Q4 2024 Redeia Corp SA Earnings Call
Good morning, everyone.
We're going to stop this presentation is there scope for 'twenty 'twenty four and we'd like to welcome all of you following us online.
Speaker Change: With us we've got batteries could have devoted the chatter seaboard, Roberto Garcia Merino exactly yes.
Speaker Change: So here's the corporate economic and financial director I now give the floor to a person or two women.
Speaker Change: Correct.
Speaker Change: Good morning, everyone and welcome and thank you for coming to this presentation, yes, again, we'd like to be able to share with you. The most relevant milestones achieved during the past year 'twenty 'twenty four and talk about what are the ASP performance and the earnings of the group.
Speaker Change: 'twenty 'twenty four has been especially difficult base for us and for our country and our whole continent, and maybe it would be a good idea to remember that it was fully here is that we presented.
Speaker Change: The current strategy plan focusing towards 2025.
Speaker Change: Which has now arrived.
Speaker Change: And so.
Speaker Change: There are three things you should remember in 2024, our revenues have gone down one said because of the regulations.
Speaker Change: Our investment has gone up threefold and we've maintained our a minus rating with the outlook for stable.
Speaker Change: Because of stretching out.
Speaker Change: Excellent management, and a deep commitment to the market transparency and honesty reporting will be presenting our outlook as well for 2025 and at the end of the presentation there'll be a Q&A. So we'll all be onstream that any questions you wish to put to us so let's start.
Speaker Change: Going over the international context in which the company has been operating over the last year.
Speaker Change: Mitch we will probably continue to operate during 'twenty 'twenty five we interact to geopolitical crossroads and recent events have shown very clearly that the age of stability and corporation.
Speaker Change: It seems to be over in front of us we have a scenario of uncertainty complexity and volatility which means that we have to get ready to adapt very fast to these new circumstances, we are seeing worrying signs of.
Speaker Change: A different kind of with that.
Speaker Change: Blocks in geopolitics that we didn't have before and the 'twenty 'twenty four elections in the European Union and the United States that Bruce.
Speaker Change: New conceptions of what the World order should look like especially with regard to the economy to technology to energy security and defense. The current scenario is very challenging we've got good strategic forces fighting one another democracy.
Speaker Change: The retiree Newsom, the green agenda than people, who wish to delay or outright July climate change billionaires.
Speaker Change: Or perhaps rising inequality. So what can we do all we can do is to continue building and maintaining international cooperation and governance mechanisms.
Speaker Change: Coating multilateralism, and making progress in decarbonization, well, it's redefining the European Union to disciplined to the new paradigms without just anytime compromising our welfare model.
Speaker Change: Geopolitics, we have to talk about climate.
Speaker Change: In the.
Speaker Change: And report that came out from the World Economic Forum later, they have said that we.
Speaker Change: We're already meeting the circumstances, which had been foreseen before and according to the company because the report last year was the warmest year on record in the first year in which we breached the 1.5 degrees Celsius limit.
Speaker Change: Over preindustrial levels and in the past year, we've been seeing extreme weather phenomena like the World Economic Forum said, we would and we can confirm that climate change is definitely real.
Speaker Change: And we saw that last October here in Spain, with a terrible storms that hit about Valencia. It's been one of the worst tragedy is caused by the climate emergency in our country and really yeah, we'd like to express our solidarity with our communities and people hit by this phenomenon.
Speaker Change: We'd also like to explicitly recognize the rest electric our teams in the province of Valencia react with agility to repair the transmission grid, which was severely hit we had 35 pilot and stomach the mountain substation, which flooded they.
Speaker Change: Quickly deployed provisional and then to finish it with solutions and then just 100 days 100 days.
Speaker Change: These facilities were back to normal.
Speaker Change: And despite the damage suffered.
Speaker Change: I'd like to highlight that the infrastructure is never stopped providing the essential services. They were built for.
Speaker Change: Providing electricity they showed their resilience and reminded us again of the importance of having a sufficiently meshed networks for safe and high quality supply.
Speaker Change: 2024 has also been a year in which we've seen major regulatory developments.
Speaker Change: Both the European and the domestic level within the European Union in December the New College of Commissioners of the European Commission was set job, including today Saturday He made us as executive Vice President for clean fair and competitive transition Brussels has opened a new phase.
Speaker Change: It's based on two fundamental pillars, its energy transition agenda, and the recently announced competitiveness compass.
Speaker Change: Which focuses on making the E more competitive by strengthening its value chains and its manufacturing capacity.
Speaker Change: This compares who would take the form of 30 meshes two of them are being presented right now in Brussels, the clean industrial impact and the affordable energy action plan. The first aims to increase the industrial competitiveness of the 27 members.
Speaker Change: Most of the things by increasing electrification and the generation of ritual PA and in Spain, We think that we've done pretty well there. The second proposes to reduce energy prices by getting a permanent road to infrastructure development, especially interconnections isn't a central tool to reduce the cost of energy completely into.
Speaker Change: I know energy market and mitigates the volatility of prices and possible price shocks.
A national level, they need to accelerate the energy transition led to the approval of the specific modifications of the 'twenty, one 'twenty six planning, which prioritizes the electricity demand in new large scale industrial projects of a strategic nature. The same principles in spite of a new vision for 2030.
Speaker Change: Which the ministry for ecological transition and demographic challenge launched simultaneously.
Speaker Change: So that for the first time it won't overlap with the current one.
Speaker Change: And it is currently being drafted.
Speaker Change: And later on I'd like to talk a bit more about that.
Speaker Change: September.
Speaker Change: So the new update of the Biniak, which is a national climate and energy plan with a significant increase in national energy and climate targets and that was also the month in which the new framework for offshore wind development was consolidated with Royal decree 96 to 2024.
Speaker Change: I should also mention whilst I'm talking about regulations.
Speaker Change: There was a preliminary public consultation push out on the modification of the network investment limit launched by the Ministry and last Friday day, the Vice President decider Argus and confirm that it will be extended maintaining a balanced approach in order to contain the costs passed on to consumers.
Speaker Change: While waiting to see what this final increase is going to be we do believe it's good news, it's necessary news and completely in line with the acceleration of the energy transition and the investment effort, we are making in the company.
Speaker Change: And then on the regulatory side of things. These N M. C. Counsel has five new members and I was able to go to the inauguration in D C.
Speaker Change: <unk> a few weeks ago.
Speaker Change: And Meanwhile, we are at.
Speaker Change: Watching the processing of the draft law of the National Energy Commission him and we think the specialization of the new regulation to be positive given the greater complexity of the electricity system in the coming years, but we also believe it must be accompanied by an updated visiting all of the criteria that should govern the remuneration of the companies.
Speaker Change: Manage the networks in our case the electricity transmission networks.
Speaker Change: So that's where we see the next relevant milestones. We're looking ahead to in 2025.
Speaker Change: When the review of the transmission remuneration model circulars for the period 26 to 31 is expected to be completed.
Speaker Change: Following the conclusion of the public consultation on the financial remuneration rate and the methodology for calculating transmission remuneration launched by the C. N M C a regulator.
Speaker Change: And here I think it's also worth highlighting the Ministry has guidelines for the new financial right.
Speaker Change: In which it considers it necessary to establish appropriate signals to provide.
Speaker Change: Incentives for electricity transmission and distribution activities.
And that's especially in order to meet the new kinds of demand, we're seeing and integrate the growing renewables generation.
Speaker Change: As I already mentioned one of the main regulatory advances of the past year was the updating of the national climate and energy plan with more ambitious objectives to complete the transformation of the electricity grid by 2030.
Speaker Change: Amongst its main goes all the 81% of electricity generation should be with renewables that will be a 32% reduction in emissions compared to 1990, and also reaching a 48% share of renewables in the final years of energy to this and energy plan.
Speaker Change: Recognize there's grids networks as our neighborhoods and propose is that of the 308 billion euros of investment that would need to be articulated by 2030, 17% should go to networks.
Speaker Change: In this respect.
25 to 30 planning will be our main two books.
Speaker Change: The process of the new planning is open already enough. The initial proposal technical proposed so that the system.
