Gas Natural SDG SA CEO Discusses Q4 2010 Results - Earnings Call Transcript

Feb.22.11 | About: Gas Natural (GASNF)

Gas Natural SDG SA (OTCPK:GASNY) Q4 2010 Earnings Call February 22, 2011 11:00 AM ET


Luis Calvo – Head of Investor Relations

Rafael Villaseca Marco – Chief Executive Officer

Carlos J. Álvarez Fernández – Chief Financial Officer

Antonio Basolas Tena – Managing Director of Strategy and Development


Antonio Cruz – Banesto Bolsa S.A.

Pablo Cuadrado – Bank of America Merrill Lynch

Fernando Garcia – Bank Espirito Santo

Manuel Palomo – Citigroup

Alejandro Vigil – Cygnus Asset Management

Alberto Gandolfi – UBS

Bruno Silva – BPI

Javier Garrido – JP Morgan

Raimundo Fernandez – Cuesta Nomura

Javier Suarez – UniCredit

Jorge Alonso – Societe Generale

Jose Antonio Lopez – HSBC

Virginia Sanz De Madrid – Deutsche Bank

Anna Maria Scaglia – Credit Suisse

Luis Calvo

Good morning, welcome to the presentation of the Forth Quarter 2010 Results of Gas Natural Fenosa presented by Mr. Rafael Villaseca, our CEO, together with the CFO, Carlos Álvarez and the Director of Strategy and Development, Mr. Basolas.

After this presentation, we will have a Q&A session in the room and over the telephone or the internet by sending in questions that you can find or through our web page.

I will pass the floor to our CEO, Mr. Villaseca. Good morning.

Rafael Villaseca Marco

Good morning those of you who are here physically in the room and those that are listening to us on the Internet or the phone. It’s a pleasure to explain the results of fourth quarter of 2010. The five points on the agenda are, first of all the magnitude, the dimensions of the year, main issues, a summary of consolidated results and then we will analyze the pro forma analysis of our operations. And then we will reach after giving you information about the most important events. We will give you conclusions and then accept questions.

So if we start, allow me to tell you how satisfied we are, in spite of the fact that we’ve had a year that was, especially in Spain had difficult times and in we’ve been, times have been difficult and bearing in mind that the company has made to provision above, provisioned for risk. Our results have grown by 14%, our EBITDA 0.5 in terms of profits after taxes. This is relevant because in spite of the results of the arbitration with Sonatrach, not definite, the company have continued to develop to actions or due to things.

The first of which is to continue the ordinary recurrent provisioning operation which we had been doing since 2007 and also included another provisioning measure which together with other measures has given us €305 million in terms of net results. So we’ve got the provisioning that we had been doing and another provisioning operation which together with a positive amounts on the P&L account have resulted in €305 million as an impact.

We’re going to be conservative in terms of in the, face of uncertainty. Our investments have gone down by 17% and the net debt has also gone down by about 16%, 17%. We’re going to look at these in further detail later.

Let’s go into the main issues. First of all, we’re going to talk about the update on Sonatrach gas contract arbitration process and we will talk about the energy business. Then we will talk about the mix of activities and we will look at regulated, of course our regulated activities. And we will talk about strengthening of the balance sheet and our financial structure and then we will talk about shareholder remuneration.

So as you see and except for the novelty of the Algerian issue, we have continued along the lines that we announced in the, continues to be, include our priorities as they are.

Let's update the situation with Sonatrach. You know that this process is affecting two contracts for 9 bcm’s about one third of our supply portfolio and it has to do with, while the arbitration “International Chamber of Commerce” ruled in August that is, gave a ruling that is to subject to certain issues Gas Natural understood and continues to understand that this is not right. It's not fair and put in a claim against this to defend its interests within the possibilities of the contract and the law.

And I have to say in that respect as we know that we presented, we appealed to the Swiss Federal Court, a stay of execution was granted and we also opened up the price revision for both contracts. We asked for price review or revision for both contracts, which would have retroactive effects and we have done something obvious. We've defended based on what was contemplated in the contract and in the law what we have been able to do.

And another thing and we hope that this will be successful, we've initiated negotiations with Sonatrach in order to reach general agreement that puts an end these discrepancies. We hope that that happens in the near future and we can solve this matter, but these legal proceedings continue and those so as I said negotiations that we hope will put an end to this. We have to say that the effects of the ruling are still uncertain or definite both because of the negotiations that we have now and the legal actions that we’ve started.

As regard to the impact on our accounts, on our P&L account, I have to say that the coverage of those contingencies, potential contingencies while those contingencies have been covered in three different ways it should be fully incorporated into our accounts for last year, the three procedures. The first one is the pass through. Some contracts with some customers specify clearly Sagane I and II contracts will be carried and included and covered automatically.

We also have provisions that we've been putting aside since 2007. We've been provisioning reasonably in order to have the amount that we might need to face the contingencies that arise. We’ve continued to do that and we will until the end of the process.

And as I said at the beginning we got a complimentary, an additional provision for the end of this year 2010 up to €305 million. So we got the ordinary provisions and then the extraordinary provision to cover the Sagane Sonatrach arbitration process, which together with other positive provisioning has allowed us to have €305 million ready.

But in spite of that we have no doubt that on the one hand if we look at the legal situation of all the procedures that are ongoing and if we also look at the negotiations with Sonatrach, we believe that we have adequately covered all the risks. And therefore we have calculated the impact of all this and we feel reasonably protected against any final result which might have an impact on us.

These estimation and calculations and provisions are part of our accounts and they have been audited by PricewaterhouseCooper without any adverse results and we therefore come through a very difficult year for the economy in general and at the same time we’ve also been able to cover the risks associated with this operation which are still pending legal results and negotiations that we’re having with Sonatrach in order to solve these problems that we’ve had for so many years with Sonatrach.

As regards the business of energy, I have to say that its behavior has been good especially if you compared with 2009, the two most relevant events have been the market has grown and 2010 growth has been 3.2% which really compares positively to the situation of the economy.

Gas demand has been flat. There has been a negative growth of 0.3%, but the convention and residential markets had a positive behavior and an increase of 10%. Markets have not yet fully recovered especially the gas market but the electric market has covered an important part of the, or made up for the terrible situation of 2009 and has gone into positive growth.

As regards the electricity business, our hedging exposure to our electricity business in Spain, volatility of prices due to the increase of generation has been very significant and this has led to oscillations of the electric pool, but thanks to our hedging policy which is being almost 100% has allowed us to cover and hedge this situation reasonably using the portfolio of customers and the other ones through the provisioning our supply contracts that we have associate for gas in association with electricity production.

