Ignacio Galan - Chairman and CEO Francisco Martínez Córcoles - Business CEO José Sainz - CFO

Good morning ladies and gentlemen. First of all we would like to offer a warm welcome to all of you who have joined us this morning. We are delighted you are able to be with us for the presentation of our 2016 nine month results. The presentation will as usual follow our traditional format. Firstly, we will begin with an overview of the results and the main developments during the period given by the Iberdrola’s top management; our Chairman and CEO Mr. Ignacio Galan, Mr. Francisco Martínez Córcoles, Business CEO and finally the CFO Mr. José Sainz. Afterwards we will move onto the Q&A session. We’d also like to point out that we are only going to take questions submitted via the web. So please ask your question only through our webpage www.iberdrola.com. We expect that the event will last no more than 60, 70 minutes hoping that you find the presentation both useful and informative. Now without further ado I will hand over to our Chairman and CEO Mr. Ignacio Galan. Thank you very much again, please Mr. Chairman.

So good morning everyone and thank you very much for participating in this result presentation conference call. Our result has continued to grow during the first nine months of the year thanks to the good performance of our businesses and the reduction in our operating and financial cost. As a consequence, net profit has grown 6.4% to EUR2,042 million and recurring net profit has increased EUR285 million, a 17% to EUR1,958 million. EBITDA continue to improve as well growing by 4.2% to reach EUR5.7 billion. As we progress with the execution of our strategic plan, net investment increased by 45% to over EUR3 billion. 63.5% of which is allocated to growth. And finally, operating cash flow is up 9.5% to EUR4.7 billion. Thanks to the result, the Board of Directors has approved yesterday an increase of 8% in interim shareholders remuneration payable next January. As mentioned EBITDA continues to increase achieving 4.2% growing rate despite foreign exchange impact. Excluding the later, EBITDA grew 6.7%. In networks, EBITDA increased 8.6% due to the improved business performance in Spain and the United States, more than offsetting the negative foreign exchange impact. In renewables, Spain and US increased output by 6% and 7% respectively offsetting 18.3% lower output in UK. But in total the renewable output grew by 4.4% year-on-year. In generation and supply, EBITDA grew 1.7%. In Spain, Hydro output is up 56.2%, while in the UK higher spot market activity compensate for the closure of Longannet. The overall energy produced globally by our company was 2.1% higher than 2015, with almost two-third emission free. As you can see on the slide 7 and as we anticipated, EBITDA has had a positive revolution along each quarter. Among other factors this has been mainly thanks to the improvement of efficiency and the delusion of certain first quarter one-off in 2015, as our expenses including UIL have gone down by EUR150 million. Net investment in the period amounted to over EUR3 billion, of which 91% was allocated to regulated and contracted activities. Considering the current good progress in the execution of investment plan, it's possible that we might expect the initial provision driven mainly by new opportunities in United States and Mexico. We will give you more details of our Investor Day in February next year of this potential increase in investment opportunity. Operating cash flow has increased by 9.5% to EUR4.7 billion exceeding investment by almost EUR1.7 billion. As the business level, operating cash flow continues to exceed investment across all of our businesses. Except for renewables, you can see of the accelerated execution of our offshore projects. We have had an active role in the financial market as the financial director will explain later on to benefit from the low interest rate and credit environment. In the past nine months, we have already issued EUR2.7 billion in long-term debt. Almost 90% of which has been done at fixed rate with very competitive levels now under 1%. We are also Leading Green financing in bond markets. An example of this is the EUR700 million green bond we issued last September with a nine-year maturity and all in cost under 0.5%. As a result of this, our cost of debt has gone down from 4.10% to 3.46%. I will now briefly review the main project underway which show our progress in the execution of 2016-2020 plan. In networks UK, we have a stable long-term return under the current distribution and transmission regularity framework. So an example of our network construction are the Western Link project, South West Scotland and Beauly Denny Lines all in schedule. In United States, as announced last quarter, the New York rate cases were approved including higher tariff for three years, starting in May this year. And the final decision of the Connecticut electric rate case for the next three years also effective from January 2017 is expected in December 2016. All the transmission projects are in progress in New York, Connecticut and Maine. In Spain, we have continued with the deployment of the smart grid having to utilize 50,000 secondary substation in almost 160,000 kilometers of line which represent over 65% of our medium and low voltage line. A distribution regulated as a base of EUR8,690 million and a new remuneration scheme have also been approved with the first regulatory period going from January 2016 to December 2019, increasing 2016 remuneration by 2.5%. In Brazil, the Elektro distribution tariff has increased by 9.11% effective