Also, it's worthwhile mentioning, and you can see that on the right-hand side of the graph, that the stable -- we have a stable customer base. 78% corresponds to European customers and electricity ones in Spain. So now we're dealing with markets where Gas Natural Fenosa has competitive advantages that are patent. These markets are the ones -- the three on the right at the top and these represent 78% of the volumes and 88% of our EBITDA. And 22% of the gas volumes correspond to the international LNG business, which is subject to global problems of the hydrocarbon business that you're well aware of, and they represent 12% of our EBITDA.

 Also, I'd like to mention, and you can see it on the graph too, that the sales to the industrial market in Spain and Europe have represented over this last nine months a growth of 7.2% compared to the previous year, which clearly indicated that these sales are very robust compared to other segments which for different reasons, for example climate changes, have been negative.

 We know that one of the main problems, or one of our concerns in the market, are the volumes that come from Sabine Pass, which is our Cheniere contract, as of 2017. On this slide, what I would like to do is to give you some sort of response to this concern.

 Firstly, the commercial operation of this contract we think will start in August 2017. It's also important to highlight that the volumes of the Sabine Pass when they take place will be sold as an integrated part of the contract portfolio of Gas Natural Fenosa i.e. they will be sold as part of a contract portfolio of liquid natural gas coming from the different origins, which also includes in their composition which are volumes which are indexed to the Brent price and those that are oil derivatives.

 With this, we will always carry out a global management of the risk of indexation in the sale prices of LNG. And it's also very important to highlight that the 5 bcm per year when the contract is fully operational that we received, 3 bcm have already got the sales committed with positive margins, and the other 2 are currently being negotiated with possible customers within our philosophy and politics that the -- of the portfolio that I've already mentioned.

 Obviously, we are now developing an active commercial relationship, negotiating the sale of these volumes in line with our experience and our background in the world markets. However, as a fact to remember, to have an idea in the worst-case scenario that, as I say, this take or pay which -- well, if it's not take or pay but it will be toll or pay, this would be around EUR160 million. So, there is not an actual risk in the take or pay but there could be one of the toll or pay which means that even if we did nothing with these 2 bcms, a maximum risk it would be EUR160 million.

 Now analyzing the electricity business for the generation and the trading for electricity. We would like to say that this has contributed 20% to the total EBITDA over the last nine months, with a high national Spanish component which generated 74% of this EBITDA.

 It's also important to say how stable these results are, especially in Spain, because despite the fact that the pool price has gone right down, it's true to say that it's recently gone up, or last two weeks it's gone up a lot but at the beginning of the year it was around 30% the price of the previous year. And in spite of the fact that they have generated around 4% less than the previous year, we have still managed to maintain the EBITDA levels.

 With regard to the EBITDA created abroad, there's been a slight reduction of EUR6 million, mainly due to the availability in Mexico caused by outages for maintenance at the -- is it the -- is it the Tuxpan power plant -- yes, that's right, the Tuxpan plant.

 Well continuing with our electricity business, I would like to say there has been a considerable narrowing of our thermal gap. So, it's gone from being 30% during the same period last year to 20%, and this is due, as you can imagine, to an increase in the hydro -- to the hydro and also renewables, as you know, are being used.

 Despite all that, our combined cycle plants are continuing with a load factor which is almost 18% and the average in the industry is around 6%. So, we're defending our position but without a doubt with less volumes, due to the move towards other types of industry.

 And on the right-hand side you can see that 32% pool prices down and a reduction in 34% in -- and a 4% reduction in -- lower production of 4%. And this is due to the import of energy, among other factors, due to the important taxes related to the generation in Spain, which is EUR10 per megawatt, which doesn't exist even in Portugal.

 We have managed to maintain this EBITDA level. Why? Because we act -- or we are in the entire value chain, which means we have been allowed to compensate the reduction in a tougher scenario but improvement in other parts, which means that the forward prices envisioning stabilization and a moderate stability of the pool price over the next few quarters.