This status continued to support wholesale and retail electricity operation and we’ve had a success with our electricity supply business through contracted and industrial portfolio which grew 1% to 23,800 GWh/year in residential customer and small industries.

They are 4 million customers and we have to say that, there has been a change in the regulation with the development of their Royal Decree 14 of 2010 which goes significantly into solving or contributes to solving the problem of the tariff deficit which has two aspects, securitization of the debt and there has been two separate securitization processes but we also want to prevent this black hole of the electric system from getting bigger.

We’ve applied through these Royal Decree, two measures have been applied. One this is the realistic approach to tariffs which have increased and the second one is the realistic approach to subsidies for renewable energies which as you’ve probably seen from recent figures that have been published reached €7 billion last year.

The main reason being or that was the main reason for the instability or imbalance in the last four, five years. So that's good news in terms of approaching the tariff deficit problem.

As regards energy, the Energy Business we have to say that we’ve continued to have expansion policy to being flexible and be able to move on different markets and we’ve secured sales, gas sales on International markets. In order to do that, we’ve signed very significant medium-term contracts with companies like Électricité de France and Gaz de France Suez to take our gas outside to important markets.

We’ve increased our portfolio of customers in France. We started supplying Italian customers with our own gas and we have started up marketing operations in Belgium. And we can re-gasify the plants of Montoire and Panigaglia. And our idea is to increase our ability to trade with gas and to have coverage on international markets.

In contrast with other significant European companies we haven't made use of take-or-pay clauses. We didn’t do it in 2009 and we haven't done in 2010. It has to do with our commercial flexibility and our logistic flexibility. The pipeline of the North of Africa has worked at 67% of its capacity and our fleet has work to 100% capacity. That means that last year, if we add the activity of our branch Unión Fenosa Gas with [Aleni] is added to our own activity, our group becomes the third largest world operator in the LNF, liquid natural gas.

In terms of the breakdown on the EBITDA, 73% of the EBITDA of the group is regulated or quasi-regulated, but in addition to that, these are regulated or quasi-regulated activities that have a good high potential for organic growth and a great degree of geographic diversification.

It is also important to say that 66% is nominated in euro and it has high-growth potential, especially organic growth for gas production especially in Latin America and evidence of this is the EBITDA of this business increased about 13% particularly in Latin America were the increase was 22%.

If this 13%, if we discount it via effective exchange rates, it would become 9% which is still considerable and increasing. So we are very happy with our business mix. We have seen that it resists times of crisis and this is a very solid base for future growth.

Now with regards to our regulated business and quasi-regulated business in Latin America, let me tell you that we still have high operational standards. And the growth has been very significant.

To start within Latin America, we grew by 6% in the number of supply points for gas and electricity, which have reached the figure of €10 million. And this is going to be the basis of our future development. Also the growth in electricity sales especially in Colombia and the Caribbean, so the whole of Latin America has also approached 6% and have also increased by own third of generation capacity in Mexico on the basis of the PTI procedure by implementing the Durango combined cycle system.

Now turning to the strengthening of our balance sheet, let me tell you that we have a lowered our investment figure, which is going down by 18% with respect to the previous year and this is because of several reasons.

First of all, because of the smaller size of our distribution network in Spain, because of their divestiture process and also because of the slowdown of growth to because of the crisis situation and also and we have finalized three very important purchase and for new projects we are implementing a very careful policy with shorter payback terms.

Now, regarding divestitures let me tell you that according to plan, in 2010, we completed asset disposals totaling 4.1 million euros, out of which the majority has already been collected. These were non-strategic assets. But we managed to sell them to attractive prices with significant capital gains. We should mention gas commercialization distribution assets in Madrid, Cantabria, and Murcia, which we have sold.

Now, as regard to the office trading, we came to an agreement to modify the asset mix that we had to have regarding gas. And so now, we still had to sell 300,000 gas connection points, which sales have already being performed. And also the transaction will be completed once the regulatory approvals are obtained. We hope that divestitures can be completed without an economic impact on our balance sheet as we said before.

With regards to sales of gas connection points, we have sold these 300 gas connection points for €450 million euros with capital gains of 250 million. So we're about to complete all our commitments with the Office of Fair Trading and we have done this with significant capital gains.

Now, in terms of the strengthening of our balance sheet, let me tell you that securitisation of tariff deficit is an important measure for us and it favors the strengthening of our balance sheet. The sector for the securitisation, the sector has already given quite a bit of money, 16.5 billion particularly and the breakdown is shown on the slide, we should mention that after the law was passed, the capital of the Kingdom of Spain is of 22 million, so we’ve recovered the amount needed to put an end to this problem.

You also know that in January and February, we already undertook two securitisation process of two tranches, which made it possible for Gas Natural Fenosa to obtain 448 million. So these are the consequences of this policy to tackle the situation of the tariff deficit. We are convinced that the government or the Ministry of Industry also are willing to cooperate because this was a very big problem for the industry.

Now, we have also significantly reduced our borrowing levels. We had a debt of €20.9 million, but now the figure is 17.4 million. So this means that we have now added by 17% without counting the additional €450 million coming from the sale of the gas connection points I mentioned before. If we count that, the borrowing ratio is 56.6%, so we are complying with our turn and we are still, as I say on track with our strategic plan, which is still our priority.

Now this is the majority schedule for adjusted net debt and we are very happy because over 60% of our debt matures as from 2015 and the amount that you can see for the immediate years are easy to manage for our company and they don't pose any relevant problems. The average life of our debt is close to five years. We have liquid availability enough to cover our financial needs for two years, if we had no additional income. This allows us to act on the market, so we can place instruments on the market.

Now, in terms of our shareholder remuneration, as I was saying before and after having made a typical provision of 305 million before tax, which would fall within EBITDA. I can tell you that all the provisions for Sonatrach are included in the provisioning chapter, so they directly affect EBITDA. And I’d like to say that the net profit has grown by 0.5% as I said before and the remuneration that we are going to propose to the AGM is inline with this.

Our approach is that the sum total of remuneration to the shareholder should be over €737 million which will entail an increase of 1% vis-à-vis the dividend of the previous year and this entails a payout of 61.4%. This is equivalent to €0.8 per share. Now the new changes of this637 million of this €0.8 per share, 324 have been given as an interim dividend and the remainder will be paid to the shareholder through the mechanism of this quick dividend.

