Q1 2017 Gas Natural SDG SA Earnings Call

May 12, 2017 AM CEST
GAS.MC - Gas Natural SDG SA
Q1 2017 Gas Natural SDG SA Earnings Call
May 12, 2017 / 10:00AM GMT 

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Corporate Participants
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   *  Abel Arbat
   *  Carlos Javier Álvarez Fernández
      Gas Natural SDG, S.A. - CFO
   *  Rafael Villaseca Marco
      Gas Natural SDG, S.A. - CEO, MD and Executive Director 

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Presentation
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 Abel Arbat,    [1]
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 Good morning, everyone, and welcome to the Gas Natural Fenosa First Quarter 2017 Results. In the first place, thank you very much for attending. And I am -- I want to present myself as a new responsible for the area of the relationship with investors with Gas Natural Fenosa. Our CEO will perform the presentation, Mr. Villaseca; and Carlos Alvarez; and the General Manager, Mr. Basolas for Development and Strategy. Once we finish the presentation, we will open the Q&A session. And as usual, you will find access in our website to ask your questions. They must be sent through the course of the presentation, after which, their reception will be unabled.

 So now our CEO, Mr. Rafael Villaseca, have the floor.

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 Rafael Villaseca Marco,  Gas Natural SDG, S.A. - CEO, MD and Executive Director    [2]
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 Good morning, everyone, and thank you very much for attending once again, our first quarter 2017 earnings results. In this case, this will be the agenda of the presentation. First, the most relevant facts of the period, then we will go into the results by businesses, then we will present the immediate expectations we have in our company. And then finally, we will conclude and start with the Q&A session.

 As regards highlights or relevant facts, I would like to say that the EBITDA of the first quarter reached EUR 1.1 billion, so 5.3% less than last year, if we exclude the EUR 15 million of EBITDA of Electricaribe last year, which we have deconsolidated. As you know, net profit was EUR 298 million, 8.3% flat and the level of investment reached EUR 321 million, 27.9 above last year. Finally, cash generation has allowed net debt to be in EUR 15.464 billion, at similar level to the previous -- over same quarter in 2016.

 So the network business continues to have solid growth in Europe and Latin America, supported by the very favorable exchange rates in electricity, specifically in Spain and exceptional circumstances that had already been anticipated some time ago in the strategic plan. There's been a drop -- significant drop in EBITDA we will later on talk about. But in international electrical generation for GPG, it has contributed to the growth, given investment in Mexico in gas division.

 Trading has stabled its EBITDA levels and infrastructure business has grown by 8%. As regards, OpEx, we continue to invest in the business that generate value, complying in a disciplined way our strategic plan. So the average return on capital employed is 8.8% in 12 -- in the last 12 months up until March. This is a figure higher than the one found in the sector, and we will continue to improve it as we can. Regarding our general situation for the year, I can anticipate that we confirm our goals and targets for the year on course, and the trends will be analyzed later on.

 Now talking about EBITDA evolution. I want to confirm the behavior in gas and electricity networks and the positive contribution of the gas business, which has been compensated or offset partially by the bad evolution of the electricity in Spain. Gas is EUR 24 million in networks above the previous year, but EUR 70 million less in the electricity business. We will see it in detail, weather conditions and the drop in oil prices and fuel prices are keys to this bad behavior, generalized, by the way, in all companies in the country. It has been systematic and has affected us, too. We need to look at nonrecurring effects, too, such as the fact that last year, there were capital gains -- real estate capital gains that are not taking place this year, and this year, it's been specific [one such] cost, capture cost for efficiency plans for staff reduction, mainly that have affected the accounts this quarter and also associated cost, few problems with exceptional fires and important significant situations that took place in Chile due to the launch of a mobility plan of customers affected by energy poverty in Spain.

 So this is the evolution of net income. And as you can see, it has been favored by an improvement in the financial results as a consequence of the refinancing and optimization of the whole debt structure in the sense the month of January we issued a bond, and the average total cost was around 4.3%. This total cost -- sorry, was 4.3% in the first quarter and dropped to 3.9%. So after the liability management operation, we trust that the -- or we are sure that the average will be 3.7% at the end of 2017 as average for the whole year.

 As regards investments, total growth has been 23%, and that has been mainly focused on Latin American networks and Global Power Generation, to a lesser extent in Latin America. Investments in gas distribution reached EUR 68 million, so they're comparable to the EUR 42 million in the previous year and EUR 86 million in electric distribution compared to the EUR 41 million on the previous year. GPG has increased investments mainly due to its portable tank projects in Brazil, EUR 21 million, and in Australia, EUR 9 million. The reduction of investments in networks in Europe, essentially, mainly -- well mainly in France, have an exceptional and temporary character and are related to the fact that the first quarter has focused on a new commercial effort and efficiencies, mainly in the gas sector and also in focusing what they can do in gas sector on higher-added-value customers and unique consumption so that commercial activity and investment activity related to this chapter has been less than expected for the rest of the year, but not the financial results in terms of capacity, consumption contracted in connection points. I am mainly talking about natural gas and networks in Europe.

 So growth in investments has been 53% of the total, as we place a target of investments of the whole year on EUR 2.4 billion for the full year, as established in the current strategic plan. So net debt is stable for our period. Our growth capacity to generate cash flow is also stable and maintained. And this good generation has been offset with greater payouts of dividends, that before our another regions reaches of net debt and EBITDA -- to EBITDA on cost of the financial debt are 3.2 and 6.8 and excluding, mainly the increase of tariff, which is temporary. And debt, total debt is below EUR 15 billion.

 To talk about Electricaribe and bringing you up to date. I will indicate that, as you already know, on the 14th of March this year, the Superintendency of Public Services in Colombia decided to liquidate the company. Before this situation, the action of the company is focused on 2 lines. We're open to negotiate if the occasion arises. There's the possibility of reaching a reasonable agreement with authorities in Colombia in order to solve this significant problem or issue -- simultaneously issue this and as already started 3 months ago with [Lucical]. In the United Nations, we started an arbitration process with our report asking for over EUR 1 billion.

 Only have we consolidated the situation, the situation of the company within our accounts, although its impact is very limited, given that, I would like to remind you that, on the previous year, the final result of the whole year for Electricaribe was negative in terms of EUR 44 million. So in conclusion, this will have no relevant impact in our goals and targets for 2017, especially in the net income, and of course, it won't affect in our dividend policy.

