Earnings Call: Q4 2014

Mar 10, 2015

Yeah. Thank you. Good morning to everyone on the phone and to those who are joining us via webcast. We have decided to start the earnings presentation earlier to shorten the time between the release of our numbers and your opportunity to get in touch with management, and we hope you find this more beneficial. That is from my side, and I now hand over to Peter. Yes. Thank you, Stefan, and good morning from me as well. Over the last months, we have taken major strides to restructure our business, and we have made good progress in strengthening our balance sheet. A major step in this regard was the successful closing of the RWE Dea transaction earlier this month. While it has taken a little bit longer than initially envisaged, I believe that we can be clearly satisfied with the result. As we always said, quality over time. The transaction does not only eliminate our exposure to oil prices, but also significantly strengthens our equity capital. Our efficiency program is progressing faster than expected. We are now looking at achieving the targeted EUR 1.5 billion for the first two waves by the end of this year, two years earlier than originally promised. We were also faster with respect to our target to reach a positive cash balance. We achieved it one year early and produced a significant positive cash flow of EUR 1.1 billion at year-end 2014, although this contains some one-offs and offsets in 2015. The decision to establish a European generation company, thereby creating one single point of accountability, certainly played a big role in the ability to cut costs and raise efficiencies. Our renewables business is on track to improve its performance by refocusing and streamlining its activities. We have shown great financial discipline over the last two years, bringing down our capital expenditure close to maintenance level and improving our net debt position and our cash balance. However, market conditions have deteriorated further, clearly evidenced by the development of commodity prices. While we do not believe that current adverse power market conditions are sustainable in the longer run, we certainly cannot rule out that they will persist for some time. The situation is certainly not helped by the ongoing regulatory and political uncertainty we are facing in some of our core markets. To prevail and succeed in these market conditions, we have to continue to adapt and drive our business forward. To do so, we are focusing on four key areas: growth opportunities, our generation business, further efficiencies, and continued financial discipline. Let me elaborate on each of these items in more detail. Let us move to the first area of focus, growth. Since 2012, we have shown strong financial discipline. We have exceeded our efficiency targets and significantly reduced our capital expenditure. We have shown financial restraint when it comes to projects which do not offer sufficient returns, such as the offshore wind project Galloper. We have made a virtue out of necessity. We entered into partnerships for the development of renewable projects and sold minority stakes in some regulated assets, such as the gas distribution network in the Czech Republic. On the back of this track record, I believe that investors should now have enough confidence in the current management team to justify talking about growth again. Let me make it clear, we are not going on a spending spree involving billions of EUR, but we are clearly shifting the long-term focus internally so that we can actively take advantage of strategically and financially attractive growth opportunities in our core business and home markets. The energy market is changing. Renewable energy will continue to grow in the quest of decarbonizing the energy system. Smart infrastructures and balancing systems will become increasingly important to handle the decentralization of electricity generation. The drive towards energy efficiency and convenience products calls for innovative customer solutions. Our initiatives to grow will focus on the three parts of the value chain which support and enable this transformation of the energy market and of RWE. In renewables, we will continue to expand our asset base. Due to the commissioning of recently constructed assets, the business will show high double-digit compound annual growth in earnings over the next three years. The focus will be mostly on onshore and offshore wind. We will continue to enter into partnerships to realize our attractive project pipeline while reducing our capital requirements and diversifying development risk. In our most recent deal in February, Statkraft agreed to buy a 50% stake in our Triton Knoll offshore wind farm project in U.K. The final investment decision will be taken in 2017. Our distribution grids play a key role in the transformation of the energy market. Investments will not only go into maintenance, but also the expansion of the grid, enabling the integration of renewables and decentralized generation units. The deployment of intelligent grid solutions and smart technologies will offer additional growth potential. We are working to deliver long term, a single-digit earnings growth rate here, although we will have fluctuations in individual years. In our retail business, we will focus on developing our product and service offerings to existing and new customers. Alternative supply models and technological advances in the areas of smart metering and home automation will become increasingly important to win and retain customers. Innovation will therefore serve as the catalyst for growth in this area. The emphasis will be on new business models and fast implementation and commercialization. One key element of success in this area is to be close to the customer. Our new pan-European retail organization will ensure that we leverage our in-depth local customer knowledge, and I'm confident that we can also grow this business at a low single-digit growth rate longer term. Moving on to our generation business. It will certainly come as no surprise to you that the situation in our conventional power plant fleet has deteriorated since the last time we showed you this slide. Baseload wholesale prices have come down from 37 to 32 EUR per megawatt hour since then. As you can see, under recent commodity prices, only roughly 55%-65% of our portfolio is free cash flow positive, roughly 15 percentage points less than 12 months ago. We have worked hard over the last months to optimize our portfolio. While we have decided to shut certain coal plants and eliminate their costs, we have opted to mothball a large part of our gas-fired power fleet. This allows us to minimize their cash burn while maintaining the option to bring them back when they will be needed and profitable again. Slide seven shows how dramatic the situation for conventional power generation is. At current price levels of around EUR 32 per megawatt hour, the division is just free cash flow neutral. In other words, it is only able to earn the cash flows it needs to cover the current cash outs for provisions and the required CapEx to keep our assets running. This is not a sustainable situation long term, and a clear political framework is needed in the short term. The dramatic shift in our business environment has required, from my perspective, a fundamental shift in the organizational mindset, the DNA of the organization, so to speak, in what we do and how we do things. Since starting 2 years ago, we have been going through a fundamental process of changing our leadership styles, our behaviors, and our decision-making processes to become leaner and meaner, quicker in decision making, and with a stronger customer focus and output orientation. My board colleagues and I have been very committed to this process, and we were the first to make the effort. Changing a company is a long and sometimes exhausting journey. But I'm deeply convinced that the successful transformation of RWE is the basis for increasing our performance, which in turn will ultimately lead to growth in our earnings. Having talked about our organizational transformation as a prerequisite for performance improvements, let's move on to the real-life test and the hard facts of our efficiency program. In March last year, we told you that we would be able to deliver EUR 1.5 billion to the operating result from our efficiency program by 2016. Thus, 1 year earlier than initially envisaged. I'm very pleased to inform you that due to increased efforts in 2014, we have already achieved EUR 1.4 billion of efficiency improvements as we managed to deliver EUR 400 million instead of the planned EUR 150 million in 2014. We will complete our EUR 1.5 billion program by the end of 2015, which means 2 years ahead of the original schedule. I'm very proud of the organization to have been able to achieve these results. However, as operating pressures have increased again, we have already started a third wave in our program and have defined measures which will contribute another EUR 500 million by the end of 2017. After its completion in 2017, we will have accomplished in total EUR 2 billion net benefit to the operating result within 5 years. Please keep in mind that our efficiency calculation is net of underlying cost increases such as wage inflation. The contribution along the value chain will roughly stay the same, with