This means that as you will know that the shareholder can either get this amount in cash or they can get the money, they get this money in shares, which is advantageous for them from a fiscal point of view. So if this is approved by the AGM, the shareholder can get his supplementary dividend which will be 413 through a mechanism of liberated capital increase.

So the shareholders may join this increase or sell his/her rights to the company and get the money in cash. So the shareholder may just sell those rise which would bought by the company or they could receive part of that in shares, which would entail a very good thing, both from an economic and a fiscal point of view, as the company did this last year in Spain very successfully and we hope that this can also be successful in newer case.

Now if we now talk about consolidated results, you have the P&L here on this slide. This includes the provisions both the ordinary provision and the atypical 305 million provision, I mentioned before and these accounts incorporates the consolidated figures for Unión Fenosa from April 2009.

Gross margin and EBITDA increased by 16% and 14% respectively. The asset disposal give us the capital gain of €370 million and with respect to the previous year we have a higher borrowing level. So we have higher financial costs. The net income is of €1.2 billion which entails an increase of 0.5% after having made our ordinary and extraordinary provisions to cover our Algeria problem.

Now let me tell you we have said this that at the end of day we could say that, well we could of course compare the two financial years and to, and there is a non-recurrent and atypical provision of €305 million which incorporates significant amount to make significant provision for Algeria and other positive figures which means that the net value is €305 million.

Now with regard to investments, they have fall in as I said before to €1.5 billion because of the reasons I mentioned before. There is the crisis, the expansion of the network is not expanding so much and then we see significant purchase for electrical stations came to an end but investments in gas distribution accounted for 54%.

Electrical business accounted for 24%. It went down because of the completion of the three projects I mentioned before and finally investments in Latin America fundamentally corresponds to combined cycles in Durango, which was implemented a few months ago very successfully in Mexico.

Now the bottom thing is that at the end of the last year, our net debt was of €19.3 billion including 50% of the debt of Eufer which is a renewable energy company we had. Now if you apply to the tariff reduction which is now being securitized and the €200 million which have to disposed off, we will have a net debt of €17.4 billion which gives us a leverage of 57.3% or multiplier net debt of EBITDA of 3.9 times.

Another analysis of our borrowing levels allows us to say that 72% of our debt is at a fixed rate at extraordinarily competitive levels. We are extremely happy about this situation. 81% of our debt is in euro and our presence in capital markets is already 45% over our net financial debt.

Now if we now talk about the pro forma analysis, we can see that we need to make two adjustments. In the adjustment for 2009, we need to incorporate while from January to April the figures for Union Fenosa, so adding €718 million. And in the accounts of 2010, this is the EBITDA, we have to add €305 million which is the extraordinary provision, the non-recurrent provision that we have made especially for the Algeria problems. So we have to compare to EBITDA in 2009, 4.5 billion and in 2010, 4.7. If we compare the figures, business-by-business you can see that there was a growth of 6%.

We are satisfied and given the situation of the world economy and the Spanish economy, growth of 6% in our ordinary business pro forma is satisfactory. Now the distribution of electricity and gas in Europe has given us an increases of 12% and 9% respectively, EBITDA of electricity business went down by 7% because of the situation of Spain, where EBITDA fell by 10%.

Now the gas activity which includes Unión Fenosa gas had a fall of 1% and so the change was not very significant and this is because the retail segment in the first quarter of the year and because there was a poorer market mix throughout 2010. EBITDA in Latin America grew by 22% basically because of gas and electricity distribution which had a growth of 25% and 18% respectively. So we therefore would have a pro forma EBITDA of €4.7 billion, which is 6.2% more. So if you deduct, you have deduct 305 million for provisions which will give you the figure of €4.5 billion.

Now if we consider the distribution in Europe, you can see that the EBITDA was 62 million and also government already brought up to date several things and after the authorities gave their approval, these figures were brought up to date. You can see the figures, you can see the regulatory tariff for July last year. And so this means that tariff based energy practically came to an end. And there is also a recovery of the amount 3.2% with respect to the full of last year.

We still have operational efficiencies and the synergies that we also announced in the plan not only in the acquisition process but also in the strategic plan of being fulfilled to the later and these efficiencies together with remuneration allowed us to have very good results.

Regarding gas distribution in Europe, basically in Spain and Italy as you can see we have reached an EBITDA of €985 million. You can see here the impact derived from the disposal of assets in 2009 and 2010. Sales grew by 4% because of the winter temperature.

And in spite of the descend of the housing construction in Spain we still had many new gas connection points and this makes us very happy because of the mix of very bad real estate prices we’re still increasing the number of gas connections points. The figure is 1.5%. And also, we have increased the length of the network because Spain is still not classified in terms of the European standards and so we still have room to grow.

Regarding electricity as I was saying, the environment was very, very complex. There was an increase in demand which is very positive but unfortunately there was a reduction in the pool prices because of the higher production with the hydro and renewable technology which can all be managed and so the pool was very volatile. The average price was 38, the similar level to the previous year.

So the production of our Group increased by approximately 1.5% and it is important to highlight that our combined generation capacity reached loading factor of 40% because of our efficiency both in operational terms and gas provisioning and this is now new because we have been focusing our energies on this market. We have planned to integrate gas and electricity and that’s why we have a loading factor of 40%, which is much higher than the Spanish average.

We participated in different markets and in a very balanced way and well, we didn’t have any fluctuations regarding this special regime. It was a very good news, we grew by 12%, fundamentally 10% because of a high production of wind energy and over 50% in hydro energy. We had an increase of 19 megawatts and we have 158 megawatts in terms of installed power but let me add the score to things.

In different stages of development in 2010, we had in Spain 500 megawatts in power for development and abroad we had [12,000]. And in 2010 in the different competitions of Canary Island, Galicia et cetera and 1000 megawatts of wind power and this is over and above what others did so in Greenfield projects we managed to achieve a good capacity for future years in terms of wind energy in these three regions Canary Island, Catalonia and Galicia, northwest of Spain.

Regarding gas infrastructures, the amount of gas through the Maghreb pipeline was very similar with 86% use of the pipeline. We didn’t have subcontracting of methane tankers because we used our logistic capacity for this. Unión Fenosa gas maintained operational parameters. Of course it is true that there was maintenance stoppage and then the recent crisis of Egypt has most affected our Damietta plant which has operated normally to-date and the Sagunto plant worked at 14% lower performance but the whole of the infrastructure business in gas grew by 8% in EBITDA vis-à-vis the previous year.