 With regard to our network activities, they represent 62% of our EBITDA, and I would just like to say that 49% of the EBITDA has been generated in Spain and 51% abroad, with an important growth, a 7% growth, as you can see, in the international business. Actually taking out the currency effects, which means that this is represented the fact that we're flat in Spain, but in the international markets we've gone up 7%, 5% in gas and 9% in electricity. So, without a doubt, these are very important amounts.

 And in some cases, I'm talking about Latin America, have even allowed us to compensate, as I've said, the problem with the exchange rates.

 With regard to the growth, we'll see this later in greater detail, but I would like to mention the fact that this activity or the growth has been very positive. In Colombia, it's been 17.6%, in Mexico 10% and in Chile with 8%. Brazil is the only country where there has been a reduction in the activity, and this is due to the hydraulic year, and this was envisaged.

 So therefore, the Latin American markets continue to be clearly positive and we are convinced that they will continue to do so over the next few quarters, both in EBITDA terms as well as in connection points. Because, in effect -- and you can see this now on this graph -- that throughout the world there has been a growth in connection points so that the gas networks in the world have grown over 3% in connection points and electricity they've grown over 2%.

 If we want to have a look at Latin America here where the growth that we're talking about are based, very strong, we can see that in Mexico the networks have grown almost 8%, in Brazil over 5% and in Colombia 4.5% and Chile over 3%. Without a doubt, we are facing markets that should continue to be growth platforms, which are both predictable and stable.

 Now, if we look at the cash flow of the Company, I can say -- it can clearly be seen here how we've got a high capacity to generate cash flow because we reached EUR2.4 billion this year. After paying dividends of EUR1.4 billion -- as we said, this was in line with what was envisaged -- paying out EUR330 million in advance, plus the net investments taking away -- of EUR1.3 billion and negative impacts of EUR167 million, in the parameter of consolidation we have got EUR16.144 billion, which is just 3.2% compared to last year. And this is all basically due to the new dividend policy.

 With regard to net investments, I would like to say that 87% corresponds to regulated business as opposed to 13% non-regulated business. All this taking away the EUR2.6 million (sic - see slide 33, "EUR206 million") of the time charter of our new methane tanker which have been booked, but they do not represent a cash impact because these are investments that have been done in line with this time charter.

 In geographical areas, 44% of investments were in Spain and we should highlight the fact that they have 55%, which is a considerable increase, in regulated business in Europe. The investment to expand the gas networks, both in Spain and in Latin America, especially in Mexico, where the immediate perspectives for new growth areas, taking into account the Mexican Government's policy where they will be [excellent] for us.

 In Spain, we have gasified 300 new municipalities with an increase of 1.5% in connection points which are now over 5.3 million. Also we should remember, as I've already said, the agreement that we have, mainly with Repsol, to acquire LNG points and they should be transferred to Natural Gas. There has been an acceleration of our investment in Mexico in the federal district and in [Los Bajios] and now we're starting to expand in these new areas which we've achieved of Sonora and Sinaloa, and we're working to make the most of the energy reform to ensure that we can continue with this growth.

 Also when we're talking about the electricity distribution, we're working in controlling the energy and in the commercial management of such.

 Well, now if we want to talk about the financial situation, I'd like to continue to say -- and we've been saying this already -- that we have a very strong profile because we've been very strict and we're going to continue with this. The cash flow and our liquidity is very important, positive and structural, because we generate cash flow which is very important. Where 70% of our EBITDA is generated by regulated business, which will have a growth tendency.

 This should highlight the fact that we've been very strict financial -- strict soundness when we're carrying out the investments, both when we're carrying out the analysis or the parameters that we move within, are very rigorous, which means that they contemplate the capital cost and also the margins that are necessary to contribute added value to our investment decisions.

 The track record that we have had -- and I justify this without a doubt as something that's going to be maintained. Our credit rating has been stable over the last four years and our liquidity position is very robust, EUR10.8 billion, which includes EUR3.1 billion in cash, which will cover our following maturities. So, we've already covered our needs until the first quarter of 2019.