RWE Generation contributing about 50% and the supply and distribution business another 30%. A central point of attention when defining our additional measures has again been the continuous improvement of our cost position. We are focusing on limiting cost increases, for instance, the staff factor costs, as well as reducing our process costs. Let me give you several examples. We have started a project called New Way of Working, which will be rolled out more or less to the entire group. It combines applying proven concepts from lean transformation programs in other industries with improving the end-to-end processes and increasing operational excellence with customer orientation being a key criteria. We have already made excellent progress in our retail business. For example, at Essent's B2C business, we reduced customer complaints by two-thirds and established customer satisfaction levels at the best in class. Furthermore, we reduced the workforce by about one-third between 2010 and 2014. Across the business units, we have been able to reduce operating expenses in a range of 10%-30%. At Essent Belgium, we can now handle twice as many customer requests with the same number of employees as before. At RWE and Power, we speeded up the home moving process from several days to 2 hours. We also review our external spend volumes and have launched a dedicated program to reduce external spend across the entire group. Here are just 2 examples out of more than 100. In the generation business, we have optimized our requirements for specific pipes in our plants across fuel types and increased the competition on the market. This leads to annual cost savings of more than 20% for these pipes. In the grid business, we were able to simplify technical requirements together with our customers and suppliers, which led to cost savings in the area of a high double-digit million EUR amount. We are also looking at further streamlining our organizational and legal structures. The positive experiences from the foundation of RWE Generation, for example, in terms of raising synergies and having a single point of responsibility, have been encouraging enough to investigate further potential within the group. In addition to the mentioned cost savings measures, we will continue to further optimize our cash flow, particularly by improving our working capital with a focus on procurement processes. By doing so, we want to improve our working capital by EUR 1.5 billion by the end of 2016. Half of it has been realized already. Therefore, we have integrated working capital management into our target setting and incentive processes. Slide 11 outlines how the efficiency enhancements impact our total controllable cost base. As just mentioned, cost reduction is of particular importance. About half of the contribution to our efficiency improvement will be achieved by operational cost reductions. Let me briefly explain our investment program for the coming 3 years on slide 12. Total CapEx is coming down further. Compared to our last 3-year program, we intend to bring down CapEx by another EUR 1 billion-EUR 1.5 billion to a level of EUR 6.5 billion-EUR 7 billion from 2015 to 2017. Approximately half of this will go into our regulated grid business with secured returns over the next couple of years. Of the remainder, EUR 1.5 billion-EUR 2 billion will be mainly spent for renewable projects and to complete our power plant replacement program. Furthermore, we will spend a little bit in our retail business, as I mentioned earlier in my presentation. Let me finally come to the dividend. Let me emphasize that we know the importance of dividends for our investors and the signal it gives to the market. We also know that the market likes stable dividends. Furthermore, a dividend has to be earned from sustainable income and financed by sustainable cash flows. Hence, we have changed our dividend policy because it should better reflect the whole and sustainable economic situation of RWE. Therefore, the new dividend policy takes our earnings and leverage situation, as well as growth opportunities into consideration. This brings the dividend proposal much more in line with the mid-term development of RWE, rather than merely focusing on the preceding year's earnings. What dividend seems appropriate in light of the current market environment and our mid-term earnings development hasn't been decided yet. Yeah. So I now take over from Peter for some more numbers, and good morning from me as well. Slide 15 gives you the performance of our main earning numbers in 2014. EBITDA reached EUR 7.1 billion, approximately EUR 0.3 billion above the upper range of our guidance. This is mainly due to three key factors: the outperformance of our efficiency programs, earnings contribution from the sale of grid assets, and a favorable trading performance. At EUR 4.0 billion, the operating result was in line with our outlook of EUR 3.9 billion to EUR 4.3 billion. The reason why it fell short of the performance of our EBITDA were asset impairments in our power generation businesses in Germany and the U.K. More on this topic and the main divisional value drivers in a minute. Recurrent net income amounts to EUR 1.3 billion and was also in line with our outlook. It declined by 45% compared to 2013. This was mainly due to the operational earnings development. This is explained in more detail now on slide 16. All in all, we see an earnings decline of approximately EUR 1.4 billion. The biggest effect is the absence of the one-off payment from the Gazprom arbitration ruling in 2013. Net of the positive effect from the Gazprom agreement in February 2014, it accounts for approximately minus EUR 0.8 billion. Furthermore, we recognized asset impairments of approximately EUR 8 billion in the operating result, of which approximately EUR 0.6 billion are value adjustments in our conventional power generation businesses in the U.K. and in Germany. As you can see from our published accounts, we have changed the classification of such impairments. The general rule is that they are no longer in the non-operating result, as we want to strengthen our internal financial discipline even further, and we consider such burdens to have an operational character. For the same reason, we will in future recognize restructuring charges in the operating result as well, as they are typically payouts which relate to future operational efficiency improvements. We continue to classify goodwill impairments as well as book gains and losses and the impact from the change in certain derivatives in the non-operating result. Furthermore, we were suffering from the deterioration of realized market spreads in the conventional power generation business and negative weather effects, mainly in our supply businesses. This was only partly offset by our efficiency improvements, although we were able to realize them faster than originally planned, as Peter has already explained. In our CEE/SEE division, the operating result fell by more than EUR 300 million. This is to a large extent due to the deconsolidation of Net4Gas, which contributed EUR 171 million to earnings in 2013. For more details on the individual value drivers, I would like to refer you to the backup section and our annual report. Slide 17 gives you the details of the development of our cash flows from operating activities. Despite the negative earnings trend, cash flows increased by 16%. This is mainly due to two factors, which are cash flow, but not earnings relevant. First, we changed our procurement strategy for CO2 emission certificates in 2014. While until 2013, we purchased most of the certificates in the same year as the CO2 was emitted, we shifted the timing for the purchase of the certificates we needed for 2014 to the beginning of 2015, the year we have to submit them. This general policy will continue for the time being. Second, in 2014, we had a positive weather effect in our working capital. Due to the mild weather, the effective energy consumption in 2014 was to a large extent lower than the advanced payments we received from our customers. As a result, in 2015, we expect much lower cash flows from the final billing for the year 2014 compared to the cash flows we received in 2014. Let's now move on to slide 18. Due to the favorable cash flow trend, including one-offs and the planned decline in CapEx, we were able to reach our cash balance target one year early. We achieved a significant surplus of EUR 1.1 billion. Mainly due to further margin erosion in the conventional power generation and the working capital effect driven by the weather, which I have just explained, we don't expect to achieve a positive cash balance again in 2015. Upside would come from potential cash contributions from a positive outcome of our court cases regarding the nuclear fuel tax. Nevertheless, in general, we are sticking to our ambition of a positive cash balance on average from 2014 onwards. Although, due to the aforementioned volatility in working capital, this might be at risk in a single given year. As you can see on slide 19, the positive cash balance was also the main reason why we were able to keep our net debt on a par with the previous year's level, although we had to digest an increase in long-term provisions of EUR 1.6 billion. Due to the low interest environment, discount rates for pension provisions in Germany came down from 3.5% at