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Edited Transcript of RENE.EP earnings conference call or presentation 26-Jul-19 2:30pm GMT

Half Year 2019 Ren Redes Energeticas Nacionais SGPS SA Earnings Call

Jul 31, 2019 (Thomson StreetEvents) -- Edited Transcript of Ren Redes Energeticas Nacionais SGPS SA earnings conference call or presentation Friday, July 26, 2019 at 2:30:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Ana Rosa Fonseca Pereira Fernandes de Matos

REN - Redes Energéticas Nacionais, SGPS, S.A. - Head of IR

* Gonçalo João Figueira Morais Soares

REN - Redes Energéticas Nacionais, SGPS, S.A. - CFO & Executive Director

* João Caetano Carreira Faria Conceição

REN - Redes Energéticas Nacionais, SGPS, S.A. - COO & Executive Director

* Rodrigo Jorge de Araújo Costa

REN - Redes Energéticas Nacionais, SGPS, S.A. - Chairman & CEO

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Conference Call Participants

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* Gonzalo Sánchez-Bordona

Banco Português de Investimento, S.A., Research Division - Analyst

* Jorge Guimarães

JB Capital Markets, Sociedad de Valores, S.A., Research Division - Analyst

* Jorge Alonso

Societe Generale Cross Asset Research - Research Analyst

* Sara Piccinini

Mediobanca - Banca di credito finanziario S.p.A., Research Division - Research Analyst

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Presentation

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Operator [1]

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Ladies and gentleman, thank you for standing by, and welcome to REN's 2019 First Half Results Call. (Operator Instructions) I must advise you the call is being recorded today, Friday, the 26th of July, 2019. I would now like to hand the conference over to your first speaker today, Ana Fernandes. Please go ahead.

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Ana Rosa Fonseca Pereira Fernandes de Matos, REN - Redes Energéticas Nacionais, SGPS, S.A. - Head of IR [2]

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Hello, everyone. Thank you for being here on a hot July afternoon, on a Friday. You know the drill, we are joined by our CEO, Rodrigo Costa; our CFO, Gonçalo Soares will make his results presentation, and then we will be open the floor for -- we will be opening the floor for questions. We are expecting interesting call. Rodrigo?

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Rodrigo Jorge de Araújo Costa, REN - Redes Energéticas Nacionais, SGPS, S.A. - Chairman & CEO [3]

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Thank you, Ana. Good afternoon, and thank you for joining us for the results conference call. The quarter went smoothly from an operation's perspective. And we don't have much to report other than this week announcement. I assume that we -- you probably will be interested in discussing the recent acquisition, and we will address that at the end, especially during the Q&A.

Starting with the results. EBITDA was in line with the market expectations, slightly below what we represented a year ago, but we must adjust the numbers to lead straight to evolution, and that was normal. As expected, we had a decline in our RAB that was partially offset by the Electrogas and Portgás contributions. And in fact, this is why we decided on the strategy we are executing. Without the local growth, we are finding and executing on ways to bring us to a stable situation. On the financial, I guess, we were able to surprise on the positive side given that the debt is lower than a year ago.

The energy levies continues to penalize our net income. And in that front, no progress has been made. The court process is moving slowly as expected, and we cannot report any news at this time. Just the fact that we keep our focus on the legal dispute, and we are waiting for the next year state budgets to understand how the government is planning to move forward with the tax. We still believe the progress will be made, but it is difficult to quantify at this moment. At the operational level, we've got new historical heights -- highs in wind and in photovoltaic generation. Our Sines LNG terminal remains very busy. In fact, the terminal reached the highest utilization rate ever.

We handle over 1 tanker per week during the first 6 month of the year. The previous record was in the first half of 2017 with 22 ships and within the same period, we have reached 33 this year. The quarter has been a busy one for our infrastructure people. We are providing good assistance to the government agencies that is running all the renewable's push. And as we said before, once the new generation projects are approved, we will be able to better understand the impact in our investment plans.