Speaker Change: Operator, I presented the other day when the Sada, the vice President soda I often address the industry at the lost energy sector Conference.
Speaker Change: The autonomous.
Speaker Change: Regions were invited to hold trilateral meetings with the rest of electric and the Ministry to fine tune the design of planning always focusing on industrial demand decarbonization underpinning competitiveness.
Speaker Change: Responding to the new demand, that's arisen, especially in industry technology, and green hydrogen, which barely existed when the current plan was drawn up and which now is the government itself has recently acknowledged exceeds hundred Gigawatts, which is what was requested so it give this figure it's context, that's double the peak demand in Spain and.
Speaker Change: So at the same conference the Vice President called for an effort to prioritize this because she said it's not possible to integrate all their requests in just four years.
Speaker Change: Lastly, meeting these new consumption goes the extension and the men are established by.
Speaker Change: These planning will be one of the guiding principles governing the planning approved by the council of ministers, which will be binding for electric and we shouldn't forget that there's growing demand exists because Spain has been working already for six years now on our country project focused on achieving energy.
Speaker Change: Transformation and take advantage of our enormous capacity for generating and integrating renewable power.
Speaker Change: This time, we've also demonstrated that we are the driving force behind renewables in the European Union. The figures proved that once again in 2024, when we set to record the highest renewable production and also had the highest share with almost 57% and then wind well.
Speaker Change: Well when you blend the generation makes it more than 23% followed by solar PV, which was 17% and 66% of the total domestic in store capacity is already renewable here.
Speaker Change: With these figures we remain at the upper part of the ramping of the member countries of the European Network of T. S. O's second in renewable installed capacity in third and renewable generation. This leadership also explains why we're exporting more and more clean electricity to a neighboring countries 2024 hours.
Speaker Change: The third year running in which our balance of trade netted out in favour of exports, but going beyond just installed capacity and favorable weather conditions. Spain's leadership in renewable power is largely due to the excellence with wage rates electric and its professionals operate.
Speaker Change: Thanks to the work of the engineers and professionals in our renewable controls and we were able to integrate more than 98% of the wind and solar output on the peninsula.
Speaker Change: And that means that the discharges we have due to grid restrictions remain at just 1.61%, which is the lowest ratio since 2022. Despite the fact that over this time we've seen.
Speaker Change: More than 14 percentage point rise in the penetration of renewables we're.
Speaker Change: We're talking about levels of discharge, which are much lower than the 5% established by the European regulations.
Speaker Change: And that's when the mix is up to 50% and also it's lower than those of other countries in the region.
Speaker Change: In this case, we're seeing how important.
Flexibility tools.
Speaker Change: It's the case of the automatic power reduction system, which we call strap in Spanish.
Speaker Change: Which we maximize utilization of the grid infrastructure since 2022, it's integrating more than 4.6 terawatt hours of renewable energy into the system on the other hand, staying occupies a leading position in Europe in terms of renewable power participation in the balancing markets specifically more than <unk>.
Speaker Change: 29, gigawatts capacity of wind and solar power.
Speaker Change: Finally in these flexibility toolbox, we also have a way of balancing demand with the active demand respond to service that.
Speaker Change: It helps us to ensure a balance between generation and demand and currently has 1148 megawatts.
Speaker Change: 'twenty 'twenty four is also been a key year in the development of the transmission grid.
Guy: Whether that's electric Guy has made an extraordinary effort here at the beginning of the year, we committed to reaching record investment levels with Capex of over 1 billion euros and we delivered.
Speaker Change: The T S ou S.
Speaker Change: That's right 1.100 billion, which is 34% more than in 2023.
Speaker Change: This is an unprecedented level of investment.
Speaker Change: It's a record milestone in the company's history as we triple the Dsos average investment benchmark of around 400 million euros a year.
Speaker Change: The numbers speak for themselves. They show that we are rolling out the current planning and it's not sort of modifications in a timely manner. It also demonstrates that our transmission grid is not a bottleneck for deploying renewable power or when deploying industrial advanced.
Speaker Change: Yes.
Speaker Change: In this way in recent months, we've put into service or started up infrastructures and all the autonomous community is insane. These include the international interconnections, with Portugal, and France, and those that will link very soon the mainland with soda and 10 are referred with legal matter. We also reinforced the mainland grid with extensions.
Speaker Change: And new Substations to support industry, and we see how we are helping to boost technology development and sports and railways and Aragon, Lindsay I, Catalonia, Madrid extra Malouda Andalusia and.
Speaker Change: The rest as well.
Speaker Change: To do this collaboration and dialogue with public administration is vital.
Speaker Change: In order to attain.
Speaker Change: The highest possible degree of social consensus.
Speaker Change: Sorry, the planning we're also progressing on the works for the future Salto, the Cheetah pumped storage hydroelectric power station, which is strategic for the energy future of Gran Canaria.
Speaker Change: And now I'd like to talk about one of the most relevant recent developments for the group, which was the change in our perimeter with the divestment of his research, which we announced last 31st of January It's a key.
Speaker Change: Operation further their cause with it we are consolidating our core businesses are neutral manager of a central infrastructure is at a time when the European satellite and sector in the World satellite sector is positioning itself around security defense and we feel that his facade has really completed its transfer.
Speaker Change: Formation into a satellite Internet operator, and service provider. We also strengthened the group's financial position. So that we can accompany the energy transition and the major industrial development here in Spain that can be helped with our infrastructures because that will be the focus of our next strategy plan the timely.
Speaker Change: <unk> and efficient deployment of the Trans mission network infrastructures that will be included in the 25 to 30 plan and it will also allow us to continue.
Speaker Change: Rolling out our commitment to sustainable value creation for our shareholders and not just our shareholders all of our other stakeholders to cause with this transaction. We have completed the divestment plan, we set up within our strategy plan in the area of telecommunications, where we will continue to.
Speaker Change: To be active through a subsidiary right now.
Speaker Change: Now with this new set up with a new perimeter RIDEA has reaffirmed its position as a neutral independent manager of electricity and telecommunications assets through its subsidiary is electric and the Spanish DSA re Intel which is the country's largest dark fiber provider, but I think that our electricity transmission subsidiary.
Speaker Change: In Latin America, and elevate our technology platform.
Speaker Change: So we're continuing to meet our business objectives, whilst always remaining true to our very essence, which is to leave things better than we found them.
Speaker Change: Which is for US the definition of what sustainability really is the commitment to sustainability 2030 is deployed through multi year plans.
Speaker Change: The current one.
Speaker Change: Defines 14 lines of action with midterm targets to achieve whether there's ambitions for 2030.
Speaker Change: Plan has also reached a degree of compliance of 79, 9% in 2024, and our identification with sustainability is unequivocal. It continues and will continue to guide our activity in all of the company's strategic decisions in spite of the uncertainty in the international shifts in direction.
Speaker Change: We can see worldwide.
Speaker Change: It remains fully aligned with the European Green agenda now more than ever.
Speaker Change: Yesterday, our board of Directors approved the management report for the annual accounts, which includes the sustainability information statement applying for the first time the guidelines of the sustainable reporting directive the CSR D.
Speaker Change: This hasn't been easy just to give you an idea it invokes reporting around 900 indicators as compared to the 96 that were mandatory until now under the Nonfinancial reporting Act here in Spain.
Fortunately supervised by the three board committees and will be submitted for approval.
Speaker Change: So our next annual general meeting as a separate agenda item in addition.
Speaker Change: It's subject to external verification through the professional services of E y doing.
Speaker Change:
Speaker Change: No assurance report with a limited level of zero weather report reflects the disclosure requirements linked to the material issues and the impacts risks and opportunities affecting or it adds value chain as required by the new European sustainability reporting standards the CSR D.
Speaker Change: Given that its transposition into Spanish law has not yet been completed the company had hoped it to follow the recommendations of the Spanish Securities Market Commission, and the Spanish accounting and Auditing Institute.
Speaker Change: We're also waiting for the first omnibus simplification package on sustainability, which the European Commission is expected to adopt today.
Speaker Change: And which could include amendments to the sustainable reporting directive and to the sustainability due diligence directive and the taxonomy regulations as.
