Redeia Corporación, S.A. (RED) Earnings Call Transcript & Summary

Good morning, ladies and gentlemen. We're now ready to begin our presentation of the results for the first half of 2023 and we'd like to welcome everyone following us by phone and over the website. Today, we're joined by the company's CEO, Roberto García Merino; and Emilio Cerezo, our Corporate Director of Economics and Finance. So I'll now hand over to our CEO.

[Interpreted] Many thanks so and thank you to all of you for attending this presentation, in which we want to share the most relevant milestones attained during the first 6 months of 2023, Redeia's performance in the first half of the year and the results we've achieved in a period that hasn't been without its challenges. We'll begin by highlighting the most important aspects of the period and then we'll drill down into the results achieved in the first half of the year. In a context, which continues to be complex in geopolitical and macroeconomic terms. We'll wrap up the presentation, offering you our most updated vision for 2023 and reviewing the progress made in achieving the objectives of the current 2021 to '25 strategy plan. And I should also say that at the end of the presentation, we will have time to answer any questions you might have. So let's move on to discussing the most important aspects of the period. The current context worldwide means that sustainable, secure supply and availability of energy correctly priced continue to be crucial for our transition towards a more sustainable future. At Redeia, we're fully aware of this reality and that's why we are redoubling our efforts to move towards a decarbonized energy system, providing neutral access to the electricity grid and that's why we have continued to work to ensure there's a neutral telecommunications infrastructure that can, once and for all, close the digital divide contributing to innovation and progress in society. Proof of this effort can be seen in some of the advances we've achieved in the first half of the year. So let me start by highlighting this point in particular. We have considerably boosted our investments in developing the electricity system, accelerating the rollout of our strategy plan. We've also put the Amazonas Nexus into service after successfully arriving to its final orbital position, which is 61 degrees west. This satellite, which is aimed at air and maritime mobility market, will enable high-speed Internet access throughout the American continents. The Northern Sustainability Plan for 2023 to '25, in which we've defined 87 intermediates and management objectives and 190 actions to achieve them, perfectly aligned with our current strategy plan and with the 2030 sustainable development goals. This plan aims to maximize the company's contribution to sustainable development, fostering responsible management and consolidating our position as a global leader in sustainability. And finally, we've concluded the negotiations for the Collective Bargaining agreements of Redeia Corporación of the group companies, employees to the current economic and business situation. Furthermore, we believe that Redeia is ready to meet the challenges that lie ahead for coming years. We firmly believe that the success of the energy transition will be based on connecting renewable resources to the transmission grid in an efficient and safe manner, achieving an increasingly decarbonized electricity system. So there, we can definitely be considered a benchmark in integrating renewables into a system that already maintains admirable figures for clean electricity with record highs in wind and solar photovoltaic generation. Specifically, the grid has made it possible to integrate 98.4% of production from clean sources into the electricity system, which means that only 2% of this renewable energy is wasted. That's a percentage well below the 5% limit established by the EU as the efficiency benchmark in management of the system. We can also affirm that we are accompanying Spain as it switches its energy model to one that is more sustainable. In this context, we have the National Energy and Climate Plan as a road map for projecting a country that's cleaner in terms of energy and whose different territories are better connected and more cohesive. As you know, a draft of this plan has been put out with an update with more ambitious targets now for 2030, including an increase in the target for renewable generation, which goes up from the previous 74% to now 81% in 2030. It also introduced stronger objectives in the field of storage and the importance of transmission grids and investment in smart grids to achieve a system that's compatible with the energy policy and climate goals set by the EU. It's also important to note that the emission reduction targets in this draft are 9 percentage points higher than in the previous plan and energy dependence targets have been brought down by 10 percentage points from the last plan. Thus, the electricity planning that defines our investment plan is key to being able to meet the commitments established for the following years. In this process of developing the system, the Royal decree 2022 outlines the objective of incorporating specific amendments to the 2021 to '26 planning to include the urgent actions that are strategic and a priority for the energy transition and that allow for the development of the industrial value chain while also kicking off a new planning process for 2024 to '29. Moreover, the increase in interconnections within the non-mainland