the end of 2013 to 2.1% at the end of 2014. For the pension provisions abroad, the discount rate declined from 4.3% to 3.4% accordingly. This resulted in a net increase of pension provisions of EUR 1.7 billion. Nevertheless, our achievements are better than the outlook we gave in March last year when we said we would expect our net debt to be in this order of magnitude. This outlook was given under the assumption of a positive contribution from the repayment of nuclear fuel tax of approximately EUR 1.3 billion, as well as no impact from the change in discount rates. Besides efficiency improvements, our efforts to optimize working capital were the main reasons for this success. Moving now to our leverage situation on slide 20. Before I go into details, let me emphasize a crucial point. The general strategy to deleverage our balance sheet is unchanged, but the way how we look at it has changed after the successful disposal of RWE Dea. The composition of net debt has significantly improved. Net financial debt, including RWE Dea proceeds, will come down below the level of our expected EBITDA in 2015. It will then include ample liquidity so that we could refinance our outstanding financial debt until the end of the decade. In February this year, we made use of our liquidity and paid back our EUR 2 billion bond with a coupon of 5%. Looking to the second part of net debt, our provisions. They are long-term in nature, as you all know. Average maturity of pension provisions is 15 to 18 years, and for nuclear and mining, even longer. Furthermore, the absolute amount of our pension provisions is currently somewhat inflated by the low interest rate environment. So the question is, how do we want to manage our net debt position post-Dea? We have come to the conclusion that a leverage factor, which doesn't take our specific situation with regards to the composition of net financial debt and provisions into account, isn't appropriate anymore to steer our leverage. We always said that the overall target for RWE is to have access to the capital market at all times. This stays in place. To make this goal more tangible, we have defined three measures to support the target. First, our aspiration is to keep a solid investment-grade rating. Having such a rating is important when it comes to refinancing our financial debt, especially in times when the capital markets get tighter, which is currently not the case, as we all know. Second, we want to keep a positive cash balance long-term. This is the best way to support our net financial debt position structurally. That doesn't mean that we will show a positive balance in each and every year. The volatility in our cash flow, mainly driven by working capital, might prevent that in certain years, as I mentioned. But our approach is unchanged. We want to earn more cash than we spend. And third, we are now starting to dedicate financial assets to our long-term provisions. As a first step, we will set aside a significant portion of the financial assets from the Dea sale. They are earmarked to fund the future cash outs from our long-term provisions. In doing so, we have now funded in one go more than 10% of our total mining and nuclear provisions and the non-funded pension commitments. Let me conclude my remarks with the outlook for 2015. First on slide 21 for the key earning figures of the group. Further efficiency improvements and growth in our renewables business will not be sufficient to stabilize earnings in line with 2014. Hence, we expect EBITDA to decline to EUR 6.1 billion-EUR 6.4 billion. Our operating result will most likely reach EUR 3.6 billion-EUR 3.9 billion, and recurrent net income is expected to be at a level of EUR 1.1 billion-EUR 1.3 billion. The main reason for the earnings decline is the further deterioration of generation margins in the conventional power generation division. Let me also point out that our outlook for 2015 does not include contributions from a positive outcome of our court cases regarding the nuclear fuel tax. Slide 22 gives you the outlook for our individual divisions. The general trends shouldn't be surprising to you. In order to keep the presentation short, I would like to refer you to the annual report and the backup section for further details. On slide 23, you see the major value drivers for our outlook for 2015. I already mentioned the future decline in generation margins. In addition, our supply and distribution networks Germany division had a very positive earnings contribution from the sale of grid assets in 2014, which we won't see this year. Furthermore, we expect a negative impact from the change in provisions. On the positive side, we expect further contributions from our efficiency program. For this year, we envisage approximately EUR 100 million. For our outlook, we have also assumed normalized weather conditions. As we don't expect similar value adjustments that we saw in 2014, depreciation should be lower than in 2014. Last but not least, our renewables business is expected to show strong growth due to the commissioning of new generation assets. With this, I would like to conclude my presentation and hand over to Stefan for the Q&A. Stefan? Yeah. Thank you, Peter and Bernhard, and let me remind you to our famous two-question rule. With this, I would like to hand over to the moderator. Moderator, please. Thank you. The first question comes from Vincent Gilles, Credit Suisse. Yes. Good morning, everyone. I have two questions. The first one is on the drop of the net financial debt EBITDA target. I mean, I call it a drop. I know it's a bit more complicated, but just to simplify my question. Did you talk to the rating agencies on that particular change of policy? If so, can you tell us how they saw it? Also, how will you do if there is any drying up of liquidity in the market if we go for a very dark scenario on the EUR, for example? How are you preparing not to be in the 2008 position again? That's point number one. Point number two is on the 10%, let's call it, covering of nuclear provisions. Can you tell us a bit more about the assets you dedicated, sort of length and type of securities, and whether you are ready to communicate to us a target of, let's call it, coverage. Thank you very much. Hello, Vincent. This is Bernhard. With regards to your first question on the leverage factor target that we have now skipped. We have explained in very much detail to the rating agencies how the overall composition of our net debt is changing post the closure of the Dea transaction, which was the trigger for jettisoning the target, as you know. They are aware of it. As you may know, this leverage factor target, net debt over EBITDA, was never that relevant for the rating agencies anyway. It was out of simplification purposes that we used it mainly for external communication. The reason that we dropped that target is not that we want to relax the financial discipline in the company, but post the Dea sale, the scenario you described in the second part of your question number one, in terms of tight financial markets and maybe dried up markets for net debt. We now have ample liquidity post the Dea sale so that we would not be worried about a scenario. Of course, we would not welcome it, but that's one of the reasons why we thought this leverage factor is no longer a reasonable target. On your second question regarding the 10% funding of provisions, I'm sorry that we won't give you any detailed split of the financial assets that we allocate to it. Just as a general flavor, you might imagine that it's similar to what you do when you are funding pension provisions. It is a mix of various asset classes with a certain risk-return profile, usually tailored to the duration of the cash-out profile that you are expecting for the future. We do not define a target on this. Okay. More Tom? Yes. Sorry, I was on mute. Yes, thanks very much. Yeah. Okay. Thanks. Then the next question, please. Next question comes from Benjamin Leyre, Exane BNP Paribas. Thank you very much, and good morning. Two questions please. First one on your new definition of a recurring EPS, which now includes impairments. I wonder if there is a maximum level of dividend payout on this recurring EPS, above which you think it would be unwise to go. The reason I am asking is that if there is an impairment, I assume your recurring EPS could be much lower. Second question on the nuclear litigation. I am curious to hear your latest views on the likelihood that the judgment by the Constitutional Court in Germany on the nuclear tax will happen this year, and whether you are still confident that the judgment will be favorable. Thank you. Okay. Hi, Benjamin. This is Bernhard. I will take the first question, and Peter will take the second one on the ruling for the nuclear case. I am not 100% sure if I got your first question totally correctly. I understood that it related to the impairments we now have in the operating result, and which, of course, then would translate through into recurrent net income as well. As you are aware, this is related to asset impairments. Goodwill impairments are a different animal, first. On the dividend policy, since December last year, we put it on this broader triangle of influencing factor anyway. So there is no longer any kind of mechanistic relationship between a certain development in earnings or cash flow or net debt to a