 Without a doubt, we are continuing to optimizing the cost of debt of our financial expenses. The net debt is stable, 0.7% increase, but I've already mentioned this, and our financial expenses have gone down 7% compared to the same period the previous year, maintaining 75% of our loans at fixed rates. So, the structuring of the Chilean companies means that we have saved on financial costs and the cost of our debt went down by 2 points since we acquired the company.

 We truly believe that we will be able to continue to maintain these financial cost limitations over the next few years, and this can be proven by the fact that we've got 10-year bonds with a coupon that is only 1.2%, which in addition allowed us to increase the average life.

 Also, I'd like to say that the bonds that have been issued by our Company have been accepted in the program of (inaudible) of the European Central Bank, and in addition on the short term, we are obtaining interest rates that are negative.

 And just to conclude, I just wanted to mention a couple of things. We are in a very complicated environment, especially in the commodity prices, due to the hydrocarbon market and exchange rates. However, there has been -- there now seems the trend will be for stabilization and improvement. I've mentioned the main reasons which explained why our EBITDA has gone down and our net income.

 But we should highlight the fact that there's been a very solid performance of regulated business, both in Europe and Latin America. In Latin America we should say that taking into account the devaluation of the currencies, we have still registered positive EBITDA growth in the majority of the companies. And with regard to activity, the gas has experienced increases.

 When we're talking about the activities, a part of our current strategic plan, the progress with Global Power Generation, means that we've got very clear profit and added value criteria and with investments in renewables which are envisaged for the year 2018 are in line.

 We're still optimizing our debt to reduce our financial costs, so we're in line with our interim dividend in the new policy, which is now EUR0.33 per share.

 So, to summarize, I would just like to say again that we are continuing with our strategic view in our current plan and also the outlook for this year, as we said, between -- well, we're in line with our figures that we had already announced in our strategic plan.

 Well, now we will go to the question and answer session. We will start by the questions that are from the floor. So, would you please first of all say your name before you speak and which -- the institution that you represent.

==============================
Questions and Answers
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Unidentified Participant   [1]
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 Good morning, [Alejandro] (inaudible) from [Fields Asset Management], I have three questions. The first one, we're in November, could you give us an idea about the next few quarters of 2017 operational -- even if there's no quantities or amounts, the quality of the investments and CapEx. What CapEx do you expect to invest?

 And then the second question's about Colombia, to understand exactly what Gas Natural is requesting and what might happen in the different scenarios.

 And the final question is about the supply business. You had said that there's a risk of tolling. What about the volumes? If those 2 bcms are not sold, what would happen? Does that accumulate for subsequent years or what?

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Unidentified Company Representative   [2]
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 Well, as regards the outlook, well, for the rest of this year it's clear we're going to comply with what I've already said on several occasions and a trend to -- which is as follows. As regards the networks, there will be a consolidation in the investments and investment projects should give us growth potential.

 There are projects for growth of the gas networks in Spain, clearly as we develop these projects, and Mexico, because of the areas we already have and the new ones that will come out of the energy reform, that is very much advanced. Exactly the same in Chile, after the law comes out we're going to launch our investment plans in Chile, so there's no doubt that there'll be significant growth.

 As regards the problem of the exchange rate, problems seem to have bottomed out and are beginning to improve, so we're quite optimistic. As moderate as you like, but optimistic.

 And as regards the supply business -- and I'll talk about the Sabine Pass contracts in a minute -- the perception is that probably the worst is behind us and we are now stable before things begin to get better. We must always insist and say that the LNG business model of our Company is very special and it protects us from some of the rough patches that our competitors have gone through.

 Our EBITDA is clearly positive, as you know. A different matter is the fact that it has dropped as regards other -- or as compared to other years, but that's another issue. These would be -- the risk that I've mentioned would be the maximum risk and we're not going to -- these 2 bcms, in order to focus what we're talking about, that would be the situation.