electricity systems will have a direct impact on the security. It's also well known, although this time, as an area where we need to improve, the degree of interconnection of the Iberian electricity system with the rest of the European continent is below the established targets. Right now, Spain's interconnection level is less than 5% of the generation capacity installed in the system. In 2023, Spain will be the only country in the European Union below the 10% target set for 2020, so it will be necessary to continue developing new interconnections where Redeia will continue playing a leading role. And in our Spanish TSO business, we're keeping up the sound investment momentum we've had for some months now, bringing forward investments to make the energy transition a reality. We are creating sustainable, smart and resilient grids. In this first half, we've increased our investments in the TSO by more than 70%, especially with the initial steps for the interconnection with France, progress has been made in the construction of the Chira-Soria pumping station and the commissioning of the new link between Ibiza and Formentera. And regarding this new link, I should point out that the interconnection will be able to cover 100% of Formentera's energy demand at all times, offering security and quality of supply. This is a huge leap forward in the energy transition of the smallest of the islands of the Balearic Archipelago. This interconnection involved an investment of EUR 96 million. It was also carried out in record time, 21 months, which was 6 months ahead of the scheduled commissioning date. On top of this, our investments are focused on facilitating the energy transition in the countries where we operate and on reducing the digital divide and achieving global connectivity across all the group companies' infrastructures. The highlights in the period for international electricity transmission include the expansion of the Centinela substation in Redenor 2, the commissioning of Tesur 4 in Peru and the integration and consolidation of the assets acquired at the end of last year in Brazil, which doubled the size of our business in that country. In satellite activity, the Amazonas Nexus satellite has reached its orbital position and has started commercial operations. I'd like to remind you that the initial investment was roughly $300 million for a satellite with 15 years of activity. It currently has 80% of its capacity already committed, which means it has a backlog of around $600 million. In addition, on the 18th of June, we launched the UNICO Demand Rural program, finance with European next-generation funds, which is allowing us to close the digital divide in Spain by bringing broadband connectivity via satellite to vastly populated remote and widely dispersed rural areas. Hispasat will be 1 of the 5 companies that will lead the consortium that could develop the IRIS 2 constellation. This is an EU initiative to create a low orbit satellite system to provide high-speed Internet access. This consortium aims to foster collaboration between all the EU actors in the space connectivity value chain to enable the strategic autonomy of the European Union become reality by providing sovereign, secure and resilient government services. In the field of fiber optics in Spain, we can highlight the agreements reached by Reintel with wholesale telecommunications operators in Spain to provide connectivity to the Ruta de la Plata by means of 2 600-kilometer dark fiber links and to contract fibre optic backbone sections with an approximate length of 700 kilometers. These agreements are part of Reintel's organic growth plan through local and regional operators, which once again consolidated as a benchmark provider for network deployment at a national level. So I'd like to wrap up here that stressing that all this activity I've just described is framed in a context where sustainability is a fundamental driver for promoting progress and well-being in the regions that the company works in. And this performance is recognized by the main sustainability indices in which Redeia is once again one of the top level companies. I'll now briefly comment on the results achieved in the period and their main figures. And then I'll hand over to Emilio, who will analyze these results in greater detail later on. So looking at the main figures achieved during the first half. In general, we can speak about a good half year with P&L performing in line with last year's figures in a complex context, and we can highlight the significant evolution of our investments. All this will allow us to make sound progress towards achieving the objective setting our strategy plan. So first, I'd like to highlight the excellent performance of the main items on the P&L, especially the fact that revenues rose by more than 3% year-on-year with an EBITDA slightly higher than in the first half of 2022. Secondly, I'd like to highlight the increase in TSO investment, where we continue to focus all the company's efforts on meeting the targets that we've set for ourselves. Thirdly, let me also highlight our commitment to the soundness of our balance sheet with a reduction in net financial debt that will allow us to face the strong volume of investments that we expect in the coming years with full guarantees. Lastly, I'd like to highlight that on the 3rd of July, we paid out the final dividend for the year 2022, thus fulfilling our commitment to the market. So I'll now hand over to Emilio Cerezo, who will analyze these results in greater detail.