As well as our second omnibus package on investments simplification.
Speaker Change: Consequently, our commitment to sustainability and transparency with our stakeholders is reflected in <unk> presence on the main sustainability indices worldwide. We've re validated our president on the down Jones Sustainably Index Europe and also on the D. J S.
Speaker Change: World with a score of 85 out of 100 that meant there was placed among the top most sustainable companies in the European and global rating for the sector and not only in this index also the MSCI in the FTSE for good among others.
Speaker Change: And in February the sustainability yearbook, 2025 considers or they have to be one of the most sustainable companies in the world.
Speaker Change: Placing us up there amongst the top five of the global ranking and in the board and all the different parts of the company. We are delighted to have the hard work that's been done by all of US recognized in this way in 2024.
Speaker Change: We also began to maximize the full power of our integrated impact strategy. The framework reaction that engages all business areas and geographies.
Speaker Change: To ensure that we deploy our infrastructure in line with our sustainable commitment and to contribute to competitive social transformation. The fight against climate change and the improvement of society and the environment and all the communities where we operate.
Speaker Change: We develop our networks with the consensus of the locals of the communities that live the respecting their landscape that biodiversity that historical archeological Unculture heritage and their way of life and their customers.
Speaker Change: We always seek a positive impact on their lives with this strategy. We've already in just two years promoted more than 130, environmental and social initiatives linked to our investment projects.
Speaker Change: Of particular relevance loved.
Speaker Change: Last year was the marine Forest platform, which promotes strategic alliance alliances for the restoration and conservation of our marine ecosystems.
Speaker Change: And the networks for renewables project, which involves the development of our methodology for our protein in the territory.
Speaker Change: And in hand, with the NGO for industrial motor Nobody lives with a bunch of patients of the renewables grid initiative the O G I.
Speaker Change: In the area in which our infrastructures are deployed we've focused our actions mainly on promoting the energy transition, bringing its direct benefits to the lose who live.
Speaker Change: With the facilities.
Speaker Change: In total we've allocated more than 9 million euros to the strategies initiatives generating a total estimated impact of just over 85 million euros.
Speaker Change: And we've developed a reporting tool for these initiatives to facilitate decision, making and project monitoring.
Speaker Change: We also do this because evidence in measurement are the best response to Greenwashing.
Speaker Change: People clustering as eco warriors and fighting for society, when it's not so clear that they are which we are seeing in some areas, but at the same reasons and for the second year running we've carried out the voluntary transparency exercise of measuring the impact and contribution of our activities the environment, which reveals that.
Speaker Change: For every euro of net profit we make we contribute 13 point 15 euros to society. So to wrap up the first part of my presentation I'd like to put across a take home message, which is that we've overcome a year. There was expected to be Christian go by reaching an unprecedented level of investment in breadth electric we practically tripled.
Speaker Change: In just five years and we've achieved this in a year marked by the impact of the end of the useful life of the assets that we know is the pre 98 outfits.
Speaker Change: And recently by the rotation of assets in the satellite business. Excluding these two effects of beta.
Speaker Change: The income from continuing operations would have increased by seven 8% and six 5% respectively. Thanks to the large volume of networking commissioning that we did last year.
Speaker Change: Net profit reached $368 4 million euros, but without the impact of the his process itself.
Speaker Change: Would have exceeded our profit of 500 million euros in line with its original forecast.
Speaker Change: Sure.
As the market already knows.
Speaker Change: We've faced a sharp fall in revenues was tripling our investment effort, which reflects the model of management excellence that guides, the company's activity, which as CEO Roberto Garcia Merino will now develop on further and we will continue to work towards 2025 with our sights set on successfully concluding.
Speaker Change: Our strategy plan and again, that's very special for the entire group is it's the 40th anniversary of rest electric we've been operating for 40 years at the service of the country 40 years, making the economic industrial and social development of Spain possible based on our commitment to sustainability and the general interest and other okay.
Speaker Change: <unk> public service. Thank you very much Roberto.
Thank you very very much and thank you Madam chair since this is our first communication. After the agreement reached with in trial for let's say live Friday is taking his place that we'd like to provide some extra information on the deal and the way it strategically fit and our plans as you know.
Speaker Change: No on January 31st the company's board agreed selling nearly 92% stake in his VSAT for 725 million euros.
Speaker Change: Sure.
Speaker Change: And EV EBITDA multiple of 7.7 times, considering the numbers of 'twenty 'twenty, four well above the multiple at which companies and the industry are listening, but close enough they're still subject to various conditions is expected to take place later this year.
Speaker Change: The deal involves acknowledging.
Speaker Change: Deficit for approximately 107.
Speaker Change: 37 million after taxes, which matches the difference between the book value of net assets from the satellite business as part of our consolidated financial statements and the sale price.
Speaker Change: What the steel we conclude the strategy will define for our telecom business.
Speaker Change: The 21 to 25 strategy plan. During this theory at 49% of re Intel was sold in 2022 and along with the hits the fan the divestment.
Speaker Change: It has led to joined capital gains of approximately 800 million euros and both transactions the rotation of assets in the telecom business towards a simplification of the group allows us to focus on where they are regulated business, which now stands for almost 90% of the group's EBITDA.
Speaker Change: It is important to highlight that this transaction will affect the way we present, our 2024 financial statements.
Speaker Change: As a reclassification of different items in his place at income statements attributable to RIDEA wont be included under a single line called profit for the period from discontinued operations.
Speaker Change: Profit for the tax year.
Speaker Change: The difference between the book value and the sale price of our stake as I mentioned a minute ago in the balance sheet. There is a reclassification into a new account called assets and liabilities held for sale.
Speaker Change: You will also involve.
Speaker Change: Net debt reduction for 2025, when we will receive the cash flow in connection with the sale, which will lead and turn to a stronger financial solvency for the group and an improved business profile that will allow us to reinforce our financial capabilities for our next strategy plan.
Speaker Change: <unk> analyzed the Hess beside a deal we are we'll now discuss other highlights and detailed result for 'twenty 'twenty four 'twenty.
2024 was a key year, a milestone I would say and the development of P. S O activity with investments exceeding 1.1 billion euros, that's 34% higher than investments in 'twenty to 'twenty, three which at the time meant a significant increase compared to previous years.
Speaker Change: In addition, we can be proud of the high levels of great quality, which as you know is assessed on the basis of availability of facilities, which in turn reached levels over 98% in 2024 also integrating levels of renewable generation into the system with figures that were.
Speaker Change: <unk> never recorded before.
Speaker Change: Plus other highlights on this tax year include public consultations on the financial remuneration rate and the methodology for calculating transmission remuneration launched by the C. N M C.
Speaker Change: The context in which the need for investment.
Speaker Change: At its peak and in a very competitive and complex environment, which suggests a global framework encouraging the deployment of networks with adequate remuneration the resolution through which the C. N M. C awarded 200 million euros to finance the investment of the interconnection with France via the Bay of the Sky.
Speaker Change: They correspond into expenses.
Speaker Change: Until December 2023rd has already been awarded and the new Rehman ration by the system. Operator was established at 86 million euros or 4% more than in the previous financial year and last the publishing our schedule for regulatory.
Speaker Change: Circulars is scheduled to start in 2025.
Speaker Change: If we now focus on public or figures published in 2020 for the.
Speaker Change: The first message is that are these numbers are in line with our announced estimates exclude N V effect of the his besides sales EBITDA, reaching one point to 1 billion euros would exceed the one 3 billion mentioned a year ago with the inclusion and his beside perimeter and net profit would have.
Speaker Change: Exceeded half a billion euros without the capital loss associated to the sale of his besides as we committed to.
Speaker Change: Taking this effect into account and after reclassifying. His passat related items, we can observe and account effective and all at times by the end of the useful life of what we call pre 98 assets with an impact of 260 million euros before taxes.
Speaker Change: However on a like for like basis, we do see growth in the main lines of revenue EBITDA and profit from continuing operations, what gives us a better understanding.
Speaker Change: The fiscal year or tax year, isolating extraordinary items looking at the evolution of revenues and detail. These went down by 12, 4% affected by the pre 98 effect without this effect revenues grow constantly by 1.7% throughout the year.