 Going into an analysis of networks in Europe. I would like to say that if (inaudible) that work is 62% of the total. Specifically in Europe, it's been 398 -- EUR 394 million, which is 36% of the total EBITDA of the company. These EUR 394 million, are in line with what was generated in first quarter last year, and we will not explain the reason for this.

 It is important in this sense to stress that there's been greater expense, nonrecurring staff expense of EUR 14 million given the costs in the first quarter, one shot, in terms of staff reduction in electricity networks in Spain. Without this, EBITDA of networks in Europe would have experienced a growth of 3.6%.

 As regards gas distribution EBITDA in Spain, the growth has been 4.7%, reaching EUR 226 million. As a consequence of the recent investments and the purchase now in transformation process of the [key] [LP] -- [PLG] networks that are now natural gas networks, so we start seeing this in our accounts.

 Electricity distribution EBITDA in Spain reached EUR 143 million, with the capture cost I mentioned before. And excluding this, electricity distribution would have grown in EBITDA by 3.3%.

 As regards networks outside of Spain but within Europe, EBITDA has maintained stable in Italy and there's been a small drop in Moldova, given regulatory reasons.

 As regards investments performed in this network, the first quarter has continuing supporting the growth in EBITDA in electricity, EUR 43 million, in the first quarter, EUR 9 million for growth. And in gas, EUR 46 million invested, EUR 36 million of which, are in growth. So we've experienced solid growth in a regulatory environment, which is stable.

 If we now talk about our networks in Latin America, and we start with gas, we want to indicate that EBITDA grew by 8.8% versus the previous year. Leveraged, very importantly, not only if there's a connection point, but also especially, due to the evolution of currencies in the area. Activity has generated almost one of the top (inaudible) in investments performed throughout this quarter and the end of last year. Out of which, the investment of EUR 68 million, EUR 45 million of these were devoted to growth. This means that growth of 41% of total investment versus the previous year.

 Chile. Chile's EBITDA reaches EUR 37 million, 13%, with no -- of course, with no effect of exchange rates represents over 21% of the EBITDA in the region. And this is due to continued growth of connection points and supply points. Only starting with the gasification plan because it will be in the second part of the year when we'll start to see a higher speed -- higher cruise speed. So EBITDA in Colombia is EUR 38 million. It dropped versus the previous year, given less margin -- trading margin that has been recorded. It is basically related to atypical situations on the previous year, given climate situations and weather conditions in Brazil. We've been favored by the growth -- strong growth in exchange rate activity up to now has been an activity that has registered drops in the commercial markets and industrial market. However, in Brazil, this trend is changing, and we clearly perceive a significant improvement in the rest of the year for the ordinary activity of the company without taking exchange rates into account. Also, excluding exchange rates, EBITDA in Mexico has increased by almost 17%, given greater margins due to regulatory updates.

 In Argentina, despite the fact that the EBITDA recorded was minus EUR 6 million, affected additionally by greater service and staff expenses, we need to stress that, on the 31st of March, the approval of the new charts was published on the comprehensive tariff review. I'll talk about this later on. And this means an important change in the situation of our subsidiary in Buenos Aires, which we'll focus in the next few years, with normality in its development and with a clear and positive impact in benefit and profit. So gas distribution networks, as a summary, in Latin America continue being an important growth platform and they have proven so in this quarter.

 As regards electricity networks, of course, we need to bear in mind the deconsolidation of the Electricaribe networks. So EBITDA reaches EUR 115 million. And if we exclude the Electricaribe phenomenon, if we deconsolidate in 2 years, EBITDA would increase by 10.6%. It is true that positively -- it has a positive role in profit.

 The growth of the Repsol in Chile. So in homogeneous terms, EBITDA would be growing by almost 3%. With the compression effect in Chile, this specific growth is given to greater sales and the constitution of great operational efficiencies, given changes of scope and divestments, efficiency plans that start to crystallize and give results. Results given on course plans that will need to continue throughout this year and part of next year because the plan is right in the middle of its development.

 And Panama EBITDA reached EUR 28 million, dropping by 3.6% basically, due to a reduction in demand and also because of climate regions. EBITDA in Argentina grew by EUR 3 million, thanks to an update in tariff. But as we have said this, we will not be consolidated up until the end of the year, but EUR 3 million above previous year. Out of the investments, EUR 86 million, all together in the quarter and EUR 37 million are in growth, which must support the continuity in growth of the EBITDA in this business of electricity networks in Latin America.

 As regards the gas business, the gas trading remains EUR 151 million EBITDA on the previous year, which is a similar figure to one that we saw this quarter this year, similar to the one that we saw in the first quarter of the previous year. So as a summary, we can say that the reduction of unit margins that has been light but clear, has been affected by a greater volume in gas trading throughout the world. These volumes have grown 9.5% and they're mainly due to greater supplies in international LNG, also due to the most important entry of supply coming from Cheniere in the United States. Also, we have increased the gas supplies to combined cycles in Spain, basically related to the climate and weather conditions of the end of last year and beginnings of this year. As I was saying, margins have experienced narrowing, light narrowing. And simultaneously, related with the growing of price of supply those months due to the need to cover peaks of supply with occasional supply at a higher cost coming from export spots markets. The Cheniere contract has been received and has come into forth. And we have been able to download 9.3 terawatt hour as early quantities during the first quarter.

 As regards EBITDA and infrastructures, it reached EUR 81 million and 8% bigger than last year, given an increase in tariffs and also the effect of dollar and euro conversion. In conclusion, stabilization of margin is in trading, EBITDA is in trading, given the light reduction in margins and increase in volume and good results in infrastructures.

 As regards the electricity business in Spain, a EUR 126 million contribution, but it has been at 38.5% lower than the previous year. It is important to stress that this has been a very relevant phenomenon in Spain and the whole of the market, as we have been able to prove in the presentation of results with our peers and competitors, given climate factors and the possible contraction of production of lower-cost technologies, the hydro one, for instance, which dropped by 44%. If this compares to the first quarter of 2016, where precisely the hydro contribution was very high, this explains to a great extent this very strong drop in the electricity results in Spain in trading and generation in the previous quarter versus the previous year. This hydro generation was replaced with thermal generation, so that coal increased 7% -- 70% and combined cycles by 26%.

 Now specifically, and regarding our company, electricity production was 7.1 terawatts, 2.7 terawatts hour at 2% -- 2.7% above the one in the previous year. Hydro energy that we produced was 75% lower than the one seen in the previous year, very much lower than the national average, given the affected hydro accounts, which meant we had to increase coal generation by 320%, at 18.2% in the one in combined cycles for gas. This increase of thermal generation came hand in hand with a very significant growth at the cost of raw materials with coal and gas, occasionally leading to tensions in the market, mainly the gases market, strong consequence of the strong demand of this project in order to cover the peaks that took place in December, January and part of February. As a consequence, the margin of the trading activity or market commercial activity in this business was strongly affected, and it could not offset the increase of pool as a consequence of the previously discussed situation.