Now as regards to the strictly gas business for gas supply, we have had a growth as you can see here of 8.3%, which can be broken down into 9% of growth in provisioning to the Spanish market, a 6% increase in retail outside Spain.

Sales to the Spanish market grew by 13% in residential demand because of the low temperatures and in the industrial segment; we are defending our supply share of 41%. Sales at combined cycles increased by 2.5% whereas sales to foreign markets increased by 6%.

Now with regard to Unión Fenosa gas, sales to the Spanish market grew by 14% and there was a very sharp growth in trading activities outside Spain although margins were not really significant. All of the EBITDA of this business reached €520 million. This was a forward aspect to previous year of 3% because of the lower margins of residential supply.

Regarding Latin America in terms of electrical generation, we grew by 7%, the generated electricity and this was because of their 450 megawatts of Durango. EBITDA reached €263 million, which is 20% higher.

Now with regards to distribution of gas in Latin America, we already reached 5.7 million of gas connection points and EBITDA grew by 25%. Without any shade of a doubt, parity between the U.S. dollar and the euro helped in this situation. Sales of gas grew in volume by 19%. Of course we should mention the cases of Brazil and Colombia but also the very significant growth in Mexico and our star project, the gasification of Mexico D.F.

Now regarding the electrical distribution Latin America we are at 5 million customers with EBIDA of €390 million which entails a growth of 18%. Sales grew by 6% and we are permanently improving operational alliance which should allow us to keep walking down this successful track. And before I turn over to your questions let me make a brief summary of the situation.

We have reached EBITDA which is 14% higher and the net income of 0.5% higher in spite of the fact that we have provisioned not only our, this recurrent among for Sonatrach but also an atypical provision of €305 million.

Shareholder remuneration was 1%, had a 1% increase and as I said they can get a part of their remuneration shared. We have a stronger capital structure and the asset disposal program is now coming to an end and it has been completed very fast and at very good prices.

So we are strongly committed to achieve sustained growth contemplated in our strategic plan. 2010 obviously was not a year where we can say that we excelled in our figures, but it was a very difficult year for our economies in general and for Gas Natural in particular, but this does mean that we will forego our goal of achieving the goals in our strategic plans. Thank you.

Question-and-Answer Session


So we will now go on to the question-and-answer session. Let’s begin by the questions from the room. So please identify yourselves with your name and the institution you represent.

Antonio Cruz – Banesto Bolsa S.A.

Hello. Good morning Antonio Cruz from Banesto Bolsa. Hello. Good morning. And regarding the provisions of 2010 for Sonatrach, we have €305 million, which is a gross figure. Now, this would be compared with that first impact in the worst-case scenario you were mentioning in the statement of October 2010 when you were saying that it could have an impact of 400 and this problem with the area could have a problem of €450.

So I would like to confirm that because you have provisioned 200 odd million net and you were anticipating €450 million. So I wonder whether this would cover all the risks possible. Now, you're also considering a worst-case scenario of an impact in EBITDA of €110 million for 2012, €450 million in EBITDA in 2012.

So I just wanted to ask you whether, given that your estimation, your most reasonable estimations are already below this worst-case scenario, I want to ask you whether this worst-case scenario could be reduced? And then regarding the consolidation of 50% of Eufer, I thought that in the past you were already consolidating this 50% of Eufer. After this impact of the net debt, I understand that this was not very significant with respect to the previous debt.

Carlos J. Álvarez Fernández

Let me take the last question which is now going to be easy to explain in accountancy terms. Well because of the decision made to separate the assets of Eufer when in terms of the headings for Eufer you have some heading that have to do that of course available for sale.

So since this headings appear then this had it’s consequences in our accounting. So what we did is to add all of these figures so that they are part of the debt of the group. So you said that it has changed but the thing is that it’s classified in different heading and when the debt is computed we don't want to cheat anybody. So I mean the fact that we have removed from heading does not mean that we are taking stock of it

Now regarding the amounts when we made this presentation in October 1, last year, we’ve manifested a maximum impact of Sonatrach for 2010 for all counts as it is, including the covenant accounts one so €450 million after tax when estimation the strategic plan that the maximum effect would be of €400 million EBITDA for 2010.

For 2012, this was but this was a top of reference that we had then. Now what we did in 2010 in the first place as the CEO mentioned is we well in the past we have been making the recovering provisions mentioned for Sonatrach which is part of the covenant cost of gas which we are still going to be making in the next three years just as an estimations that we have made.

Now this estimation because of retroactive effects, taken into account the provisions established, the repercussion on the customers and the situation of negotiations we made an additional provision which is another €305 million.

We say that €305 million is a net effect so it's higher than €305 million, but of course we have to respect the confidentiality so we can’t break it down. And this is what we’ve said and this is what – but we can't really give you the exact figures because in terms of the Accountancy Standards we can't break them down because this could harm our negotiation process vis-à-vis Sonatrach.

And this has shown not only because that our, the litigation but also because we are having negotiations which will be completely successful if we are sure which when we say that, impression is that figures are very unfair and we don't have any doubt about it especially taken into account the current situation of the market, I’m sure that the negotiations will be concluded successfully so that in the future everything can be normalized. So we have acted prudently and with a certain...

But we have been really very bold in our provisions and our older provisions have also been maintained. We are convinced that in the current situation as you can see the situation is easy but I’m sure that we will be able to solve this problem with Sonatrach in short period of time.

Now to conclude this answer so where we have discounted that €305 million that will be the additional provision in the EBITDA for gas supply, we would have recurrent provisions for the amounts that have been estimated and this is what we will be doing in successive years.

Pablo Cuadrado – Bank of America Merrill Lynch

Hello, good morning. I'm Pablo Cuadrado from Bank of America Merrill Lynch. I have several questions. The first one is about Sonatrach. I think you explained this quite well. Could you give us an idea of the timing you expect for these negotiations?

I believe that everything may be linked to the decisions of the Appeal Court in Switzerland. So what is your perspective as to when the final resolution should be declared? Do you think that it could probably happen at the end of this half year or not? And then regarding the dividend, I have another question on the script modality, as mentioned. As you were saying, that's not new in the industry. But this does represent a change from the strategic plan. Should we consider then for the future there will be an implicit change in dividends in terms of the growth in net profit?