 As regards Colombia, the problem in Colombia, if you'll allow me to simplify it, is that we're delighted with our investments in Colombia in general and the area, it's a growth area, growth region, it's very dynamic and therefore this project warrants our attention and our efforts.

 But there is a problem; unfortunately regulation -- and we've been saying this for a long time -- doesn't offer the necessary legal security in the face of fraud and bad debt. Now these problems over time have generated an extraordinary debt, which is continuing to grow, because this lack of legal security continues. A solution is clear; we need a reasonable framework to allow us to reduce fraud and bad debt to reasonable and controlled levels, so that we can continue with the business. Because this is a growing region that will require investments to serve more customers and a higher level of demand.

 But in order for that to be possible, whoever it is that is involved there, money will have to be collected and fraud will have to be combated. It's a very significant problem which we cannot really control. What would GNF like? Well, as an important shareholder, to talk to the Colombian Government so that a framework is introduced that makes it reasonably secure legally and that's what we need.

 And if that happens, this will be feasible in the future. If not, the project will not be successful, whoever gets involved in the region. But we are confident that we will be able to solve the problem in the long run.

 Rafael, if you allow me, the question that you've mentioned, you've asked about CapEx and the GPG projects. This year it's true, as we've said, we've got under construction, or will have under construction, three GPG projects. The impact of the investment -- there will only be an impact in the case of Australia and Brazil because the Chile facility or project will be after next year.

 The investment of EUR120 billion in Australia, about half of that would be invested over the -- in the course of next year and practically all of the money in Brazil would be invested more or less straightaway. About 10% of the investment will even be made in this quarter, so we're talking about EUR130 million, EUR140 million that will be invested in association with these two projects.

 Any more questions in the room? Good. Well, we'll go to the questions -- read out the questions that we've received through the web.

 We start with Manuel Palomo from Exane. First of all, the first question is whether it's possible to explain why the result of the quarter is negative and what's our expectation for the end of the year.

 Well, in the chapter of miscellaneous and other matters section of the EBITDA, we include other activities that have a lower impact that are not included in the other chapters. Basically, the mining business in South Africa and engineering, et cetera. The main reasons for the EBITDA not to have been preserved throughout this year is because last year the mining activity was more or less normal, but whereas this year, because of prices and stoppages at the mine itself, have caused the EBITDA to be almost zero in these first nine months. As compared to the previous year, it's about EUR10 million, EUR11 million because of that mining business and the problems we've had there.

 And perspectives for this last quarter, well, the situation has gone back to normal in the mine. We think we're going to be able to recover part of that deviation and the deviation we don't think will be so great. There will be a gap, but we'll be able to mitigate it by starting our production in the mine over the next few months. That would be the expectation.

 And the other reasons, well, are a series of different reasons. A little less in engineering, some extraordinary events which have contributed to that deviation.

 Good. More questions about LNG that have already been answered.

 The next question, Gas Natural has one of the more thermal fleets in electricity, but as regards trading and marketing of electricity in Spain, have you thought about an increase in your exposure to customers?

 No, we don't believe that -- well, our trading and our marketing policy has a ratio of about 15% on the market. In marketing (inaudible) is about 12%. While I don't share the point of view of the person who has asked the question, our policy is to be matched with the market more or less in general.

 There are two considerations. First of all, where does the policy come from and what is the policy itself? Well, it comes -- it results from the situation of the distribution networks. The distribution networks -- I'm talking about electricity -- set up a map in Spain which is opening up to liberalization. So, there'll be movement and changes over the next few years, but this won't be sudden.

 Now what is our policy? Well in general terms, we want to be in line with the market and cover our situation with different instruments, basically trading and marketing. We don't -- we're overdrawn at the moment slightly, but the pool is very volatile and we don't want to be -- we want to be in step with what's going on. The pool now is going up this month, it's gone up very significantly because of the high volatility that has to do with the French market.

 The long positions in marketing feel the impact very significantly. When the pool drops, as has happened during the first half of the year, it's more favorable if you're long in marketing. So, we want to have midterm measures and have a profitable market share.