Speaker Change: On the side of international business, we can highlight higher revenues in Peru, partially offset by lower income in Brazil affected by the exchange rate as for the fiber optics business. There is a lower contribution coming from the renegotiation of some contracts in the past few months and.
Speaker Change: A more demanding market context, if we now focus on the evolution of operating expenses go down by two 3% vis vis the previous year.
Speaker Change: However, excluding expenses doesn't have a counterpart in other operating income these operating expenses actually fall by eight 7%. The first thing we observed higher expenses, where the counterpart in other operating income line consulted a cheetah due to faster progress of the word.
Speaker Change: As well as other projects from third parties.
Speaker Change: Their supplies and Opex.
Speaker Change: Our reduced by 61 million, mainly due to the end of the extraordinary action planned for certain T. S. O assets in 2023, partially compensated by higher expenses in European projects by the system operator.
Speaker Change: Staff costs went up by 3 million due to a higher average head count which is required to meet the challenge is coming from the growth of group's regulated assets ups upset by the nonrecurring effect of new collective bargaining agreements that took place in 2023.
Speaker Change: After a detailed view of our operating income and expenses the evolution of both items leads to an EBITDA that AR has reduced 12.4% vis vis the previous year. However, removing the effect of pre 80, 398 ethics EBITDA would show a significant.
Speaker Change: An improvement of 7.8%, thanks to higher operating assets and the reduction of GSO cost. The international business is affected by higher nonrecurring costs in Chile, while the evolution of fiber optics EDA is conditioned by those lower revenues.
Speaker Change: And opex similar to those during the previous year.
Speaker Change: This brings us to a net profit of 368 million euros throughout the year affected both by pretty 98 assets and the capital losses from the his past that sale, which amounted to 137 million euros.
Speaker Change: To reach this benchmark, we see that depreciation and amortization and others reported an increase due to the new assets in operation at the same time, the financial resolved worsen slightly mainly to the higher cost of debt, which has gone from 2.1% in 2023% to 2.27% at the end.
Speaker Change: 24, and also affected by higher average balances from debt, partially compensated by higher financial income coming from the efficient financial management of the placement of existing liquidity corporate income tax goes down due to lower baby tea and minority interests are reduced by.
Speaker Change: 10 million euros due to the impact of the his besides fail on this item.
Speaker Change: The results from discontinued operations. Therefore shows a change in performance between 'twenty 'twenty, four and 2023 in the satellite business.
Speaker Change: Considering the evolution of our income statement, which is highly condition by extraordinary effects. This year one.
Speaker Change: The highlight is group's investments, particularly those other T. S O and defense group investments reached 1.17 billion during the year out of which one point 10.
Speaker Change: Our investments in the T. S O. Therefore, as we said.
Speaker Change: Exceeding the previous year investment by 34% and it's also worth of notice that 95% of our investments are eligible under the European taxonomy.
Furthermore, the volume of investment in Tia So does exceed our initial estimate for 2024 set at 1 billion maintaining the trend observed in recent years. Thanks to the company's ongoing efforts to move ahead and executing the infrastructure plan.
Speaker Change: As for our progress N T. S O strategy projects, we can highlight the following first the interconnection with France through the Bay of Biscay, what the goal of reaching the milestone of commissioning in 'twenty 'twenty, seven or interconnections between mainland Balearic Islands, and the mainland in Sudan, or the new Galicia, Portugal.
Speaker Change: Interconnection, which will allow us to increase our exchange capacity what the neighboring countries.
Speaker Change: Besides the progress in storage in the country Islands, where the advancement of certain construction milestones and the hydraulic pipeline and the sales to the Chita project and another highlight.
Speaker Change: Is that the control system applications and integration of renewables linked to the system operation.
Speaker Change: As for the balance sheet net financial debt at the end of year stands at 537 million euros, that's 395 million above 2023, the operating cash flow generated during the year exceeded 950 million, mostly due to the following considerations.
Speaker Change: The generation of cash flow from operations of 1.18 million euros, including the connection.
Speaker Change: The income tax refund from 'twenty to 'twenty, two which stood at 193 million mainly from the capital gain from the re Intel fail.
Speaker Change: There was also an increase in working capital with an outflow of 30 232 million as a result of the repayment of excess tariffs collected in previous years for a total of 183 million the outstanding amount at the end of 'twenty four for this item, which is 220 million euros in it.
Speaker Change: It's expected to be repaid an oncoming months.
Speaker Change: Surely 200 million from congestion rents destined to finance the investment and the interconnection with France coming from investments made until late 'twenty two 'twenty three.
Speaker Change: Considering all of the above and the investments made throughout the year plus the payment of dividends. The net financial debt goes up by seven 9% showing solid financial ratios and maintaining our credit rating of a minus by standard <unk> Poor's and Fitch.
Speaker Change: As for our financial debt and it's worth highlighting its diversification in terms of sources of financing with now 92% at fixed rate until maturity and.
Speaker Change: We're predominance of euros over other currencies. Thanks to the structure, we have maintained a competitive average cost of debt that presently stands at 2.27% in the next few years, we will be facing maturities of approximately 3.8 billion euros largely covered by our strong liquidity position.
Speaker Change: Which well be reinforced after closing the his besides fail.
Speaker Change: And last I would like to highlight the efforts that the company continues to make in terms of sustainability by finance and green projects contributing to energy transition, 100% aligned with the European taxonomy in terms of funding and throughout the year two milestones were achieved first the issuance.
Speaker Change: Other green bond for 500 million euro bonds with a yield of 3.07% in January 2024.
Speaker Change: Also the first issue of a senior Green bond by Rene a corporation issued in June last year for another half billion with a maturity in eight years and a yield of 3.46%.
Speaker Change: We also continue to benefit from the support of the European investment Bank, which enabled us to strengthen our financial position to carry their relevant investment plan we devised.
Speaker Change: Additionally, our ESG linked financing continues to increase now standing at 69% of the total bringing us ever closer to our commitment of 100% sustainable financing by 2030.
Speaker Change: And finally, it is also worth noting that our institutional shareholders our position as a E. S. G.
Speaker Change: Reaches 48% of investors, who consider themselves socially responsible having analyzed at the end of 2024 financial year, which was a very particular year in terms of performance and a very exciting one in terms of strategy plan, we now turn to the future.
Speaker Change: And the way we estimate the company's performance will be during 2025.
Speaker Change: In terms of T. S O investment, we will close 2020 for exceeding the 1.1 billion with promise focusing on projects that will allow us to define a robust interconnected and digitalize network. We now face 25 with the same positive attitude and we estimate to more than triple the pace of investment.
Speaker Change: <unk> to the beginning of our strategy plan, reaching investment levels exceeding 1.4 billion for this year, which would bring us above 4.2 billion cumulative investment between 'twenty, one and 25, which is well above the target we had initially set for ourselves.
Speaker Change: We are thus fulfilling our responsibility once more are the backbone of the energy transition and we can assure that investment will remain at high levels for the next few years and to conclude we finish this presentation with the outlook for 2020 five in line with our strategic objective offering.
Speaker Change: Attractive shareholder remuneration and maintaining a solid financial structure.
Speaker Change: If 2024 was a year earmarked by the end of the useful life of 398 assets 2025 will once more be a record year for foreign investment Mark by the simplification of the group and greater focus on our core network business, our investment efforts allow us to invest.
Speaker Change: Such an estimated EBITDA exceeding 1.25 million euros, and net profit above half a billion euros for 2025.
Speaker Change: Net debt is likely to increase mainly due to the high volume of investments planned for 25.
Speaker Change: However, this increase will be offset by the collection of the 725 million coming from the Hispanicize sale, therefore, leading to an estimate of approximately 5.7 billion by the end of 2025, we therefore close 2020 for a very special year due to the affair.
Speaker Change: A free 98 assets, which was known to us since 2013 and with start 2025 fully focused on the future considering a group are geared towards the deployment of transmission networks with a more solid balance after selling his preferred to face the what solvency the.
