Earnings Call: Q4 2019

Jan 29, 2020

Good afternoon, everyone, and welcome to Angie Energia Chile's 4th Quarter 2019 Results Conference Call. If you need a copy of the press release issued yesterday, it is available on the company's website at www.anje/enerje.co. Before we begin, I would like to remind you that this call is being recorded and that the information discussed today may include forward looking statements regarding the company's financial and operating performance. All projections are subject to risks and uncertainties and actual results may differ materially. Please refer to the detailed note in the company's press release regarding forward looking statements. We would like to advise participants that this call is dedicated to investors and market analysts, not for the press. We ask all journalists to contact Andre, Energia Chile's PR department for details. I would now like to turn the call over to Mr. Eduardo Milligan. Mr. Milligan, please go ahead. Thank you. Good afternoon and thank you for attending ICL Annual Results Call. Today, Bernardo Del Fante, Head of Corporate Finance Marcela Munoz, Head of Investor Relations and I are very pleased to be once again with you and present our results for 2019. So now let's start and please move directly to Page number 9, and we'll go through the main key events of 2019. In 2019, we took different decisions towards our decarbonization plan and the ECL transformation. First, back in June, we announced an agreement between the government and the 4 main electricity generation companies to commit the closure of 8 coal units, representing almost 1 gigawatt of installed capacity. This 1 gigawatt represents around 20% of the coal capacity in the Chilean market. We at CCL contributed with additional 2 units, units 14 and 15, representing 268 megawatts, which will be closed by the end of 2021. And second, last December during the COP25 organized by Chile in Madrid, we announced together with the Ministry of Energy that we are ready to commit closure of 2 additional units by 20 24. These units are CTM-one and CTM-two with a total capacity of 3 34 megawatts. In summary, we have already committed to close between 2019 2024 almost 800 megawatts of coal units and at the same time, please see next page 11, we announced the execution of an ambitious asset rotation plan, which involves the construction of approx 1 gigawatt of renewables between solar and wind generation units. This plan will require an investment of approx $1,000,000,000 or less if we continue to be successful in the procurement and sourcing of the equipment. We have already launched the execution of half of this plan by acquiring 2 PV plants, Los Lores and Andacollo, with combined 55 megawatts capacity and starting the construction of our first three renewable projects with combined capacity of 3 62 Megawatts. Hence, we are covering 4 17 Megawatts of the 1 Gigawatt already announced. At the same time, we are preparing the additional 600 megawatts to complete this first phase or even more in case we capture additional demand over the next years. This means we already committed a total investment of approximately $326,000,000 Now, on Page 12, we summarize 2 recent important events on the financing side for ICL. I'm pleased to invite Bernadita to explain both to us. Bernadita led the execution of last week's bond issuance in the U. S. Market and we will also be leading the execution of an interesting financing alternative that we are currently structuring together with the Inter American Development Bank. Okay. Hello. Good morning, everyone. So please turn to Page 12. Exactly 1 week ago at this time, we were in New York at Citibank's offices, accompanied also by Scotiabank and Bank of America. And we were in the pricing of a new 144A Regues issue for the purpose of refinancing our existing $400,000,000 bond with maturity in January 2021. So as we were watching how the orders came, we could finally see an oversubscription of over 5 times, which allowed us to increase the size of this new issue to $500,000,000 while achieving a very good price of 3.484%. So the new issue is a 10 year bullet bond. We have already prepaid close to half of the $400,000,000 bond. And yesterday, we launched a repurchase offer for the other half at Mako price. So the effects of this transaction are that we extended the average maturity of our debt to 7.4 years and we lowered the average coupon rate of our debt to 3.72%. We will report a 1 shot loss affecting our 2020 financial statements of about $14,000,000 corresponding to the make whole premium. But we consider this as nonrecurring, so it will not affect our dividend payment decisions. At the same time, we will report about $5,500,000 per year in interest expense savings. In 2nd place, in terms of our debt activity, as Eduardo mentioned, during the COP25, we signed a letter of intent with IDB Invest to structure an innovative type of financing for the purpose of encouraging the construction of renewable projects to permit the acceleration of decarbonization plans. This financing is for an indicative amount of EUR 125,000,000 and includes 2 tranches, 1 direct loan from IDB and another one