 We foresee a gradual growth over the next few quarters, in line with a forward market and that's where our commercial activity will focus, to preserve and progressively and moderately improve our marketing and trading in line with the pool price. Now that is one of the keys why we have achieved and preserved the same EBITDA this year.

 As regards electric activity, because of our policy, marketing policy, a drop of 30% in the pool and 4% in production, we've prevented that from affecting our production. So, we are in line with the market in general and we have had success, because after the drops in prices and volumes, this was a very significant challenge.

 Good. Well, the next question is from Carolina Dores from Morgan Stanley. She's got a couple of questions about other matters and the margins. Part of this has been answered already.

 The question is what level of -- what capital gains are included under the guidance that you've given us for the net profit for 2016?

 Well, as the CEO has said, capital gains that we have after the Quintero plant sale, that's EUR50 million included in that guidance. Also, even if it's not capital gains, we are waiting for the recovery of the amounts that are pending in Argentina that would be included under that section too. And as the CEO has said, we are also looking at the possibility of certain issues of regulation, such as the social bonus are included, at least the current part are included in that guidance.

 Good. The second question is for how long have you been accounting for the provisions in such a way that that reaches EUR1.2 billion? And when do we expect to recover these amounts?

 Well I think that I have explained this, I'll give you more details. Of the total EUR1.3 billion, 83% is provisioned in a current way on the P&L accounts for each of the years. So, in accordance with our accounting laws and standards, bad loan or bad debt goes under losses in accordance with the accounting practices that are applicable. For instance, in this year so far until September, EUR150 million against the P&L account of Electricaribe have been provisioned to pay for the bad debt, so that's what we've provisioned.

 When do we hope to recover that? Well, there are two ways to recover these amounts. The first one is to do it in -- to get customers to pay. Through our recovery services -- we have very sophisticated recovery services. I think we are in the front line of smart systems for recovery, but it's a big problem to recover these amounts because of the social situation and the situation as regards the regulator.

 It's very difficult to get these amounts back, to recover this debt in the current situation, as I said. We hope that if the regulations change there is, as I said before, a framework that is stable and that allows us to manage this problem more efficiently.

 Jose Ruiz from Macquarie has asked a question which has already been answered as regards the provisions in Colombia.

 Then we've got Harry Wyburd from Bank of America Merrill Lynch has two questions about Colombia and the gas, Sabine gas contract, which has been answered.

 And the other question is there's been quite an increase in LNG prices in Asia in recent weeks. In your opinion, what is causing this and how could this affect your margins for gas trading?

 Well, that is not the only phenomenon that is happening in the market of LNG, there are many and the situation is very volatile. Undoubtedly, it's a positive piece of news, after many quarters where things have not been good. We are convinced that the adjustment is taking place in markets.

 It's necessary to remember -- we should remember that many countries have seriously restricted their LNG production because of the situation of the markets. Half our own supply is readjusting itself and [half have] reacted many quarters ago and this in the end reaches the markets.

 It's not the only factor; then you've got the weather and many other things. But we are reasonably optimistic about this, because after this has adjusted itself, things will probably get better.

 We're going to still see events happen, things happen, but the trend will be towards stabilization and moderate growth, subject to one-off situations of volatility because of phenomena like this.

 Good, the other question has just been answered now, the expected evolution of margins.

 (Inaudible) asks three questions that have been answered already on contracts, Cheniere contracts, et cetera.

 [Bree Blass] has got two questions, also answered, on gas margins and Colombia.

 And then there's a question that hasn't been answered on generation of electricity of Spain and it's as follows. Could you benefit from higher electricity prices in France? Do you think there will be higher load factors in combined cycle plants as a result of that increase of French prices?

 Well, that is already happening. In fact, that's not a hypothesis, it's a reality. The situation in France, five nuclear power stations have stopped because of technical problems and I haven't had this confirmed, but there could be others that will have to stop for maintenance and preventative action. And this has led to a situation where there's a drop in the offer in the French market and therefore, prices have shot up.