Or do you still keep the prospect and the, this problem with Sonatrach is sold, you can restore this growth of 10% a year. Now regarding the liberalized electrical business in Spain, as you said, there are a few measures were introduced at the end of December regarding deficit, distribution, et cetera. And I would be interested in knowing about liberalization and electrical generation with the new energetic efficiency measures and the new generation rate and the new capacity payments.

Could you give us the forecast for the impacts for your generation portfolio of 2011 vis-a-vis 2010, which may have a positive impact perhaps?

Rafael Villaseca Marco

Well, as regards the first question it is not easy to specify timings because all of these issues are really very particular. But it is true that the first half year of this year could be a reasonable horizon to have completed these negotiations with Sonatrach. But of course, negotiations go on one side.

And the activities in the course of justice follow their own course. But the ideal thing would be to solve all these problems at the negotiation table. But it's difficult to say when a solution can be expected. Yes, but I think that the first half of this year should be a reasonable time horizon. But of course, I can't tell you for sure because there's no established schedule for this.

Now as regards the dividends, no, there's no change in our dividend policy. I will go into the strategic plan was accumulative, it was annual. And so we are working to maintain that goal. And so we have nothing to do, some modification in our strategic plan at all. In 2010, we had our reasons to introduce these changes. But that's it. Now regarding generation, a series of expectations have been opened in terms of the reorganization of the electrical sector. And we are very happy because the government has really put its foot down and has really decided to take the bull by the horns. We're still in the talk about how certain things are going to be organized.

And there's a sub commission in the Spanish Parliament that mentioned that it was important to remunerate that power guarantee, because combined cycles must be render in this service to guarantee that there's no blackout. And so that has been recognized already. And of course, it needs to be developed. So we're still waiting. We're still waiting to see. And now if you understand, it has to do with being rigorous and making generation instruments competitive.

It's important because combined cycles are going to require further investments, because we need more stations. But even if this was not the case, then need for them to access a backup to the system is paramount. And so this means that the corresponding remuneration needs to be reconsidered in the short term.

And we're convinced that it is going to happen in order to recognize these investments, which are the first source of electrical energy production in Spain. And we guarantee that there's no blackout and also the combined cycles will have to be increased in the future. And so all of this may sound optimistic in the sense that the remuneration has to be reasonable if those fundamental goals are to be achieved. Any further question from the floor?

Fernando Garcia – Bank Espirito Santo

Fernando Garcia from Bank Espirito Santo. The provision endowments are of 238 million. Does this include some effect of the Sonatrach problem? Or do you think, or is this going to be a recurrent figure in the future? Another question is about electrical distribution. There is a one-off effect of €35 million. I understand that approximately half of that would have to do with the effect of 2009 and a half to the effect of 2010.

Carlos J. Álvarez Fernández

No, 35 million is all for 2009. And as for your first question, the provisions have to do with bad debt. So the increase, well if you look at the previous years, the figures have consolidated. You just have these four months missing for Unión Fenosa. And this year, I believe that we have had a significant increase in sales in the area of Latin America, especially in the Caribbean Sea.

And so sales have increased in proportionately. We just increased the bad debt provisions. So this is parallel to the increase in sales. You know that our criterion is to adopt. So we would just make provisions for anything that is overdued, which had been overdue for more than six months. So that has been our policy here in the Group. It's like an automatic provision.

But I think the CEO mentioned the provisions recurrent and non recurrent provisions are incorporated in the – at the level of EBITDA and at the level of the margin, except for some minor effect, which might have been contemplated as a financial expense, for example, a real interest that might have to be paid eventually. But this is not really relevant.

Manuel Palomo – Citigroup

Good morning. Manuel Palomo from Citigroup. I have a couple of questions. The first one is – well you said you were happy about the decision of the government regarding tariffs and the curtailment of renewable energies. So do you think that from now on you would have – you would only have increases in access tariff, because two of the big headings that have been introduced to cut down the renewables come back in 2013 and 2012.

So my question is whether you expect in some way or another this coming back of these costs will also be paid by access tariffs. And I would also like to know if you could tell us beyond 2012 whether you expect any measures for regulation of renewable energies that may be important.

And the second question has to do with the goals of the company. In its strategic plan, the company gave EBITDA, debt, and dividend goals. After today's conference call, it seems that you do not really know that you can get – reach those goals in spite of what may happen with Sonatrach. But nevertheless, my question is, supposing the decision of Sonatrach is negative for the Company, if you had to forgo one of these goals, which of the three would you forgo? Would you give a priority to any of them?

Rafael Villaseca Marco

Well, first of all, the cutback of the law on sun power, there's a limitation in terms of the hours. And that has to do with our limitation. And I think that, in the end, I think that the special regime has been 7 billion euros this year. There are two alternatives. Either they're cut back, or they're increased. The government has done both. They've also looked at other – taken money from other areas. But the big lines or vectors that are going to be used for the redistribution of the sector are in place. There's not much more to say about this.

To the extent that the renewable energy policy continues to grow, it's going to be slowed down slightly, I think. It will lead to tariff increases. And if not, there'll be a mix. I don't know what other solution there might be. The government seems to want to do a mix. It seems reasonable. But first of all, the idea which should be not to generate a deficit and secondly not to increase the tariff. So I think that the puzzle really is not many more pieces of the jigsaw puzzle left to put in the puzzle so the objectives that we considered in the strategic plan. We think we can achieve them.

We don't think that it's possible to extrapolate the situation as regards the Sonatrach arbitration because in the worst of cases – and we've told the market, it should also be brought in mind that we're going to have an ordinary revision or review of prices. It's obvious that in the situation of the world and Spain in particular for '10, '11, '12 is completely different from the situation in '07, '08, '09. So there is a situation that will have to reach reasonable levels and figures because the ones that are contemplated now have got nothing to do with the current situation.

Alejandro Vigil – Cygnus Asset Management

Hi, good morning. I'm Alejandro Vigil from Cygnus Asset Management. I have some questions, one, about Sonatrach. The media are talking about many different options in case that the payment should be made offer assets, shares. What can you tell us about this? And then the second question is about, I know that you don't give guidance, but what’s this year going to, what does it look like for the company especially in liberalized businesses, whatever you can say about gas and electricity?

Rafael Villaseca Marco

Good. First of all, to say that Gas Natural Fenosa has not offered Sonatrach a share in our company to pay for the amount and it's not received an offer from Sonatrach. So we're not going to obviously comment about the details of the negotiations, but that should be made clear. In terms of the perspectives in 2011, we can say a few things. The gas and electricity demands will be about 1%, we think. And we believe that there'll be slight growth that can be estimated to be at about 1%.