Speaker Change: Growth, resulting from our new planning that we will also maintain this year. Thank you very much for your attention and we stand by for your questions.
Speaker Change: Yeah.
Speaker Change: Okay.
Speaker Change: Ladies and gentlemen.
Speaker Change: Yes.
Speaker Change: The question and answer period is now open if you wish to ask a question. Please press star one on your phone keyboard to cancel your question. Please press star two first we'll take questions in Spanish and then we'll take questions in English.
Speaker Change:
Speaker Change: Our first question comes from Fernando Garcia from RBC Fernando. Please go ahead.
Speaker Change: Yes.
Speaker Change: Yes.
Speaker Change:
Speaker Change: Good morning, and thank you for taking our questions and thanks for the presentation too.
Speaker Change: I have two questions about your guidance. The first one is about Capex you announced.
Speaker Change: Our capex higher.
Speaker Change: That amounts to in the past exceeding 1.2 billion for 2025. So my question about that is it.
Speaker Change: Theres, one 4 billion capex, you're announcing to be expected for further years as well.
Speaker Change: And beyond that.
Speaker Change: Well, obviously, we will have to wait for the plan to be published but.
Speaker Change: Do you have any hints about the planned calendar and one that will be issued.
Speaker Change: And then my second question is about net profit euro.
Speaker Change: You're guiding over half a billion for 2025 and considering that your number is for 24, excluding his the fad was approximately 505 million and considering growth from new assets and the potential impact of N plus two.
Speaker Change: Under the new remuneration payout plan.
Speaker Change: We'd be talking about a much higher guidance than half a billion.
Speaker Change: Those are the two questions I have for you. Thank you.
Speaker Change: Thank you very much for your questions and festival regarding the referenced you make of the one 4 billion figure well, obviously that is a pretty big effort that has to be made by the company to get this level, but I can also say that.
Speaker Change: Sure the volume of Capex.
Speaker Change: Will require further preliminary approval. So it's a benchmark that is valued budget. Despite its ambitiousness for 2025, and that's where the future well, we'll have to wait and see what comes out with the new planning.
Speaker Change: I think that the declarations made by the third Vice President recently would lead us to expect that we might be hearing more details over the next few months I'd say, but it's true that the time horizon, we don't know the full scope, yet, but we would expect to be looking at quite high levels higher than this figure.
Speaker Change: Well sincerely speaking, we don't know, but we reckoned that capex will be reasonably high and I'd like to put her for the message.
Speaker Change: But I can eat Rica is doing what it has to do its doing the groundwork to ensure supply everywhere, whilst rolling out that investment and internally as well. We're also getting their facilities, we need to take onboard higher levels.
Speaker Change: But for the moment I can't give you a clear benchmark for the future because we don't have that kind of visibility regarding the planning, but yes, given the messages that are out there and the initiatives being taken to increase the threshold on the limits on investment or perhaps even getting rid of any capital we.
Would expect that investment could be here, even above that are referenced vigor and then you asked about net profit.
Speaker Change: Well that is a benchmark.
Speaker Change: For 2025.
Speaker Change: And if you know us and I think you do.
Speaker Change: You know that we always look ahead.
Speaker Change: In a reasonably conservative manner.
Speaker Change: 2025, our profit will be affected by the review that's done in the regulatory processes and we've taken quite conservative assumptions for including that in our estimates it's.
Speaker Change: It's true the 'twenty 'twenty four was affected by an item of financial revenues that we won't get in 2025, so those kinds of impacts which explained why that 500 million figure has been set.
Speaker Change: And it might look good so it's quite conservative I would seem to be possibly lube and low but it depends on what happens in regulation and.
Speaker Change: We'll have to see what kind of levels that we would commit to get last year's levels. In 2025. The next question comes from Javier Suarez from Mediobanca.
Speaker Change: Go ahead.
Javier Suarez: Yes, Hello, Good morning, everyone. I also had two or three questions. The first.
Speaker Change: Has to do.
Speaker Change: With what's already been asked by Fernando about the Capex one.
On page 34, where you talk about figures of one for $1 4 billion euros now this figure.
Speaker Change: Is it gross or is it in it I.
Speaker Change: I mean, what I'm interested in is to see whether this figure.
Speaker Change: Does include Capex that might be recovered financially speaking through European funding, which wouldn't and feed into the regulatory amounts are reported can you give us an idea about that.
Speaker Change: What kind of Capex are you expecting in 2025, and Capex, which will then feed into your bottom line now. That's my first question. The second one has to do.
With the more philosophical side of the financial structure of the company after selling off his spits out what kind of Russia ratios will you have above all your credit rating.
Speaker Change: You talked about.
Speaker Change: You said that 90% of the business is now regulated business, but I wonder how much will that impact your conversations with the rating agencies.
Speaker Change: Would you expect them to notch down their requirements to maintain the rating that you currently have.
Speaker Change:
Speaker Change: What kind of structure would be the optimum capital structure for you.
Speaker Change: Do have the credit rating that you absolutely have to maintain or do you feel quite comfortable with what you've got.
Speaker Change: And do you think with the regulatory changes your rating could perhaps be impacted by bringing down the requirements. So with the sale of his for certain with the change in the regulations, what kind of impact do we expect to see on your financial position.
Speaker Change: And then another thing which is also conceptually why does the government or the ministry want to delay the approval of the national infrastructure plan.
Speaker Change: Does that have anything to do or do you think it has anything to do with the government. That's may be thinking there'll be a big growth in demand than initially expected, which would mean that the calculations would have to be done, especially carefully and so what we see biopsies are reveal or delay in the approval of.
Speaker Change: The plan because the investment is going to have to be bigger than initially expected do you think that's the correct interpretation. Thank you.
Okay. Thank you Javier so if it's okay I'll give you an outline on the first and the second question and then I can hand, it over to Emilio for an analysis of our financial structure.
Emilio: So about Capex as you asked 1.4 million that's a gross investment.
Emilio: That we mentioned we have European funds authorized for 931 million that will affect commissioning from 'twenty four 'twenty five 'twenty six.
Emilio: Honestly with the volume of investment we expect to tackle in the next few years those funds will be more than welcome.
Emilio: Obviously.
Emilio: When it comes to acknowledging the attributable.
Emilio: As such our foundation, the remuneration would stay but consider that out of that investment we will be making in 2025, approximately 400 million will be subsidized by these P. R T. Our funds.
Emilio: Although we will physically received those funds during 2026 and 27.
Emilio: About the HIPAA set sail.
Emilio: We will discuss that in further detail, but before we go into that I wanted to convey a global message about that deal and strategy terms, which will affect the risk perception of the group.
Emilio: I am convinced that the hit but that deal is positive for all three companies involved.
Emilio: Particularly for Virginia.
Emilio: I believe it clearly sets our objective and our priority what cheese, which is having all immediate possible to enhance our regulated activity presence in Spain, the investment horizon, which is not complete yet will be high.
Emilio: And I believe that by the hits the fan sale beyond our beyond our focus and financial terms at least we'll trigger three positive effect the collecting the prize we agreed which according to our intuition would be closed.
Emilio: And late Q3 this year, perhaps early fourth quarter that would be a first driver and then obviously.
Emilio: His preferred well need a reasonably high investment level to meet their stake and the European project and the renewal of certain satellite.
Emilio: Capabilities that are contemplated in the end, they're planned and which will not have to be dealt with in our new strategy plan within there and as you said it brings the risk profile for the group down.
Emilio: So obviously that generates a stronger our cash balance and we will also need to work with rating agencies to help them understand that were more solid in terms of financial ratios.
Emilio: And lower risk now.
Emilio: In unexpected scenario, where the better regulatory in Redmond ration scenario.
Emilio: We believe that our rating agencies will have visibility on these factors and will lower their demands on financial ratios I'm convinced they will I would say it was a very positive deal and makes us stronger.
Emilio: Considering the the bland, we won't have to tackle very soon any extra flavor on that Emilio yes. Thank you Javier for that.
Speaker Change: Yes to round up your common scrubber if Don.
Speaker Change: Certainly selling his per sat is positive from a credit perspective positive for the group just didn't and treasury terms in financial debt terms the fail wall.