 Despite all this, it is very important to stress that our drop in EBITDA are in fact given to the increase of pool, which was not offset by very strong drop in the margins of shore trading. And despite this, our drop in results has been smaller than the one of our competitors' and this lesser proportion, and the negative effect mentioned is due to the fact that our generation mix and our integrated business model have been able to somehow withstand in a more clear and effective way this strongly negative conditions, which, in any case, we need to say that we don't expect to see for the rest of the year and that needs to become moderated throughout the next quarters. And we do not believe there will be extra (inaudible).

 As international generation, regards international generation is concerned in terms of the GPG. As you know, the EBITDA in the first quarter was EUR 71 million, an increase of 14.5% versus the previous year's pace on efficiency in the company and the good results in Mexico.

 In Mexico, specifically, EBITDA increased by over 21%, given a better management of production and sale of energy and greater availability. As far as other investments, on course investments are concerned, we need to explain that we continue to have a good advancement of photovoltaic projects in Brazil and the winds project in Australia. As for the Brazil projects, they are expected to start in the first half of 2017, and they will be transferred to our accounts. So these projects sustained a greater investment we have developed, investments that meet the profitability requirements and they're clearly above our cost and profit cost and margin that are allocated to our resources and that furthermore, are in a very advanced execution process.

 If we now give an outlook for the rest of 2017, we believe that we can summarize it in some statements. The first one is that we will continue to have organic growth in network, electricity and gas, mainly gas. Positive impact of comprehensive regulatory review in Argentina, really relevant and which has been nonexistent in the first quarter. New volumes and business initiatives in LNG, which we hope allow us or enable us this new volumes to offset the margin situation and the new initiatives to start and settle the foundation for future growth. Progressive normalization of Spain electricity business, the negative circumstances of the first quarter, we don't believe will take place in the rest of the year. Secured growth for Global Power Generation with the launch of the photovoltaic projects in Brazil. The efficiency plan, I will mention later on, which will continue to lead to positive results throughout the year. And the optimization of the -- cost of debt optimization, and this will drop throughout the year up to 3.7%.

 And now going into greater detail, as regards organic growth in the networks. We need to indicate that the investment is basically focused on the networks business. It has a strong organic growth potential, especially in Latin America and also gas in Spain.

 As regards gas networks, we have a goal for the year, which would be in Europe around 180,000 new connection points. In Latin America, around 0.5 million additional connection points. With regards to electricity networks, we've already done in the first quarter investments, a EUR 43 million in European networks and EUR 86 million in Latin America networks. So we've already invested around 20% of what had been forecasted for the full of the year this first quarter. So we will continue to grow -- they will continue to grow as the organic growth or as the result of the organic growth of all the businesses that we're developing.

 As regards to Argentina, I already said, on the 31st of March, the government approved the review -- comprehensive review of tariffs in amounts, based on what was forecasted in the regulatory framework negotiated and they will be applied in 3 stages. The first stage has already been applied. So we will achieve an improvement of results in Argentina this year, so that we expect to reach an EBITDA of EUR 66 million -- of around EUR 66 million this year. And next year, we are confident that, given these regulatory increases which are updated every half year, we hope to reach a EUR 145 million in terms of EBITDA. So dramatic change and with future perspectives of our investments in Buenos Aires.

 As per LPG -- LNG, we hope to increase the volumes around 6% versus the previous year. We will continue with our policy of optimizing supply in the long term. And we want to combine this with the situation of spot markets as long as we can do it and as long as markets can offer this positive arbitration.

 We will continue with the lever of flexibility, given by logistics capacity and the flexibility of portfolio, supply portfolio and final customers. We can now say that we have almost contracted all the volumes for the year 2017 and that we expect to have a stable evolution of margins, maybe slightly negative, but in any case, with a pressure on top margins in Spain, we are actually seeing in the rest of international markets throughout the year. We will have 2 additional tankers improving our fleet and our logistics capacity as a consequence.

 We would also like to indicate that we have several innovative initiatives ongoing as regards markets and final consumption of liquefied natural gas, so that we hope to lever growth and profitability through new initiatives. In floating re-gassing units, small-scale solutions in gas trading and the bunkering of liquefied natural gas, an example of this last one, which we hope we can continue expanding throughout the year, has been the agreement with Valeria, a very important cruising company and goods and people transportation, in order to supply and drive their fleet, which are turning into LNG.

 As I was also saying, we expect to see progressive normalization in the electricity business in Spain in the first quarter. We've seen a very -- atypically very negative, not only in Spain, but strongly in Spain, but we've also seen this in Europe, given to very well-known circumstances that could be surmised in an increase in pool price without possibility to transfer to the final customer, important reduction of hydro protection replaced by generation of coal and gas. It's more expensive in notable proportions. And in our case, also because in the first quarter of 2016, also given to exceptional circumstances, it was also much better for us. EBITDA has dropped in this first quarter, as we've seen by EUR 79 million in this business. And we really -- we feel relatively satisfied within this undoubtedly bad news because we've been able -- given our business mix, we've been able to absorb -- well our match between trading, for instance, have avoided impact that other companies have suffered in a more significant way. We expect progressive normalization of this very important business segment, although, naturally, it will be subject to uncertainties in the environment, such as volatility, climate conditions and pool prices. So expect to close with a negative range between EUR 100 million and EUR 200 million versus the previous year.

 I would also like to indicate that this was something forecasted one in May last year. A year ago now, we launched the strategic plan. We already told you that we expected a situation in generation plus trading in the electricity business, which was more negative than the one seen up to then. You have it in the graph now on the screen. And without a doubt, it was something that they we had estimated in any case. It has happened. And we hope it can become more moderate throughout the rest of the year.

 As regards Global Power Generation, we have already said that we expect to have the advantage of investments now developed. You should note that the photovoltaic investments in Brazil had been launched with an internal profitability and of 17.5% in IRR, 7.5% in Australia for our winds project, this Brazil project, where we expect both to be operational on the second part of the year. I would also like to say that our targets for this business area were not optimistic or ridiculous, so we have now maxed the goal for the year 2018. We trust we can get new investment opportunities for Global Power Generation in the world and that in any case, our investment policy will always be in projects which have reasonable limited risks, such as these 2 and also with clearly or -- profitabilities that are clearly above the ones required, given our cost of capital.