specific dividend. As you know, we have never given any dividend floor or cap or specific number that we commit to beyond 2014, which is going to be paid this April. Yes. Benjamin, on the nuclear fuel tax, first of all, the procedure in Luxembourg is not finalized yet. We have the Advocate General who has given his advice. Mostly the court follows that, but not always they do. Secondly, we have the second string, which is the debate in front of the Constitutional Court in Germany. Our judgment, and basically the judgment of the wider industry, was that the complaint in front of the Constitutional Court in Germany had a somewhat higher likelihood than the one in Luxembourg. But in front of a judge, you never know until the verdict has come what exactly is the situation. Expectations so far have consistently always been that somewhere towards the end of this year, we will have a further indication from Karlsruhe. I am just looking to my left. Yeah, that is still the latest view that we have. Thank you very much. Okay, thank you. Next question, please. Next question comes from Deepa Venkateswaran, Bernstein. Thank you for taking my question. I have two questions. The first one is on the impact of the one-offs and offsets in your working capital from the change in policy on CO2 procurement as well as trade payables. I just want to understand how much of that EUR 3.6 billion you expect to sort of reverse in 2015. The second question that I had was actually related to your financial position. Obviously with the Dea sale, you will have EUR 4 billion more of liquidity at least, which will sort of take your financial asset position from EUR 8.6 billion to EUR 12.6 billion. Do you have any plans to perhaps refinance more bonds than are coming up for maturity? What will you do with so much of financial assets? Thank you. Hi, Deepa. This is Bernhard. The one-offs on the working capital side, indeed, the two main drivers are the carbon effect and the weather. The nature of the carbon effect, as you can see from the slide now in this presentation, if you net it, is probably above EUR 1 billion, which we will see in 2015. This is just now an estimate for the ongoing year. For the weather, we think it's a significant triple-digit million euro amount. You might see there as a swing. The difference between carbon and weather is that carbon is just a typical one-off, where you do something in your inventories. It works once in working capital, and if you keep the new level, it won't improve your cash flow again, but it also won't burden your cash flows. With weather, it's a swing. Yeah. Therefore, the cash effect is bigger than what we've seen in earnings. Yeah. It accelerated cash flow in 2014, and it will depress cash flow beyond its normal level in 2015. On the financial position post-Dea. Yes, we use the proceeds, obviously, for two reasons so far. The one is the financial assets that I mentioned that we put against our long-term provisions, and the other one is, as I mentioned also, that we repaid the EUR 2 billion bond that matured in February this year. So it's a mix of both, and we will decide on this opportunistically. Okay. Thank you. Thank you. Thanks, Deepa. Next question, please. The next question comes from Patrick Hummel, UBS. Yes. Hi, good morning, good afternoon. Two questions as well. First one, Peter, on your statement regarding the dividend, yet you haven't defined yet what an appropriate dividend level is. I'm looking at this slide 13. I was wondering, because the earnings situation, you give a guidance for 2015, you give us a guidance for cash generation, as well as you abandoned your official leverage target, and you have given us a CapEx budget for the next three years. I was just wondering what is missing to make you say, "Okay, under the current environment, we would aim for a stable dividend for the coming year as well." The second question is, I'd like to understand why you have actually started funding the nuclear liabilities, because your previous communication was more like, we run the business with our operational assets, and that's the way we generate most returns, and therefore, that's the best way of eventually paying off the nuclear liabilities. Is that as a response to political pressure, or in that sense, could we expect you to even support the idea of a German nuclear liability fund and just outsource the whole thing? Thank you. Patrick, Peter here. Let me start with the dividend guidance and why we're not making a statement on that, although all other major drivers for 2015 are in the guidance. The answer is rather simple. The year doesn't stop after 2015. A stable dividend guidance always is being done with a look on the years beyond, as far as we are concerned. As soon as there's quite this amount of uncertainty for 2016 and beyond, it is very difficult to make a statement to 2015 which has some kind of an indication for the years following that. That is the stability of our dividend policy that we want to proceed. If 2016 or 2017 would be very good or would be very poor, that would need to have a consequence for the dividend as we would state it in 2015. Peter switched off his mic, which means that he probably expects me to answer the second question. Hi, Patrick. The funding of nuclear liabilities. First of all, it's not nuclear only. We don't earmark assets against liabilities in our balance sheet. It's just a matching of the asset side of our balance sheet against the overall structure or profile of the liability side, if you will. You asked, why don't we take operational assets instead of financial assets? Well, at least for the time being, at such a short notice as the Dea cash-in happened on Monday last week, I think 10:46 or so it was, German time. It was difficult to find suitable operational assets to invest in such an order of magnitude at short notice. We've been saying before that we were lucky in a way, if you want, that our financial discipline on CapEx has not led us to letting any major attractive projects go, which we would have done otherwise if we had more capital available. Therefore, we thought it's the best and most prudent way to put this money into financial assets before letting it lie idle on a bank account, which doesn't carry too high an interest these days. There has been no political pressure of any kind on what we do with the Dea proceeds, to be very precise. What we think we demonstrate here is that we behave reasonably with these financial assets or with this cash at our disposal. Therefore, we take rather the wind out of the sails of those who are propagating for an externalization of the nuclear liabilities in conjunction with a straight funding of them. Okay. If I get you right, you still would prefer to have control by yourself rather than outsourcing the liability management to the German government, essentially? What I mean is whether you have the cash on your balance sheet or put it into a dedicated asset fund. In the end, it would not move the needle for you, would it? Well, if you reduce it to such a narrow trade-off, yes. But as I said, it is not put against nuclear alone, it is put against our whole liability side, which is now more non-financial debt than financial debt. Therefore, we want to manage it differently. I don't believe in outsourcing these tasks to a state agency, that this makes things better. Thanks very much. Okay, thanks. Then next question, please. The next question comes from Alex Karnick, Deutsche Bank. Yes. Hi. Thanks for taking my question. I have two housekeeping questions for me left. Given now that restructuring charges are part of your recurrent net income, can you just let us know what the EUR 2 billion cost savings program costs, and what amount, if any, do you have included in your 2015 guidance? The second question is, on one of the growth slides, Mr. Terium, you highlighted the double-digit earnings growth in Innogy. Is that a change to previous targets that are out there that I think stem from the meet the management about EUR 400 million EBIT in 2016 for Innogy? Thank you very much. Let me start with the second one, and then Bernhard can give some further thought on the restructuring charges. The double-digit growth of Innogy is as it was originally planned. There is no change to the plans that we have previously disclosed on Innogy. If you look into that, a portion of it is that one-off charges fall away. We have had some negative impact from business activities that were not that successful, which we cleaned out. Secondly, it is wind parks coming on stream, on the grid, and delivering their returns. That is where the growth comes for the next years to come. Yeah. Thank you. Hi, Alex. This is Bernhard. With regards to the restructuring charges, the numbers and the guidance we have given is all including those, also under the new rules, as part of operating result. Okay. It is a net number. Okay. I take it you do not want to comment on the magnitude of any provisions or whatever that is included in there. You are right. I do not. Thank you very much. Okay. The house is clean now. Next question, please. The next question comes from Bobby Chadha, Morgan Stanley. Hi, good afternoon, everybody. Sorry, good morning. My first question is around slide 7 and how it relates to, I think it's slide 6. On slide 6, you show that 55%-65% of your assets are free cash flow positive