Finally, 3 days ago, we announced the acquisition of Transemel in Chile. The investment we are doing follows our successful experience in this market. We are already there through Electrogas. Our results encourages us to research new opportunities, and we closed this new investment this week. The asset is very good. The deal terms were fair. The outlook is very positive. It's a modest investment, but quite important for us. The same conservative precautions were applied for investment research and decision.

Now we will have to execute under the same principles that we applied to Electrogas and Portgás projects, understand the business, and that's what we do best: priority to the operation's efficiency and safety and financial discipline.

And from my side, now this is all. And I will -- Gonçalo will take the floor now, and we will -- I will return for the Q&A.

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Gonçalo João Figueira Morais Soares, REN - Redes Energéticas Nacionais, SGPS, S.A. - CFO & Executive Director [4]

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Okay. Hello, good afternoon to you all. So as Rodrigo said, this is, in terms of results, noneventful quarter and semester. Results were broadly in line with what we have expected.

EBITDA totaling those EUR 247.4 million, a drop of 2%. And there's a couple of items which are more timing issue that I will address a little bit later on that address -- that explains part of this drop, but most of the explanation is the lower rates and of return that we knew that were coming.

Portgás in Chile, although small, have been contributing positively to EBITDA, which is good. And hence, net profit came down, around EUR 1.8 million, by 3% without any, let's say, major surprises. Net debt continued to improve and reduced along the year versus last year. And the cost of net debt is still a little bit better year-on-year, but stabilizing, as you can see, and as we said. And CapEx is pretty well underway in this year for us to beat what was our business plan interval in terms of the business plan, in terms of CapEx.

So if you look at Slide #3, I'll just go over it. It's just the main numbers, nothing to comment there.

So moving to Slide #4. And you can continue to appreciate the drop in the 10-year Portuguese bond yields. They were -- they are at extremely low levels as of now. They continue to decrease.

And Mr. Draghi comments yesterday do not give us any good news in this front. So when he sees that we don't like what we see, it seems that rates may be at lower levels for a little bit longer.

And that being said, you can see that their reductions in the rate of return are smaller than those drops. In gas, they are at the floor. And so I think that we were little bit insulated, and we have been able also on the funding part, trying and manage these mainly before but still now.

What can we see if we move to Slide #5, and talking a little bit about CapEx is as I said, CapEx is well underway this year. I think we'll be able to beat every headset before our goal that we stated in the business plan. It's still early on as you know, but I think it's a good sign that it is going up around 26% and transfers to RAB are also going up. And these were several projects that some of them were waiting for specific licensing and some of them have a slight delays at the end of this. So these are things that were brought into the regulated asset base at the beginning of the year. And that if you want, João can give you a little bit more color on what they are. But I'd say that things are, let's say, pretty well, in line with what we expected. We even have a small delay on the distribution part in gas, but I think that's when the year-ends will be we'll be delivering on the CapEx that we told you that we would.

Unfortunately, and you see that on Slide #6, and despite this fact, this is a year of pressure in terms of RAB. We know this. I think this will be less -- we'll feel a little bit less RAB at the end of the year, but of course, this is what we knew when we also acquired some other assets. We knew that this was the pressure that was coming, okay? And let me just point out the increase in Portgás, which is the only asset that is increasing at expected level. This is a little bit better, the regulated asset base versus what was our objective.

Slide #7, you put that 2 together, so you see the evolution of assets and the evolution of the rates. In the transmission business, you see that both are a little bit elements of pressure. So there's the declining RoR and the declining asset base. So -- but this was completely expected.

In Portgás, you see that the ability to increase the regulated asset base allows us to compensate for the decrease in RoR. So I'd say that this is what you were also expecting. And so no news here.

Moving into cost and to Slides 8 and 9, and starting with Slide 8. So I'd say that you see here costs pretty flat on the quarter.

