Earnings Call: Q4 2014

Feb 25, 2015

Buenos días. Good morning, ladies and gentlemen. Thank you for giving us this opportunity to present to you this morning our strategic plan for the period 2014-2019. I want to thank both those of you here in person in this room and those joining us by webcast, for attending. Joining me is Juan Lasala, who is our Chief Financial Officer. In order to avoid interruptions during the presentation, we will answer any questions you may have at the end of the presentation. First of all, we will focus on the results for 2014 and on the most significant events that took place during the year. 2014 was an eventful year, marked fundamentally by the new regulatory framework. This is a highly restrictive framework in terms of electricity transmission tariffs. Together with the further improvement in the Spanish economy and its macroeconomic variables, it has contributed to raising the level of certainty in the company's financial statements. That fact has been reflected by the market. 2014 was also a year in which some one-off events took place, which had a significant impact on our results. We will discuss those events in the following minutes. In the first place, it is important to mention that in November, we reached a final agreement with the Plurinational State of Bolivia on compensation for the nationalization of Transportadora de Electricidad, TDE, effected in May 2012. This agreement had a positive impact of EUR 52 million in our financial statements. Another relevant event was the signing, in that same month of November, of the agreement on the transfer of use and operation rights for Adif's dark optical fiber network for a 20-year period. Later on in this presentation, we will give you further details of this strategically important operation. Additionally, in December, a new law on corporate taxation came into force, which will result in a lower future tax rate for Red Eléctrica, but which in 2014 resulted in a lower income tax expense, which amounted to EUR 106 million due fundamentally to the reduction of deferred liabilities with the Spanish tax collection agency. This element had no effect whatsoever on the year's cash flows. Stripping out these extraordinary effects, which I have just mentioned to you, the company's year-end earnings increased by 5.4%, exceeding the commitment we made in early 2014 to grow by between 4%-5%. Lastly, I would like to end by highlighting that the board of directors has proposed a dividend of EUR 3 per share to be distributed and charged to 2014 profits to be approved by the shareholders' meeting. This dividend represents an increase of 18% compared to the preceding year, delivering on our commitment to ensure profitability for our shareholders. Focusing now on investments and commissioned assets, it should be noted that in 2014, Red Eléctrica made significant progress in international interconnections. We completed the interconnection with France through the Eastern Pyrenees, which will allow Spain's electricity exchange capacity with France to be doubled to 2,800 megawatts, as well as a new interconnection with Portugal through the 400-kilovolt Amarance-Guiana lines. These are emblematic interconnections, and certainly, the country needed these interconnections. They are absolutely key, and Red Eléctrica has played an important role there. Likewise, the Council of Ministers in Spain approved, in the middle of the year, a ministerial order authorizing the new investments to be carried out by the company. Emphasizing the interconnections between the islands of the Canary Archipelago in the Balearic Islands, undersea cable laying operations for the Ibiza-Majorca interconnection began in 2014, and this will culminate the integration of the island's electricity system. To close on investments, the 220-kilovolt Tintaya-Socabaya line in Peru was successfully commissioned in June 2014 in accordance with the schedule agreed with the Peruvian government and with the regulatory authority in that country, Transmisora Eléctrica del Sur. Therefore, has now started the operational phase of the concession, which will run for 30 years. As far as system operation is concerned, there was also significant progress made. We will only make a brief mention to this at this point, but due to its relevance, we will go back to it in deeper detail later in the presentation. Last March 2014, Red Eléctrica started posting on its website information on the hourly prices of the unit electricity cost to apply to the electricity bill of consumers with a contracted capacity of less than 10 kilowatts and under the small consumer voluntary price scheme. Additionally, Red Eléctrica has started to organize and manage the new auctions system to assign the interruptibility service in a competitive and efficient manner. Finally, it is important to also mention that a crucial step was taken towards a single European electricity market with the rollout of simultaneous and synchronized operations, which seek to couple the daily electricity markets of Southwest and Northwest Europe. 2014 was also a year of great progress in the field of corporate social responsibility, in line with the best international practices. Bearing in mind, as usual, those best international practices and the alignment of the company with the recommendations on this matter, the very first Red Eléctrica corporate governance policy was approved. The purpose of that policy was to establish a catalog of principles to reflect the company's compliance with current regulations. In this regard, it is worth mentioning that the company is positioning itself as the leading IBEX 35 company in gender diversity, with 50% of the board of directors comprised by external female directors. A percentage that reflects the importance it grants to gender diversity. Furthermore, and also bearing in mind the forementioned best practices, the number of independent members in each of the committees of the board of directors, audit committee, and governance and corporate responsibility committees have been increased. Another key milestone in 2014 was the entry into force of the collective bargaining agreement, ratified by all labor union representatives for a 5-year period. This builds on three fundamental pillars: labor productivity, reconciliation, and the improvement in flexibility and sustainability. This has finally decoupled workforce salary adjustments from inflation, linking it to in-house productivity and GDP. On the other hand, one of the foundations of Red Eléctrica's corporate culture is the pursuit of business excellence through the application of efficient management models and sustainable managed models. In this sense, during 2014, the company continued to meet the standards based on which it renewed the European Seal of Excellence 500+ in 2013, awarded by the Club for Management Excellence. This seal places Red Eléctrica as the company in Spain with the highest score in the seals awarded by the Club for Management Excellence. Also, the company is included in the MSCI indices and in the Euronext Vigeo index family, in recognition of its high level of performance in corporate responsibility and sustainability. Let's now go on to analyze the key financial figures for the year for the P&L account. Firstly, revenues were boosted primarily thanks to the revenue generated by new facilities put into service. The company's net revenue climbed to EUR 1,847 million, 93% of which came from electricity transmission. The EBITDA totaled EUR 1,385 million, up 6.4% year on year. EBITDA performance was marked by favorable developments concerning operating cost, more specifically, supply costs and other operating expenses. It is worth highlighting, too, that in the fourth quarter, operating costs decreased by 11.5%, mainly due to the construction works linked to a concession of a transmission line in Peru that was recognized in the fourth quarter of 2013, and the lower cost corresponding to taxes, duties, and other operating expenses. Stripping out the impact of these items, the EBITDA would have stood at approximately 74%, which is the usual level we achieve, I believe. Net operating profit increased by 5.6%, and the profit for the year amounted to EUR 718 million. That's 35.7% higher than the previous year. This increase was mainly due to two exceptional items, as I've already mentioned, such as the collection of the EUR 52 million figure, thanks to the agreement reached with the Bolivian authorities in connection with TDE, and also the fiscal reform, which yielded a positive impact of EUR 106 million. Stripping out those effects, which do distort the result for the year and the effect of the Adif operation, the growth resulting from the company's ordinary activities, as already mentioned, was 5.4%. Finally, the company invested EUR 956 million, including the investment relating to the Adif's transfer contract, specifically the EUR 493 million in the development of electricity transmission grid in Spain. All of these figures underscore the company's constant growth path and the appeal of our investment proposal for shareholders by combining increased earnings with an attractive dividend payout for shareholders. Turning now to the balance sheet. The debt balance at 31st December 2014 stood at EUR 5.4 billion. Thanks to the strength of its cash flow generation, mainly as a consequence of improved results, Red Eléctrica was able to