[Interpreted] Thank you very much, Roberto. I will now take a closer look at the income statement as a whole where the following things are worthy of notice. First of all, just as our CEO said, revenues for the period reached EUR 1.06 billion or an increase of 3.2%, thanks to the contribution from our Telecom and International businesses. EBITDA grew slightly by 0.6% as a result of solid performance of revenues and partly offset by higher operating expenses after the addition of new companies into the consolidation scope and the effect of accounting for certain costs associated to Chira-Soria, among others. Furthermore, EBITDA coming from regulated businesses accounted for more than 83%. Net profit was EUR 354 million or a reduction of 2.4% year-on-year and with minority interest linked to the sale of 49% of Reintel as the main cause for this drop. If we move on to analyze revenues by business line. The aforementioned contribution of diversification business stands out. Their solid organic and inorganic performance has made it possible for Redeia to contribute EUR 37 million to group's revenues. The regulated business in Spain had a slightly negative contribution revenues from system operation grew by EUR 4 million due to the review of remuneration parameters for the regulatory period 2023 to 2025. Also, we obtained more income from third-party projects, but these were not enough to offset the EUR 9 million drop in transmission activity, mainly driven by our forecast for 2023 following the new criteria included in the final tariff orders for 2016 to 2019. In International business, which grew by EUR 12 million, we can highlight the positive contribution of Redenor in Chile or Tesur 4 in Peru after their respective commissioning. The increased work on behalf of third parties and the favorable effect of exchange rates. Also, the incorporation of new assets to the consolidation perimeter of Argo in Brazil in December 2022 and better results of TEN in Chile also help explain this performance, and the telecom business improved revenues come mostly from the addition on Satellite business. In the opposite direction, there were lower revenues due to the scheduled discontinuation of video services in Brazil. There's growth rest of improved results of investees due to greater contribution from Hispasat following the signing of a new contract with the Ministry of Defense. Finally, on the side of fibre optics, making these contracts to inflation as the main driver for improved revenues. If we now focus on operating expenses, we see that this grows by EUR 50 million or 18% higher than the same period last year. However, to more clearly understand this performance, it can be useful to break down the increase between comparable and noncomparable expenses. As we can see on the slide, noncomparable operating expenses grew by EUR 43 million, mainly driven by the addition of access to the perimeter for EUR 27 million and the accounting of associated costs for Chira-Soria for EUR 21 million. The reason is that regulation applicable to the accounting these assets requires a construction of costs and revenues based on the degree of progress, thus generating a net impact on EBITDA for the remuneration of the work in process, which rose to EUR 3.6 million during the first half of the year. In addition, the noncomparable effect coming from international construction projects must be taken into account, and this was EUR 5 million. As for comparable costs, we see that these only went up by 2.5% despite the inflationary environment in which we find ourselves, mainly driven from higher staff expenses linked to a growing workforce and the costs in connection with collective bargain agreements signed at the beginning of the year. In this sense, collective bargain agreement had a nonrecurring accounting impact at the end of last year and these will be normalized at the end of this year. The performance of revenues and expenses leads to an EBITDA showing a slight growth over last year, supported by a positive contribution of the group's regulated businesses. Under TSO, efforts made to contain operating costs have successfully offset a reduction in regulated transmission revenues. EBITDA from International business also grows thanks to higher revenues and the contribution from investees. EBITDA in the satellite business shows frank compared to previous years due to the expected expiration of some video services in Brazil. And yet, the recent start-up of commercial activity and the new Amazonas satellite will make a significant positive contribution. EBITDA from the Fibre Optic business declined slightly due to an increase in electricity costs. Net profit. Net of the effect of noncontrolling stakes for the sale of 49% of Reintel was placed 1% above last year. The improvement in EBITDA and financial results due to positive management of cash surpluses that provided financial income during the period were offset by a slightly higher effective tax rate due to taxation associated to the dividends received from group companies. As for investment, we continue to allocate capital in line with the group's strategic priorities established for the '21 to '25 plan. As we can read on the slide, the group's total investment amounted to EUR 414 million. We consider that it is important to underscore that TSO investments reached EUR 354 million or a 74% increase over the same period last year. Among other actions, we see the boost generated by investments linked to the interconnection with France via the Bay of Biscay Group or the commissioning of the new submarine link between the islands of the Ibiza