 But the interconnection capacity between Spain and France is limited, but until now the difference is tax differences between both countries has caused a situation where we have imported a lot of energy at low prices and that has forced a drop in production in Spain. That stopped in October, although it will go into November, it will still have an influence in November and there'll be a greater production of the combined cycle plants.

 But renewables are still a priority, so it would depend on how the wind and the hydraulic production do this year, but this is not a hypothesis; it's a reality, what you're asking in the question.

 Good. The next analyst is Javier Suarez from Mediobanca, and there's a question that's been answered already about capital gains.

 And the second question is whether the Company would pay out the dividend -- advance, or interim dividend in the form of scrip.

 No, the Board hasn't considered that possibility, or any other. You know what we approved and there's nothing new and nothing we're going to -- we're not going to talk about it.

 Jorge Guimaraes from Haitong has asked a question, which has already been answered, about Colombia.

 Fernando Lafuente from N+1 has got several questions. The first one is as follows. The sale agreement in Chile, there was an agreement whereby families could ask for loans. Has that been accepted and how much money have they asked for?

 No, they haven't. No loans have been requested so we've got no risk with the families at all.

 Second question is about the distribution of gas in Brazil. It says in the results report you talk about 3% decrease in EBITDA, excluding the exchange rate issue. And you say that this is due to the volumes. Is there any mechanism to adjust volumes when it comes to setting rates or tariffs?

 Well this is something that we know about, it happens often and is foreseen always in our plans. Last year was -- the volume of gas on our networks was very high, therefore, the EBITDA was too because it was a very hydraulic year and the combined cycle plants in Brazil were working full blast. And the gas comes through our networks and that's why we had that profit.

 When the year is hydraulically normal, that doesn't happen. But what the situation is -- normal situation is what's happened this year, not last year. The volatility of the level of hydraulic production in Brazil will mean that there will be years which will vary very much, but that is not a market issue; it's because of the hydraulic production. If we exclude the consumption of gas in Brazil, which is affected by the industrial crisis, it's still growing.

 Well the next one, Colombia has gone up 20% with that exchange rate differences and there's been a drop in the hydro. So how do you adjust this and take into account all these volumes?

 Well, of course, the situation in Colombia is similar, although in the gas networks the cost of the gas is a pass through. Therefore, both things end up compensating each other. The regulatory system in Colombia contemplates the fact that the Company has to buy the gas, but it also has adjustment mechanisms so that it ends up being a pass through to the end customer. So therefore, it gets higher when the year is firmly active, because it means that electricity cost goes up, et cetera.

 Do you want to add anything, Carlos?

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 Carlos Alvarez Fernandez,  Gas Natural SDG SA - CFO   [3]
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 No. Just wanted to say that the increase in the connection points compared to the same period last year in Colombia, gas is 120,000. So, of course, 120,000 connection points which are new, which obviously have consumption, which means that activities in Colombia grow and the EBITDA grows at this same pace.

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Unidentified Company Representative   [4]
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 The next question is what is the capital cost of the Company when you're analyzing the new investment in GPG?

 There is a difference per country and currency. If we do investments in Brazil and is Brazilian reals, then we're talking about double digits, around [10]. If we're talking -- well secondly, how much have we got contracted?

 Well they're normally long-term contracts, so 90% of the energy that we get we sell on the long term, so the capital costs are low. And if we have more exposure from merchants and the cost for -- capital cost is higher and also the risks for construction. If we go and we offer our -- offer at 90% is fixed and we have the guarantees and then it's the constructor or the EPC who accepts the risk, then our capital costs are less.

 Otherwise we ask for a premium for the construction to create value for the risks that we may have to be taking on board. So, it depends on the country, it depends on the currency, it depends on how much generation is contracted already. And also on the technology and on the -- also depends who is buying the energy from us.

 Well, the next question is the conversion of the LPG is going to be between 2019 and 2020, so how is this going to be done?