from August. Overall in networks, 85% of the growth investment included in the plan are already under way. With regard to 16 million retail customers, 9 million which are already have a smart meters installed, we offer a variety of products and services being the only utility to offer tailored tariff based of time of use. Other services we are offering include remote control heating, distributed generation and storage, electrical vehicle charges or the new ScottishPower application called Power-Up which enable customers to buy their own energy in daily unit from their mobile phones. As you can see in slide 13, in renewable offshore we have over 1,000 megawatts under construction. In Germany, Wikinger 350 megawatts initial production is expected in 2017. In the UK, 70% of the equipment and services for East Anglia 1 have been contracted and the first output of this 714 megawatts capacity is expected in 2019. Finally in France, we are doing preliminary works in St. Brieuc where initial production is, 500 megawatts capacity is expected in 2022. In relation to our onshore wind farms we have over 1,800 under construction in the United States, United Kingdom, Mexico, Brazil and Spain. Over 80% of which are to be commissioned between 2016 and 2018. We also have 336 megawatts of solar photovoltaic plant in construction in Mexico and United States to be commissioned between 2017 and 2018. As for our relevant bet in offshore wind in which in addition to the current project we have just described we have 3,100 megawatts of future projects in our two main hubs in the British North Sea and German-Baltic Sea. Altogether they are up to almost 5,000 megawatts of offshore capacity. We are also considering the possibility of using our know-how in offshore in the United States, and seizing potential future opportunities are significant step have been taken by different state mainly in New England. For this type of project, the expertise developed by our company adds very high value because they require very specialized engineering skill that very few companies have. Just to give you an idea, in slide 16 shows that the height of a wind turbine generators in East Anglia 1 will be similar to the Eiffel Tower and the diameter of the rotor will be larger than that of the London Eye. At the same time, important progress is being made in the generation capacity of the turbines but we have gone from 3.6 megawatts in our first offshore wind farm in West of Duddon Sands to 5 megawatt in Wikinger up to 7 megawatt in East Anglia 1 and probably more than 8 megawatt in St. Brieuc in France. Finally, you can see in slide 17 in Mexico we have been pressing for over 30 years with almost 4,000 megawatts of additional capacity in construction. In renewable, combined cycle and cogeneration. So by 2020, our total installed power in the country will reach almost 10,000 megawatts and by 2019, our output in Mexico probably will exceed our current production in Spain. Therefore the execution of our investment plan is well on track with current capacity under construction adding 4,057 megawatts by 2018 and by 2020 almost 7,000 of regulated and contracted generations. And probably capacity will be added mainly from Mexico and United States. Our American company AVANGRID where we hold 81.5%, increases adjusted net income by 45% in the period to $404 million. And full-year net income outlook is between $604 million and $634 million with around 30% of growth. This allows the maintenance of a total annual dividend of $1.728 per share included the next quarterly dividend of $0.432 per share result in a total yield up-to-date prices of 4.5%. On the slide 20, you can see that our AVANGRID investment plan is progressing with the construction of 744 in offshore wind farms and 66 megawatts of solar photovoltaic. As the PTC extension up to 2020 has recently been approved, we are taking the necessary step to be eligible ordering 2,000 megawatts of wind turbines and repowering 350 to have the opportunity to be before 2020. As for networks, we have several transmission and distribution projects such as Lewiston Loop in Maine, Metro-North Corridor in Connecticut, and Ginna Retirement in New York. And we have another potential opportunities such as deployment of 1,800,000 smart meters in the New York and the Reforming the Energy Vision strategy. Over the last months, much has been said about global warming as a consequence of climate change and the urgent need to limit temperature increase. Actually very few global issues had completed, such as consensus and imperative need to take an action. Finally, next 4th of November, the Paris agreement under which most countries have committed to reduce their CO2 emission will enter into force and sponsored by elite by United Nations. This is going to accelerate any transition into the carbonization where the electricity sector has the key role to play. With a more renewable energies, more and smart networks to integrate more distributed generation and deliberate services to increase energy efficiency and more historic capacity. Therefore, utilities have to transform their business’ model into the so-called utility of the future. In Iberdrola, we have already been implemented in transformation from the past decades and we are today number one renewable producers among European utilities, even lower emission companies in the sector. The cleanest United States integrated utility with almost zero emission and the second wind producer. Leading the digitalization with over 160,000 kilometers of the utilized smart grids and more than 9 million smart meters for connectivity. And