and Formentera. International investment activity was limited as expected to completing Tesur 4 in Peru and certain progress in Redenor 2 substation in Chile. In telecommunications, investments may came mostly from the launching of the new Amazonas Nexus satellite, which was recently put into commercial operation as we recently said. And to conclude the section of investments, I must underscore that over 85% of the company's organic investments are eligible under EU taxonomy. The group's net financial debt stands at EUR 4.3 billion, EUR 321 million below December 2022. I must remind you, however, that the EUR 500 million of hybrid bonds issued in January are accounted under equity. At the same time, average gross financial debt went from EUR 6.4 billion to EUR 6.1 billion at June 30, 2023. Operating cash flow generated during the year exceeds EUR 280 million, mainly coming from 2 contrasting aspects. First, the generation of a solid cash flow from operations rising to EUR 632 million from improved profit before taxes and higher interest. Second, due to the negative contribution coming from working capital, which involved a cash outflow of EUR 345 million, driven mainly by the refund of excess tariffs collected in previous years. Taking all of the above into account and considering investments made through the year, payment of dividends and the funds coming from the hybrid bond issue, net financial debt fell by 7%, thus showing solid financial ratios and maintaining an attractive credit rating. In the sense, Standard & Poor's recently reaffirmed our rating at A- with a stable outlook. It is particularly noteworthy in our debt structure, the high fixed rate percentage of 90% considering the trend in interest rates for the past 12 months. The structure allowed average cost of debt for the group to stand at 2.11% despite the complicated interest rate environment. Over the next 5 years, we will be facing maturities of approximately EUR 3.9 billion, out of which EUR 3.3 billion are already covered by a strong liquidity position. I must also mention the efforts the company continues to make and sustainability by finance and green projects contributing to energy transition and mitigating climate change, 100% streamlined with the EU taxonomy. During the period, there have been 2 significant milestones. The expected issuance of hybrid bond for EUR 0.5 billion, reinforcing the solidity of the group's capital structure, strengthening our solvency and diversifying our investor base as well as acknowledging our sustainable commitment by the fiscal 2023 award. We are finally proud to state that 57% of our financing is linked to ethical, social and environmental criteria, bringing us closer and closer to our commitment of having 100% ESG financing by 2030. Ultimately, we can conclude that we are positioned as a benchmark in ESG due to having 45% of our institutional shareholding cataloged as socially responsible investment. Having analyzed the end of midterm, I will progress about TSO investments, which have significantly accelerated in the transmission network and more reach levels already close to the company's record highs in 2023. This makes it possible to confirm the current new investment cycle, keeping our investment targets for the end of the year at around EUR 700 million, with prospects of even surpassing these levels. In EBITDA, it should be noticed the higher TSO commissionings, the greater contribution from the latest lines acquired in Brazil and the new commissionings in Peru and Chile for the International business, the stable fiber revenues contractually protected against inflation and the slightly lower contribution from the Satellite business due to the expected end of certain connectivity service in Brazil, give us a forecast of estimated EBITDA of over EUR 1.5 billion in 2023 and net profit in line with those obtained in 2022, with both figures consistent with the strength and stability of our business lines. So we can now move on to discussing the progress we've made in our 2021 to '25 strategic plan, just as we're at the halfway point in it. First of all, I'd like to remind you of the efforts the group has made to increase its investments in the transmission network in Spain, which is reflected in an increase in the 2021 to '25 investment target from the initial EUR 4.4 billion, up to a figure of around EUR 4.8 billion, with a 10% increase in the TSO investment target. This increase is underpinned by the change in the company's investment dynamics, which has led us to exceed EUR 700 million this year. And that means that by 2025, our best estimate is to reach a TSO investment volume of around EUR 3.7 billion as against the initial EUR 3.35 billion we had to start with. So for this first half year, we've made 10% progress toward the TSO investment target in 2025 and we expect to complete a further 10% in the rest of the year we have ahead of us. We've already completed our organic and inorganic investment targets in the international markets. And in addition, we've made 47% progress towards our investment targets in the telecommunications activities in the first half of the year. So as you can see, in general terms, investment is rolling out as planned with the pace and volume committed increasing in the case of the TSO. We can conclude by once again reaffirming our financial targets for the period up to 2025, offering attractive shareholder remuneration and maintaining a sound financial structure. So that concludes today's presentation. I'd like to thank you for your attention and to say that we'd be very happy to answer any questions you may have.