funded by the Clean Technology Fund. So we will work in structuring this loan in the following months. Now please move to Slide 13 to discuss the price stabilization law approved by Congress in November 2019 soon after the outburst of the social unrest in Chile. We discussed this in our last call, but we will refresh for those of you who could not attend. So please note that in the regular invoicing from generation companies to distribution companies, there exists 2 price dimensions. The first one corresponds to the price included in the contracts that we were awarded in public auction, which is calculated twice a year according to the formula included in the contract. This price is set in dollars and converted to pesos at the average exchange rate of each month. The CNE calculates a weighted average of the contract prices for all the generation companies in the system and publishes the Presio de Nungo Promedio or P and P, which is normally published with a few months of delay. According to the new law, the tariff to be charged to final consumers will be frozen and will receive the name of Precios Tavilizado Al Clienta Regulado or PEC or PEC. The PEC will remain fixed in Chilean pesos until year end 2020. This tariff is the same one that was prevailing in the first half of twenty nineteen. So with this, an average 9.2% price increase that would have taken place beginning July 2019 was annulled. In practical terms, our revenues from electricity sales to distribution companies should not decrease as a result of the price stabilization law. They will be affected though by the behavior of fuel prices including in the tariff formula as usual. Our cash flow from regulated contracts in Chilean pesos should remain at similar levels as those already reported in the 1st 9 months of 2019. So in short, two prices will coexist, the P and P and the PEC, as shown in Slide 13. Whenever the PNP is higher than the PEC, as it is today, an account receivable will start to build up. The P and P should start falling beginning 2021, but more evidently in 2024, as the lower priced PPAs awarded in more recent auctions become effective. So once the P and P falls below the PEC, the account receivable will begin to be repaid. This account receivable from distribution companies is what we call the stabilization fund. And which is the main variable that will determine the size and recovery speed of the fund? It is by far the peso dollar exchange rate. Please note that the exchange rate of the PEC is approximately COP 6.40 per dollar, while the FX rate is currently above MXN 7.50. So again, the PPA price in dollars will continue being used to calculate our revenues in the income statement, whereas the PEC will determine our cash flows. The difference will accrue and generate an account receivable. As of December 31, 2019, the size of this account receivable in our books was 73,500,000 dollars The resulting working capital financing cost will be borne by the generation companies. At this time, the regulation detailing the form of implementation of this law is being drafted. We also note that several financing institutions are currently studying monetization alternatives for the stabilization fund that will be defined once the regulation is published. Some of the details of the mechanism are shown in Slide 13. For example, the stabilization fund balance for the entire industry may increase only until July 2023 or until it reaches a total of EUR 1,350,000,000. Dollars If this happens, the CNE will have to make the necessary adjustments to the PEC to avoid any further increase in the fund. The price stabilization mechanism ends at year end 2027, at which time the fund must have been refunded entirely in U. S. Dollars. Now continuing with other recent events, let's go to Page 14, please. In our last two calls, we have talked about the full interconnection of the Chilean system, which was achieved in May 2019. This interconnection is mainly contributing in 3 aspects. 1st, it reduced the volatility of the system's marginal cost. 2nd, it helped to reduce the marginal cost. And third, it has translated into a more frequent coupling of the marginal cost in both systems, the North and the South, which is relevant to reduce differences between both systems, facilitating competition and benefiting the overall systems efficiency. The interconnection is not the only factor that explains the behavior of marginal costs. We also need to consider the lower coal prices, which are basically determining the systems marginal cost and the additional gas coming from Argentina, especially in the central part of the FEN. I'm still on Page 14. So we contracted up to 600,000 cubic meters per day or a total of 4.6 tera BTU of gas supply from Argentina for the period between October 2019 until April 2020. These volumes are to be delivered in a flexible manner with no take or pay or deliver or pay obligations for the counterparty. Our imports are made through ECS, a related gas distributor based in Argentina. The agreement will allow us to buy gas at a lower price that will permit a more continued dispatch of our combined cycle units, contributing to achieve slightly lower and more stable