meet investment payments in excess of EUR 915 million, including payments corresponding to the transfer of Adif's fiber optic network and EUR 344 million in dividend payouts, and partly financing the negative development of the working capital caused by the reversion 2014 of the favorable conditions of 2013. As already disclosed in previous releases, these included the collection of the settlement of the transmission tariff in December of that year, an increase in the VAT creditor balance. This favorable situation in 2013 was inverted in 2014, as expected. Additionally, a series of transitory imbalances were recorded in 2014 relating to the electricity tariff totaling EUR 390 million, and the VAT linked to the purchase of the usage rights of the fiber optic network amounting to EUR 90 million. Both of those items are expected to be collected during the early months of 2015. It is also worth mentioning that the average cost of debt eased to 3.49% from 3.84% recorded in the preceding year, while the average term to maturity stands at 4.9 years. Our prudent financial policy, coupled with our strong liquidity position, provides a solid foundation for delivery of our targets. During the period, the key developments from a financial standpoint include the arrangement of a new long-term credit line for the sum of EUR 800 million with a term of five years. There can also be an extension for a further two years, and its margin over the Euribor rate is +0.6%. This new line will replace the existing syndicated loan set to expire in July 2016. It will be used to meet corporate needs. This transaction represents the extension of the maturity period for one of the main sources of liquidity for the company and marks a further step forward in the company's strategy of adapting its financial structure to the new regulatory environment. Additionally, it is important to highlight another relevant development, such as the EUR 300 million bond issue on the euro market in June 2014, with a term of nine years and an annual coupon of 2.125%, an issue price of 99.587%, representing a yield of 2.176%. This issue took advantage of all the favorable conditions in the debt markets at the time, and the long maturity of the bonds means that they will contribute value to the company in the current regulatory period and the following periods. If we put the spotlight on the company's solvency, we can see that the EBITDA-to-interest ratio has improved significantly. The increase in debt during the last quarter, essentially the result of the already mentioned operation with Adif, entailed a coverage ratio, net debt to EBITDA of 3.9 times. This includes the payment of the transaction while excluding the EBITDA of the acquisition as the consolidation begins on 20th November. Stripping out the Adif effect, the financial ratio would be in line with the preceding year's figure, which will be 3.5 times. If we turn to the debt breakdown and look at it by instrument, you can see that we have a well-diversified debt position. The company also benefits from a strong liquidity position, which is highly diversified with broad terms of availability. Two-thirds of this liquidity are long-term instruments, one-third with a maturity of over five years. Lastly, 79% of the financial debt is fixed to term at 31st of December. The preponderance of EUR over other currencies, only 1% of our debt was linked to the dollar at year-end. We will now discuss the main lines of the strategic plan for the upcoming years. The reality of Red Eléctrica and the plan we are presenting today for the upcoming years is framed within a European context with many challenges, both present and future. The new package of climate and energy for 2030 was presented in 2014, which covers these challenges and seeks to guarantee the competitiveness, reliability, and sustainability of the economy and the energy sector of the European Union. The goals ratified by the European Council are a 40% cut in greenhouse gas emissions with respect to 1990 levels, a binding target at EU level of at least 27% of renewable energies, renewed ambition in energy efficiency policies with a cut of 27% on consumption forecast, a new governance system, and a new series of indicators to guarantee a competitive and safe energy system. These objectives pose new challenges for the electricity system, which is in a state of transition towards a new model characterized by the preponderance of renewable energies, which require a different management approach than conventional energies, the reduction in dependence on fossil fuels, and the emergence of consumer groups that traditionally played a passive role. In this sense, compensating a lower manageability of renewable energies, promoting energy efficiency measures, and managing the new role of consumers, which is much more participatory, represent just some of the challenges that will need to be tackled over the coming years to ensure the efficient management of the system as a whole. Network integration and energy storage will be the key tools that will help develop a low-emission electricity system, giving shape to a fully functioning and totally connected domestic energy market. The goals established for 2030 at the European level determine the challenges and issues that Red Eléctrica will have to overcome over the coming years. We are in a stage of transition towards a more dynamic electricity system, characterized by the increasing active role that consumers will play and the more and more important role of new factors such as flexible generation, energy storage, the development of supranational grids, and the mass adoption of electrical vehicles. Thanks to our focus on innovation and the efficient management of the system, we will be one of the key agents to drive the implementation of this scenario. The grid of the 21st century must be flexible, capable of conforming to the changing needs of the system, bi-directional, intensive, and safe in the use of infrastructures. A grid that can be operated and protected safely and easily. This grid must be fed with relevant real-time information, satisfy energy demands while optimizing the needs for new investments, and safely integrate renewable energies. It must facilitate the creation of new business opportunities, be environmentally friendly, and, very importantly, the tool that drives the development of electricity markets. Thanks to our vast know-how in the management of networks, both within the Spanish mainland and in non-mainland activities, our proven track record in the management of fiber optic networks and international electricity transmission businesses, REE is ready to take on these challenges. This slide illustrates some of the key milestones achieved by the company since it was founded in the development of the electrical sector, both in mainland and non-mainland systems, as well as fiber optics and the international network business through its Latin American subsidiaries. We can thus say that our business model guarantees a high potential for future development and is based on the company's extensive knowledge of networks. The strategic plan that we are presenting today for the 2014-2019 period rests on the core of our business, which is the management of power transmission grids. Our line of action will be an efficient management of the TSO and the fiber optic networks, ensuring solid growth and consolidated activities. We will further boost this growth through additional improvement based on new system operation tools, as well as on new opportunities arising in stable markets capable of offering adequate returns. These lines of actions will be supported by a management model centered on innovation, excellence, and corporate social responsibility. Our mission is focused on the achievement of sustainable development. This will entail promotion of a more efficient electricity system, focusing on ensuring the economic sustainability of the company in the mid and long term, and on the promotion of socially responsible relationships with the value chain, paying special attention to shareholders, customers, and suppliers. All this, adapting the best practices in corporate governance to earn the trust of stakeholders in the way we conduct our business, promoting all the time a corporate culture based on the value of commitment reflected in our ethical code. This is also a plan that must be focused on people and on the search for the development of talent, promoting stable and quality employment in a safe and healthy environment. Red Eléctrica cannot disregard the environment in which it operates. It must build quality ties with the different stakeholders that integrate it, developing a relationship with society that aims to generate shared value with a high commitment to the protection and preservation of the natural environment, ensuring the preservation of biodiversity and fighting against climate change. The goals of the 2014-2019 plan are defined to achieve solid growth in the consolidated activities. We're going to invest more than EUR 3.5 billion in these activities, EUR 3.1 billion of which correspond to investments in the Spanish electricity transmission grid, and EUR 475 million to the management of fiber optic networks, including the sum corresponding to that agreement for the transfer of Adif's fiber optic network. Another key line of growth for the company will be enabled by new activities, such