[Interpreted] [Operator Instructions] The first question comes from Javier Suarez from Mediobanca.

[Interpreted] I had 2 or 3 questions. The first one has to do with your business plan update and when we should expect to see. I mean in the presentation, you said that the end of the climate plan should move to us towards the end of 2024. But does that mean that once you've got more visibility about it, you'll be able to come up with a new business plan, maybe extending visibility to the end of the decade? I'd also like to ask whether right now, with the visibility of CapEx that you have, is there perhaps a lack of regulatory visibility? I think that the regulatory debates will start in 2024, but won't end in 2024. So my question is, how are you going to try to match these 2 variables? One is the visibility in CapEx, and the other is the regulatory visibility in order to get a business plan that will give you some visibility right towards the end of the decade. So that would be my first question. The second question has to do, obviously, the company is speeding up its investment rollout. And the effective increase in CapEx in the scope investments for the end of the year. So talking about your organic CapEx, it seems this will become more and more important. So how does the company see the need to accompany the new CapEx with more asset rotation? And would some of the assets that you have for diversification here be considered desk core than they used to be?

[Interpreted] Many thanks for your questions. If you wish, we can then start with the first one. I think that, as you said, you've identified the issue. We do have 2 variables. They're both very relevant for the future of Redeia in the medium to long term. One is obviously CapEx, our capacity to invest. And I think that luckily, we do have quite a lot of visibility there of the kind of investment we can rollout between now and 2030, either linked to the planning we have covering the '21 to '26 plan. All the indications we get from the Energy and Climate Plan that has already established investment in the grid of up to EUR 9 billion up to 2030. And that means that the horizon for investment is pretty clear in the main orders of magnitude. What's missing may be in the company is to confirm that we have the capacity to deal with EUR 1 billion investment each year that we require for the internal horizon that we have as our target for this year, but also thinking about next year. And then once we get that capacity, that EUR 1 billion a year, we should be able to deal with the kind of volumes of investment we need to meet the energy and climate plan targets for 2023 -- sorry, for 2030. So that's sufficient to plan for the future of Redeia and the market needs and the company's ability to execute its plans. I think we should be able to meet the targets and estimate things within a reasonable time period thinking ahead to 2030 because there, I'd say the future of the company is pretty clear. And as you say, Javier, so correctly. The other thing is the regulatory side of things. What regulations will cover the rollout of these investments. We've been working on the regulatory review, which will affect the period that starts in 2026, both internally and in contact with the CNMC, which is our regulator. And it's true the CNMC -- well, giving us, what, 2.5 years to wrap up the process. And we think the CNMC will be focusing next year on starting a dialogue with us to analyze alternatives in developing the regulatory model, but it's also true that formally we're not expecting anything until 2025. So next year, will be a year in which we will be sharing ideas, the outlook we have and proposals we have with the regulator. It's also true that in this future regulatory framework, there are 2 or 3 fundamental parameters that, well, we think are reasonable to push up. One, is the financial returns. We've had that [ EUR 558 million ] for the rest of the period. But given the current interest rates, it would be only fair to think that there will be an increase of that benchmark rate. And there's another rate in the costs recognized by the regulator, which in our case, are based on benchmarks, which go back to 2015 or 2016. And really after this period where we've had a high impact of inflation on raw material costs, it would only be fair to put up these benchmarks. So we're quite optimistic that in 2 of the key variables of the model, we should see an upward review. And there are other parameters that aren't actually covered in the current regulatory framework. The work in progress remuneration and the different factors, recognizing the impact of inflation. And there, in the regulations, we think if we look back to the installation of the pumping station in the Salto de Chira, which was recognized when we did the work in progress being included. And just because of convergence with general standards in other European regulatory frameworks, we think that the Spanish regulatory framework should recognize these structural changes with the model doesn't currently cover. So there's a big variable that 2025 not giving until '25, any visibility of the regulations, but we'll be in contact with the regulator over the next year which will give us some idea of what we can expect in the framework. And once we've got those 2 variables cling, we'll be clear more about the investments, and we'll have to wait for more details about what's happening