Speaker Change: Bring in approximately 1 billion lower financial debt.
Speaker Change: Net financial debt.
Speaker Change: Less than we would have without that sale, we're collecting 775 million plus the hospice at net financial debt at the end of the year.
Speaker Change: Centering the potential investments are all round up to that.
Speaker Change: The lower 1 billion in net financial debt and also US Roberto was saying in terms of credit rating the telecom business when the satellite business is riskier.
Speaker Change: Than the traditional.
Speaker Change: Core business for a day or.
Speaker Change: So according to our conversations and the memos from rating agencies. The transaction is a positive for us and for our credit rating.
Speaker Change: So we can and in the next few months, we can expect a easier conditions F F O versus debt considering that our group risk has been reduced.
Speaker Change: Nonetheless, the reassessment of those credit ratios.
Speaker Change: It's done by rating agencies after gaining visibility on the new regulation Red electric of Spain will be subject to.
Javier Suarez: Also Javier.
Speaker Change: About planning the plan as you said, we are working on the presence ladwa chairs and ambitious enough and we're executing it swiftly I would say actually last year, we had an absolute record of authorizations.
Javier Suarez: We're just clearly are reflected in our position by next year of 75% of that plan will have been rolled out plus the changes and very specific aspect. So the new plan that is.
Javier Suarez: About to be published will lead to a new strategy plan, we already have a draft for that plan to face. The investments ahead, but right now investments are very demanding and our board of directors are making early decisions in terms of provisions required.
Javier Suarez: And our departments are working on the ground to reach consensus and prepare for required authorizations are the 'twenty 'twenty five 'twenty 30 planning is very special because it changes the general philosophy until now it was based on massive integration of renewables, whereas now the.
Javier Suarez: The new plan at least of the New plan. We expect includes very relevant new features which include the <unk>.
Javier Suarez: Redrafting of demand, we're considering a requested the man that greatly exceeds the previous plan and 100 gigabytes gigawatts that need to be given priority, where the heavy territorial component involving the technical capacity of the network to absorb.
Javier Suarez: That extra demand, including all the renewables and the National plan.
Javier Suarez: While maintaining supply intact. So it's a new challenge integrating this new demand, which is a change in the paradigm.
Javier Suarez: So the minute the new plan.
Javier Suarez: As published or at least are the draft for the New plan is published we will meet with the different regions as we did during the preparation stage to determine their priorities.
Javier Suarez: And therefore do our best.
Javier Suarez: To update our.
Javier Suarez: Our investments, but until the plant is published and approved we cannot request further authorization. So we will continue our commissioning and executing and preparing ourselves for the new plants. So the answer to your question is that the new plan is more complex and involves much higher demand reaching up to 41%.
Javier Suarez: Of all obligations for new connections during the new network deployment.
Javier Suarez: Okay.
Speaker Change: Next question comes from Fernando Lafuente from Alantra. Please.
Javier Suarez: Please go ahead Fernando.
Javier Suarez: Sure.
Speaker Change: Hello, and good morning, Thank you for the presentation I come with two questions.
Speaker Change: The first one the million dollar question, Youre, saying, youre, making conservative assumptions for your guidance, but I would like to hear your opinion about a reasonable.
Javier Suarez: Return can be placed basically considering the messages issued by <unk> in their own earnings report last week.
Javier Suarez: And then the second question is about your asset portfolio I mean, now that you sold half the fat.
Javier Suarez: Do you.
Javier Suarez: Are you contemplating any noncore assets that you might sell I don't know maybe in Latin America.
Javier Suarez: Anything about that.
Javier Suarez: Have you found your perfect asset basket or are you considering something else. Thank you.
Javier Suarez: The number for that question and yes, what are we expecting.
Javier Suarez: From the review of the tariff.
Javier Suarez: For the financial return on regulated assets.
Javier Suarez: And obviously, the creatives needed and so they have to accelerate the rollout of the grid infrastructures now that's complex them, we have to make sure. We were always competitive when raising funds for our projects and we understand that the reasonable way of going about this is to have a minimum benchmark.
Javier Suarez: Of about 7%, 7% benchmark, which several companies in the business or considering to be valued at the moment and from then on it's up to the regulator to assess the caisson.
Javier Suarez: Coherence with the energy policy of the government and what we have to do in getting the infrastructure ready for all of the business that we've talked about this a lot in our guidance for 2025, we think the benchmarks would be more conservative.
Javier Suarez: But given the environment and the changes in regulation and what we have to do we think that that.
Javier Suarez: Is a benchmark of about 7% minimum which is what should be taken into account by the regulator and then you asked about asset rotation well, we talked about in the presentation with the sale of his preset, we've pretty well completed that part of our strategy plan.
Javier Suarez: It's true that the financial situation of the group right now is excellent we're in a privileged position to deal with the Capex required for the next few years and you May remember we started.
Javier Suarez: With the sound a minus rating, we got European funds and we'll continue to do so to fund our growth and we will see an increase in the operating cash flow, which will be pretty important over the next few years our capacity.
Javier Suarez: We have to boost finance through hybrid instrument issuance is quite important so we've got enough drivers to take onboard whatever might come obviously, we're not contemplating any other ways of financing this growth by issuing further capital or anything like that.
Javier Suarez: But we do have a lot of drivers available to us to grow so we're not thinking that we need to rotate any of the rest of the assets. We have we say 90% of our activity is down regulated we're also including international activity and the returns there are obviously higher than what we obtained in Spain, but in the <unk>.
Javier Suarez: Regulators.
Javier Suarez: Stable and secure so right now we've got sufficient drivers to not have to think of for the further divestment.
Manuel Palomo: The next question comes from Manuel Palomo.
Manuel Palomo: From BNP.
Manuel Palomo: Go ahead.
Speaker Change: Hello, Good morning, many thanks for the presentation and for answering the questions. My first question.
Speaker Change: It's a follow up on.
Javier Suarez: On the answer you gave just now.
Javier Suarez: About that's the minimum.
Javier Suarez: Is that for the finance, who return exclusively Oh.
Javier Suarez: Is it 7% as a minimum for everything including the impacts of possible efficiencies you might get in Opex or capex. So that would be my first question.
Javier Suarez: And then the second question would be.
Javier Suarez: Unless in a way is linked to what you have to sit in your answer.
Javier Suarez: Got it.
Javier Suarez: Your capex, which seem to be way higher than we'd expected more than 1.4 billion for 2025.
Javier Suarez: And from what.
Javier Suarez: I've been able to understand that might be a benchmark for a run rate over the next few years for your Capex.
Javier Suarez: Yes.
Javier Suarez: How can you finance this.
Speaker Change: Do you really think that with your free cash flow.
Speaker Change: It will be sufficient you'll be generating enough free cash flow.
Speaker Change: Yeah.
Speaker Change: I think the market is quite concerned about that are you thinking of using other assets and then the other question I have has to do with.
Speaker Change: Your investment.
Speaker Change: Some of the utilities.
Speaker Change: Probably the majority of them.
Speaker Change: The the National Energy plan recently approved is perhaps too optimistic.
Javier Suarez: I'd like to ask two want to Corey do that's electric because investments depend on achieving the targets of the national energy plan.
Javier Suarez: And then finally and this is conceptual.
Javier Suarez: But I think as the system operator your opinion.
Javier Suarez: His board and valid.
Javier Suarez: It's about the closure of nuclear power stations, what's your opinion.
Javier Suarez: Vote decommissioning nuclear power.
Speaker Change: But in terms of supply security I think that's vital for you isn't it.
Javier Suarez: Thank you.
Javier Suarez: Yeah.
Javier Suarez: Thank you Manuel.
Javier Suarez: So let me give you some visibility on your first and second question and I'll leave it to Emilio to deal with the way that investment volume will be financed.
Javier Suarez: Okay. So about the regulator scheme, we expect this year, obviously T. R. F. S. One oh the F. R. R. As one of the main elements to consider but the model affecting the transportation or transfer activity has other components that need to be reviewed during the year.
Javier Suarez: Here.
Javier Suarez: When we mentioned, 7% we're talking about.
Javier Suarez: The minimum affecting financial remuneration.