as the investments in storage activities in the islands and the international investment and electricity transmission activities. All this will require an investment of about EUR 1 billion. Thus, we can define the following global objectives for the company: an improvement in EBITDA margin at the end of the period equal to or above 200 basis points, up to about 74%, reaching a net debt to EBITDA ratio of 3.5 times on average during the period. A range of growth of earnings per share based on 2013 figures, between 5.6% in compound cumulative rate for the period. That is based on 2013 figures again. This section of the presentation focuses on detailing the basic pillars of the plan. For that purpose, we have to take a look back. In 2007, Red Eléctrica was granted the status of transmission system operator and sole carrier on an exclusive basis. Therefore, is responsible for the development and expansion of the network, for its maintenance, for the management of the transfer of electricity between external and the Spanish grid, and for guaranteeing network access to third parties on a basis of equality. For the development of this function, it is essential to have a transparent, stable and predictable regulatory framework. In this regard, Royal Decree 1047/2013 was approved in December 2013, establishing a new methodology for the calculation of the remuneration for the electricity transmission activity. This is a transparent, stable, and predictable and helps regulatory stability to our business, establishing mechanisms to ensure the sustainability of the system and providing incentives to improve efficiency. The key elements of the new remuneration framework are as follows. The new regulation established a formula for remunerating transmission assets using a single methodology, taking their net value as the basis for their financial remuneration. The framework establishes six-year regulatory periods, the first one of which concludes on 31 December 2019. The model is based on unit investment in operation and maintenance values, with a pre-established method for updates and revisions. The financial return is benchmarked to the Spanish 10-year bond yield. This will increase by a differential to be revised in each regulatory period. The reference of the Spanish 10-year bond is 4.5%, with a differential of 200 basis points during the first regulatory period. Under this scheme, installations begin collecting in year N plus 2. However, the mechanism has enabled the so-called delay factor that ensures that all installations put into service since 1998 receive remuneration equal to what they would have collected had they started receiving it from the moment they were commissioned, in other words, in year N. Once the assets' useful lives for regulatory purposes come to an end, they may be extended by increasing the remuneration for O&M. There are also incentives for the efficiency and availability of the transmission network. This regulatory framework will provide the cornerstone on which we will build our strategy, which is the efficient TSO management. Below, we will take a look at the series of projections related to the remuneration for transmission up to 2019. Included in the report submitted to the State Council analyzing the regulatory impact of Royal Decree 1047/2013, and which resulted in what the graph represents. It should be noted that this is for revenues that depend on the rates established, considering the assets and service in year N2, which differ from the revenues that the company recognizes in its income statement, since we are accounting for them on an accrual basis, naturally. Keep in mind that a hypothetical scenario was defined for this calculation, entailing an investment of EUR 600 million, including the incentive for availability, and assuming that the first year of the first regulatory period will be 2015. Also, the projections include the remuneration for Gas Natural and Fenosa's transmission assets. The accuracy of the projections will depend on the actual investment that is carried out and on the company's operational performance, which results in the availability incentive. Therefore, in 2015, we see that the tariff finally defined for the year 2015, approved by order IET/2444/2014 of the 26th of December, determining the electrical power energy access tools, has established EUR 1.675 billion as the remuneration for Red Eléctrica, EUR 1.654 billion of which correspond to the remuneration for the use of transmission infrastructures and EUR 21 million to the availability incentive. This figure is consistent with the EUR 1.685 billion figure defined in the projections, deducting the effects of Gas Natural and Unión Fenosa, and therefore, we can affirm that this tariff is reasonably in line with estimate calculations. Now, it is necessary to keep in mind at this point that for final closure of the regulatory methodology, the Ministry of Industry had to define certain remuneration and regulatory aspects such as the following: residual life of facilities built before 1998, determined based on the documentation submitted by the company accrediting the update and upgrade of operations on its facilities, and the unit reference values, both for investments and for operating expenses. Considering the investments that will be carried out on the transmission network between 2014 and 2019, we can indicate that in the context of the revision of the electricity sector to eliminate the tariff shortfall under which it had been operating, implied a new moratorium on new investment and the freezing of the previous infrastructure plan 2008-2016. Since then, however, a series of critical facilities for the system have been authorized for an amount of EUR 900 million, including the two Mallorca-Ibiza links, as well as the additional investment totaling EUR 917 million, mainly related to non-mainland systems and interconnections, which increased the visibility related to the investment plan that the company was to carry out. All this is delimited by the new remuneration framework that limits the amounts to invest by the company to 0.065% of GDP. Once the regulatory framework is almost closed, we are now awaiting the approval of the new infrastructure plan 2015-2020, which is being developed, a draft of which is available on the Ministry of Industry's website. This new plan will envisage investments commissioned for an amount of EUR 4.4 billion, linked mainly to key requirements such as network grid reinforcement of international connections with France and Portugal, new interconnections between mainland Spain and non-mainland subsystems, and between the mainland and Ceuta, network reinforcement in the islands, mainly the Canaries, and destined to evacuate wind generation, as well as the need to connect power storage installations. Considering this new scenario and under this new plan, which will hopefully be passed during 2015, we will be able to define the company's investment portfolio for 2014-2019, totaling EUR 515 million per year, with average yearly commissioning of approximately EUR 600 million. We would like to point out that the ENTSO-E methodology applied in the definition of the plan, based on the cost profit analysis in the development of the transmission network, allows achieving one of our key objectives, to ensure that investments help reduce system cost and secure the consumer supply guarantee. All this with sustainable integration of the facilities in the territory. The map that you see on the slide. We can see the Spanish mainland on this slide, and it shows the location of the most relevant actions that will be carried out during the period in this area with the purpose of progressing towards the minimum level recommended by the EU regarding the commercial exchange capacity with the European system. Here, key actions achievement of this goal include the reinforcement of the interconnections in the northeast axis, the Basque Country-Navarra link, and the phase-shifting transformer in Orcau. The European Council has stressed the importance of developing a fully functional and totally connected internal energy structure, highlighting that it is essential to mobilize all means required to achieve the minimum 10% goal of the installed generation capacity through international interconnections as a matter of urgency, raising the goal to 15% by 2030. This investment requirement in new interconnections will be included in Red Eléctrica's investment horizon starting in 2019. That doesn't mean there's not going to be previous expenses before that period, but the investments coming at the last stage are, as I just mentioned. Another objective linked to energy efficiency is slashing system costs in order to ensure that the most efficient generation can be evacuated, and finally, increasing the flexibility of electricity supply process to efficiently integrate user behavior. Also, among the actions or non-mainland systems, it is worth mentioning the interconnection between islands, which improve the reliability of electricity systems due to the possibilities for mutual support and enable in the event of a lack of capability in one of them. The plan envisages interconnections between Fuerteventura-Lanzarote, Tenerife-La Palma-Gran Canaria, Mallorca-Ibiza, which will be the world's longest and deepest alternating current undersea link, which will also yield environmental advantages and cost reduction