on the regulatory front and there maybe we'll have to wait and see what the update might be for our strategy plan. And then your second question. Indeed, I do think we're in an investment cycle, which is really powerful in the core business of the company, regulated activity in Spain in the transmission grid. And there it's true, as we've always said, one of the premises of the company is that we must maintain a robust balance sheet with the financial capacity to cope with the investments we need, that EUR 2 billion that I was talking about per year. And then we have to look at the core business of the company and of the group and look at our priorities about where we want to invest and evidently just as we've always done with Reintel, for example, if we needed to come up to invest more in certain other assets in the company to get a more robust core activity, well, we'll analyze those things at the moment. We've already got our commitments quite clear in financial terms. We've already got the capacity to generate cash. So for now, these alternatives of getting value from certain diversified assets and moving them around within the plan. But if we need to do that, then evidently, that we will always try to establish priorities in a sensible manner.

[Interpreted] Next question from Manuel Palomo from BNP.

[Interpreted] Actually, I have 2 questions for you. The first one is, could you please share your vision about the new track of the NECP and consistency of investment plan for Red Electrica with that new draft and ECP. Should we expect for those investments to grow? That's the first question. The second one is about optimization from the perspective of shareholders. I fully agree when you mentioned potentially better returns and the oncoming regulatory framework until 2025 and better structural results in the regulatory framework. So my question is, why would you accelerate those investments? Why are you in such a hurry to invest before or while the new regulatory framework arrives? Why not wait until the new regulation framework and keep your balance healthy in the meantime.

[Interpreted] Perfect, Manuel. Thank you very much for your question or questions. Well, regardless, the ultimate objectives of the NECP, there's clearly an evidence strategy to bring in renewables into the system. So in terms of new renewable generation volumes estimated and maybe the reference of the present plan or the new draft establishes a clear target. From the Red Eléctrica perspective, any implementation of either NECP plan, both the present one and the draft will require further grid development -- some serious grid development. All the magnitude and renewables, gigawatt and PV can -- will not be efficiently integrated into the system without a nickel grid deployment. So if you're asking whether the new plan is consistent with the new investments forecast for coming years, I would say it is and further investment will be required, not just to deploy the Red but also to provide smart networks that can operate in different environments and the operations required to face the challenges coming from the massive integration of renewables into the system. So we are accelerating our investment capability as we expect that volume to be put into grid investments. And we're considering further scenarios of even larger grids to face all that inflow of renewables after 2026 because our strategy is clear beyond the more or less ambitious objectives set by the NECP. From our perspective, that EUR 9 billion investment is more than consistent. And actually, we foresee a scenario where even more investment will be required after the new NECP draft has passed. As for the second part of your question, I believe we need to focus on the role of Red Electrica plays in the whole electric network system regardless the regulation framework applied to our activity. Our main purpose is operating and managing the electric grid, which requires massive investments to cover or to meet the system's needs. Obviously, we trust that the regulation framework applied to our activity will be consistent with energy policies on the table in Spain. But our role is and remains to deploy the electric grid when the planning states and whenever it is necessary to accompany the energy transition process in Spain, and we trust that the regulator will be consistent with the energy policy and we'll acknowledge the effort we're making to a company the electric system needs. So we trust it will -- this is the way it will happen and the regulator will realize that any aspects that can be improved will be improved, so it's -- it is our duty in Red Electrica to deploy our grids and networks and work with the regulator to make that deployment profitable and valuable for our shareholders and that -- that's the task we have ahead of us, along with the regulator and to round that up to add something to that in terms of investor remuneration, all the commissionings we do in 2024 and 2025, considering the NI plus 2 regime we have now will be remunerated under the new remuneration framework, and that affects our TNF, which we expect to be over 5.58% as we have forecast now. And then in the new environment of inflation, these fees will also be applicable for the investments under the new risk appetite framework with the -- whatever new standards are approved after 2026. And certainly, we expect those thresholds to exceed the ones we have today.