marginal costs. However, our largest combined cycle, the Unit 16, has been undergoing an overhaul and has been about out of service since last October. So we expect it to resume operations by the end of this month, that is tomorrow, okay? Yes. Now let's just turn to Page 15. So as you know, our clients in 2019, we concluded PPA renegotiations with Antacoya, part of the Antafagasta Minerals Group, as well as with Molycop and Kybodex and also signed new contracts, all of which represent a total of more than 0.7 terawatt hour of contracted demand. The concepts behind these renegotiations are the same applied to previous PPAs, an initial and finally, an extension of the PPA at latest market conditions. In terms of our assets, we have 3 relevant events, the acquisition of 2 solar PV plants, the start up of the construction of Calama Wind Farm and the Capricornio solar plant and the full commercial operation of I'm In relation to our ratings, Fitch reaffirmed our international BBB rating, changing the outlook from stable to positive, and our local rating was upgraded by seller to AA9. Finally, during 2019, we distributed the final dividend for 2018 and also distributed 2 provisional dividends totaling $90,000,000 on account of 2019 profit. Now I will leave you again with Eduardo. Thank you, Bernadista. We will continue from now on with the main key messages for 2019. So please let's go directly to Page 18. So first, 2019 has been an important year for ICL. Our contracted portfolio in 2019 reached more than 11 terawatts hours, mainly driven by the full ramp up of the regulated PPA in the center south region, which as you know started in January 2018. This also means our portfolio is well balanced between free and regulated clients. The total demand of this new regulated PPA in 2019 reached around 3.1 terawatts hour, slightly below our previous estimates given the higher migration of regulated claims. In this line, please see Page 19. Total revenues reached almost $1,500,000,000 in 2019, while ECL EBITDA increased from around 276,000,000 dollars in 2017 to $535,000,000 in 2019. This means EBITDA almost doubled during the last 2 years in line with the guidance we provided. Net recurring income reached $244,000,000 in 2019, representing a 57% increase compared to previous year and net debt reduced to EUR 683,000,000 following the strong cash generation during the year. On Page 20, we present ECL supply curve, which is very useful to understand our results. As you can see, IEM also known formally now as TTM7 started operations around May and became the most efficient unit in our portfolio. CTA and CTH continue to operate as base load units for the system, while the rest of ICLC units are marginally dispatched, as you can see in the table on top of this page. And these trends will probably continue over the next year. On the other hand, our 2 combined cycles running with natural gas almost produced 2 terawatts hour, representing 17% of our contracted demand. Finally, ICL bought almost 50% of its contracted needs between the spot market and a supply agreement with other generation company. This means buying the spot market at a lower cost and producing with our less efficient coal units, which still act as a physical hedge to limit the production costs at a certain level. On Pages 21 and 22, we don't have yet any material additional news. We are just proud to mention our current portfolio has a 12 year average remaining life with regulated clients and top tier companies in the mining and other relevant industries. However, we can mention that we added several additional smaller PPAs with the B2B companies in 2018 2019, representing additional 0.3 terawatts hour during the last year. We can also mention that we continued with interesting and constructive conversation with the clients who still have a co link PPAs. And we definitely confirm that our intention and objective is to offer them a solution that should create value for both. So coming soon. Now let's talk about our projects and their status. On Page 24, we present the status of our asset rotation plan. 1st, in April 2019, we acquired 2 PV plants with combined capacity of 55 megawatts or $35,000,000 2nd, we launched the implementation phase of our first three renewable projects with a combined capacity of 3 62 megawatts Kalama Wind Farm with 151 Megawatts currently under construction and with expected COD on the Q2 of 2021. The main contractor for this project is Siemens Gamesa. Then Capricornio Solar PV Plant is also under construction. NTP was also granted last September and the COB is expected in the Q1 of 2021. The main contractors are described in the second bullet. And finally, the notice to proceed for Tamaya Solar PV is underway. We also estimate the COD of this additional solar project in the Q1 of 2021. This means by 2021, we should have almost completed half of the renewals we announced and in between, we should continue bringing other projects from our 2.2 gigawatts of projects under development to our ready to build stage. Now I am on Page 25. 