 It's important to talk about the efficiency plan, too. We must say that the current efficiency plan is running along the right tracks. We have achieved EUR 109 million out of a EUR 150 million, which were our goal between the 2016 and 2017, up until the end of this year. This makes us optimistic regarding meeting the goals for this year. And given this good track, we're launching a plan that needs to improve the current one, given that we see perfect capabilities for not only meeting the current plan but also to improving in the immediate future results as a consequence of efficiency plans. Also, good news to say that the cost of capturing for this efficiency plan, most of them have already taken place in the first quarter, especially those related to networks in Spain.

 It's also important to stress the business in Chile and how well it's going. Specifically, efficiency plans in Chile, for instance. The number of entities have been reduced from 77 to 55, and the process continues so that this year we expect to see important synergies of all types that rise from the merger of many electrical -- electricity distributions that the group we purchased had in Chile. This must happen before the end of the year. And without a doubt, it will be one of the strong levers to have and see good results in the group's efficiency plan, so we are on the right track.

 I must say that we're very satisfied with all this. We are aware that all our competitors have launched efficiency plans, but allow me to remind you that we have been doing this for many years, specifically. And ever since 2009, given the integration with Union Fenosa, we launched the first one. And I'm not mistaking when I say that we were the first European utility launching a severe efficiency plan, and we continue to do it throughout these years one after the other. So that in an accumulated way, it's EUR 780 million, the ones that we have obtained from efficiencies. This has been key to us when it comes to absorbing almost totally the impacts of the successive regulatory measures in Spain, given the fact that many of these efficiencies were also focused on the Spanish market. We valued and we explain this fact then that the regulatory measures in Spain affected us in EUR 745 million in a similar period. And having been able to use the efficiencies at that moment was key, so that this didn't have an impact in our results.

 And this has translated into something that you know perfectly well and that I will now remind you. Ever since 2010, when we started to see these regulatory and efficiency issues in Spain, we are the only utility company in Europe that has managed to get its results in levels that are not lower than 2010. This is not out of -- or by chance. This is the result of our good work and efficiency plans. This encourage us to work in along the same lines in the future because we have the know-how, expertise and knowledge to do it in the future, and we also have the immediate opportunity, so that we've launched, as I was saying, a new plan that will try to continue the current one and continue along the same tracks in immediate years -- or years to come.

 Something similar with the cost of debt in the first quarter. We have launched partitions for 10 years, EUR 1 billion and a coupon of 1.375%. We also had an activity of liability management with a bond of 7 years of EUR 1 billion. Both operations have allowed us to drop the average cost and also prolong average life cycle and lower our average debt around 3.7% at the end of the year. So all this with strong liquidity you have, and the details of this presentation will allow us to continue saying that we have a firm financial situation and that we will continue acting with strict discipline.

 And to conclude, I would like to say that the first quarter has been summarized and that we expect the following for the rest of the year. In the first place, we are on track to achieve the 2017 targets despite important headwinds that we have experienced in the electricity sector in Spain. Regulated activities have continued having robust performance throughout the world. We have already stabilized the gas supply business, their results are stable versus the previous year. And I have already said, volumes and spoken about volumes and margins.

 Investment in networks and renewable energies are going to roll off. We talked about the project with results that are clearly obvious, our capital cost, and we are also on track not only to achieve the efficiency planned targets, but also to launch a new revision of this plan naturally to improve it. And finally, the company will continue to work like last year to optimize its asset portfolio with the aim of creating value. Last year, we obtained divestments of over EUR 700 million. We will continue doing this and managing our portfolio. (inaudible) Of all this, we want to repeat once again that our net profit for this year will be as -- in the strategic plan between EUR 1.3 billion and EUR 1.4 billion and our dividend policy will be with an established minimum of EUR 1 per share.

 This is all, and thank you very much. We will gladly answer all your questions.

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Questions and Answers
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 Abel Arbat,    [1]
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 Okay. Thank you very much, Rafael. So we now move to the Q&A session, the questions received through the website. From now on, I want to remind you that the questions have been disabled, so if there's any pending questions, please get in touch with the Investor Relationship Team. We will be very glad to speak to you. So we'll start with the Q&A session.

 The first question comes from [Jorge Alonso], analyst, regarding gas trading margins. The question particularly is whether we can explain why the gas trading rate in terms of megawatt hour is lower this year versus the previous year. And whether this is consequence of the fact that we had to buy gas in the market during the month of January.

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 Rafael Villaseca Marco,  Gas Natural SDG, S.A. - CEO, MD and Executive Director    [2]
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 It is true. Part of the reduction of margin is given to the fact that, in January, there were demand peaks, extraordinary peaks of demand unseen for many years. They have been well known. And they had to met with spot purchases that were extremely expensive as could be no different, but it's also true that specifically in the Spanish markets, there is a basic commercial situation existing that doesn't encourage pressure to go upwards, rather stabilization or going downwards. But in any case, this background problem has been worsened this year given the peak of demand of gas that is widely known.

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 Abel Arbat,    [3]
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 Very well. So the second set of questions comes from Carolina Dores from Morgan Stanley, analyst. And 3 questions are involved. First one, is the application on the EUR 20 million, given the extension of average life cycle life. What is the profit of the extension of the life cycle? Is this profit included in the net income guidance of EUR 1.3 billion and EUR 1.4 billion for the year? The second question is related to the targets for 2018. Carolina asks, whether we can help her with the bridge on how we expect to comply with the 2018 EBITDA target and net income to EUR 1.6 billion. So where is our improvements going to come from? And the third question is related once again, with marketing and trading margins. It's been partially answered, but she will -- she asks, whether we believe they'd reach the lowest point.