benefits for the electrical system, Mallorca-Menorca, and Ibiza-Formentera. This plan also aims to improve the network grid in the two archipelagos, fostering competition on the island's generation market, the safe integration of renewable energies, and the progressive replacement of fuel with renewable sources and the reduction in system costs, mainly. We will now analyze another one of the fundamental pillars on which our strategy is built, the new tools at the disposal of Red Eléctrica as a system operator, island storage. The electricity system in the Canary Islands is characterized by certain particularities that need to be overcome. It is actually integrated by six electrically isolated subsystems, and they are small if you compare them to the mainland network. There is also a certain level of difficulty to make some interconnections between the islands. That factor makes it harder to take full advantage of the synergies that electricity interconnections enable, epitomized by greater stability of the system. It also results in increase in generation-related costs due to the complexity when performing joint optimization of the system to guarantee service quality. Also, strategy has been devised for the integration of renewable energies, which are highly intermittent and hard to predict in these systems, and there are no known references posing additional challenges in the management of the required balance between generation and consumption. For all of those reasons, promoting the increase in the power storage infrastructure as a tool at the service of the system's operation, mainly in pumping, although keeping in mind other future technologies, will allow to guarantee a greater level of integration of renewable energies. At the same time, it will make the electricity system more secure. The deployment of storage installations will represent a huge leap forward in the carbon emission cutting process in the Canary Islands. Currently, only 8% of demand is covered with zero emission technologies, compared to 64.8% in the Spanish mainland. Since 2007, a series of initiatives have been promoted to consider pumping installations as a system operation tool that will help to integrate renewable energy sources in isolated systems. In this context, the planning and electricity and gas sectors 2008 to 2016 paper that was published in May 2008, already include an estimate of benchmark power values that storage systems should yield in the reversible plants that need to be built in the Canary Islands. Subsequently, in October 2009, the Council of Ministers approved the comprehensive strategy for the Canary Islands region. That detailed the measures to be adopted to reduce the energy dependence and foster the penetration of renewable energies in the islands. In March 2013, the law on the assurance of supply and increase of competition in island and non-mainland electricity systems was passed. That established that the ultimate purpose of pumping stations will be the adequate management of these systems and assigns exclusive property rights over them to the system's operator, Red Eléctrica de España. Furthermore, this proposal indicates that Red Eléctrica would have to purchase existing installations in April 2014. Through a ministerial order, Red Eléctrica was commissioned to execute the 200-megawatt Chira-Soria reversible hydraulic plant on the Greater Canary Island. Finally, Endesa and Red Eléctrica reached an agreement on the transfer of the concession over the hydroelectric plant, determining the terms of the transfer of operating management duties. That agreement entails a payment of EUR 11.2 million as a transfer fee, covering all the expenses incurred by Endesa between 2011 and to date. The Chira-Soria project includes a 25-year concession with a possible extension to 50 years over the waters on the Chira and Soria reservoirs. The project also envisages the construction of a reversible pumping station and the connection with the Santa Águeda substation through a 220-kilovolt power line. The project's total investment could amount to around EUR 300 million. It's absolutely essential on this point to indicate to you that island storage infrastructure is a tool of the system operator, which acts exclusively as the owner of these pumping stations in order to guarantee the supply and integration of renewable sources receiving regulated remuneration exchange. Therefore, Red Eléctrica does not act as a conventional electricity generator in this case. I want to make that absolutely clear. It is at the heart of Red Eléctrica's functions. Besides storage, there are other activities that allow the system operator to manage the system in efficient and secure manner. I've mentioned at the beginning of this presentation, in 2014, Red Eléctrica started to arrange and manage the new auction system to assign the interruptibility service in a competitive and efficient manner. As you already know, interruptibility is a demand management tool. It provides flexibility and a quick response for the operation of the system in situations of imbalance between generation demand. This service is activated in response to a power reduction command instructed by the company as the system operator to consumers that are suppliers of the service. Also, since last March 2014, Red Eléctrica has started posting on its website information on the hourly prices of the unit electricity cost to be applied to the electricity bill of consumers with a contracted capacity of less than 10 kilowatts, and who fall under the small consumer voluntary price scheme. The acronym for that scheme is PVPC. As you know, it's a scheme that replaces the previous last resort. From its independent neutral position, Red Eléctrica informs consumers about the process and does so in an absolutely transparent manner by offering a tool through which each citizen will be able to manage his or her electricity consumption in a more efficient manner. Finally, it's important to mention that in 2014, too, a decisive step was taken towards a single European electricity market with the rollout of simultaneous and synchronized operations, which seek to couple the daily electricity markets of Southwest and Northwest Europe. These services are known as cross-border energy mix services or balancing services. In last June, Red Eléctrica, REN, and RTE successfully launched the cross-border energy mix services in the interconnection between Spain and France and the interconnection between them and Portugal. This new cross-border energy service between TSOs will contribute to optimizing the use of exchange capability that may have been rendered idle after the adjustments in the trade exchange programs in the intraday market to greater coordination of the interconnected electricity systems and to a greater level of competition in the balancing markets. This will also entail a more efficient use of the balancing resources and will send out the most competitive and efficient economic signals both in the balancing markets and in the price of deviations. It will also enable integration of renewable energies in the electricity system. The goal for the future is to establish these cross-border services with Italy and the United Kingdom. Just recently, one of the new interconnection has just been inaugurated, and it will mean that there will be no longer in the future that high percentage of saturation in the existing interconnections. That will lead us to more competition, more competitiveness in this integrated market. Also, new activities linked to developing smart grid will be promoted. All of these activities require a remuneration framework that is adequate for system operation. Therefore, after the progress made in 2013 and 2014, we will continue to work to finally achieve this. Now focusing on what we have called other businesses within our strategic plan, I would like to discuss with you the fiber optic network management business. In 1989, Red Eléctrica, as a group, started deploying its private fiber optic network. In 1997, the group started commercializing its spare network capacity. Red Eléctrica, therefore, has been building an extensive wealth of expertise and experience in the operation management of dark fiber networks with a consolidated consumer base or customer base, as you may be aware. In 2014, on 20th of November, Red Eléctrica finally formalized the Adif fiber optic network transfer and commercial operation for a 20-year period in a sum of EUR 434 million after being awarded the unconditional authorization from the Spanish Office for the Defense of Competition, CNMC, and acceptance by virtually all Adif customers of the transfer of existing contracts to Red Eléctrica Internacional. That operation took place, therefore, within the context of the company's strategy to expand its business base within the scope of the activities in which it already engages. As a result of this transfer, Red Eléctrica is now the leading neutral fiber optic network operator in Spain. We guarantee access to our infrastructure to all operators. Also, our business is absolutely independent from our customers, as our sole focus is the operation of the dark fiber optic network. It is worth mentioning that both fiber optic networks are highly complementary, as Red Eléctrica's group's network presence is most notable in the rural areas, while Adif has a more relevant presence in metropolitan areas. The