1st, on transmission, we continue with the construction of 3 projects awarded back in 2018 with a total investment of approximately $40,000,000 In addition, and back in October 2019, we also participated in the latest auction to build additional regulated transmission lines. The results of this latest action will be disclosed next February by the authority. I want to confirm that we continue to be interested in this type of regulated transmission projects, but of course, at a certain minimum return. So let's cross fingers and wait until February to see. On Pages 2627, we show the main characteristics of our recently commissioned I'm unit and the new part. Both projects were developed on budget and at the expected performance. In the specific case of I'm there was a delay in the startup, which was compensated by the LDs, which are penalties negotiated with the EPC contractor. These penalties compensated the loss of profit during the month this unit was not available in our generation fleet. Let's talk some minutes about our financial competitiveness and the guidance for 2020. Please turn to Page 28. So last year, we reached the last phase of IAM's commissioning and Port Andino was already in operations. Hence, our CapEx financing needs considerably decreased releasing on balance sheet financing capacity. We will be able to finance our investment in renewable capacity through a mix of operating cash flow and additional debt, while keeping our leverage ratios under control. In 2019, we already invested $64,000,000 in our renewal plan, while in 2020, we expect to spend most of the CapEx need to complete the first three renewal projects currently under implementation. In this line, our net debt to EBITDA ratio should increase during 2020, following the additional debt we will raise to finance a portion of these needs. Also following our cash flows, we may be able to finance at least EUR 500,000,000 of new investment in renewal capacity through additional debt, while keeping our leverage ratio, as said before, under control. We need to consider that in 2020, we will have most of the negative impact related to the regulated tariff stabilization mechanism, Bernardino explained a few minutes ago, which will need to be financed by ICL until these long term receivables are collected in the future. Now in terms of guidance, please move to Page 29. As mentioned before, ICL delivered solid results in the last 2 years, reaching the high end to 2018 guidance and exceeding guidance for 2019. For 2020, we expect a slightly higher contracted demand compared to 2019, but a lower operational and recurrent EBITDA during the year, mainly explained by the termination of 1 PPA in the second half of the year, and we are also considering a more conservative average spot price for this guidance. When we compare the operational results of 2019 with 2020, we need to consider that in 2019, we received from IEM EPC contractor a EUR 75,000,000 compensation for the delay of startup, which corresponded to an operational loss of profit, but almost EUR 35,000,000 were related to the portion of revenues I'm was not able to generate in 2018, while the difference corresponds to 2019. This means the adjusted EBITDA for 2019 without the positive recognition of 2018 loss of profit could be around EUR 500,000,000. The lower EBITDA in our guidance for EUR 2020 is related to the variables I mentioned before. Basically, the end of an important PPA during the second half and a more conservative view on the spot price for the year. Then in 2021, ECL should be able to see a recovery in EBITDA once the 3 renewable projects are in operation since ICL will replace spot purchases at spot market prices by producing with these new units at almost zero cost. To the left side of this slide, we show the main variables that may impact our results depending on their behavior. Finally, regulatory changes such as green taxes or changes in ancillary services can always impact results. We also need to consider that the higher penetration of renewals in the system will need some future changes in the market design. Our own transformation is aligned with this and we will need to closely work with all the system actors on these required changes for the future. Once again, we are glad to confirm that our guidance was exceeded in 2019 and we remain committed to deliver positive results going forward. We'll now move to the next section. So I invite Bernardo Dita, who will invite who will give us more details on our financial results. Thank you, Eduardo. I'm on Slide 31. Our EBITDA advanced 42% to EUR 535,000,000 in 2019. As we will see, this was mainly a result of increased volume sales to distribution companies and also the liquidated damages paid by the IEM EPC contractor. So let's give a closer look to each of the bars of this chart. We will start with the blue ones that represent positive EBITDA variations. In 1st place, sales under the new PPA with distribution companies, which had a ramp up beginning 2019, reached to almost 3.1 terawatt hour and $402,000,000 in 2019. This increase in volume sales had a positive $158,000,000 impact on revenues. Then we also reported an increase in volume sales to free clients. In 3rd place, we reported lower fuel costs. This was because of 2 main reasons. 