And I am not going to go, but if you see then on the next, you see also that core OpEx is growing around 0.8%. But let me give you a couple of comments on how costs are behaving. In terms of external supplies, as in previous quarters, there is a -- and João can give you a little bit more color of this also. There is an exceptional activity in the terminal. And so this translates into electricity costs, which have a relation to revenue. So part of this external cost around EUR 1.3 million relate to this. And so they are actually costs that have a margin, but you don't see it here.

The second thing that I wanted to comment, and namely on the personal cost, is that this has 2 -- I'd say, 2 things that you have to be aware. The first one is that there is a little bit of a transfer of cost between Portgás and the transmission business, because as we've told you, and we concentrated certain functions in our shared services area. So there's a little bit of transfer around EUR 200,000 to EUR 300,000 from Portgás to the -- not the transmission business but to what appears here under the transmission business, okay?

The second thing is that there was a change of accounting in terms of how you recognize the extra salaries you pay in vacation time. We recognized every single rate in the month of June, it's completely a timing issue. So at the end of the year, you will not see an increase of personnel because of this. But in the middle of the year, you see around that EUR 750,000 increase. So there is around EUR 1 million of personnel that is increasing here on this red line, which is mostly timing issue. Headcount is at 690 and is well -- is actually a little bit below of what we expect.

In Portgás, I think there's a lot of impact, but a big part of this is relating to subsoil occupational levies that have decreased, or that are lower, and so you see them here in Portgás. Parts has to do with costs from the LPG business that are not here. Parts have to do with the personnel issue that I told you that came to the transmission side. And part of it is just the fact there is really these decrease costs along the way, okay?

Bear in mind that the cost that I referred to the subsoil are completely passed through because we pass them to the consumer. So -- and they are shown here, so either increase or decrease. For us, it's completely irrelevant, but it's important for you when you see that changing cost to understand that, okay? You see that in Slide #9. You see that on the cost, which before core OpEx, there's a lot of them that are stable, but there's a lot of them, namely the subsoil that is decreasing because of that. The ITC mechanism has more to do with exports and imports of electricity, which, if you are curious, João can also give you a little bit of color later on because there's been a lot of -- I'm giving him a lot of things to comment.

And so if you move into Slide #10, you just have the summary. So this is what we thought. So you see this dynamic of assets' remuneration. And then this dynamic of OpEx contribution but with actually -- given what I told you is actually slightly positive, it's negative because of this timing issue.

And then you have this positive effect, both of Portgás and you also have a positive impact of Electrogas. Electrogas, although small, this year is growing pretty well, EBITDA local is growing around 15%. This is mainly the reason because of the increase in interruptible contracts, driven by the import of gas from Argentina, and that has led that the contribution to REN is now at midyear close to EUR 4 million, which is almost 30% year-on-year increase versus last year. So it is small, but it is going in the right direction.

Moving to Slide 11 and commenting a little bit. So D and A, nothing particular to comment. Relating to taxes, Rodrigo already mentioned that we don't have any major news on the special levies. The only good thing is that because assets went down, the special levy also went down a little bit. And so nothing to add. The rest are completely in line with our expectations in terms of effective tax rate.

In terms of financial results. And you see this improvement of EUR 0.5 million. This is actually going down around EUR 1.5 million. Again, there is a timing issue here because last year, the dividend from Mozambique was already received in June. This time, it was not. And so there is more or less EUR 1 million versus last year that you have left here. So the reality of the financial cost is that they went down around EUR 1.5 million. And this is, on one side, the result of the reduction of the rate, but which is very small by now, so we are kind of stabilizing in this low 2%. It is also the result, and you can see that on Slide #12, of the reduction of net debt that we have been continuing. So net debt had decreased more significantly in the first quarter. In the second quarter, as you know, we paid the dividends. And so the next 2 quarters, except for the fact of this M&A transaction that we did, the next quarters will also be cash flow positive. So you'd probably end up at the end of the year reducing in line with what we would have told you, we'd be reducing around EUR 50 million or EUR 75 million versus '18 year-end. But because of the acquisition, it's going to be a little bit different.