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 Carlos Javier Álvarez Fernández,  Gas Natural SDG, S.A. - CFO   [4]
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 As concerns the question of re-estimation of useful life of combined cycles cells, of course, has had an effect on the first quarter, which can be [traded] in EUR 18 million before taxes, and for the whole of the year, it would be around EUR 75 million before tax. This corresponds to combined cycles in Spain. As we say in our release and given the technical studies performed and adapt into the sector, we were only the company in this sector, not only in Spain, but also in Europe, maintaining the useful life below the average of other companies. As regards the relationship of this impact and guidance, well, of course, as our CEO has mentioned, we are keeping our guidance, and what we are now presenting includes all of the references to be in that guidance between EUR 1.3 billion and EUR 1.4 billion net income at the end of this year. The second question relates, if I'm not mistaken, to how we are going to meet the 2018 targets. I believe that, in this presentation, the CEO has given a wide explanation for the short term. We have a goal, which is 2017. And specifically, analyzing the first quarter, what levers and what opportunities do we see there to reach the targets of 2017. This was presented in the strategic plan. And I believe that the foundations for growth, specifically in networks and the improvements in optimizations that we have put to the table will have continuity in successive years and also the improvements of efficiencies and financial costs that will undoubtedly, help complete and meet targets in coming years. In terms of trading margins, and I guess she's asking about gas, the market is high volatility. We have seen up to now recent times in Spain, a slight downwards trends and internationally an upwards trend. It's difficult to know whether they're firmly settled. As regards the Spanish market, our main market, we have to say that we believe this trend will continue to remain stable and slightly downwards.

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 Abel Arbat,    [5]
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 Well, moving onto the next question coming from Harry Wyburd from Merrill Lynch. Four questions. The first has been already answered, relating to the situation in Argentina and the expectations for EBITDA for 2017, which has been answered on the presentation. The second question relates to the compensation of Electricaribe. And particularly, he's asking how it compares -- how the compensation we're asking for compares of $1 billion to the book value of Electricaribe. He also asks about the calendar -- expected calendar in the arbitration process. The next question is related to trading of gas, and he mentions that volumes have grown for the quarter, asks for explanations as regards our expectations -- both expectations for volumes and in what regions. And the last question of Harry is related to the sales of minority that have been out in the press regarding our gas distribution in Spain. And Harry mentions that sales rumors are related to minority, so always maintaining consolation scope. So his question is, will we always consider only minority sales? Or is it possible then in the future we might also think about greater sales?

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 Rafael Villaseca Marco,  Gas Natural SDG, S.A. - CEO, MD and Executive Director    [6]
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 Well, I'll try to answer the first question. The first one was Electricaribe and the arbitration. The demand is above $1 billion, so $1 billion. And the book value of the company is EUR 475 million, so the expectation is not easy, but there was a fast process. A fast process could be considered as something that takes 2 years, and not so long one, maybe 3 years. So in 3 years' time, we can maybe have proper decision or ruling, given volumes, gas volumes. And as was indicated before, the total gas volume is expected to grow by 6% this year, and it has been devoted to the markets where we regularly operate. There's nothing singular about this. We have only deepened our sales in markets and the customers who were already working with us. As regards gas distribution, and I also need to explain that the company has not made any decision regarding this whatsoever. It's totally true that in our periodic and frequent way we're reviewing all our business portfolio as going to be different and reviewing all the opportunities in light of what is happening in the markets. Obviously, the gas distribution business, while there's been some novelties there, which stressed the interest in reevaluating or reassessing our position and our situation and the possible situations that arise, and we're doing so, of course. But I need to say that no decision has been made and that what I also must stress is that we also analyze, in this case and many others, all the situations that could really generate interest for the value of the company.

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 Abel Arbat,    [7]
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 So let's continue. The next question comes from the (inaudible) -- three questions. The first one relates to the strategic plan. The analyst mentions a few of the changes such as deconsolidation of Electricaribe. The limited visibility of growth after 2018 and the changes in the board of the company. The question is whether we should wait for an update of the strategic plan soon or whether we should expect one soon? The second question relates to the structuring and management of our portfolio, which has just been answered. And the third question is related to renewables. And he's asking that we have less exposure to renewables than some of our peers, so what is our focus and how are we going to close this gap?

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 Rafael Villaseca Marco,  Gas Natural SDG, S.A. - CEO, MD and Executive Director    [8]
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 As regards to the first one, for now, the strategic plan is enforced. As you know, it had commitment to 2016, 2017 and 2018 and beyond that. There were expectations up until 2020. After 2018, of course, the launch of a new plan will be required in a permanent way. As is also logical, the company reviews its strategic plan and makes the appropriate decisions according to the evolution of markets, situations, et cetera. For now, we have the strong commitment of meeting the current plan, and we believe that we cannot currently think about something different except for working with the levers I mentioned so that this can take place naturally. Depending on the future of circumstances, markets and businesses, we will once again rethink the situation when it corresponds and to communicate them to you if this justifies to start talking about 2018 and on. Up until now, the decisions have not been made. Regarding the renewable gap, that's totally right, and our position is lower to the average in the sector -- found in the sector here in Spain. And we are addressing this issue from a very pragmatic perspective, as regards to Spanish market. We are launching our investments in the Canary Islands, the ones that we obtained in strong competence, but it will also provide interesting profitability. And we will watch out for all opportunities that will singularly in Spain arise to invest always under clear profitability conditions apart our capital cost. To these effects, the company has worked in recent years to obtain sites, suppliers for technology and situations that allow us and enable us to perform these investments. We are now in a tender in Spain. We are studying the possibility of tendering, always with acceptable profitability conditions, so that, progressively, when new developments, we can reduce this gap that we have in renewable energies in Spain. And the conditions of these projects are now very different to the ones found 5 years ago, as is clearly well known. Out of Spain, the instrument is Global Power Generation, and they have already started doing so moderately according to the different goals established in the strategic plan, which mean 2 things: quantitative new capacity, new installed capacity goals, which are reasonable and affordable. And also always condition to the fact that their profitability is clearly above capital -- cost of capital. We have already investments in Australia, Chile and Brazil. So Global Power Generation is working along these lines to identify projects where we feel that both profitability assessment and risk assessment are perfectly limited, so that we can invest with -- in moderate ways, as long as we find opportunities that comply with minimum financial requirements.

------------------------------
 Abel Arbat,    [9]
------------------------------
 Thank you, Rafael. Now to the questions that have been answered. Net income of EUR 1.6 billion in 2018. This has been answered. Another question by José Ruiz of Macquarie on the unit margin for gas trading, which has already been answered. Then another question by Fernando Garcia (inaudible) on the target of EUR 1.3 billion and EUR 1.4 billion. We confirm that guidance for 2017, so this question has been answered. Now we also have 3 questions of BBVA, Isidoro del Álamo, analyst. The first question has already been answered and relates to the sale of the minority retails and this gas distribution. And he asks about our position as regards to sale and gas distribution in Italy.