fiber optic network infrastructure management business resulting from Adif's transfer has become a long-term priority for Grupo Red Eléctrica. This operation presented very positive tangible elements right from the outset. As a result of the operation, Red Eléctrica's mesh network now spans over 32,000 kilometers deployed over two separate infrastructures. Interconnecting both infrastructures, we will be able to market a single network, enabling new possibilities for our customers linked to, first of all, ring closing with new network sessions. Secondly, new redundancies on existing sections. Thirdly, we will be able to offer improved access for Adif customers to rural areas and for REI customers to urban areas. Fourthly, coverage of shadow zones. Fifthly, international and island access. Also, the merger will yield a positive financial impact starting in the first year. Adif will continue to be responsible for the rail fiber network maintenance, guaranteeing the continuity of current service levels and eliminating any operating risk to customers from day one. REI's approach includes contracting professional management support services for a minimum term of six years, network management, territory management, pre-sales, and commercial management. The purpose is to ensure gradual transition and minimize the impact of the change. To round off this breakdown of the benefits of the transfer agreement, I would say that by 2015, we expect the increase in revenues to be equivalent to 3.3 times 2014 figures, and with the telecommunications business accounting for about 4% over the group's overall revenue with EBITDA figures. The company, furthermore, is always looking out for investment opportunities that may arise in stable markets offering acceptable yields. The company's internationalization process is therefore based on our know-how as network managers and on a series of basic investment pillars, such as stable and predictable revenues in low-risk environments, seeking to obtain adequate profitability, holding preferably a majority stake, and engaging actively in the management. Red Eléctrica's vocation is to establish a long-term presence in countries with low country risk and in stable regulatory frameworks, putting priority on acquisitions from green projects. An essential element in this approach, with the clear purpose of reinforcing shareholder remuneration as the first goal that needs to be met, Red Eléctrica strives to identify investment projects capable of yielding adequate level of profitability in this regard. We consider that an investment yield is the adequate level of profitability when it is capable of guaranteeing returns in excess of the cost of capital, plus 100 basis points. All of this strategy we have set out through the presentation must be developed within a context of continuous managerial efficiency. As a result of the new remuneration framework, we are required to improve our levels of efficiency while offering adequate quality levels and putting priority on the following areas. First of all, efficiency in facility engineering and construction by optimizing designs, managing supplies, without disregarding ever new quality requirements, and always seeking efficiency throughout these processes and during subsequent maintenance operations. All of this will allow us to achieve the aforementioned EBITDA margin improvement at the end of the period, equal to above 200 basis points. Secondly, sound financial management, optimizing capital costs, taking advantage of current interest rates, and with a flexible financial structure, together with the application of other criteria such as sustainability and efficiency in the way we run our activities, linking salaries and wages to the company's goals and targets, and achieving fiscal optimization. All of this will allow the company to secure additional improvements over the targeted results and will contribute to an estimated growth rate of the company's profits during the period between 5% to 6% in yearly compound cumulative rates, as already mentioned. Based on the already mentioned capital structure that allows optimizing the cost of the used resources, the financial policy of the company becomes a basic management tool for Red Eléctrica. Besides cutting financial costs until 2019, the final year envisaged in this plan, our actions must also seek to ensure that our financial management activities become a source of value creation beyond that year for the regulatory period 2019 to 2025. Furthermore, all this will have to be achieved keeping properly diversified financing and maturity structures in order to minimize risk for the company. We will focus our efforts on reducing the risk of interest rate changes, optimizing shareholder profitability, make the cost of the possibility that the new regulatory framework offers for optimizing the difference between the future return on investment and cost of debt. In the implementation of the points that we have just discussed, we must take into account Royal Decree 1047/2013, which establishes that the financial remuneration rate may not vary on an annual basis above 50 basis points, either upward or downward, in order to avoid sudden changes in remuneration. Thus, the financial remuneration rate will be progressive and limited from the current 6.5% rate, which in an extremely low rate context during the period could decrease progressively to a minimum level of 3.5% in the last year of the series. The same mechanism would act in an upward direction. It is true that we cannot predict where 10-year bonds or the rate itself will be in 2017 and 2019, but thanks to this progressive limitation of the financial profitability rate, we can ascertain both clear references for the decision-making processes regarding borrowing policies. This minimizes the risk of unfavorable rate trends with an impact over debt and asset remuneration and the very development of our revenues. We'll, therefore, focus on guaranteeing an adequate profitability both in this and the following regulatory period. Red Eléctrica will continue to offer one of the most solid balances out of all of the European utilities. We expect the average debt EBITDA ratio to remain to a certain extent within the level of 3.5 times during the term envisaged in the plan. This ratio is consistent with the objective of maintaining an adequate credit quality. Thanks to this solidness, Red Eléctrica will enjoy a level of flexibility that will enhance its future growth capabilities in the new activities that we have described. I would also like to highlight the long-term debt maturity calendar that Red Eléctrica will have to comply with in the coming years. As you can see, the amounts that need to be amortized in the next 3 years are covered by the liquidity of the company's balances at this point in time, which as we saw, is above EUR 1.7 billion. Last, and to finish articulating our strategy of offering the best possible combination between company growth and an advisable remuneration policy, we would like to explain our dividend policy, which we intend to be transparent, sustainable, and with high visibility. The board of directors in a meeting held yesterday, the 24th of February, has agreed to propose to the AGM the payment of a dividend of EUR 3 per share to distribute with a charge to 2014 profit. This figure represents an 18% increase vis-à-vis the sum distributed on 2013 profit. Based on the foregone, we are committed to guarantee the average dividend per share growth of 7% in yearly compound cumulative rate for the 2014-2019 period. At this point, we would like to highlight that the EPS in 2015 will be logically lower than the one achieved in 2014 as a result of the singular events that had, or the unique events that had a significant positive impact in 2014. In this context, our commitment is to guarantee an attractive dividend growth during the whole 2015 and 2019 period, and we're going to stress that particularly during that period. Finally, and to sum up, the average strategic lines that the company will follow in the 2014-2019 period, will be aimed to giving shape to an investment plan that is consistent with current economic climate and entail investments in totaling approximately EUR 3.6 billion during the period. Also, special attention will be paid to new business opportunities that may arise, focusing on the development of new activities and international expansion, allowing the company to capitalize on its current capital structure. This activity will enable an improvement in the EBITDA margin of at least 200 basis points by the end of the period, keeping a solvency ratio in average of approximately 3.5 times. Thus, we expect a moderate pace of growth with compound average annual growth of between 5% and 6% during that period. As regards our dividend policy, starting with a dividend in 2014 of EUR 3 per share, we will keep a dividend growth rate of 7% in yearly compound annual rate. Red Eléctrica will continue to focus its effort on the generation of value for its shareholders. All this while making progress towards a sustainable, flexible, smart, safe, and efficient network that will give rise to Network 21 and keeping a solid capital structure working to guarantee a high quality and efficient electricity supply. This is the end of today's presentation. Many thanks for your attention. We will now open the floor to questions. First, I