We don't think that the gas market margins are going to get much worse. We're not very optimistic in terms of growth. But we don't think that the margins will get any worse. And they'll be right about 1%. And we hope to follow the expectations of the strategic plan and the different businesses that we have will be between 3% and 4%, electric business about 1% of growth. We reported that we’ll be above 50 after a year of high volatility, because of the high level of wind energy and hydroelectricity, hydraulic energy.

And as regards to bottom line results, you should remember that we won't have so many extraordinary items this year as last year. But that's what we can say about this year. Anymore questions in the room?

Unidentified Analyst

Hello, good morning. I’m from Caja Madrid. I would like to know about divestments. You were talking about €1.5 billion for the [Alpesa] network, the cycles, combined cycle plants. There's been changes. You've sold some things. Are you going to sell anything else?

Rafael Villaseca Marco

We’ve Arubal and the second combined cycle in Plana del Vent, so that’s it. I’ll turn to Antonio, whether you want to say anything.

Antonio Brufau Niubó

In terms of strategic plan, we said that some sales were pending about €1 billion, €1.5 billion in addition to the initial plan included all the assets of CNC where we hadn’t signed the contract. So that includes Plana del Vent, but not the rest of the combined cycle plants. And then €1 billion, €1.5 billion included the divestment in CNC and some in the portfolio management divestment. So the €450 million in distribution of gas in Madrid would be part of that package plus the future sale of Aruba would be within that package of €1 billion, €1.5 billion plus.

Other things, the sale of gas have gone on minor sales. Anymore questions in the room? Good, so we will go to the questions from telephone questions. In Spanish first, the first question please.


Good morning. The first question is by Mr. Alberto Gandolfi from UBS.

Alberto Gandolfi – UBS

Good morning, everyone. My name is Alberto Gandolfi. I've got four questions. First of all, if we talk about EBITDA, the EBITDA that you've reported is €4,477 million. Can you please tell us a little about the EBITDA? What would you done to consolidate assets in 2011? What's the EBITDA? What about the assets that were not included in the consolidation?

And the consensus is at 4.5 for the next year. Do you think that this is a comfortable figure, the EBITDA €4 million or not? Second question, given the coverage or hedging in the wholesale and retail business, I was thinking about a pressure on the margins in 2011, as other companies are saying in the same business, very low generation price, low competitive gas.

Can you tell us about the coverage for 2011 in the wholesale and retail business? The same question for generation, what's your spot spread achieved for 2010? What's the spot spread, like-for-like spot spread for 2011? And finally, could you tell us something about volatile issues, like taxes, that have a very low rate in 2010 and amortization? Thank you.

Rafael Villaseca Marco

Well, Carlos?

Carlos J. Álvarez Fernández

The easiest is the second one. We don't give guidance on EBITDA so I think we've given indications of what we foresee. We have seen foreseen moderate increases, margins. This investment will I think that we want to, the effects of this investment we going to try and make as little to reduce their impact as much as possible, and it will depend on the assets in Madrid, the divestment will affect as more in terms of EBITDA.

And as regard the other things there is no additional divestment foreseen for 2011, and what's being done in 2010 I think the effect is not too large. It’s less than a 100 million. So, this EBITDA is contemplated in 2010 because the assets that have been sold and that won’t be recurrent. And the last question, as regard to the last question we're going to keep them right as 20 for ’09 I think now something similar to that would be, what we have for next year. That will have a lot to do with the regulatory asset sale and that will allow us to have a tax rate which is lower, which with all other thing, everything else this is a situation whatever below 30, and more or less the same as the previous year.

And in the amortization the idea would be to continue with the logical increase as a result of the investments we are going to make. So amortization is going to increase as a result in the investments in the previous year. They are not going to go down because the amount, the total amount amortized is not that high.

Antonio Basolas Tena

Yes, in 2011 there is going to be an increase probably of the full process with regards to 2010. So there is probably there will be slightly smaller margins, but we are trying to optimize generation and gas supply to generation together with marketing and trading and maximizing the margin.

Luis Calvo

Good, next question.


The next question is from Mr. Bruno Silva of CPI.

Bruno Silva – BPI

Good morning. I've got a couple of questions, the first one with regards dividends. Have you got any commitment from your shareholders, main shareholders to not exercise the option as regards dividends? And the second one, in terms of renewables, what you've made in Galicia, what's the frame in terms of remuneration for gigawatts? Are you going to continue with that? And the final question, can you confirm, I don't know whether you've answered but I didn't hear anyway, the coverage of liberalized generation in Spain. What would be the output that is covered and at what price?

Rafael Villaseca Marco

Good. As regards the first question, the shareholders will decide what they think fit. We hope that the offer is good and that it is well accepted. We haven't had any confirmation logically until now. But we hope that the offer will be accepted well and will cover this price. We're going to see what happens. As regards the next question, you can answer yes in terms of the renewables in Galicia and Catalonia. We are looking at the different parts and plants that we've been given. And we're going to see what the regulation is after 2012 in order to make our investments accordingly.

In terms of generation, we've got two mechanisms basically. One is contracts of gas that are port indexed and the others are contracts with customers to have a position of 100% coverage of generation. We hope to achieve a similar objective for 2011 maybe for 2012 be practically below initially and then we can say that if we look at both mechanisms, we get about 90% balance. The final price more than €50 of megawatt.

Luis Calvo

Good. Next question?


The next question is from Mr. Javier Garrido from JP Morgan.

Javier Garrido – JP Morgan

Hello. Good morning. I've got two questions. The first one is about provisions and what we expect to (Foreign Language) provisions that we expect will have an effect, but what's the amount that will come through negotiations with other customers in terms of pass-through contract with Sagane? That's the first question. And the second question is very much detailed. In 2010, in the business of gas distribution, what outage have you considered in terms of the accounts? The 47% that's concentrated in the tariff and for the true-out gauge?

Rafael Villaseca Marco

Well, we've considered only those that have contracts that were too specifically we say and that it said that it's pass-through mechanism, strictly those where it is contemplated. They were two main regulated businesses, gas and electricity, in terms of remuneration that's being considered and where the 2010 accounts are. In both places, we've taken into consideration what was published at the end of December with retroactive effects for 2010. And the tariffs in 2011 will include what is applicable to 2010. And that's been both for gas and electricity what we've done.

Luis Calvo

Good. The next question, please?


The next question will be from Mr. Raimundo Fernandez with Cuesta Nomura.