So moving to Slide 13. This is, I'd say, the summary of everything else. Nothing to explain. So this decrease of EUR 1.8 million, again, if you put this into context and you consider those couple of timing issues that I told you about, it will actually be more on the flattish side than on decreasing 3%.

So final remarks on 14 and then waiting to comment on the rest. So pretty, I'd say, good and solid results in terms of financials and continue to manage well on the operating side, continue to manage well the levy -- I am sorry, the financial costs. And both Portgás and Electrogas are contributing positively. And just the final word, I am not going to talk a lot because I will leave that to the Q&A. But we did announce this acquisition of Transemel. And this is completely within what we have told you that we would be doing in our business plan. We had said that we were going to continue to do this disciplined growth outside of Portugal, and this is what we have done.

And we waited '18 to integrate Portgás well. That job was done. And so we now were able to capture an additional, I'd say, incremental growth opportunity in Chile, which is a market that we know a little bit better by now. But let me -- let us see what specific questions you have about that. So thank you very much, and we are open for any questions you have.

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Questions and Answers

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Operator [1]

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(Operator Instructions) The first question we have today comes from the line of Sara Piccinini from Mediobanca.

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Sara Piccinini, Mediobanca - Banca di credito finanziario S.p.A., Research Division - Research Analyst [2]

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Sorry, I have a quite a few questions on the deal, so I'll maybe start from some, and then I can follow up later. So on this acquisition in Chile, I guess, this will be fully consolidated. So if you can help us giving some other details, such as maybe the EBITDA and also net income contribution? And also maybe the cost of that -- of this acquisition, so we can calculate the accretion? And then if you can, again, give us an indication about the accretion of this deal? So this would be the first question. If you can help us to calculate the EPS accretion.

Then the second question is on the significant EBITDA growth that you have indicated. So cash flow -- EBITDA is going to increase 35% until 2023. So what justifies this growth? And this can be sustainable in the long term, what is your expectation of the EBITDA growing in the long term? And then about the CapEx, you have said that this asset has already a CapEx plan of EUR 60 million until 2023, how this CapEx will be distributed through the years?

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Gonçalo João Figueira Morais Soares, REN - Redes Energéticas Nacionais, SGPS, S.A. - CFO & Executive Director [3]

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(technical difficulty)

Is this -- Hello? I'm sorry, this was on because I was already answering. So let me start with the last question on the CapEx plan. So I am not going to give you exact numbers, but I'd say if you want a ballpark figure, around 2 quarters of that -- 3 quarters of that CapEx is going to be done in '19 and '20, and then the remainder, the other quarter is going to be done in '21 and '22. So that's more or less the logic, okay?

So in terms of the EBITDA growth that you mentioned, so there is the, I'd say growth, an EBITDA growth, which is this '18 to '19, and that is driven by several things. It's driven, one, specifically by some CapEx that is being concluded this year, okay? And secondly because there's some revenues and that derived from past regulatory adjustments before that. So that explains most of that difference.

From then onwards, it's mostly related to the fact that we are investing in the company, okay? Yes, we are completely -- we are going to fully consolidate the company. So you have a good idea of what the EBITDA accretion can be in terms of the company. And so I think that on that front, you can already have a way of calculating well kind of impacts that will have on the company, okay?

And in terms of the accretion, it's a little bit more difficult to answer you, but what we see is that it does have a positive accretion in the first few years in the terms of net income of, I'd say, between 2% and 3%. So I'd say that Ana can give you a little bit more of detail to each one of you about this, but that's, I would say, the main thing I would say.

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Operator [4]

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The next question we have today comes from the line of Gonzalo Sánchez-Bordona from CaixaBank.