1 is that our generation decreased due among other reasons to the increased penetration of renewables in the system, plant maintenance schedules and outages, the frequent dispatch of coal plants at lower load factors and an increase in gas supply. So coal generation in particular dropped as compared to last year as it was affected by the delayed start up of the IEM project. In contrast, gas generation increased due to an increase in gas supply, particularly in June July, and because gas generation is better suited to cope with intermittency of renewable generation. The second reason for the $33,000,000 decrease in fuel costs is the drop in international coal prices. Our fuel costs could have decreased even further had it not been for the number of plant start ups to cope with the systems intermittency, which requires higher consumption of diesel. In next place, we had a $24,000,000 positive impact on EBITDA from several items, including an increase in spot sales from the recently acquired Solar PV plants and more importantly, an increase in transmission revenue, primarily resulting from re liquidations from past periods. In next place, we reported EUR 5,000,000 from lower operating, maintenance and administration costs. Then among the other positive factors, please note the $72,000,000 impact primarily explained by liquidated damages paid by the I'm project EPC contractor. As you know, the I'm project was committed to supply distribution companies, and this project was initially expected to begin commercial operations in July 2018, but it did not start commercial operations until May 2019. On the one hand, this meant that IEM failed to receive capacity payments over such period and on the other ECL's energy supply costs were higher than those it would have reported had I'm being in operation. This is because I'm is our lowest cost plant in our thermal fleet. The delay triggered the collection of liquidated damages as provided in the construction contract with the main contractor. Delayed liquidity damages are intended to compensate for lost income similar to the concept of business interruption used in the insurance industry. In this specific case, $74,900,000 of the liquidated damages paid by the EPC contractor went to our income statement. We recognized this amount in one shot in the Q2 of 2019, while we should have recognized roughly $35,000,000 in the second half of twenty $18,000,000 in the 1st 4 months of 2019, have the plant been in operations as originally planned. In this same bar, we also included a variation in other insurance compensation for business interruption. So this is why the $75,000,000 in liquidated damages plus a negative variation in insurance compensation resulted in the $72,000,000 dollars net positive impact on EBITDA. Then we have a very important here that shows $107,000,000 of a positive impact from the lower marginal costs or lower prices on energy purchases. As we have discussed, this is basically because of the interconnection of both systems, because of lower coal prices and because of the more abundant supply of gas, both LNG and Argentine gas. We will now comment on the gray bars, which corresponds to the negative effects. First of all, given the significant sales increase, which coincided with a decrease in our own generation, we reported higher physical energy purchases, which represented a $135,000,000 cost increase. 2nd, the contracted sales increase also required higher capacity purchases and also some unavailability of our own plants caused by both plant maintenance and outages of our power plant. The increase in the sufficiency capacity provisions had a $63,000,000 negative impact on EBITDA. 3rd, despite the heavier weight of the higher price regulated PPA distribution companies in the Southern segment of Essen, we reported a decrease in average realized prices, mainly due to lower fuel prices when compared to 2018 when coal and oil prices reached very high levels. Lower average realized prices had $125,000,000 negative impact on EBITDA. In sum, EBITDA increased by 42%, mainly because of an increase in volume sold, the liquidated damages paid by the I'm EPC contractor and the lower energy procurement cost per megawatt hour sold. Okay. Now please turn to Slide 32. At the center of the slide, we can see each of the after tax variations in net recurring income, which increased to $244,000,000 in 2019. The good news is that by far, the main variation is the after tax increase in EBITDA of EUR 116,000,000 which we just explained. Other non operating items, mainly the variation in insurance compensation for property damage and depreciation, had a $9,000,000 negative impact. And we also reported an increase in interest expense just because interest is to be capitalized following the completion of the IEM project. If we look outside the box to analyze nonrecurring impacts, we see how our net income was impacted in both periods by the impairments of the coal fired units that we have already closed or will close in the coming years. In 2018, the impairment of Units 1213 had a $52,000,000 after tax impact, while in 2019, the impairment of 4 coal units, it's $14,000,000 and $15,000,000 plus CTM 1 and 2 had a $134,000,000 