in the GenCo. In the guidance or the illustration that you've given on slide 7, does this assume that those cash flow negative assets are closed or are running in a cash flow negative way? Or what's your assumption there? Because I thought you'd always said you would close assets as soon as they became free cash flow negative, and this is really a kind of medium-term guidance. Then the second question relates to the cost savings. I think slide 9 is very clear with the EUR 500 million of additional cost savings over the next two years, then another EUR 100 million from wave 2, so EUR 600 million in total. But I'm just trying to compare that with slide 11, where it shows only a EUR 200 million reduction in total controllable costs. Is there a definitional difference there? Because I thought your cost-cutting definition was always after cost inflation. Yeah. Hi, Bobby. This is Bernhard. With regard to your first question, well, on slide 7, you see these highly stylized numbers, which might still include some assets which are slightly cash negative. As far as I can remember at least, we never said that, A, all cash flow negative power plants will be shut down immediately because the main criterion for that is what part of the cash negativity would go away when you close it down. Especially, for example, on lignite, where you have this kind of symbiotic relationship between the lignite mines and the power station. This is a more complex issue than just fuel prices and power prices minus operating costs. The second one is that even some of the mothballed plants still cause slightly negative cash flows. With regard to your second question, comparing our slides on the overall efficiency program and total controllable cost. The gap between the two are other effects which we regard operational performance or efficiency improvement. This is improvements in availability of power plants, this is improvements in retail margins due to measures on our side, and this is also improvements to grid margins, for example, throughout the regulatory cycle. Okay. So you could characterize some of the efficiency improvements as revenue benefits or availability benefits rather than just cost reduction? Yes This was always the case, also in the past. Great. Thank you. Okay, thanks. Then the next question, please. The next question comes from Deborah Wilkins, Goldman Sachs. Yes, good morning. I have a question for each of you. The first one is with regard to the financial debt. Post-Dea, it looks as if the net financial debt will be a very low single-digit number. So that's at the end of 2015. Is there a level of absolute financial debt you'd rather not go below? The second question, you said in your opening remarks that the mark-to-market power generation free cash flow neutral is not a sustainable situation. What does that statement actually mean? What will you do if the environment persists, or are you actually expecting something to change from the government? Let me start with the second one, Deborah. Not sustainable is, as you call it in English, something has to give in. Otherwise, the lights go out. That's the simple conclusion. What it is that has to give in is either the price or the capacity. We're pretty sure that either the market will price it, and you get fly-ups, high price spikes, and volatility, or the government will put something sensible in place which makes sure that you have an adequate return on the power plants and a more secure system. Which of the two it's going to be, I think we'll get some further clearance over the summer when the green book is being turned into a white book by the German government. If nothing of that happens, then we will behave like rational market actors, like everybody will do, which means closing plants that are cash negative. Under the presumption that Bernhard already mentioned, if a plant makes EUR 1 million or EUR 1.5 million cash negative a year, then closing it could cause a mothball of that, and is not necessarily the better alternative. But on an ongoing basis, there's always a moment where the cash negative situation needs to be cut, and closing is the only option, and we will certainly not hesitate to do so. Yeah. Hi, Deborah. With regard to your first question on the level of financial debt or net financial debt, post the Dea sale, you're right to assume that it is very low, low single-digit billion euros. There is no minimum level that we target or that we communicate. But it's very clear that given these very low level of net financial debt, the refinancing of this debt or the potential scenario of a liquidity squeeze that I think also Bernhard mentioned, is no longer one which scares us. Therefore, it's not a major concern anymore, I would say. No, but sorry to follow up on that, but I was actually thinking of it from a, also a read-across for the dividend. Is there a level you don't want to go below in terms of the debt where you'd actually look that there's excess capital either for CapEx or for dividends? If you look out to medium term and your CapEx is running at such a low level, what happens if you do have some flexibility? Well, there's, as I said, no direct mechanistic link, neither from earnings or net income to the dividend, nor from cash flow, nor from net debt. This will all be taken into consideration. Also forward-looking, as Peter said, but no direct link and no immediate cause and effect relationship. If some value is here, then this will happen there to a dividend or something else. Thank you. Okay, thanks, Deborah. The next question, please. The next question comes from Lawson Steele, Berenberg. Yeah, hi. Most of my questions have been asked. Just one, actually. You talked about retail and focus on product offerings and getting closer to the customer. What information do you need from the customer, and what data do you need in addition to what you have today? Maybe you can just talk around that whole customer thing, please. Well, there's a variety of data that we could use. This scratches and goes beyond imagination. Take, for example, in the Netherlands, where we use a big data approach by putting a plane with a photo camera in the air, making pictures of all the houses in a certain area. We then combine that with cadastral information and with our customer information, and we make a specific individualized product offering for photovoltaic panels on the roof of such a house. It measures exactly the potential square feet that is available, the direction, whether it's south or southeast or southwest bound, and it makes then a full specified product offering for that customer. That's an example where big data is being combined with various data sources, not only from our own customers, but also from public and from own created backgrounds. That is just one example. If you really go into the house, there's much more than that, which you can use. For instance, the management of when a house consumes electricity or a household, but also beyond that, you go into the area of heat and gas consumption. I think that's another one where there's a lot of advantages in, where we can really give some input, too. At the moment, it is very much about delivering the products and the convenience that a customer wants to make it relevant for him in his house. There's already, by today, a lot possible, but the convenience very often is something that stands in the midst. What we see, and I think that's a more general comment, is after the first wave of information technology, which was internet and email based. The second wave is very much around your iPhone and your handheld, and you carry your whole life on that thing, including pictures and contacts and emails, et cetera. The third wave, which is going to come, is around the connected home. I don't think that we already have a very clear view on what potential will arise around the connected home. But it very much is clear it is going to be around electricity and heat, and that is our core business. We know how to handle that, we know how to manage that, and we know how to make product and product offerings around that. Okay, thank you. Okay, thanks. Next question, please. The next question comes from Peter Bisztyga, Bank of America. Yeah. Hi, good afternoon. Two questions from me. First of all, going back to your credit rating. Do you think the rating agencies are still going to look at measures like FFO to net debt? If so, what level do you think is going to be appropriate, going forward? That's my first question. Secondly, in the U.K., the Competition and Markets Authority investigation identified that suppliers were exerting power over certain types of standard tariff customers. I was wondering, how many of those do you actually have in the U.K.? Is there any risk to your plans for single-digit growth in retail, coming out of that competition investigation, please? Hi, Peter. First to your credit rating question. Yes, of course, rating agencies still have a look at such KPIs as the one you mentioned, FFO over net debt, or similar ones, which are usually more cash than earnings oriented. Well, the level they expect is usually a mix along those various KPIs plus those qualitative factors which they take into account. We don't commit to any kind of explicit targets there. On the CMA, yes, we have seen these remarks that they think that customers on standard tariffs are more