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Gonzalo Sánchez-Bordona, Banco Português de Investimento, S.A., Research Division - Analyst [5]

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Just couple of questions on this transaction too from my side. I think in the presentation, you referred that there were some expectations on some auctions to be held in Chile for more transmission lines. So something like that in the next few months or years? I just wanted to understand what kind of visibility do you have on those? And if you believe that you would be able to add incremental growth on this transaction with that? And also just wanted to understand, as my second question, on -- how this fits within the investment plan that you have in the strategic plans? So is this all you are doing internationally? Or are you planning to do any more transactions? So what's your view on this regards?

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Gonçalo João Figueira Morais Soares, REN - Redes Energéticas Nacionais, SGPS, S.A. - CFO & Executive Director [6]

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So Gonzalo, I can give some color. The information that was there was also to explain to you that Chile's growth market, and that there is growth coming. As of now, we are completely focused on this company that we acquired. And our concern is going to be in integrating well. The company is understanding this. So this is our priorities now. It is good that you are investing in the country where there are recurring growth opportunities. So that was more of the point. It will not take away anything from the fact that this is not -- now going to be our main focus is to concentrate in terms of the integration of this. The opportunity in this opportunity to grow, they are completely public. So they are published by the Chilean government that with a lot of time they have puts up information on what's the new project in terms of electricity are going to be.

So we all know, and everybody that follows the Chilean market knows exactly when, and we know in the case, I don't know maybe it's September or October, when they are going to come, and next year it's going to be again. So they have this normal, I'd say, process of putting up information which is completely public. We can give you -- we can send you the link for you if you want to go and check, but that was more of the point of the thing.

Apart from it, it's completely, I'd say, that this is what is fitting completely. So with this, this investment is completely within the envelope that we said. And now we are not concentrating on anything else apart from the fact that we want to integrate the company, and that's it. So we like to do things in steps; we like to do things in a safe way, in a conservative; and this is what we want to do now.

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Operator [7]

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(Operator Instructions) The next question today comes from the line of Jorge Guimarães from JB Capital.

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Jorge Guimarães, JB Capital Markets, Sociedad de Valores, S.A., Research Division - Analyst [8]

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I had four. Firstly, can you -- do you have any idea of this solar auctions that are being held in Portugal these days? Do you already have some expectation about the potential impact on the CapEx? This would be the first one.

Second, are there any developments about the project of interconnection with Morocco?

Thirdly, these investments in Chile, could they mean that you are -- and inorganic growth opportunities will be completely directed for foreign investment, meaning longer interested in electricity, low-voltage concessions in Portugal?

And finally, fourth one, if you allow me, what would be the cost of debt that you are considering for these 2% to 3% EPS accretion?

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João Caetano Carreira Faria Conceição, REN - Redes Energéticas Nacionais, SGPS, S.A. - COO & Executive Director [9]

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This is João Conceição speaking. For your first question on the solar auction, well, the information we have that we can share is the same as you can find in the press because the auction is still ongoing. So it's going to be finished today. There is lots of competition on this auction, and what we have seen so far is that the prices are being quite aggressive, the prices that are being offered by the bidders.

Regarding your question specific on the impact on the CapEx, this specific auction today has not an impact on what we have already foreseen. What will have an impact, of course, is going to be the plan until 2030, and the new auctions that the government has announced that it wants to launch in the near future. Those will definitely need some increase in our CapEx plan. We are just finalizing the analysis. This is not yet public, but it's going to have a positive impact on our CapEx. So just...

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Jorge Guimarães, JB Capital Markets, Sociedad de Valores, S.A., Research Division - Analyst [10]

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So you have no idea of any metric of CapEx per megawatt or something like that?

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João Caetano Carreira Faria Conceição, REN - Redes Energéticas Nacionais, SGPS, S.A. - COO & Executive Director [11]

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We don't have that figures yet, so far, completely defined.