------------------------------
 Rafael Villaseca Marco,  Gas Natural SDG, S.A. - CEO, MD and Executive Director    [10]
------------------------------
 It is the following: Italy is focusing reorganization of the gas distribution sector, the famous (inaudible) with the clear intention of consolidating it. This will mean a very deep and rooted change in gas distribution in Italy. So we now have a difficult situation where we'll need to decide whether we really participate in this consolidation of the Italian market or whether circumstances advise us not to. And in that case, we must rethink it -- we must rethink our presence in this business, because the situation before and after this change in the Italian regulation will be really significant. In order to have a clear idea of the situation and the alternatives that we have, we are developing important studies of the future, the opportunity and the profitability of the several alternatives that we have on the table. Nowadays, we have not made decisions except for being very cautious and clear about the alternatives that we have in the Italian market. Obviously, the future will pass through consolidation. And we know what our size in Italy is. So bringing all this to the table, we should make a decision, clearly trying to maximize the value of our investment in Italy.

------------------------------
 Abel Arbat,    [11]
------------------------------
 Okay, thank you very much. The next question also by Isidoro, relates to the forward sales of gas for 2017 and 2018. What are the margins expected for the year?

------------------------------
 Carlos Javier Álvarez Fernández,  Gas Natural SDG, S.A. - CFO   [12]
------------------------------
 As we've said, we have gas contracts that, in the national and international scope, allow us or enable us to thinking about the process that we'll have this year. And as the CEO has said, this year we're seeing -- in the renewal of the contracts that are taking place, we're seeing some competitive pressure in the Spanish market. In the first quarter, we've seen better behavior of markets and internationally as a result of this equation, while the margins in the first quarter have been downwards, but stable, as compared to the previous year. And this is the perspective that we're seeing for this whole year. Also taking into account that volumes are almost contracted at 100%, so there's no expectation of great variations for the results of this chapter for 2017. For 2018, of course, contracted volumes are not at 100% level yet, but the portfolio starts to be contracted, and the expectations are also favorable for the following year.

------------------------------
 Abel Arbat,    [13]
------------------------------
 Very well. We continue with the following analyst. Stefano Bezzato from Crédit Suisse. Three questions. The first relates to the sale of the gas distribution and business in Spain, but mainly he is asking about the rationale behind that sale. The second question, why during the first quarter we have had a drop above in hydro production versus the whole of the system. And the third one relates to the fact for our integrated comprehensive model and the question is how has the increase of electricity prices have affected our results?

------------------------------
 Rafael Villaseca Marco,  Gas Natural SDG, S.A. - CEO, MD and Executive Director    [14]
------------------------------
 As for the first question, the -- there is double rationale. One is generic. Systematically and generically, we do a review of our position in portfolios, but generically speaking, of course, because no decision, as I said before, has been made whatsoever, specifically. And as relates to the gas -- natural gas networks in Spain, the business relationships bring figures to the table that are worth considering, that's what we're doing. Always insisting that the analysis is done regularly. And secondly, we have not made any decision. As the -- as concerns to the hydro, it's basically hydrographic basins in Spain. The drop has been 44, but where our hydro basins are mainly in Spain in Galicia and also highland in the (inaudible) have been much lower than average so that our reservoirs and our production capacity have dropped much more than average. Sometimes it's the other way around or opposite, but this is how it is in this case. And the last question, how pool price and their increase have affected it negatively. Of course, these temporary and powerful increases, while it's impossible to factor them to the final customer, the comprehensive model I was referring to is a model by which the production capacity is matched basically with the trading one. And if we don't do this, if it's an at-risk generation, you can imagine that which positions that are assumed and that would have resulted, for example, in 2016 in the same period of time, they'd have been ruined. It's been quite the opposite this year. Trading has acted negatively, why? Very simple, because it's impossible to transfer at that speed these increases to the final consumers, these sudden and important increases in prices. This is one of the main reasons that accompanied, obviously, by the increased production costs because the fuel is much more expensive than was seen last year. (inaudible) this year, this has been so at last year, it was the right opposite. So this is a huge volatility of the electricity system in Spain, which prices are very much (inaudible) especially and you know there is also residential, and this means things have higher volatilities than desired. That's why we try in all these businesses -- and all this business, but in this one especially, we try to match risks, trying to avoid them. We know that, on occasions, we lose. And this was applicable to the gas sector. We lose some occasional profits such as the one in the electricity sector in Spain in the first quarter of 2016, but we also know these things very frequently go to the opposite side. In this case, we have suffered the increase in the pool, but as I was saying, in quantities and conditions that are much more positive than for our competitors, and those are the reasons.

------------------------------
 Abel Arbat,    [15]
------------------------------
 Okay. Thank you very much, Rafael. The next question comes from Philippe Ourpatian from Natixis. It's a question related to the growth of gas businesses and electricity business and distribution queue and the growth of the activity without the currency impact here. The question has been answered. There is an appendix in the presentation where you can see a breakdown of impact in the activity and the transfer of currencies. The next question comes from José Javier Ruiz from (inaudible) and refers to the efficiency plans. He's asking how we can read the EUR 67 million of impact, whether it's a reduction in OpEx, whether it includes Chile. And how much comes from distribution business in Spain.

------------------------------
 Carlos Javier Álvarez Fernández,  Gas Natural SDG, S.A. - CFO   [16]
------------------------------
 The reading is explained in the presentation itself. We include two graphs, and I will explain where they come from. On the one hand, we quantify the EUR 40 million, EUR 41 million of additional savings that will be generated to reach the EUR 150 million target in 2017, as the CEO said. And then on the other hand, we see the impact of -- because we're always talking about net savings, so we're talking about the different impact versus the previous year of capture cost. So on the one hand, we have gross savings, and the other one is the differential between capturing costs of this year and the previous year. That is how the EUR 67 million are calculated. So what is included here? It is true that in capturing costs we have been explicit about the impact on the synergy distribution business in Spain, so we will have savings in successive years now, but not because this goes to -- this goes to capturing costs in this business doesn't mean that all savings comes from that business. They will also come from other fields, but there haven't been capturing costs or because they are very small as regards to management of savings that have been performed. This does not mean that all savings comes from Chile, also gas generation and they also come from the corporation. It's not exclusive to the electricity distribution business here in Spain.

------------------------------
 Abel Arbat,    [17]
------------------------------
 Thank you very much, Carlos. Two additional questions by Macquarie analyst, José Ruiz. He asks in relation with the drop in electricity generation business in Spain, around 30%, which has been the specific impact on technical restriction markets on one hand. And the following question is related to the volumes of gas trading, and he asks whether we're including the 5 bcms of the Cheniere when we speak about current volumes, contracted volumes.