[Interpreted] Next question from Ignacio Doménech from JB Capital.

[Interpreted] I want to come back to the Draft Energy and Climate Plan with greater export being made to France. And I'd like to ask whether you're expecting a third interconnection? And if so, when it might come into operation? The second question is related to your financial income. And I think you've benefited from surplus tariff and getting a previous tariff increases. So could you say what's outstanding to return during the year? And then what your estimates are for the financial income of the group for 2023 year-end?

[Interpreted] Thank you very much, Ignacio, for your question. Well, interconnection. Well, you know that's one of the main points of focus for the company. You perfectly understand that we do have a lack of capacity in interconnection with the rest of Europe. And we are working very hard, very intensively so that as soon as possible, we can have the Bay of Biscay underlying interconnection. And if everything goes well this year, we already have the physical infrastructure rolled out. And so we could expect commissioning for the end of 2027 or maybe 2028. We can expect it to come into real operation then, and we're rolling out the plan. And that's great news because the dynamics of the work done with RTE, which is our peer in France is going very well, and you can ratify that by looking at the progress we're making -- working in the Bay of Biscay with French peers and the CNMC has supported us and the Ministry as well. So we hope to make an announcement this year that we actually have this physical infrastructure going and we're just waiting for the final formal announcements to be made before we make our announcement. Prior and after that, we've got the 2 interconnection projects over the Pyrenees, which would give us capacity of about 8,000 megawatts more with the rest of the European continent. And what we're expecting is that there will be complexities in the projects, but we think that around about 2030, 2031, these projects should come online with the dynamics of the work. Work is being done already on some of the preliminary stages of analysis. We think that right now, given the need of the Spanish electricity system and the understanding between the regulators, the -- and the TSOs and the ministries in the 2 countries, we should be able to get work going very soon on covering that interconnection shortfall. And then Emilio, on the financial side of things, maybe I'll hand over to you because that's one of the positive points to highlight this half year, although if we go on seeing this performance, we will have to see that in the treasury at the end of the year.

[Interpreted] Well, actually, Ignacio during this year, we've had attractive revenues coming from our solid high liquidity position, about EUR 1.6 billion. Certainly, most of this liquidity position will be drawn during the second half of the year. We've already paid EUR 0.4 billion in dividends. We just amortized a bond issue for EUR 300 million and we will also have to return the excess tariffs we've been charging in previous years. At present, at the end of June, we have approximately EUR 0.5 billion to return to CNMC and we expect that most of that will be paid back this year, maybe EUR 100 million will be carried over for next year and that will meet that our net financial debt will go back to a higher level than we have today, and financial revenues will dwindle during the second mid-year. Right now, despite the rise in interest rates, we've had a better midyear results than last year. Our vision is that by the end of the year, the financial net results will be slightly below last year, considering that financial revenues, we will generate during the second midterm will be lower than those during the first half of the year.