net after tax impact. In Slide 33, we can appreciate a net debt reduction. In terms of uses of cash, capital expenditures amounted to 135,000,000 excluding capitalized interest, most of which most of these capital expenditures correspond to the final payments to the IEM project TPC contractor. In the next bar, we show the acquisition of the Los Lourdes and Andacollo solar PV plants, for which we paid $35,000,000 although we presented here net of the cash available at those companies at the moment of the acquisition. In next place, we paid $119,000,000 in dividends. This includes the $22,000,000 final dividend on account of 2018 earnings paid last May as well as $90,000,000 in provisional dividends on account of 2019 earnings. This bar also includes $8,000,000 in dividends paid to our partner in CPH. The next two bars correspond to factors that had a direct effect on debt balances, but had no effect on cash. So we have accrued interest, mark to market variations and the vehicles and land leases that were classified as financial leases following the implementation of IFRS 16. Finally, we paid $72,000,000 in income taxes and CO2 taxes in 2019. And in terms of our main sources of cash, we included in the gray bars, we have 2 basically, dollars 22,000,000 cash paid by 10 dollars and $569,000,000 in operating cash flow. This last number includes the $80,000,000 paid by the in liquidated damages by the IEM EPC contractor, of which almost $75,000,000 went to the income statement and the remaining $5,000,000 went to the balance sheet as a reduction in our fixed asset account. Now Slide 31 provides details of our liquidity and debt structure. So the main changes are the following. Thanks to the EBITDA growth and lower net debt. The net debt to EBITDA ratio has continued decreasing and is now at 1.3 times. And our gross debt remained almost flat because the addition of financial leases following the application of IFRS 16 was partially offset by a $10,000,000 reduction in our short term bank debt, which reached $80,000,000 as of the end of 2019. Now on Slide 32, we can see that we have increased the dividends paid, including the EUR 90,000,000 in provisional dividends to recognize the improved recurring income and the conclusion of a CapEx intensive phase. We are now positioning ourselves to finance the next investment phase, which will allow us to invest in renewables as we embark on our asset rotation plan. Our stock price evolution in 2019 shows that ECL's share price fell 4%, whereas the IPSA fell by 9%. Well, this is all on my side, and I will leave you with Eduardo to make the final remarks. Thank you. Well, to conclude the presentation, we just want to highlight 3 main messages for this year. First, that in the last 2 years, ICL delivered solid results, meeting on average the high end of the guidance we provided 2 years ago. 2nd, that we have entered into an important transformation phase, committing to close 6 core units between 2019 and 2024, building close to 1,000 megawatts of new renewals and that we should continue bringing other projects from our 2,000 megawatts of projects under development to our ready to build stage. And third, the development of our renewal portfolio will be key to optimize our supply cost, given our solid portfolio of PPAs, but will also be key to capture future additional demand and growth for ICL. So with this final message, we are concluding our 2019 Naolo presentation, yes. We hope the presentation was interesting and that we met your expectations. So thank you, and we are ready for any questions you may have for us. Thank you. The floor is now open for questions. The first question today comes from Andrew McCarthy with Citi. Please go ahead. Hi, good afternoon everyone. Thanks very much for the presentation and taking my questions. The first one was on the guidance for 2020, in particular, thinking about the EBITDA guidance of between $450,000,000 $470,000,000 Last year, obviously, you had the successful completion of IEM since the full interconnection of the transmission system has occurred, spot prices have come down. So I was just trying to understand better why for 2020 you're seeing pretty much flat sort of recurring EBITDA. Just be helpful to understand what areas in particular you may be conservative on there. I think you mentioned conservative view on spot prices. Just to get some more color on what you're thinking there would be really helpful. Hello, Andrew. Sure. There are two reasons. The first one is the end of Salibra PPA during the second half. So this will be a mechanic adjustment in our EBITDA. We will not have any more the PPA, so the margin. So we just need to multiply the price times the annual demand of this PPA. And the second one is related to the spot price. We have seen during the last quarter an important reduction in the spot price, but we need to consider that during 2019, I think the gas from Argentina increased very much flowing to the center mainly. We don't know what is going to happen in 2020. So as we probably explained before, there is a simple rule of thumb, every $5 lower or higher in the spot price could add around $15,000,000 to $20,000,000 in our