 If they're not converted it means that the business for LPG is a profitable business and therefore, they are contributing from day 1 EBITDA to the Group. These are good assets and they're contributing and therefore, we will develop a program as quickly as suitable to recover that.

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Unidentified Company Representative   [5]
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 Can I just add something please? The conversion's already started. As we've said in the report, the majority will be carried out in the years 2019 and 2020, but transformations will take place in the year 2016, some have been done. There will also be some in 2017 and in the year 2018.

 If you look in our report -- in the report on results in the chapter on gas distribution, when we put there our P&L, there is a line which says [transformation] and there's also a part that goes to provisions. These provisions that have been done in the past years, there was nothing, it was zero. This year we put a few million euros there and this is [the position] of this LPG which we can sell along in these channels until it's transformed. So, on that item, that is what represents the purchase of the LPG and so therefore, it contributes to the EBITDA.

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Unidentified Company Representative   [6]
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 Well, thank you. And the last questions which have been replied. One about the EBITDA as applied to the others. And the other one was on the prices of the PPAs in renewables and that was in our presentation.

 The next analyst is Andrew Morgan from Credit Suisse and he is asking a question that's already been asked about the provisions in Colombia.

 The second one was about the development in renewables. He says, well, I think you're getting late to the market when you're going to try and grow in renewables. Why do you think that you'll be able to compete successfully against the other players who are more established in those markets? What advantages has Gas Natural got and what sort of returns do you expect in your renewable projects?

 It's true to say that we are late to get an important position, for example, in the Spanish market. But it isn't in other markets, whose development in renewables is just starting, which are the Latin American markets. We're not late there whatsoever and proof of this is the fact that we're now fulfilling all the profit levels and we are now getting the projects that we had proposed for the year 2018, with the profit levels that are suitable.

 And in addition, the renewables market situation is changing and changing considerably. Up until now the renewables business had been uniquely in mature markets like Spain, a very easy business, very easy. There was no market risk, neither in volume nor on margin and the profit levels were guaranteed, as you will know.

 So therefore, it was just a question of getting your permit in and this has meant that lots of companies have joined the market and have got good results. But we have to be realistic, this business, as was demonstrated, anyone who wanted to participate -- and it was a regulated business in Spain. And the profile of the companies that won this were companies that were totally out -- they weren't really part of this market.

 Talking about the know-how and the expertise of the Company, if you think about it, even in mature markets, those who won the tenders were people who had no expertise in those markets. For example, Spain a few months ago. But things are changing. I'm sure the countries that have learnt of what had happened in Europe are now doing things in a different manner.

 So that we think that we can contribute to these markets where we are; Chile, Mexico, Brazil, we can contribute our knowledge, specifically in managing the projects at a local level, because we have people there and we have an organization set up there. And especially when you start to get emergent risk, whether it's total or partial, because we have businesses there. We're one of the few Spanish businesses that have got trading or networks there.

 If the electricity in Mexico is all sold through the PPA, no problem whatsoever. Anybody can do that investment and all they've got to do is to get the permits. But that's coming to an end. The Mexican Government, of course, is increasingly more asking for more liberalization and more participation in the management of the project and in the commercialization of the trading.

 Gas Natural Fenosa knows a lot about selling energy in Mexico. Therefore, that's just to mention a market, to the private individuals and on an industrial level. So, then we say that we're (inaudible) as we say there, they're asking for -- we need to be more involved in the sale of what comes from these projects.

 There is no other Spanish company on the same level, because none of them have got a commercial or a network there. So, no one else has the expertise as a dominant factor. Obviously others will have other experience, but our experience shown in Spain and the other countries proves that we have a good background. And markets are changing considerably, they're becoming much more professional, as are the offers and the supplies.

 So just to end, despite the lack of a dominant position in the Spanish market, but we still have over 1000 megawatts here, so it's quite a lot. But I would like to say that we are winning in conditions that are very competitive and we have profit perspectives and risk perspectives which are very reasonable.

 The next question, which has already been responded, came from Daniel Rodriguez at Fidentiis and that made reference to the others in the EBITDA.