sticky and therefore they think the margins are higher. We don't give any detailed numbers on this, but roughly a third of our customer base is on non-standard products. Okay, thank you. Okay, thanks. Next question, please. The next question comes from Ingo Becker, Kepler Cheuvreux. Yes. Thank you. Good afternoon. I have two questions. First, on your provision accounting, you left the nuclear mining discount rate unchanged at 4.6%, I understand, because you are working with long-term moving averages, and those have not yet triggered a change there. I think we understand the relationship between discount rate and escalation rate, but things did not change this time around. I am wondering, can we tick this off for good, and would you confirm that we should not expect action on this next year? This is solved for good at this stage? The second question, sorry, it is a bit technical. I noticed a EUR 4 billion increase in other liabilities in the balance sheet and note 27 tells us this is a change in derivatives accounting. Could you just remind us what that was about? Thank you. Yeah. Hi, Ingo Becker. Well, first on provision accounting. Yes, you are right with everything you said on the relationship. Well, A, it is long term, and B, it is ultimately what we call the real interest rate, which is the spread between the escalation rate by which we assume cost inflation to go forward on these costs and the discount rate, which really matters. We think that, of course, we cannot give you any firm assurance before the year is over that nothing will happen there. Let me assure you that I do not see major risks of major movements in the balance sheet originating from that, because any considerations on the discount rate would also be mirrored by similar considerations on the escalation rate. The EUR 4 billion increase in derivatives is something, well, basically a kind of effect you see on both sides of the balance sheet. You see it on the asset side and on the liability side. So both on receivables and liabilities, and it is due to certain kind of derivatives, OTC derivatives being used, which under IFRS cannot be netted against each other, and therefore we have just technically a longer balance sheet. So in German, which has no economic substance whatsoever. The net position also out of the movement as you see is only triple-digit million euro amount. All right. Okay. Thank you. Okay, thanks. Then, next question, please. The next question comes from Adrien Foquet, Deutsche Bank. Yes. Hi, good morning. Basically, I have two questions. The first is whether you could provide color on the speed of the provision funding, whether you target a certain percentage by a specific date, and whether this implies more bond issuance, for instance, in the short term, given how low yields are. The second one, could you please refresh a little bit your hybrid bond policy ahead of the first call date of the Euro bond this year? Thank you. Well, hello. I will start with the refresh, which is very short and crisp and simple, and it is totally unchanged on the hybrids. On the percentage of coverage of long-term provisions by financial assets, we do not commit to any certain targets there, nor any specific timelines. But we do not see ourselves as being in the business of issuing bonds in order to ramp this up. This is probably more the business for financial institutions and not for utilities. Okay. Thank you very much. Thanks. Next question, please. The next question comes from Peter Crampton, Macquarie. Okay. Good afternoon. I'll keep it very short. Only one question. Following the Dea sale, does this mean the only major last asset disposal that you're planning is Urenco, and is there any update on when this could happen? Yes, Peter. This is indeed Urenco, the only one left in the magnitude that you could call major. I think the timing that we've indicated was it's not going to happen before the second half of 2015. But I would be very hesitant to make any more concrete announcements on that. Not before, could also mean later than that. Okay, perfect. Thank you. Thank you. Next question, please. The next question comes from Zinjoi Bannery, Barclays. Hi. Thank you for taking my question. I just wanted to clarify, I couldn't quite catch the comment on the hybrid. So in terms of the hybrids that are callable in September this year, are you thinking about refinancing them with another hybrid? Or now that you have the Dea proceeds, could you use some of these proceeds to call the hybrid like you did with the bullet maturities earlier this year? Thanks. As we said before, we have all the options open on the hybrid, which becomes liable this year. Okay, thank you. In general, do you see hybrids as a necessary part of your capital structure? Would you think about increasing your hybrid issuance program? We do not comment on any specific plans we have here. We currently see it as an integral part of our balance sheet structure, which is not equivalent to a necessary part of the balance sheet structure. Okay. Thank you. Okay, thanks. Next question, please. The next question comes from Andreas Thielen, MainFirst. Yes. Good afternoon. Firstly, I'd like to understand the impact on the D&A from the impairments, if you could give any direction there. Secondly, with the working capital improvement you're targeting until next year in total, from what you explained earlier on, the weather effect in the current year is negative. So I just would like to see if the assumption that the total EUR 750 million improvement is potentially split something like one third, two thirds for the years 2015 and 2016. Thank you. Starting with the working capital question. This was the improvement we had now in 2014 and for 2015 or 2016, we do not give a specific guidance. Working capital is notoriously difficult to forecast, as you can see. This is also one of the reasons why we over-delivered on our positive cash balance target that we had originally for 2015, and we already managed to achieve it in 2014. With the asset impairments, I assume you are referring to the ones we did this year, correct? Yeah. Correct. Yeah. This is in the order of a low double-digit million EUR amount. Okay. Thank you. Then, of course, not the asset impairments, but the depreciation effect on it, yeah? Yeah, sure. Yeah. Just for the sake of completeness. Okay, then. Next question, please. The next question comes from John Musk, RBC. Yes. Hello, everyone. Just two pretty quick questions. Firstly, on slide seven, which is your sort of mark-to-market on generation, can you just outline how quickly, based on the pricing that you have put into that spreadsheet, you would expect the generation business to move to a negative operating result? Secondly, I just wanted to maybe read between the lines of what you were saying on the free cash flow target for 2015. Are you saying that it is going to be hard to hit that target in 2015, given what may happen with some of the working capital? I will start with the second question on the free cash flow post dividends for 2015. It is exactly that. We perceive it to be difficult to reach a balanced cash budget this year because of these swing effects hitting us back from 2014 and the certain positive one-offs, which we had already in 2014, which otherwise would have come probably in 2015 when we had done these measures later. It is notoriously difficult to forecast, as I said, especially these swings in working capital. What is more important is that we really target on average. If you take 2014 going forward, that on average, we want to be cash flow positive throughout the various years. Any single year can deviate from this, either on a positive or a negative side. On generation, we do not give any specific guidance now to this part or this division of the company, but just as a what if consideration, which is not a segment guidance to be explicit again, roughly in 2017, when all the hedges concluded at higher price levels have expired, and if market prices remained where they are today in the outer years, we would be hitting this zero line. Okay, thank you. Okay, thanks. Next question, please. The next question comes from Alberto Ponti, SocGen. Yes, hi, good morning. Sorry, again, on page 7, just a clarification if I read the chart well, you are basically saying 2017 EBITDA could be around EUR 500 million or thereabout. So it is a confirmation of that. The second thing is actually on what is on your report. You talk about, in 2014, a positive impact of EUR 139 million of lower depreciation because of the reduction in the useful life. The text seems to suggest that you are going to have another EUR 139 million additional to that of last year in 2015. Can you confirm that? Thank you. Yeah, I will start with the first part of your question. Again, we do not want to give any specific guidance now on all the individual numbers or effects that you see on page seven. We will not give any kind of indication for the 2017 EBITDA. With regards to your second question, I am not sure that I fully understood it acoustically. I mean, the harmonization of those useful lives of the assets leads overall to a lower depreciation. On the other hand, we have an offsetting effect because we commission new power station, which leads to higher CapEx. The overall guidance is around EUR 2.5 billion. I get that. I will take it offline. It is