------------------------------
 Rafael Villaseca Marco,  Gas Natural SDG, S.A. - CEO, MD and Executive Director    [18]
------------------------------
 Answer was given to the first question. The restrictions market have different behavior. Restrictions markets, the greater the volume and tension in the system, they increase. But naturally, their effect in the pool is totally different. It doesn't have a direct impact on the pool. So the restrictions market has total generation in the month of January and February increased in volume. As it couldn't be otherwise, but it doesn't have a special or significant impact in the problem. It's the restrictions market. It was around 10% in total production. That could have been its contribution to the total problem, but no more and no less. The second question, yes, of course, we include all volumes that we expect to receive from Cheniere this year. There won't be the 5 of them, because we won't see full service of contracts until August, but everything that we expect to have, the progressional plan of the 5 bcms are included in those quantities.

------------------------------
 Abel Arbat,    [19]
------------------------------
 Thank you, Rafael. And now there's a series of questions that have been answered, particularly a question by the BBVA analyst, Isidoro del Álamo, regarding efficiency plan and the EUR 14 million, explained previously by Carlos. Then there is another question by BBVA relating to gas margins, also covered. Another question by Manuel of Exane as regards speculations on the sale of assets on gas distribution, we've already talked about. This is covered. Also, LNG by Manuel Palomo from Exane, related to the volumes of LNG. He says that last year, around 28.8 bcms were supplied. And he asks whether out of the volume growth of LNG expected, they will all be in line with the additional Cheniere volumes or whether they'll be an additional growth factor for those volumes?

------------------------------
 Carlos Javier Álvarez Fernández,  Gas Natural SDG, S.A. - CFO   [20]
------------------------------
 There is a graph in the presentation where we explain supply for 2016 and the ones forecasted for 2017. If you can see the graph, which is on Slide 20. On Page 20 of the presentation that is where we show where growth comes from, the expected 6% for 2017 is related to our reduction -- some of the expected reduction in natural gas through gas pipelines and the temporary amounts that we have to optimize spot markets and others and also the increase is mainly given in LNG due to the additional quantities and the contracts by Cheniere. But this is all. We have a breakdown on Page 20 with these comments.

------------------------------
 Abel Arbat,    [21]
------------------------------
 Okay. Thank you very much. Two additional questions by the Exane analyst, Manuel Palomo. The first one relates to electrical generation and trading in Spain and asks about our production -- hydro production expectations for the following quarter. The second question relates to renewables and asks what our expectations are versus renewable auctions in Spain and what is our target as regards awarded or granted megawatts and what is the price threshold we would consider acceptable?

------------------------------
 Rafael Villaseca Marco,  Gas Natural SDG, S.A. - CEO, MD and Executive Director    [22]
------------------------------
 I won't answer the second question, but this is the tender. If I tell you the quantity and the price, we don't need to go to the tender anymore. I can anticipate that we expect a very strong competition in the aspiration of -- the appearance of many companies, unforeseen companies in this sector, such as -- as a first auction. So our attitude will be hugely cautious on the one hand and also rigorous when it comes to presenting projects that are attractive not through speculations and their development, but also because they are exceptionally good because of the sites where they are, because of the conditions that we have achieved in hardware. So as a conclusion, we'll see it in a few days' time. We'll be there, and we'll see exactly what the conditions are, of course. And as regards hydro generation, the month of April won't be different, because there hasn't been in Spain the month -- it hasn't been raining in Spain. Now the month of May where it's starting to rain now. It's very -- it's difficult to answer this question. Hydro projections are very difficult, for basins I can only anticipate facts, and in the month of April, we know there's been no changes. In the month of May, yes, it's raining, but it's difficult to anticipate how this will be translated in our projection.

------------------------------
 Abel Arbat,    [23]
------------------------------
 Thank you, Rafael. We continue with a series of questions by Alantra Equities. Fernando Lafuente, analyst. I'll start with the first one. He talks about the distribution -- gas distribution business in Latin America. He says that activity has dropped almost by 2% in local currency, apparently, by the business in Brazil and Colombia. In this context, he is requiring further explanation of what is happening in Brazil and Colombia and what have been the regulatory changes in both countries.

------------------------------
 Rafael Villaseca Marco,  Gas Natural SDG, S.A. - CEO, MD and Executive Director    [24]
------------------------------
 Yes, so regarding Colombia, it's been -- well, the previous year was very positive, and there's been a drop in consumption this year, which has been transferred to our results. The rest of the year, we'll see how it evolves. It is very much related with temperatures, of course, but there's also a low consumption, occasional situation in Colombia. We don't think is important or relevant. As regards to Brazil, I was saying before, in the first quarter, has been low in consumption, in residential consumption and industrial consumption, both things naturally much more relevant, the industrial and the residential. But I can orally indicate here that, in the month of April, a change in trend has been consolidated in Brazil. So industrial consumption is starting to now acquire higher volumes. So in Colombia, we see just an occasional situation. We are one-off. We don't think it's relevant, and we're convinced that it will go back to normal. In Brazil, the negative trends, which was somehow dragging, it's now changing, and we can now confirm that April is turning towards a positive situation. I want to clarify that this is not related with the change in the regulatory regime, as the CEO was saying, they're just related to consumption, and there's been no change in regulation in those countries.

------------------------------
 Abel Arbat,    [25]
------------------------------
 Okay. So moving on to the questions by Fernando. He's asking about the gas distribution in Mexico with the growth of 17% in local currency and 13% in Chile. So can we further explain what have been the levers for growth in these 2 regions?

------------------------------
 Rafael Villaseca Marco,  Gas Natural SDG, S.A. - CEO, MD and Executive Director    [26]
------------------------------
 In both places, and as we already anticipated, we're developing important growth plans. I remember that in the last presentation we made, we spoke about the important projects for growth that we have in gas networks in Chile and in Mexico. In Chile, they're only starting given that the plan has been launched, but it will be -- it will come fully in force halfway through this year and the beginning of the next, and it related to the reclassification of Chile. It was approved at the beginning of this year, the legislation that covers the whole development of natural gas in Chile. And there, our company is incumbent, a leader. And it's going to be the predicament, we're going to be there. It's already started. I also must add that, simultaneously to this, up until now, apart from this, because growth has been moderate in Chile, it's related with the efficiency plan launched in Chile and in Mexico. Well, Mexico is basically continuity, as you know, apart from the new regions of Sonora and Sinaloa, we are already investing in other areas in the Mexico Valley, and we have other than portfolio, which will have to launch us important growth where in regions that were not reached by natural gas up until now, and we're now starting to see cash flow of these investments. And we're satisfied because both countries have their gasification policies very clear, and we frankly know our development projects very well.