Javier Suarez: But the model that applies to all of US right. Now does not include remuneration on current works, it's not indexed to inflation, we're working with single reference values that have been valid for a decade. So we do expect that during the revision period by the regulator.
Javier Suarez: The changes will be applied and we're grateful to the regulator for listening to us and being open to hearing about new initiatives.
Javier Suarez: And says we want to converge to similar regulatory frameworks in Europe.
Javier Suarez: We aim to.
Javier Suarez: C a reveal of unit reference values.
Javier Suarez: After the price increase with witnessed in the past few years and the huge demand for transport power transportation and distribution networks.
Javier Suarez: That we will have to deal with in the next few years.
Javier Suarez: So considering the global picture of we do expect a reasonably better environment than the present, one including a better F. R. R and other main parameters to be entered into the model.
Javier Suarez: That's the global picture, that's an overview as for how we will finance this investment horizon without visibility on the brand yet we can guess that there's 1.4 million.
Javier Suarez: Is or Belgian it is manageable.
Javier Suarez: For the next few years.
Javier Suarez: And at the risk of repeating myself I will say that we have plenty of financing alternatives.
Javier Suarez: And in no case are we considering a capital increase at all within reasonable circumstances of course.
Javier Suarez: We do have several layers of possible decisions before going into asset divestment.
Javier Suarez: Some of these options are profitable and already considered before we even consider a capital increase so we're relatively.
Javier Suarez: Yeah.
Javier Suarez: Confident there anything you would like to add a million. Yes, we have several drivers that will allow us to do Li finance the demanding capex are.
Javier Suarez: Coming upon us in the next few years and as you said yourself Manuel.
Javier Suarez: Capex are likely to include <unk>. After the impact of this new F or are we don't know how much it will amount to but it will be higher than now plus the volume of our.
Javier Suarez: Support and subsidies.
Javier Suarez: We will get subsidies for all items exceeding 1.5 billion euros that we'll significantly.
Javier Suarez: Support our investments and will help us reinforce our capital structure at the same time, we can also issue hybrid financial of papers, we already issued the first hybrid for half a billion euros and with our balance sheet capabilities. Now we are able to issue approximately $1 3 billion.
Javier Suarez: Top of the 300 million, we already have and as we continue to invest in the next few years and our as our balance sheet grows this capability to issue hybrid papers will grow as well.
Javier Suarez: These are slightly more expensive instrument, but to reinforce our capital N. Our a credit rating, we would consider that a driver.
Javier Suarez: From now on so those are three different layers to reinforce our balance sheet plus access to different funding sources.
Javier Suarez: To highlight the support we were offered by the European investment Bank to finance flagship projects like GTR, Saudi hour, the interconnection with France at very competitive prices.
Javier Suarez: Plus other sources of funding like issuing funds or bank loans.
Roberto: Roberto was saying.
Roberto: Considering the analysis and the assumptions we've made so far we are rolling out a capital increase and we have several instruments to help us fund our capital investments and our coming years.
Roberto: Yes about your last two questions are two inner energy integrated plan, we have drawn a road map in the tool box that would make this deployment possible would be the plan. So far we have a we have always delivered when called upon so.
Javier Suarez: Our plan is binding.
Javier Suarez: Uh huh.
Javier Suarez: Triggering agencies, our plan is not so our responsibility is to our network and we stand by it.
Javier Suarez: Until the end actually if we look at the renewable energy numbers that are already in service or with axis applications everything seems to indicate that we will actually meet the P&I ECA requirements.
Javier Suarez: But nuclear shutdowns were key operator, and our reason for existing is supply.
Javier Suarez: Security and maintenance.
Javier Suarez: So shut downs or a request that the ministry and the Ministry will consider whether or not each step.
Javier Suarez: The nuclear shutdown path, well maintain our supply and supply security and that's where we stand in that process. Thank you.
Speaker Change: Next question from Ignacio Dominic from Saturday capital.
Speaker Change: Ignacio go ahead please.
Speaker Change: Hello, and good afternoon, and thank you for the presentation and for taking our questions. My first question is a follow up on.
Speaker Change: We our investments of point for a $1 4 billion you said that approximately point 4 billion will come from subsidies right.
Speaker Change: So I wanted to understand the timing for those 931 million, where does that strike you during 'twenty four 'twenty five 'twenty six or does it extend until 'twenty seven.
Speaker Change: Also.
Speaker Change: Beyond those 931 million.
Javier Suarez: I understand there are.
Javier Suarez: Other subsidies.
Speaker Change: For interconnections right can you provide some more detail about that that's the first question and the second one is about the strategy update.
Javier Suarez: Your strategy update.
Javier Suarez: Okay.
Javier Suarez: Do you expect to introduce an update soon.
Javier Suarez: Around Q2, this year or something in connection where the regulation update and also could you. Please provide.
Javier Suarez: A hint.
Javier Suarez: And where you intend to go with your investment levels in the next few years.
Javier Suarez: In terms of a better pay out.
Javier Suarez: Scenarios.
Javier Suarez: What to pay out scenarios.
Javier Suarez: Your company considering if.
Javier Suarez: If you can provide those thank you.
Javier Suarez: Thank you Ignacio European funds well there.
Javier Suarez: Let's see if we can clarify things.
Speaker Change: We've got approval for a subsidy.
Javier Suarez: 931 million euros for commissioning projects.
Javier Suarez: From 2024 to 2025.
Javier Suarez: And before the end of June 2026, so with the volume of conditioning that we have got in our planning.
Javier Suarez: For these years, we've estimated that the subsidy can be distributed 300 million.
Javier Suarez: Financing some of the commissioning that we already did in 2020 for 400 million.
Javier Suarez: Subsidizing part of the project's full commissioning in 2025, and then all the rest in 2026 projects. The thing is with the process. It has to go through the administration in order to draw down the subsidiary so they wouldn't actually be there as cash in what are they as books.
Javier Suarez: Until 2026 and in 2026 and 2020, Stephanie is when they'll be on our accounts. That's the effect of the economic flows really and we have to net things out to see what the drop is commissioned in 'twenty four 'twenty five and half of 'twenty six.
Speaker Change: Additionally, and he's absolutely correct, what you said.
Speaker Change: We've also got additional subsidies for financing the interconnection project with friends over the bed. This go the project as you know was for more than 200 million and its additional in finish no subsidy from European funds, but there's also additional funding that could come for over 400 million from.
Javier Suarez: The congestion fees, which we received 200 million of already.
Javier Suarez: So that means that that's the total volume that Emilia was saying of the 1.5 in funds that we could get from Europe.
Javier Suarez: And that means we'll be welcoming them they'll be very welcome and then the plan will the future strategy plan.
Javier Suarez: For the year will depend a lot on the remuneration parameters set and what comes out of the planning process, but from what we've seen so far although we don't have any certainty about it we think that we can be sure that in the second quarter of this year, we will have more visibility about the T. R F.
Javier Suarez: For them from the first planning draught.
Javier Suarez: And the initial remuneration will get it in the models that we have and the F. F off then.
Javier Suarez: That will mean that into summer, we won't be able to complete the full strategy plan with all the parameters with any certainty as to the future plan. It's obviously going to show who significant growth in the company is brought it up.
Javier Suarez: And when we look at that.
Javier Suarez: It's going to.
Javier Suarez: Yeah.
Javier Suarez: Be quite upbeat regarding.
Javier Suarez: What we'd be able to do as the dividends well, we'll have to have all the input we required to have a full picture of what we can do but definitely one of our priorities and that idea is to share the value that we meet with our shareholders and our payout policy will be a fundamental part of our strategy plan.
Javier Suarez: As we firm it up in the future.
Speaker Change: The next question comes from Jorge Alonso from Bernstein.
Javier Suarez: I had please.
Javier Suarez: Uh huh.
Javier Suarez: Thank you very much good morning.
Speaker Change: My questions have to do with what you just said.
Speaker Change: About the subsidies in your Capex could you give us.
Speaker Change: Some figures.
Speaker Change: And what Youre commissioning.
Javier Suarez: So we can do our estimates and see what kind of influence.