Raimundo Fernandez – Cuesta Nomura

Hello, good morning. The first question that I wanted to ask is about the dividend, which is a general question, companies proposing maintain the internal dividend and supposing an increase of the dividend, the total dividend by 1%. I think that that's a certain level of confidence as we go to the future.

What are you going to do with the dividend in the future? Will it depend more on the agreement with Sonatrach in terms of the pricing that will be offered in the next few years? Or will it have to do with paying the 1.9 billion? Is it that it is $1.9 billion, will the dividend be maintained or less risk? And can you reach a reasonable agreement as regards the future prices, if that that can be maintained?

Rafael Villaseca Marco

We don't associate our dividend policy to specific issue or items. The Sonatrach issue is important. But (Foreign Language) this we've dealt with. It's not associated, as I say, with any specific event or item. And therefore, we are – first of all, we hope that that should be or that that we believe must necessarily be solved in terms of the market. And that's not reasonable. It's not going to happen. And secondly, the problem of Sonatrach is relevant but must be put into context, can't be the only driver that is behind our activity. In any event, it's of interest to both parties to commercialize the gas in reasonable conditions.

Luis Calvo

Good. Next question?


Next question is by Javier Suarez from UniCredit

Javier Suarez – UniCredit

Yes, good morning. I had two questions. The first one is regards the investments of the Company in – you invested €1.5 billion in the business plan that you presented before this summer. The annual CapEx was around – was about €1.8 billion. You'd announced I think €5 billion for the period 2010 to 2012 in terms of CapEx. Will that be maintained? And the second question is about – you mentioned the possibility of some good news in terms of synergies.

And that's been of interest to me. Could you please give us more details about where that comes from, that progress and the synergies? There's possible good news if we, that possible good news if there'd been increase of the synergy target. And the third question is about a business of gas in Spain. I wanted to make use of the opportunity to ask what you think about the effect of gas and petroleum oil situation and what the impact of the effect of what's happening in North Africa might be.

Rafael Villaseca Marco

Last question could you repeat because we didn't understand it?

Javier Suarez – UniCredit

Yes, your position in the gas market, could you tell us your vision, what you think your view, what you think about what's happening in the north of Africa, the impact it might have on the situation of international gas markets and also know your opinion about prices of gas and the structural situation and this adjustment between gas prices and oil prices on the international markets.

Carlos J. Álvarez Fernández

Well, as regard to investments, we are going according to plan. We're going to continue according to plan. We're more or less on the or at the average value in 2010. There was a slowdown in some cases in the area; specific distribution of gas in Spain and thought would be one of the things in 2011, maybe 2012. Investments will be higher than 2010.

As a result, the work has been done, et cetera. And also, in electric distribution, electricity, there'll be maybe additional investment, small additional investments in Spain. Maybe the average will be higher than the average we had until now. And more in the medium term, we've looked at investments, special regime investments, which may be this year as a result of the different circumstances. We started up a lot of the parks that we have in plants now.

And as the authorizations come through for all the different developments that we haven't planned, these investments will be contemplated as a part of all those projects, as presented when we presented the strategic plan. In terms of the synergies, I think that well, one of the novelties is that the plan is advancing at very good pace and that the objectives are going to be covered, 95%, 96%, 97% of the objectives that we had for 2012. So basically, the objectives that are initially covered for 2012 would probably be covered by the end of this year.

As regard to the last question, the situation in the north of Africa is obviously special and worrying, but we should maybe look at the situation. We've got interests in Egypt. The crisis in Egypt seems to be getting better. Our plant in Egypt has continued to operate normally. We hope that things go back to normal. And we don't foresee anything else. In Libya, we have a contract for supplies, small supply contract that finishes next year. Things have continued normally until now.

And Algeria, well, circumstances are what we can see in the press. It's important to underline in our case of with Algeria that even in worse moments than these, compliance by Sonatrach of the contracts has been exemplary. We don't expect anything particularly negative to happen. There's a significant level of production in these countries. A collapse would be of impact, but we don't think that will happen.

It's also true that Spain, due to its position in re-gasification plants has the possibility and capacity to diversify its provisioning its supply but all that's hypothetical. These are circumstances that we have to foresee, but which at this time we don't consider we think that commitments and contracts will be complied with normally, as has happened until now.

As regards the gas contracts, a lot has been said about this, but there's a thing that we should remember in terms of a possible decoupling. That would require stock markets that develop significant amounts that can be bought cheaper. And that would require producing countries to sell those amounts to the spot markets. And that's not happening. And I doubt that it will, so very difficult to think that that is something that will come or happen immediately or even in the short term.

The producing countries are not many and they are in small group. And they have their medium and long-term contracts associated to the price of Brent. I don't think they'll change their policy. Recent statements from Gazprom and Russia and Algeria have been very clear in the past, they’re not going to do it and if they're not going to do it, how are those spot markets, how would those potential spot markets be supplied? I really doubt it.

On the other hand, you should think that those countries that develop a policy of decoupling by selling important amounts on spot markets more cheaply would be shooting themselves somehow in the foot, because it would be difficult for two suppliers to exist in a country, an expensive ordinary supplier and a cheap supplier on the spot market. That's not possible and would lead to a tremendous amount of confusion of the markets, legal action all over the place, because it's not possible for gas from one country to be dealt with by the markets in that way. So we don't think that decoupling is going to happen soon.

However, in some places in the world, the U.S. the development of non-conventional, un-conventional gas has led to a change in the allotment of prices, but if we key to Europe, there are spot markets, very shallow markets that are fed by the same countries that sell gas in a long-term in association with Brent and that circumstance, leads to a situation where we don't think that there's going to be any changes in the short term or the medium term.

Luis Calvo

Good. We go to the next question, please.


Our next question is by Mr. Jorge Alonso from Societe Generale.

Jorge Alonso – Societe Generale

Hello. Good morning to everyone. I've got a couple of questions. One has to do with the division and provisioning and marketing division. We've seen an improvement in margins in the last quarter. It moves away from the trend in previous quarters.

And I would like to know whether we can, whether the margin improvement will be seen in 2011. We've made a significant effort to cut back on the costs. What can we expect in 2011 in that respect? Also, you're talking about renewable installations and everything you're building.