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Rodrigo Jorge de Araújo Costa, REN - Redes Energéticas Nacionais, SGPS, S.A. - Chairman & CEO [12]

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Okay. Regarding Morocco, as we've always been saying, this is a project that it's in the hands of the governments of both countries. There is a study being developed. We don't have any feedback for the moment on the results of that size, and that's going to be the moment that when they finish the study, that will trigger, let's say, the political discussions between the 2 countries, and the decision if they will or not go with the project. We are doing our job. The study is being moving. But we, for the moment -- we still -- this is a scenario where we always had -- there is a possibility, but the governments are the ones who need to decide. We don't have it as part of our, let's say, budgets for the coming years. But if, of course, we have an opportunity to develop the projects, we are very interested and we will.

Regarding Chile. As Gonçalo already explained, in Chile, this project fits perfectly in what we said we want to do. In our perspective, this is the right type of geography. Regulation is predictable. The country economy is quite solid. The political system also very mature. And we decided to start with Electrogas a couple of years ago. The experience has been very positive. We being there helps to track other opportunities. We found this fun. We submitted our offer; we won. And now we want to make it work. As we said before, we are not looking now into doing something in the coming months. The future is the future, we don't know what's going to happen. Because the key priority now, as we said, is making sure we take control of the asset, we keep doing a good job with the asset. We have very good resources here to help on that. And I am sure we will do a great job.

Regarding other opportunities for growth. Portugal, it's -- the opportunities are extremely limited and especially the ones that we can really look into. And at the moment, we have -- you referred the low-voltage concessions, nobody knows when the tender will be launched, the terms of the tender. We tend to be very, very focused on what we do, and we don't get distracted easily. We have no plans for the moment to go after other opportunities. This is where we are. We did Electrogas, we did Portgás, we keep doing a fantastic job in Portugal. Portugal remains 97% of what we do. That's where we have our focus. It's a very solid business. And we don't see nothing that should change that. And that's how we operate.

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Gonçalo João Figueira Morais Soares, REN - Redes Energéticas Nacionais, SGPS, S.A. - CFO & Executive Director [13]

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Relating to that funding question that you asked, I'd say that it's in -- funding is done in normal, I'd say, market conditions. The idea we have is to fund this now through Portugal first midterm until we have them, and we'll look into the chance to finance this locally with nonrecourse instruments. But now it's going to be funded through Portugal. I'd say it's normal kind of cost of funding of, I don't know, 70 to a 100 bps of what is normal market reference rate.

I wanted to -- actually to clarify one thing, which I don't know if some of you are going to pick or not, but we saw that in some of the reports published, and there was a little bit of confusion in terms of the price. Because the price that we put out is the equity price. It is the price base for the shares and the amount that we all refer to, the $167 million. There is not a very large amount of debt, but there is some debt. And so there is around EUR 25 million of debt, EUR 24.9 million to be precise. So the EVs are 192.4. I just wanted to clarify that because I didn't want to mislead anyone in terms of multiples or anything. We saw that perhaps there was not complete clarity in all -- in everybody about that. So I just wanted to take the opportunity to make that crystal clear, okay? Thank you.

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Operator [14]

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(Operator Instructions) The next question today comes from the line of Jorge Alonso from Societe Generale.

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Jorge Alonso, Societe Generale Cross Asset Research - Research Analyst [15]

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Just to understand, so now what you had said about the equity and the debt. So if we add the EV you paid plus EUR 60 million CapEx you will invest in order to get around $14 million EBITDA by 2023, that means that you are about to pay 16x still EBITDA in 2023. It looks a little bit high unless you are missing something about the future growth on EBITDA due to the tariffs or the CapEx expected there or because the remaining useful life is really, really long that can justify such a big multiple even still in 2023? Just to be sure I'm not missing here nothing.