Javier Suarez: This will have on your earnings in.
Javier Suarez: In 2024, how much did you commission how much will be commissioned in 2025, and if you have an idea about 2026 and give us an estimate figure that would be fantastic. In this context could you also give us a figure of how you'll work in progress is going to look at but you've got the year end figures for 2024, So we know what you've already invested.
Javier Suarez: And how much of that is work in progress.
Javier Suarez: It has an impact on that but not on the drop or the leader.
Javier Suarez: Then could you give us an idea about what you're expecting for the cost of debt over the next few years. Thank you.
Javier Suarez: Thank you for your question Jorge.
Speaker Change: So we'll give you a joint reply malian myself about commissioning as we said during the presentation for this year 2025, we estimate our gross commissioning value of 1.1 billion that will be needed for the point for a Belgian we discussed from European funds.
Speaker Change: As for the next few years well whatever we do will depend on the new National plan, but allow me to remind you that in 2027 and 28 very relevant.
Javier Suarez: Jack will will come up we're talking about storage and the insult to the Chita, Andy interconnection with France, which will come about in 2027, and 28 and at that point, we will have a relevant commissioning impact in terms of operational cash flow considering the perspectives for years 28 and 20.
Javier Suarez: Nine so at that point, we do expect to have a significant progress.
Javier Suarez: And in terms of ongoing works, which were already singling out because of work in progress from Salta Cheetah Cheetah is already are remunerated at the F. R. R. As approved by the Ministry for energy transition and that involves approximately 280 million.
Javier Suarez: <unk> of current works remunerated for the Chita project and about 2.5 billion for ongoing works for other transmission assets that are not remunerated, so far but well be under the new.
Javier Suarez: Regulation framework, where at least we expect though so those are a threshold I'll leave a financing to Emilio.
Speaker Change: Yes of course, the financial cost of debt and debt at an average.
Speaker Change: Bridge of 2.27 at present at the end of 'twenty four as we wrote in the presentation and as we said 90% of that debt is fixed rate, but obviously as matured debt maturity. He's arrived and new fundings are faced that number will gradually shrink.
Speaker Change: We expect to have a financial cost of around 2.4% at the end of the year.
Javier Suarez: And.
Javier Suarez: We understand there will be a progressive increase and later years.
Javier Suarez: This will obviously have a certain impact on the financial expenses this year of which according to the effect of this light interest rate increase might go up by 10 million euros.
Javier Suarez: And another 10 million due to the growth and that our volume and as Alberto was saying, we will have lower financial income in 2020 five than we did in 2024, because there will be less a treasury available.
Javier Suarez: Yes.
Speaker Change: Thank you no further questions in Spanish we will now take questions in English.
Javier Suarez: Yeah.
Javier Suarez: Okay.
Speaker Change: Thank you as a reminder, please press star one if you'd like to ask a question first question is from opposite on at Morgan Stanley. Please go ahead.
Speaker Change: No. Thank you very much for taking my question. The first one is on the Q4 results.
Javier Suarez: I noticed that there were.
Javier Suarez: There was quite strong EBITDA in Spanish transmission and in the Q4 compared to the compared to last year and yoga quarters. I was wondering if there was any.
Javier Suarez: Who did you one off in there or any negative one offs in Q4 last year or anything that we should have in mind or if it's a sustainable pace of our EBITDA generation in that path and similar question as well.
Javier Suarez: The associates and and JV line in the equity income.
Javier Suarez: In Q4 was actually quite deal because it was quite weak.
Javier Suarez: And I read about the nonrecurring impact from Chile, I was wondering if you could quantify that in and if you could say if that would normalize entirely in 2025.
Javier Suarez: The second question is on the net debt.
Javier Suarez: So you're talking about $5 7 billion of net debt in a 2025 I just wanted to make it clear basically on the on the subsidies.
Javier Suarez: Contributing to reduce that debt.
Javier Suarez: I think you've got 200 million in 2020 four basically what you're saying is that you wouldn't get zero in 2025 and all the rest of.
Javier Suarez: Of the $1 5 billion will come in 'twenty, six 'twenty seven or I don't know if I've misunderstood then there is some some subsidies that will come in cash and 25. Thank you very much.
Javier Suarez: Okay.
Javier Suarez: Thank you very much now as to your first question.
Javier Suarez: You'll remember the from 'twenty to 'twenty two to 'twenty three we were managing a special plan for the maintenance of the assets in the network, which accumulated 100 million over the two years, but it was especially intense in the final quarter of twenty-three and that meant the part of the differences that you observe.
Javier Suarez: Looking at the last quarter of 24 compared to 23 is down to those yeah. One offs, we couldn't say.
Javier Suarez: Which we had to additionally, manage in December 'twenty three.
Javier Suarez: And then to give you a point of reference.
Javier Suarez: With fiber optics and that what we've got him read 10 for 2025, we're expecting to see a slight increase in Nevada does there is some adjustments with one offs in 'twenty to a default, but we were expecting for 'twenty five is they'll get consolidated upbeat there at the current levels or possibly.
Javier Suarez: Even a bit higher than what we and the 24th.
Speaker Change: And then I've put net financial debt I mean, there were like 25 is collecting the price of the stake in his preset and it's true that most of the European funds will come in 'twenty 'twenty six 'twenty seven but Emilio will you probably got some other items you can add here well just continuing with the sub.
Javier Suarez: As we've already mentioned, yes in 2025, we are considering that we'll collect subsidies to of about 200 million euros between well most of it actually will come from the congestion in fees that we already talked about but also some of the.
Speaker Change: 30 million euros, we'll collect from the European subsidies for the interconnection with France.
Speaker Change: So in our net financial debt for 2025, we were including the increase against 2024 of 250 million approximately.
Javier Suarez: And that's positively impacted by the 200 million in subsidies are negatively impacted because.
Javier Suarez: As we've already told you in our presentation at the end of 'twenty toward where you've got some 200 million euros, which we had to return to the system.
Javier Suarez: Because we still have the provisional settlements for 'twenty through 2022 'twenty, three and 'twenty four and we think in 2025 will be regularizing. The situations totally and then we'll have to make that payment.
Javier Suarez: And then the rest of the increase in our debt is moderate given that indeed will be collecting 725 million euros from the sale of his preset and will also have an a beta which will be significant obviously will have to use it in order to be able to cover the level of investment we have of that 1.4 billion euros that we've.
Javier Suarez: Already been discussing.
Javier Suarez: Yeah.
Javier Suarez: Okay.
Speaker Change: Thank you. Our next question is from James brand at Deutsche Bank. Please go ahead.
Speaker Change: Hi, James can you. Please check your line is not on mute.
Javier Suarez: Unfortunately, we're not getting any audio from James's line, So I will move on.
Speaker Change: And we now have no further questions on the English room.
Speaker Change: In that case, we can now take questions that we've received through the mail messages have already been done.
Javier Suarez: But analysts have asked us much improved bone bank.
Javier Suarez: Bank of America, Barclays, and Brilinta, Cuatro and invest in better.
Javier Suarez: So the two questions outstanding are we expecting to obtain further subsidies take into account the higher capex, we're going to have to deal with.
Javier Suarez: That's the first question or shall I give you that as to what the.
Javier Suarez: Remuneration on financial assets for 2025, and can you give us some forward looking information on that.
Speaker Change: Well first of all thank you for your questions No. We're not working on the scenario, which would include other subsidy as a starting point is what we've already discussed as Habib said, the total figure probably will be about.
Javier Suarez: 525 billion.
Javier Suarez: And we're looking at the kind of remuneration and we're not expecting to get further subsidies from funds and you ask about the rep.
Javier Suarez: And.
Javier Suarez: That's the starting point for recurring growth over the next few years. So the point of reference there would be that it's quite complex you have to look at the old us. It's a back book and such like but we're talking of about 10.5 billion. That's a reference point as a starting point.
Javier Suarez: Okay, well that was the final question and so we can wrap up today's presentation as always the Investor Relations team is here to clarify things further if you want so many thanks to everyone to see you soon.
Javier Suarez: [music].
Javier Suarez: Okay.
Javier Suarez: [music].