okay. Thank you. Okay. Yeah. Thanks, Alberto. Then let us have a chat afterwards. Next question, please. The next question comes from Ahmed Farman, Liberum. Hi. Good afternoon. Good morning, everyone. Just two questions. First, on slide 6, could you tell us what is the underlying cash burden behind the line you show, and how do you expect this 55%-65% in, let's say, 12 months time? So how do you expect this ratio to be? The second question is on slide 7, and this sort of relates to Peter's earlier comment about this not being a sustainable situation, but do you see this as a sustainable worst case, at least from a free cash flow perspective from the conventional generation? In other words, even if power prices fall a little bit further, do you have enough levers to pull to keep it cash flow neutral on a medium-term basis? Thank you. Hello. With regards to the cash burden implied by that slide number 6, we don't give a specific overall number there. Otherwise, we could just straight away start giving cash guidances on the individual divisions. On the question on how far the situation described on page 7 could even deteriorate, or if we are confident if, well, whatever happens, even in the worst-case scenarios, we would always turn the entity cash neutral. It depends on what you regard a worst-case scenario, yeah? If in a doomsday scenario, power prices drop to a level where we stop lignite mining, we will be in a situation that we will have just the cash utilization of provisions in lignite and nuclear and not much cash generation left. This leaves to the innocent bystander, the question of where the electricity in Germany should come from under these circumstances, which ties it back to Peter's question. Something has to give, yeah? All right. Thank you. Okay, thanks. Next question, please. We have a follow-up question from Bobby Chadha, Morgan Stanley. Hi. Thank you. Again, it's really around the generation business. I noticed in the annual report, the generation business still has around 15,000 employees. As you say, it doesn't seem long-term sustainable to have a business without much cash flow supporting a kind of structure of this size. What are the options that you might be considering in the longer term to try and resize the business to the new normal level of profitability and cash flow? Or are there even any options? Maybe one helpful thing would be to split out the employees between the mining piece versus the generation piece. Hi, Bob. This is Peter. Let me first make an upfront statement and treat it with cautiousness that it is meant to. We have the non-firing policy finished by the end of last year. Which means that we now have, if we would, options available that just weren't accessible for us until the end of last year. That's not a threat. That's not something that we will use if not necessary, but at least it's a way out. Secondly, a lot of the people in generation are in lignite mining. It's a very intensive part of the generation division work, intensive part, and so far, the whole of the discussion stands or falls with what is the step and the hurdle by which we need to cut into the mining activities. But if that happens, then Germany is really in a very miserable situation. Thirdly, that's still kind of light at, well, not only at the horizon, but with immediate light, the demographics of the generation division are such that there are quite a lot of older people in there. So we can, with early retirement solutions and with various other means, use the demographics to work for us instead of against us. Do you think that the actual structure of the business, given that it used to support a substantially larger amount of profitability, has already been adjusted through waves one through three? Or in this kind of scenario for a few more years, is there something else that you need to do? Well, wave three also includes the generation division. That is why we've announced that, and we've also indicated that there are further cost savings coming out of generation. But after you've done the low-hanging fruit and the fruit hanging just above that, the ice is going to get a bit thinner on the potential which is there to grab further cost savings out of that. If it would need to go beyond that, we're talking about more structural things. But it's easy to already preclude on that. On the other hand, you might throw away potential for the future, and as long as it's not necessary, we would rather keep all options open than already get into a deadlock position where you can't move out of anymore. Okay. Thank you. Okay, thanks. Next question, please. The next question comes from Deborah Wilkins, Goldman Sachs. Hopefully a simpler one. Could you just actually give us the clean EBITDA and operating result for 2014? Can you adjust all the one-offs for us? Well, Deborah, on the operating result, it is quite simple in a sense, indeed, because the one-offs basically balance each other off. We have a few burdens, which are the asset impairments in generation, both conventional and a bit renewable and on gas storage. We have a few positive one-offs, and this is pure coincidence, to be precise, a few positive one-offs which offset them, which is both on the change in long-term provisions. We have a slight positive movement. We have book gains from grid sales that we mentioned. We have compensation payments in the renewable area, and we had the Gazprom agreement, which, well, was a one-off in the sense that it also considered the situation till 2016. This is what you see on the operating results. Basically, the kind of clean operating result would be more or less the EUR 4.0 billion that we communicated. On the EBITDA, we might want to leave this to you. You can easily see that some of these aspects are contained in EBITDA, especially the positive ones, whereas the negative ones, the asset impairments, are not part of EBITDA. The kind of clean EBITDA is therefore considerably lower. Just as a guidance, if you clean it up, the EBITDA, you probably would see a movement similar to the operating result compared to last year, roughly. Then we would not have exceeded our guidance by this amount that we did. This was, as we said, due to this different nature of one-off effects. Thank you. Okay, thanks. Next question, please. The next question comes from Vincent Gilles, Credit Suisse. Yes, thanks for taking the second question. Actually two questions. The first one is, we've been on this call for an hour and 20 minutes, and you painted an extremely grim picture of last year, this coming year, and the midterm future. At least that's the way I listened to what you say. Is there anything in the exogenous factors influencing your company, be it carbon reform at a European level? I don't know, external M&A, anything that you believe on balance could actually turn positive and help your company's growth in the future? That's my first question. Or are we doomed to see effectively bad news and influence of commodity prices continuously influencing your earnings, offset by what you're doing very effectively? My other question is related to this is, of course, you're not going to give us the exact numbers of your five-year medium term plan, but what type of growth should we expect from a company like yours now? Are we talking about 2%, 3%? Are we going to beat inflation, whatever inflation is in Europe, or are we talking about a zero-growth environment for the medium term? Yes. Hi, Vincent. I'm not sure what telephone conference you've been in with the grim picture. But we have exceeded significantly our efficiency plans. We have an EBITDA, which is clearly above what we gave as guidance. We have delivered on all elements of our numbers and the quality of those, if you really read between the lines. We have one-off impairments in, and despite those, we still deliver the guidance for 2014. That, for me, in the environment that we are in, is not a grim picture. It means that we have done our homework, that we have created a starting position out of which, that's the second part of the story, which also was one of the major parts of the press conference before, we're getting into growth mode again. But if you suggest us to throw big amounts of money at risky things in faraway countries, then you need to look for another CEO, another company. What we are doing is we're getting back into a growth mode in the areas that we feel comfortable with, in the business that we know, in the countries that we are familiar with. In those areas, we identify growth options. They are in Eastern Europe in general. I think there are quite a few customer portfolios that will come for sale there. There is autonomous growth options there that we will bank upon. We will grow in renewables. That's a very easy growth option. You've noticed, and we've explained that we have a lot of partners investing with us in renewables. By only varying the portion that we take in an offshore wind park, it does not need to go to 100% because there's a risk-sharing element in there as well. What we can do instead of 15%, also 25% or 35%, that's easy growth to be fueled that we can do. The third area which we will grow is in the combination of grid and customers, mainly in Germany. Well, in a given day, next to all its detriments on power price, has a booming effect in certain business lines, business products, customer products