would take questions from here in the room, and then we will take questions from the webcast. Thank you very much. As you are getting the microphone to ask the questions, I have been told that that was 50 minutes. We know that is an exceptionally long presentation, but of course, we have been talking you through the whole year, the financial year 2014. As well as that, we have been presenting our strategic plan, 2014. I was looking ahead from 2014 to 2019, so I do apologize for the presentation taking up so much of your time, but there were so many details I wanted to share with you that we think are so important for you to hear and important for us in forthcoming years. Particularly when we have the new regulatory framework, we have the macroeconomic environment, and the challenges out there are key ones for us. It is so important for you to understand that Red Eléctrica is playing such a key role in what is finally the union of energy markets in Europe, as we have heard about that so much, have not we, in the past? I believe it is European commissioners now talking about that, and we play a key role there, and we have to be ready and prepared to play that role. We firstly, to do that technically, and secondly, to be able to provide value to our shareholders because we are a business and we are a company, we are listed on the IBEX. We need to bring those two things together and also make efficiency gains. That is our challenge. Thank you very much for listening, and let us start off with the questions. Thank you very much. Fernando García speaking. I have three questions for you. The first one is the fact that you've talked about average growth rate of 7% annually for your earnings per share. You said that that's an average figure. My specific question is about the growth rate you're expecting in 2015 because of the extraordinary items you've already talked about for financial year 2014 in your presentation. Secondly, your estimate improvement on your EBITDA margin, the 200 basis points between 2013 and 2019. In that improvement that you're estimating, would that include reduced maintenance investment costs, the investment that you used to have to carry out under your OPEX line? I'd also like to ask you about the outstanding regulatory issues here, particularly with regard to the pre-1998 assets, the standard values that are being used. Could you give us an update on the position on regulatory issues at the moment? Thank you very much. The CFO is going to answer these questions, but just let me say a few words. Average growth, I said, was between 5% and 6%. With that, is our commitment to the dividend to grow by 7%. We said for 2015, it's going to rise by 7% over that of 2014. In terms of EBITDA margin, this is one of the issues. With this regulatory framework, I should say, we have to be efficient, very efficient. I'm not saying that we weren't in the past, but we have to look at this new context, and this regulatory framework obliges us. We have to be especially efficient. They're saying they're giving us the regulatory framework, and this is something new, this is very important, to give us a remuneration structure for the entire period. They even talk about the next period. This is extremely important. This is something new. Secondly, it's true that remuneration goes down with regard to the past period, and that's linked to the efficiency points. In other words, we have mechanisms to be efficient, and we obviously have to take advantage of that. In terms of operations in this new framework, we have to implement a strategy to guarantee supply, but obviously trying to adjust operational cost to the scenario. That's our obligation as a company, obviously. Full guarantees are essential. The team then can get savings between 74% to 76% over that period in EBITDA. That's an objective that we're committed to, and we're working on that. As a board member and now I'm chairman, we've always complied with what we've promised. Our word is good, and so we're working very hard to comply with this. Under normal conditions, I can guarantee you that we're going to go for that. In terms of the regulatory aspects and anything else that you have further on those first two questions, very briefly, in terms of that 7%, that's an annual average, but there's no reason to believe that that average will not be complied with. It doesn't mean that it could be 6.8% or 7.3%, but our intention is that that 7% average will hold in terms of EBITDA of the 200 basis points. We've estimated that. An average scenario with the useful life, and looking at the things that could most affect the maintenance CapEx that we're using. Logically, the shorter the useful life of the assets, since none, right, then it would be the less amount than needed. So we're still in a period where this is not too clear yet. We still don't know exactly what the useful life will be. In terms of pending regulatory aspects, we have done everything that we could to get all of this information since March 2014. We've sent all of the technical reports about the extension of the useful life and about the standards and other parameters. The Ministry, I imagine that the regulation of gas, the end of the regulation of renewables, they've had a lot of work, and this issue wasn't a priority for them. In the conversations that we've had with the Ministry, sometimes they say, "Well, it's not so important because the path is marked for you. You have the commitment with those guidelines." It seems to be so clear that they haven't put a big priority on giving us exactly all of the regulatory issues. But I do expect this to be resolved relatively swiftly to close this model. It's at 97% finalized, so I think that very soon it will be completely finalized. Thanks very much. I had two questions related to investment. I don't have the presentation here, so I hope I'm not mistaken here, but I think there was EUR 1 billion for international expansion and also for the islands. I just want to confirm that figure. Within the EUR 1 billion, you talked about EUR 300 million for the Chira-Soria plant, and I wanted to know what else will that EUR 1 billion be used in the islands. Could you give us some figures on that? Of that EUR 475 million, I think it was for fiber investment in fiber. That would be investment during the period or maintenance during the period or growth. I wanted just some clarification on those figures as well. Thank you. Yes, you're right. Investment, the EUR 1 billion is international and also islands, and EUR 300 million are earmarked just for the Chira-Soria plant. The overall distribution will probably be half and half, I would imagine, because there'll probably be another site in Tenerife, which will take maybe EUR 100 something, EUR 200 million at most. It's always very hard to give you an exact figure, particularly under the heading international, when you have to actually bid for a number of projects that you're hoping to be awarded or do you have to acquire ongoing networks. But more or less, that would be the split there, 50%-50%. As for the EUR 475 million for fiber optics, yes, it includes the EUR 433 million for the original transaction, and the remaining amount would be development investments that the concession contract for Adif, that transfer contract actually asked us to make. There is an annualized amount which will allow us for certain returns on the older Adif networks. It is already included in our business plan, of course, and under the regulatory standards. Let me add something or clarify a point about investment. Yes, we are talking here about expanding our base there. It is pumping and also it is international. It is all under the same heading. Even at the end of the day, then it is or may be regulatory activity. We are not going to be collecting on a sales variable revenue basis because we are not going to be selling kilowatts here. But for the purpose of the stability of the system and supply, this is what we are going to be investing in. This is exactly what the law says we have to do as system operator. Yes, that figure, the EUR 300 million figure, is included there, plus whatever else we would need to pay for inter-read. It is included on the international side, and it is also included in the business plan. But there are other hundreds of millions of euros out there in the Canary Islands, apart from the EUR 300 million. There are EUR 810 million that have been established, set out by regulation for this year and next year to be able to actually roll out the new model. I would say that together with the international interconnections, and we are very much involved, fully engaged there with international interconnections, particularly linking up mainland Iberia with the rest of Europe, then the islands. This is a total shift in the model. 