------------------------------
 Abel Arbat,    [27]
------------------------------
 Thank you, Rafael. Two more questions by Fernando, Alantra. Relating efficiencies, there's a question -- specific question on the efficiency measures and their reason for this first quarter and the whole of the year and whether these efficiencies are included in the context of the strategic plan of EUR 220 million that was already explained of efficiencies. And the next question is about what we consider core and what we consider noncore and what makes more sense to be considered as noncore.

------------------------------
 Carlos Javier Álvarez Fernández,  Gas Natural SDG, S.A. - CFO   [28]
------------------------------
 I think that the presentation already writes this down. I'll start from the beginning. But when we presented the strategic plan, the constituted plan, there was an efficiency plan presented, included in the whole of the goals of the strategic plan, where we said that, in 2018, we would have efficiencies, gross efficiencies of EUR 220 million. In the same presentation, what we said was that we split them to the different years to set the goals and to communicate the market the degree of achievement of this efficiency plan. So for this year, 2017, we said we would reach EUR 150 million, which are the ones that we have shown in the presentation. And also, the CEO has said, we are -- feel comfortable in saying that we're doing really well in the developments towards reaching this goal. So we are probably encouraged to increase with a new efficiency plan, the goals that we have set for successes on coming years. So what are these efficiencies about? As I was saying before, they are related to all areas, improvements in processes, improvements in regulated, antiregulatory activities and also the corporate activity in general. They are related with the implementation and automation of processes, also digitalization as being heard of. And when we talk about savings, it's related with direct costs savings due to third-party investing and also with people in some regions, as we've said, gas -- electricity distribution. They are related with rationalization in those businesses where we see most maturity.

------------------------------
 Rafael Villaseca Marco,  Gas Natural SDG, S.A. - CEO, MD and Executive Director    [29]
------------------------------
 As regards core and noncore activities, you can imagine the concept, but to be more specific, this is what we already described in the strategic plans, but it basically attends to criteria those activities that give us appropriate and interesting profitabilities and have had growth. Naturally, these activities are the ones that we try to treat as core business. And we also try to see them from the perspective of what synergies we can achieve with them with these principles with which we actually establish the strategies that then include in the strategic plans to see what are the basic activities. Those that for any other reasons are having inadequate profitabilities or become mature and have no prospective outgrowth. Naturally if, because of whatever reasons, they don't have those synergies, whether geographical or operational, they would be classified as noncore and subject to an analysis and review, which is much more intense than in the other case.

------------------------------
 Abel Arbat,    [30]
------------------------------
 Thank you, Rafael. The next question continues with efficiencies and asks about the areas and regions where we see the greatest potential.

------------------------------
 Rafael Villaseca Marco,  Gas Natural SDG, S.A. - CEO, MD and Executive Director    [31]
------------------------------
 Well, these are the ones that we indicate in the strategic plan. And I insist once again, we always periodically look and analyze the situation to see where the change is, so I will talk about the strategic plan to say that, as is obvious, there's a different situation in gas and electricity in Europe, the especial one in Spain. Distribution networks will continue to grow. And where we focused our improvement around the world, the energy, the gas and electricity business throughout the world, given the energy needs. We said this a year ago. It doesn't -- or it hasn't changed essentially, but we are reviewing it frequently to see how these perspectives become specific and how they can affect our businesses.

------------------------------
 Abel Arbat,    [32]
------------------------------
 Thank you, Rafael. And in this sense, they also indicate where we see the greatest potential in terms of efficiencies. So what countries and regions in general terms in all businesses with industrial processes, there are opportunities and networks and generation?

------------------------------
 Rafael Villaseca Marco,  Gas Natural SDG, S.A. - CEO, MD and Executive Director    [33]
------------------------------
 Naturally, in networks, our volumes and expertise are the ones enabling us to apply efficiencies and more significant synergies. We will try to continue being worldwide leaders in efficiencies and gas networks, and we will also try to transfer this to the electricity sector too, both in generation and in distribution mainly, without forgetting that we'll also need to apply efficiencies in the corporate activity. Understood in its widest sense, this is an (inaudible) race. It's more of a marathon than a sprint. And we believe we have the expertise and the will to continue applying them to the different businesses. We don't believe we have reached the end of this.

------------------------------
 Abel Arbat,    [34]
------------------------------
 Thank you, Rafael. And just to finish, we have four additional questions by HSBC, Pablo Cuadrado, analyst, Four additional questions, which I'll now detail. The first question is related with the interest of Italgas, in our gas distribution business, which has a valuation of approximately EUR 600 million. Is this reflecting the real value of assets? And the second one, the trade business in Spain and the drop in the first quarter as relate to our integrated model, whether are we doing well or bad in sales as regards to distribution business in Spain. The four questions relate to Electricaribe. What is the level of provisions that we expect to have by the end of the year? And the fourth question has already been answered, relates to the renewable auctions that are expected in Spain.

------------------------------
 Rafael Villaseca Marco,  Gas Natural SDG, S.A. - CEO, MD and Executive Director    [35]
------------------------------
 So in a reverse order, as regards the first one, well, it's just not about talking about provisions. There's a balance outside of the income statement, and we are confident that in any case, the value that we finally obtained through one way or another will be much higher than the EUR 475 million, which are what appear in our balance sheet. We don't expect provisions in any way. As regards to margins and situation, we are matched. This has been our permanent policy. Not having risk positions in excess or lack of trading, this has been our historic position. And we will continue to maintain it as regards to Italgas. Any further details, you may want to add?

------------------------------
 Abel Arbat,    [36]
------------------------------
 Well, yes. Simply, I want to remind you that the natural gas business in Italy has regulated gas distribution business, but also wholesale distribution, retail trading and services, so we are assessing the businesses overall. I don't know what you talk about when you mentioned this value, whether it's the whole of the business, and we have nothing to say about this. Having said all this, we can only qualify as premature the rumors of Italgas, because the company -- we're still analyzing this with all the great detail. And that's possible.

 Okay, so this was the last question. So we are now closing the Q&A session. As you know, if you have any pending questions that you could not send, the team of Investors Relationship are at your disposal to answer your questions. And thank you very much to everyone, and I'll pass the floor to CEO, Mr. Villaseca.

------------------------------
 Rafael Villaseca Marco,  Gas Natural SDG, S.A. - CEO, MD and Executive Director    [37]
------------------------------
 Thank you very much for your interest, for your attendance, and we'll see you in the next quarter. Thank you very much.




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