 Miguel Medina from JB Capital has a question related to the auctions in Mexico and the CEO has just referred to that.

 Now let's go to Cesar Gonzalez from JB. He has two questions, that have already been answered, related to the gas margins and the other, activities related to the EBITDA. So, I believe that his questions have been answered.

 So how much volumes that you mentioned, the 3 bcms for the 2017, 2018, are they committed for those two years?

 I can't remember the figure. Yes, they're long term, I can't remember the actual periods. The 3 bcms are long-term contracts, I don't remember the exact dates.

 Gonzalo Sanchez from BPI talks -- asks about Electricaribe. When do you expect to have details about the impact of the amounts that have not been provisioned? What's the risk situation right now in Electricaribe?

 Well, the risk of nonpayment is not going to go -- be reflected on the P&L account. Our policy at Electricaribe, as in other areas, what is more the pending payment for more than six months is included for the year, that's our policy.

 To that we should add some other considerations. When we know that somebody that has not paid or a customer with pending debts, that is also included. Based on that, the Group does a calculation of the provision that is needed to cover that.

 As the CEO has said before, when a debt comes up and hasn't been paid, we have our mechanisms to try and recover. And at this time, we think that part of that we'll be able to collect. That's why we haven't provisioned for it, that's the policy of the Company.

 We are thinking that that part that we haven't provisioned for, we'll be able to recover. Time will tell if it is or not, the systematic way is that maybe in Colombia as in other countries, well it's a bit conservative to say that six months is already bad debt. So we can be, I think, satisfied with our policy in that area.

 Good. Javier Suarez from Mediobanca has another question. Could we say what amount corresponds with the inclusion of the social bonus in our guidance?

 Well, I think it's about 20-odd a year, 20-odd a year.

 The next analyst is Javier Garrido, has some questions that have been answered about the EBITDA for guidance and social bonus. And the question that has still not been answered is, is there any reason for the negative trend of electric distribution in Spain in the third quarter?

 Well, it's a quarter that has more to do with what happened in the previous year. I think there was -- income and expenses were distributed in a different way, but there's nothing specific to make it -- that has to be repeated. It's more to do with the way that expenses and income were organized last year.

 Michael Charlton from Santander asks a question about the 3 bcms for Sabine Pass and Rui Dias from UBS asks some questions that have already been answered.

 And we've got the next one, how comfortable do you feel with the recent shareholder changes and the new situation of the Board?

 Well we're very comfortable, we feel very satisfied with the changes that have taken place, and that have meant the entry of a new shareholder. We're satisfied, especially because of the GIP joining our shareholders and their representatives on the Board which are going to clearly promote growth and creation of value by our Company.

 Good. The next analyst is Antonella Bianchessi from Citi. First question is about sales of -- forward sales of electricity for 2017, what volumes and what prices have you got?

 Well, about 60% in volume and about [60] -- around [60] in price.

 And could we -- do we know the return on investment rate for renewables in Chile and Australia?

 Well, based on the data that we offered in the presentation and CapEx production and price of the PPA, I think that we can calculate it. We're not going to give you the data because we've got to continue competing on the market, but I think in any event it's above the capital cost for each of these countries with a value creation premium. And in both cases it's been transferred -- the risk for construction and other areas has also been integrated there.

 And the last question from Cosma Panzacchi from Bernstein, you talk about a reduction in the debt for 2017. Could you tell us about a figure, more or less versus the current 4.3%?

 Well, above 4%. 4.1%, 4.2%, that will be the figure more or less.

 Well thank you very much and that concludes the Q&A session, so I'll pass the floor to the CEO.

------------------------------
 Rafael Villaseca Marco,  Gas Natural SDG SA - CEO   [7]
------------------------------
 Well thank you very much, thank you for your time and hope to see you soon, the next time. Thank you very much.

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Editor   [8]
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 Statements in English on this transcript were spoken by an interpreter present on the live call. The interpreter was provided by the Company sponsoring this Event.




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