92% is dirty, expensive fuel, and what they want to do is switch to renewables. Renewables, of course, are intermittent energy sources, and when you have intermittent sources, you have to make a lot of investment to guarantee the same security of supply that would be cheaper. Funny enough, it is going to be cheaper, non-mainland sources with no emissions, of course, and total security of supply. What that means is that there is a requirement for Red Eléctrica to make a series of investments for the islands. So instead of the seven different isolated systems, we have to join them together. I think there will be three in the end, and there is enormous amount of investment that has been made, as well as bringing on board the renewables, particularly wind energy. For the whole system, you have pumping as well. Pumping storage is another element that is key. I am talking about investment that we actually have definitely to make, plus the other EUR 300 million. So you are talking about EUR 1.1 billion just for the Canary Islands that has been set out for a whole series of investments that have already been scheduled. But the way we classify them and put them in different categories there is one thing, but you are talking about that billion plus the pumping. I apologize for adding on there. Yes, of course, the EUR 800 million that chairman just said, of the EUR 800 million that are already included there as TSO. Good morning. Yes, I am from Santander. My question is about this revenue track we have been talking about. Do you have any idea about the standard value, the implicit standard value, and the residual value that are being used by the Ministry of Industry at the moment? I don't think I can add much more to what we've already said, especially what Juan Lasala has just mentioned. We're still waiting. The only reference that we have about that is that report, economic report that the government sent to the Council of State, and then the specific reference from 2015 about the tariff, where it is consistent. One more thing, all of the documentation that they've asked us for, we have submitted them with all of the details, with all of the types of information that they requested to be able to properly regulate. I don't think they're going to take very long. I expect it to be out soon. Thanks very much. I can't give you any further information. Hello. Cesar Gonzalez from GT Capital. Sorry for going back over regulation, but I have a specific doubt. In December, the regulator published a report on the tariff, and there was a comparison between remuneration from the ministerial order and the one based on the 2013 decree law. It's important. Is there an important difference between those two amounts? It's around EUR 100 million, I believe. I wanted to know what justifies from a technical point of view, that difference between those two calculations, and to what degree are you comfortable having the ministry keeping us to the path and not going to that other figure? Thank you. Well, that report was pretty complicated to read, actually, even for a really informed expert to read. It was not straightforward at all. It talked about EUR 90 million on the one hand, and then in the press article, there was a mention of even a figure as high as EUR 200 million. Unfortunately, we don't have the underpinning figures for the calculations made by the CNMC at all. What I can tell you today is that we know that in an informal conversation with an investor and analyst, that CNMC did say that there might have been some defect or flaw there with regard to the inventory of facilities. In other words, you might have the standards absolutely right, but you've multiplied the standards by amounts, quantities. If that figure is wrong, then of course the result is wrong. It may have been that the ministry has seen that there's been an error, a mistake there, and that's why they decided to prolong and extend out that royal decree, because that is their vision, isn't it, for the future? It's the track, it's the path that they published, and that's the reason why they published that path for us to follow. That's the only thing we can tell you today. That press article didn't really give us any more information about the parameters used for the calculations. From informal conversations we've had with the ministry, I'd say that irrespective of whether or not the figure's right, the path is right, because that path has been established with that figure of EUR 600 million. If you change the investment figure a little, and that might happen, then that path, that track to the future, would be different, but the commitment to the fundamentals of that track or that path, I think are pretty clear. That's the way I see it. Good morning, Sonia. Two very quick questions. The average cost of debt that you have contemplated for your strategic plan is the first one, and then the investment you're going to be making in pumping that EUR 1 billion, I think, is a pretty safe figure. Is that a straight line investment through the strategic plan, or will it be more investment earlier on in the initial phase? Could you give us some color on that? Thank you very much. Investments in pumping. We've been working on this for some time, and we're working with Endesa on this as well. For this project, no construction has been executed yet, but there are some expenses that have been paid, and now everything is up and running. We think that in 4 years, that construction work will be done in terms of the pumping. Maybe in investment terms, it would be a little bit more intensive in the second 2 years, because now here at the beginning, there's a lot of permits, concessions, and so forth that we need to obtain. Probably there'll be more investment towards the second 2 years. We're hoping that it will come into operation in 2019. In terms of the rate curve, we're talking about historically low levels right now of rates. This is kind of a guessing game, but we've estimated that over the short term, we'd be around 1.5%, and over the long term, between 2.5% and 3%, approximately, compared to the current rates. This only affects new debt. Committed debt already has their interest rates established. In terms of what we're pending, we're looking at other tools that could affect the rates. For example, there's bond buybacks and so forth, and a very successful one, specifically Enagás did one, very successful, and I would congratulate them for that operation. In that regard, we're always watching and looking at those possibilities of, if we have short-term bonds, of trying to extend those where possible. We could have certain advantages, not only of extending through the first regulatory period, but also into the second and capture those fixed margins could be very interesting. Good morning, BBVA. I have to ask for a clarification on the investment plan in Spain, those EUR 100 million that you spoke of. I'd like to know what amount is included for interconnections with Europe, and if based on the plans in the European Union of 10% of interconnection for 2019 and 15% for 2020, could we see maybe an increase of that figure by those dates? This is a very important issue, but you also have to understand that there is a certain amount of uncertainty surrounding this key issue. We have just made an investment, EUR 700 million investment, together with RTE, and we're starting to commercialize supplies there in June. It's just been opened. Then there's another one in the Tener network with European connections, and that's the underwater connection through the Bay of Biscay. The initial valuation, you're talking about EUR 1.6 billion-EUR 1.7 billion. I know that this is initial figure. When is this going to happen? When are we going to get the specifics on it? The horizon has been set out for Europe. What they'd like to set out is 10% of the installed capacity. We have 100,000 megawatts by 2020. The Council in Europe has accepted the Commission's proposal for it to be 15%. It may be wishful thinking, I wonder. This is an essential issue for us. In Barcelona in March 2002, that 10% figure was set to be achieved 10 years later, by 2005, and it's just 1.4 at the minute. We will make it to 500,000 megawatts. But you have to look at what's already been completed at the moment. We're talking about right at the end of the period. If they want it to be before 2020, that would just be a year after the end of our strategic plan. We'll see. Maybe. There may be some investment that will be contained in our period, but we would also hope there will be some other interconnections through the Pyrenees. The government wants that because the Council's saying the 10%, and there's some other points that have been established by the Council. All of this is being worked on at the moment. This plan cannot really set out much tangible investment for this series of interconnections. For the next period, I would imagine there will be a bigger contribution made in investment. In any event, the Spanish government, this is what I've understood, I'm not sure it's been published or not, that it's likely that these extraordinary one-off interconnection investments will be taken out of that 0.06% GDP figure. Because, of course, if we did have that investment, then everything else would have to be shifted. There would be serious operational problems, and I don't believe they want that. That's all I can say about interconnections. Quite obviously, I get the impression that, unlike what happened in the past, this is actually happening. This is real and serious, and there's a different will there in Europe because the Council has said to the Commission, "I want concrete projects, and I want you to give me this, and I want this to be seen within European financing parameters with the Juncker Plan, et cetera." This would obviously have an impact on us, but we don't yet know the amount, so we don't know when, which year this would happen. If there are no further questions here from people in the room, we can move on to the