at the interface between the grid and the customer. That is an area where we exclusive are in. That's not an area where the telecoms or the Googles of this world are in. That is something that we've been doing. We have one of the most efficient grids in Germany. We have over 300,000 renewable applications already connected to that grid. To build products on the back of that is something that we take as an advantage. We haven't started with that only today or yesterday. If you take our SmartHome product, it's the only feasible working product all over Germany that has been sold more than 100,000 times. Now, those are the seeds that we have been planting on which we can grow. What growth is that going to be? We said single digit. That is certainly not 1% or 2%, but that's also not 9% or 10%. I would say somewhere in the mid-range of that, but that's as specific as it could get at this moment in time. Some of that growth can be exponential, but it is a slow, lumbering start like most of the new products until the wheel starts spinning, and then it can become much more as what we are looking for at this moment. Are we seeing that already in this year? Maybe to a portion, but not fully. Is that coming next year? Yeah, most likely. Do you know what exactly power price is going to be for next year and the year after? So making promises at this moment in time, I've heard from one of my previous CFOs already the credo which says, "Under promise, over deliver." I'd rather stick to the under-promising part and maybe over-deliver rather than now making bold statements that do not come to fruition of realization. That's basically the story where we are in. That's in the middle of a very difficult environment, and I think we're managing very consistently through. There's another credo I would like to mention here, which is earn your right to grow. We've demonstrated by the financial discipline and the way we watch after the home that we can exercise discipline and that we, even in a very difficult environment, take the example of the Dea sale, we still deliver despite the very difficult environment. That's the track record we have been building up, and I would leave the fantasy to you and not to us to make promises on. Just for clarification purposes, the growth is single digit that Peter referred to was, of course, in the non-conventional power generation parts of the company. If you want to know the net number, give me the power price, and then we can do a back of the envelope calculation. Okay. This was the last question, or do we still have a question open? We have further questions. The next question comes from Ingo Becker, Kepler Cheuvreux. Yes. Thank you. I also had a second one. It was somehow related to the questions you, Peter, just answered. I was just interested in your view. I think you mentioned predominantly targeting Germany from a customer kind of service angle. Do you see potential for that business in your other key markets like Netherlands, U.K. as well, or would you differentiate between those markets? Do you see the potential, I understand it's early stage, of offering any successes you may have in these markets to new target markets that currently would not lie in your stated home territory? I had a second question on the upcoming photo years in gas and electricity, in the DSO business in Germany. I understand you probably cannot speculate here what the regulator will do. I was wondering if you have any indications or any information that you can share with us, given the starting of that review now in gas and power. Thank you. Yeah, thank you for that question, because this would have, otherwise, together with the answer to the question to Vincent Gilles, this would have been part of my closing remarks. Naturally, all that we are developing in Germany, is due, and destined to be, if you would call it in German, export yeah. Those things can be applied in other countries. Not all of them, and not all of them immediately, but take the example of solar. We've used the technical development in Germany to put competitive solar products into market in the Netherlands. That's a very clear and simple example. There are also other examples, and it does not need to go west only. I was in Slovakia on Friday where we have a 49% participation. They, for instance, have copied and pasted some of the things that we have over here or in the U.K. Take the example of a loyalty card. The only thing they do different, they don't give the loyalty card as a cost factor to their customers. They sell it to their customers and earn money with it. On top of that, with the backing of the loyalty card, they, for instance, have a product of renting LED bulbs. So, kind of a sharing profit situation, where if you want, you can buy LED light bulbs from us. You don't buy them, you lease them. The lease fee is being accounted for on your energy bill, and it runs against the energy saving on a monthly base. After two or three years, the light bulbs are yours and you can use them for another time, and then take the full savings out of that. With that, it sounds a bit like twisting around the edges. We, by now, are the largest seller of light bulbs, LED light bulbs, in all of Slovakia. We sell more than General Electric or any of the other retailers over there on light bulbs. It's just an example of how much fascination and fantasy there is in this area. Does it only involve the countries that we are in? Naturally not. We have already, in last year, indicated that we are looking for one more territory, one more region. So we don't go to South America, we don't go to China or to India, but we've said, Gulf region is a region where we probably can get foothold. There were a few arguments or a few aspects to that. One of them is also there, an energy transition, an Energiewende is taking place. Currently, some of those countries are burning more oil to produce electricity, as in five or six years from now, they will produce. That doesn't sound like a good business model. So they need to convert to renewables, maybe gas backup. They need a whole system. They need a grid, they need a wholesale market, they need trading, all of that. In order to design that, it doesn't help if you can only deliver them the kit and construct that. You need to have the whole energy management capabilities that we as a company have. It's very good news to say that, as late as last week, we have won the tender for developing the energy concept for the city of Dubai in the Emirates. We've been in direct competition with major consulting houses like Accenture, McKinsey, and Boston Consulting, but also with major technology houses. In an open competition, they've chosen us as the partner to develop their concept. Naturally, if we develop that concept, we will look at also back trailing in some of our engineering services and maybe some of our construction activities. Are we going to go in there with big investments? Certainly not. But that's not necessary because that's a territory which maybe doesn't have all the technical capabilities, but it has a lot of money. Well, that fits fine because we have the technical capabilities, and we don't want to spend the money over there. We might go in with a portion, take a skin in the game and get a nice return on that. That's fine and that is expandable. That is the way we approach the growth, and that is where we take advantage of all the learnings that we have here in Germany and want to bring it to other countries and other areas. Struggling with the microphone, sorry. I think there was the question about the photo years in gas and electricity in Germany. We ask for your understanding that, A, at this point in time, we have no evidence so far, and we want to be rather tight-lipped about the whole process. Okay. Thank you. Okay, thanks. Is there still a question open? The next question comes from Deepa Venkateswaran, Bernstein. Thank you for taking my additional questions. The first one is, I'm coming back to dividends. Obviously you've given the broad framework, and then you haven't proposed anything concrete for 2015, to be paid in 2016. What is the catalyst or driver outcome you're waiting for? You know what the forward prices are. You know your hedging position for 2017 at this point. I just want to understand, what is it that you need to see happening so that you have more clarity while you're going through your internal work? The second question is a small housekeeping, is just on the weather effect for next year. If it's a normal year in 2015, what is the impact you might see on your operating profits versus 2014? Thank you. Hi, Deepa. On dividends, again, there's nothing more we can say on future dividends than what we've already said. No more detail there. On weather effects, it's basically a low triple-digit million EUR amount that we would expect on a positive side if it was a normal year compared to 2014. Okay. Final question, and then we take everything offline, if there is a final question. There are no further questions. Okay. Thank you. Let me remind you there are two upcoming events. Number one is our AGM on the 23rd of April, and number two is our Q1 call on the 13th of May. With that, thanks for dialing in. I hope you find it more useful in the earlier hours of the day, and we see and meet each other on the road over the next couple of weeks. Thanks. Bye-bye.