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Gonçalo João Figueira Morais Soares, REN - Redes Energéticas Nacionais, SGPS, S.A. - CFO & Executive Director [16]

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No, you are not missing anything. The issue of being high or not is because you are also comparing this to Europe, which has a lot of differences when you look at Chile. So I would say that the main one is growth, but let me start to tell you about the regulatory stability regulation in Chile. Typically, when you do a Greenfield, you get a rate which is set for 20 years, so that is something which is a little bit different, then after the 20 years, it's a 40-year cycle. But it's very different. The second thing out there is in compared to Portugal, it has a slightly better country risk, but it's far away. So for us, we view it in a different way. But in terms of evaluation, it is what it is.

But third, I will defer the high growth of this, so you say you are completely saying is correct. So when you compare to transactions made in Chile, this is, I'd say, the lower compared to comparables in the market. The only one that is below 20x was actually a minority stake that was bought some time ago. So -- and there is a lot of explanation. The rates of return are difficult to compare. So when you want to try to make that comparison, it's not easy. They are -- it's a different scheme. The feeling we have, and that's why we also made the acquisition is that they are slightly higher than they are here, and it is exactly why and that is what we need to have is a slightly higher rate to justify the fact that we are investing abroad. But the main explanation, I'd say, is the fact that in this case, you are almost doubling the asset base, not doubling, but increasing materially the asset base. So we do not see the easy multiple as high as I -- we see it in line and actually below.

They are -- it -- they are different worlds and different risks, and it's very difficult for you to compare the EVs. It is when you do this, this year, and you do those calculations that you have to take into account that. And we are convinced because we did that, that this is value-accretive and operation for our shareholders.

Last thing that I wanted to say in terms of regulation is that this is a perpetual concession, unlike most of the ones that you compare to here. So there's a lot of small details that explain why multiples tend to be higher than that, which does not mean that they are high -- they are higher, okay? I hope that I helped.

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Operator [17]

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(Operator Instructions) We have a follow up questions here from Sara Piccinini from Mediobanca.

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Sara Piccinini, Mediobanca - Banca di credito finanziario S.p.A., Research Division - Research Analyst [18]

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Again, sorry, on the attrition. When you talk about the 2% to 3%, is this already in 2020 or it's an average for the period of 2020-'23? Because if I see the EBITDA growing from March, I would expect more accretion going forward rather than in the short term. So if you can justify that?

And then the second question is on the impact on net debt that you expect in 2020. Is this meaningful? How much is the impact on net debt to EBITDA that we should expect in 2020?

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Gonçalo João Figueira Morais Soares, REN - Redes Energéticas Nacionais, SGPS, S.A. - CFO & Executive Director [19]

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Yes, you are right that when I told you those 2% to 3%, they start on -- it's something that starts already in 2020. As you move in time, in our model, we actually have accretions which are higher than those -- that range, okay?

In terms of accretion of net debt to EBITDA, we are in the, I'd say, the 0.3 -- 0.2% to 0.3% range of increase in term -- going forward. So it's not completely stable, but I am not going to give you, but I'd say that they are ballpark in that figure.

We were, as always, not only very mindful. Although you may not all agree, we are always very mindful of 2 things on one side of profitability of the asset or returns, and also the impact it has in terms of accretion of results. And on the other side, we are also very mindful, as always, on the impact it has in terms of credit metrics, as this is a core objective of ours to maintain as investment grade and to maintain the levels that we have currently.

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Operator [20]

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(Operator Instructions) There are no further questions.

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Ana Rosa Fonseca Pereira Fernandes de Matos, REN - Redes Energéticas Nacionais, SGPS, S.A. - Head of IR [21]

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Okay. So if there are no further questions, I guess, I'll have a lot of work after this call is over. I'll be waiting for your personal questions. If not, have a great weekend. Thank you. Bye.

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Rodrigo Jorge de Araújo Costa, REN - Redes Energéticas Nacionais, SGPS, S.A. - Chairman & CEO [22]

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Good vacation.

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Operator [23]

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Thank you very much. That does conclude the conference for today. Thanks for participating. You may all disconnect.