questions that have come in through the webcast, through the internet. Let's get started with the webcast questions. We have one from Javier Garrido from JP Morgan. His question is: why are we getting that 3.5 times estimate for net debt to EBITDA ratio when comparable peer companies have a higher figure? Javier is also asking whether that EUR 1 billion figure for new investment in new activities includes that 5%-6% CAGR increase in EPS. Then he's talking about that 3% increase in transmission cost and the 200 basis points increase there, but lower cost of debt. Don't you think that that 5%-6% is perhaps a minimum, a floor level? Thank you. That 3.5 times the net debt over EBITDA, it is true that there are other companies that have higher levels. We have a restriction. We have to be very close to the sovereign bond rating because that's the major source, and the major source of income is linked to that. If you talk about the net debt over EBITDA and you can cut that length, then surely in business terms, then that figure would be different. We have to maintain that ratio of net as reasonable rate for our business. Now, in terms of the EUR 1 billion of new investment, yes, especially in the last year's end period, the Chira-Soria, up to 2019, that would include revenues from that series. All of the income from telecommunications would be included as well, and a relevant part of international would also be included. We can imagine that an important part of that EUR 1 billion will mark an increase in the BPA. Now, between that 5% and 6% a minimum level. We've always been reasonably conservative in making our estimates, but I wouldn't call that a minimum or floor value. It is an objective which I believe is achievable, and it is conservative, but at the same time ambitious. The next question is from Javier Suárez from Mediobanca. Javier asks that Red Eléctrica said that the residual assets from 1998 could be around 20 years. Now, what would be the implication of extending that useful life if it was much lower than what was expected? Javier also asked of how much room is there for cost reduction, and what is the difference between the current cost of the company and standard costs. He also asked if we could give the RAB rate for the company for 2014 and where it might be around 2019. Bien. Well, yes. We have asked for the pre-1998 residual value to be set at 20 years. Why? Because we believe that it is more than justified, with the 10 years in the Royal Decree 1047. That was the Royal Decree that came out in 2013, not 1993. It was 2013. Yes. Could add on another 10 years. All of this has been justified because of all of the investment that the company has done in enhancements in the assets. What would happen if that residual value was much lower? Well, in this regulatory period, quite reasonably, I think there would be very little impact at all. It would not matter so much. I think the impact would perhaps be greater in forthcoming regulatory periods because of the amortization rates would be going up. As you are depreciating the amortization, then the financial investment is smaller. But in this period, to go from 10 to 20 years as a residual life extension would not be relevant at all. That question about the difference between current and standard cost. That would be to give away all of the leeway we have in our activities. I am not sure it is the right time to do that. But certainly, in the reports that we put into the CNMC, the margins on the investment project costs are detailed one by one. There are margins of all sorts there. There are some types where we have very low margins and others that we are in a much better position. But to give you a construction cost margin there, I think, overall, it is a bit riskier than the maintenance cost. I do not think it is that hard for you to actually identify them in our accounts. But you are talking about 10% there after tax, I would say, more or less. As for the RAB 2014 and our debt, as the chairman said, it will depend on the parameters and the standards. We have said to analysts, I see a lot of you here, that EUR 12 billion was going to be assigned to Red Eléctrica. We have said over and over again that that figure is compatible with the path or track set out under that royal decree in Spain. Could it be +EUR 1 billion? Could it be EUR 500 million below that, more or less? Yes, it could happen. But it is more or less compatible with the track, with the revenues from our financial transactions and from our activities. How might that figure progress in the future? How might it move on? I think if we are investing about EUR 650 million, or instead of investing, should I say we are putting in operation about EUR 650 million of investment every year, and we are estimating that the amortization from the system is around EUR 500 million, then logically, you would expect EUR 150 million per year to be the increase every year. So after 5 years, the figure would be higher than EUR 750 million, EUR 700 million, EUR 750 million. It depends an awful lot on the assets that are actually put into operation, of course. The next question is from Pablo Gallardo from HSBC. He is asking why the average investment in the plan is EUR 550 million, but I think it is EUR 600 million, is what another figure is in the plan. Well, this is normal, that these two figures don't coincide, given at 550 we're talking about projected investment, and the other is in service. It might be executed over a period of 4 years. Since the investment come from the past, it's illogical that there's a certain difference between the figures. We're talking here about executed investment per year. There are other factors as well. For example, we have the delay factor also in putting things into representation. That's a 10% figure there. It's also true that the years don't match up exactly, the 2015-2019. The other is 2015-2020. There's certain defects there. That's basically the reason for that discrepancy. The next question is from Carolina Dores from Morgan Stanley. She asks if we can confirm the growth rate for the BPA. If it's the 213 rate. Yes, it's 2013, the earnings per share figure. We didn't want to use 2014 because of the number of extraordinary items we've got in those figures, and also because in the strategic plan 2015-2019, although 2015 to 2019 is the plan, the real first year was actually 2014. That's why we wanted to base our figures for this year on 2013. Next, we now have another question, RBC Capital. First of all, they want to say congratulations for the implementation of the interconnection with France. This is the question, the guidance for investment that we're giving, is there any amount that's earmarked for the reinforcement of those interconnections or any other new interconnection investment amount? Could you tell us about the status of the talks at the moment on making those investments in new interconnections? It's a very important issue. One thing is interconnections, and the other thing is reinforcement, both in France and Spain. The Iberian Peninsula is really well-connected with the rest of Europe. One thing is interconnections, the other thing is the reinforcement. We have mentioned reinforcements in Spain and the Basque Country, in Navarra and the western part, reinforcements for that. They form part of the investments that we're making in the TSO. In terms of dialogue, of talks, we can't go over and above what is already taking place. We're talking intensely in REE and with our French colleagues to comply with the European Council's mandate. It's not easy, but we have a very positive attitude on both sides to achieve our common objective of reaching, over the next several years, of those 8,000 megawatts. Also, we've just inaugurated in the Gulf of Biscay and another two interconnections as well. Marie Choice from RBC Capital has asked if with the indebtedness ratio over EBITDA of 3.5 times, if there's room for any further indebtedness. The question is, if we believe that in the guidance of 7% dividend, if we could improve on that figure? Well, is there further leeway for us to take on more debt? Yes, there could be some leeway there for take on greater debt. That 3.5 times net EBITDA ratio, I did say this before, we have to really keep terms. When we have our total debt, we have to make sure that we're compatible with the credit rating. We have to be very close to or absolutely aligned with the Spanish Treasury rate there. That 7% CAGR rate, could it be outperformed on? Well, anything could happen, of course, in this life. But we're estimating that 7% is a policy that would give the right remuneration back to the shareholders after putting up the dividends this year by 18% compared to the last year. Fair enough, we've had extraordinary items, but I think we have really made a big effort already this year. Jose Javier Ruth from Acquire is asking if the payout would be close to 80% by 2019. Well, that depends on the path of profit per share. I made a calculation. Now, if profit per share is around 5%, with that path of dividend, we would reach that 80% by the end of this series. Now, if it's 6%, then it would be a little bit lower, around 76%, approximately. Well, the rest of the questions, some came through the webpage, but I think they've already been answered either here in the room or from some of the other questions. So I think that the Q&A session has drawn to a close.