What will the installed capacity be in 2011 to 2012 based on what you're building? And the final question is about your forecasts for Latin America for next year from the operational point of view and also whether you think there'll be a positive or negative effect in terms of exchange rates next year. Thank you

Rafael Villaseca Marco

As regards the first question, we've said before that maybe we were too cautious. And we don't foresee that thing will get worse. Those margins will probably get a little better. We'll see how the year moves along. We see clearly that they won't get worse. And it will depend on a series of circumstances. This potential improvement would depend on a series of circumstances.

In terms of Latin America, I think that this past year, we've had two positive effects. One is the operational effect. And the other one is the exchange rates. We don't expect there to be any change in terms of debt. In terms of renewable for 2011 and 2012, we won't be affected by Catalonia or Galicia operations or projects.

Different matter will be in 2012. We're going to have to get all the authorizations for the projects. But what had been established for 2012 in the strategic plan was to have 100, to 200 additional megawatts in renewable energies that will be supplied through projects that we're developing and that had a tariff, the split from Eufer or the Gas Natural [Elsa] or the Canary project.

Luis Calvo

Good. Next question?


Next question comes from Jose Antonio Lopez – HSBC

Jose Antonio Lopez – HSBC

Hello. Good morning. I have several questions. The first one is whether you could tell us some more details about the changes in the capital flows and more details about the assets that go to minus $1.2billion. And the second question, what do you think about the issue of the government's credibility in terms of reducing the deficit by 2013, especially when the legal limits change or alter the change on the 22nd of December last year, limits which are different? Do you think that this is believable that the deficit will be cut down, reduced by 2013, that the new legal limits will be respected or things will change in 2012? Thank you.

Carlos J. Álvarez Fernández

I haven't got the answer. I can look, do some research. I don't know. I haven't got the details. I can look at it and let you know. As regards to the second part of the question, I think that it's been important for the government to decide to look at the deficit of the electric tariff and therefore lay the foundations to solve the problem. Fortunately, they've been on time.

They have increased the limit a little bit. That is true. It was inevitable for this. And however, we've laid the foundation solidly for securitization because electric companies can't finance that amount and secondly because to see how we can avoid that to increase, which is a clear aspiration of the government and political parties.

We have been debating for a long time in Spain about the causes. I don't think that we, there is anymore debate about that. I mean, we know that this is a very significant issue. And the government has approached it. And I think that they're looking at this business very rigorously in all other areas and also in electric areas.

So I think that the government and whatever other government comes along will be rigorous in order to prevent situations like we've had and we've seen. I'm sure that that will be the case. And in general, society is whoever, this is a situation that has clear causes and that we have to solve them. Are there no more questions?

Luis Calvo

Yes we’ve got one more question in Spanish and in English. We have a question in Spanish from Virginia from Deutsche Bank.

Virginia Sanz De Madrid – Deutsche Bank

Yes, good morning. I have two questions, one about the debt, whether debt in 2011 will follow along the lines that you think in terms of having the money of the deficit, of tariffs, and the sale of assets that you still have pending. And if the Sonatrach issue was solved reasonably, do you think that the rating agencies would be able to make a favorable decision as regards rating of the debt? Or this will not happen until 2012? And I have a general question, which is to understand what impact you think the entry of MetGas might have when they come into the market in Spain.

Carlos J. Álvarez Fernández

The first question is yes, yes, yes. I suppose the answer is yes. I think that as things move along, if everything continues to move along, the tariff deficit issues move along and the Sonatrach arbitration process comes to an end, as we think, I think that we will probably go up in terms of our ratio or category.

But I think that the relevant thing is that we continue to work in order to achieve the A category, which is our aim within the plan. Once we, that's what we're going to continue to aim at. As regards to Emet Gas, I don't think that they will be in the short term any relevant impact because we don't know what the volumes are, what volumes. We suppose there'll be a significant level of EBITDA there.

And that will probably replace supplies that now come to Spain from Algeria by ship. So probably the impact will be moderate in terms, also if you remember that the market in Spain is not growing, although we expect to grow to 1%. But that's not relevant. So they'll probably replace one with the other. So it's not obvious that there's going to be war of supply. It wouldn't make sense. It would only lead to worsening of the margins and wouldn't benefit anybody. So we're waiting to see what their plans are. But we think it will be moderate.

Luis Calvo

The next question, please?


The next question comes from Ms. Anna Maria Scaglia from Credit Suisse. Please go ahead with your question.

Anna Maria Scaglia – Credit Suisse

Good morning, everyone. I've got a few questions if I may. Sorry to go back to the Sonatrach case, but can you please explain how on which basis the Swiss court can reject your claim? This is the first question. The second question is, what is the risk that the Swiss court reaches a solution, which is a conclusion on the case before you and Sonatrach are able to agree any solution together? And the third question is, can you clarify what is under discussion with Sonatrach is the future gas price? Or are you also currently discussing about the €1.9 billion that you were supposed to pay to them for the past amount? Thanks.

Luis Calvo

Could you repeat the first question? The sound is not very good.

Anna Maria Scaglia – Credit Suisse

First question is on which basis the Swiss court can reject your claim, so basically reject your appeal. The second question was, what are the risks that the Swiss court reaches a solution before basically you agreed with Sonatrach and also if you can clarify what is currently under discussion with Sonatrach? Is it the past amounts and the future or just the past? And maybe if you can help us to understand if you are fully provisioned at the moment or there could be further provisions going forward. Thank you.

Rafael Villaseca Marco

Well, first of all, our claim in Switzerland is based on the fact that we don't agree with the way in which we don't agree with the judgment of the court and how the court has arrived at this judgment. So these are formal components. And we don't think that things have not been done correctly in accordance with all the different rules and regulations. And we also think that the result is completely disproportionate, is not in line with the situation of markets. That's what we've said in Switzerland. And it's difficult to foresee dates or well, we believe that there are reasons to say have an idea about what they might say, but we don't know.

We can't tell you what we think they're going to say. But we do think that what we're saying is true and that will be considered. But we cannot give any specific details.

In terms of the negotiation with Sonatrach, that includes everything, past, present, and future. And it's indispensable to establish a framework that is slightly more peaceful, more reasonable in terms of the situation of markets. And that bears in mind the interests of both companies. So we are considering a wide range of topics with Sonatrach. Good. Any more questions? No more questions.

Luis Calvo

Good. I'm told that there's one question that's come through the Webcast, but it's already been replied to. So we can finish this event. And I pass the floor to the CEO.

Rafael Villaseca Marco

Well, I’ve just have to tell you that we’re thankful for your interest and we are at your disposal to clarify whatever you like and hope to see you again soon to explain the accounts of the first quarter. Thank you very much.

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