EBITDA during the year. So what we are probably considering in this projection is a higher spot price than the one we have seen during the last two quarters, which probably is adding additional €15,000,000 to €20,000,000 costs, considering that we are still buying spot an important part of our contracted needs. Great. That's really helpful. Thank you. And just another question, if I may, on the CapEx. I see you've got almost or in the region of $300,000,000 CapEx for 2020. Within that, you've got $241,000,000 for renewables. Is that just for the projects you've announced that's now I. E, Calama, Tamaya, Capricornio? Are you also considering other projects there? And just related to that, how much to go up to your full sort of $1,000,000,000 investment plan for the additional 1 gigawatts. There you're saying you're going to get to about 2 times net debt EBITDA by the end of the year. How much additional room do you think you have there to add debt up to what net debt EBITDA level? It would be great to get some more thoughts around that. Well, in relation to the first question, yes, the CapEx that we are including is only related to these first three projects. From a communication point of view, as you can see, we are keeping 1 gigawatt, EUR 1,000,000,000. But if you make some calculations, you will realize that probably the amount will be lower. And this is something that should happen, thinking positively. But right now, we are still keeping this guidance. Then in relation to the net debt to EBITDA, how much room? I think we have enough room to finance half of what we already announced with additional debt. Our net debt today is below €700,000,000 and our EBITDA will be close to €500,000,000 if we want to keep our leverage ratio close to 2.25 times, then we still have room. If we want to temporarily increase it to 2.5 times, again, it's something that could be possible. Okay, great. And for the you mentioned that you see sort of I think if I understood correctly, so for the remaining CapEx of the let's say up to $1,000,000,000 half of that you could finance via debt. And so the other half would be from would just be from operating cash flow effectively? Sure. That's the, let's say, basic plan. We will see how to optimize this plan during the year. The main variable, which today is not, I mean something close will be if we are able to implement a factoring structure over the long term receivables coming from the stabilization fund. Got it. Okay, that's very clear. Thanks very much. The next question comes from John Grueck with ICM. Please go ahead. Hi, Eduardo. Thanks for the call. A couple of questions. Firstly, with the receivable, what do you expect it to be for 2020 at the current U. S. Dollar FX rate? And secondly, can we have a bit of guidance around dividends, please? You've talked about where you're comfortable leverage being. We know what your CapEx plans are. We know what your EBITDA is. So there is scope for additional dividend payouts. What are your thoughts on that? Thank you. Hello, sure. Well, during 2020, we should accumulate an important amount related to the stabilization fund. This amount will be dependent on the FX rates. As we explained during the presentation, as of December, we already have around EUR 73,000,000 in our balance sheet as long term receivables and we will probably have additional EUR 100,000,000 to EUR 150,000,000 during 2020. And that's why we were mentioning that this is an important variable to consider in relation to the cash flow generation during 2020. This is a one shot. This should only occur during 2020. And that's why unfortunately we are not ready to announce that we are planning to increase the dividend ratio. But our objective is to probably be at least close to 50% of our recurrent net income or that's a target that we would like to manage during the next year or the next 2 years at least. Considering that we are also implementing several projects at the same time and that other projects may be accelerated if we are awarded with additional PPAs or with new transmission lines following the auction that will be known by February. Okay. Thanks. Just coming back to stabilization fund, you say up around EUR 100,000,000 to EUR 150,000,000 But you said only in 2020. Surely, you're still accruing the receivable through 2021 as well. You've still got that gap right up till 2023. Yes. So during 2020, we will see an important portion. And then in 2021 2022, we'll see a smaller portion coming from the stabilization front. Okay. And it can only until July 2023 or when the fund reaches an amount of 1,300,000,000 to 5,000,000,000 dollars Then if that happens, then the PEC or the fixed price will have to increase or be adjusted so that the fund doesn't increase anymore. Okay. Thank you. This concludes the question and answer section. At this time, I would like to turn the floor back over to Andre Energia Chile for any closing remarks. Well, thank you very much for your participation and see you soon. Yes. Thank you all Thank you to have had this call for our year end 2019 results. Thank you. This concludes today's presentation. You may now disconnect your line at this time and have a nice day.