have a storage capacity over 4,000 megawatts enough for more than 1 million homes. As a consequence, we have been recognized by the Dow Jones Sustainability Index as the world's top utility in 2016. Also we are the only European utility included in the 17th edition of this ranking. During the first nine months of the year, we have employed 1,917 new persons. As you can see in the slide 22, I’m especially proud we have just opened our new corporate campus in Madrid with 180,000 square meters and capacity for over 1 million hours of training. The campus has dozens of laboratories and training rooms for advanced technologies, digital, wind, solar, cyber security, IT, drones et cetera et cetera et cetera. It also has all the means of any school of management for the skills such as finance, treasury marketing et cetera. In summary, the campus will be the training hub of the group where knowledge and international practices will be shared. The results we are presenting today allow us to increase interim shareholder remuneration by 8% to EUR0.135 per share payable in January 2017 following our commitment to increase shareholder remuneration in line with results. The supplementary dividend will be announced in February 2017 and after its approval to our general meeting we will be paid in July 2017. Just to conclude, nine months results reaffirm the 2016 EBITDA outlook embedded at net profit level. They also confirm the growth, sustainability and predictability of the company allowing to increase its shareholder remuneration in the short, medium and long term. Now, I will pass over Pepe Sainz who will present the Group result in further detail. Thank you. José Sainz: Thank you Chairman. Starting in slide 30, as the Chairman has said a quarter for strong operating results drove nine months EBITDA 4.2% up compared with the first half EBITDA of 1.4%. Recurring net profit grew 17%, operating cash flow 9.5% to over EUR4.7 billion and reported net profit was 6.4% up to EUR2,040 million. UIL consolidation increased EBITDA by EUR333 million and net income by EUR66 million. FX lowered EBITDA by EUR137 million but it was fully hedged at the net income level. Revenues in page 31 decreased by 9.1% to EUR21.5 billion due to lower prices and FX depreciation while procurements fell more 16.7% and EUR11.8 billion due to the above-mentioned impacts and better generation mix. As a consequence, gross margin increased 2.3% to EUR9.7 billion. 601 million of UIL contribution more than compensated 236 million of negative FX impact. Net operating expenses were up EUR57 million or 2.2% up to EUR22.7 billion, improving 4.5% growth in June. The consolidation of UIL added 207 million partially compensated by the FX impact that lowered expenses by EUR82 million. On a like-for-like basis and excluding the FX impact, net operating expenses improved 2.6%. Net personnel expenses grew 2.7% and decreased 4.2% excluding FX and UIL. And net external services were up 1.6% and improved 0.7% excluding both impacts. On page 33, analyzing the different business and starting by networks, it’s reported EBITDA grew 8.6% reaching EUR2.9 billion with the US and Spain as the main drivers. Net operating expenses rose 15% driven by mainly the UIL consolidation 207 million, taxes were up 13% also due to the above-mentioned perimeter. In Spain, EBITDA rose 6.6% reaching almost EUR1.2 billion and improving first-half, 3.5% increase. The 2.5% increase in the remuneration according to the new framework, incentives and cost control more than offset the EUR29 million impact of positive settlements accounted for in Q1 2015 that in 2016 had a negative impact. In the UK, EBITDA fell by GBP16 million to GBP581 million, with a 3.5% decrease in gross margin affected by the profiling of the RIIO-ED applicable from April 1, 2015. Net operating expenses improved 7.7% in pounds as operating income rose 12 million due to larger works for third parties. In the US, EBITDA was up 51% to US$973 million, including US$372 million coming from the UIL consolidation and normalization of certain seasonal impacts mentioned in previous quarters. EBITDA in US GAAP was $1,047 million, still $73 million above the IFRS EBITDA. Finally, Elektro EBITDA fell 10% to BRL579 million with 2.1% lower energy circulated and 5% lower tariff due to the August 2015 full-year review that lowered the income by 14%. Net operating expenses improved 1.7%. Since August, tariffs are rising 9% due to its annual review. In page 35, we go on the generation and supply EBITDA that was almost flat better than the first half results, 3% full reaching EUR1,734 million. Improvements in operating results and one-off positive court rulings both in Spain compensated the FX impact and weak performance in other geographies. In Spain, EBITDA was up 1.6% reaching EUR1.2 billion, thus improving the 2.5% fall in the first half. Gross margin was up 3.1% as higher output driven by a 56% in hydro production and a 4.6% in nuclear, together with a higher retail activity more than offset the lower gas results minus 50 million. Net operating expenses minus EUR50 million compared to last year. Net operating expenses were up 25% still affected by EUR104 million of non-recurring positive results in 2015. Levies were down 11% as new positive court ruling in the first nine months of 2016 were higher than the previous nine months by EUR64 million. In the UK, EBITDA grew by GBP4.8 million to GBP187 million with 5.9 decrease in gross margin compensated by a 4.2% decrease in net operating expenses and a 30% decrease in levies. In the wholesale and generation business, gross margin decreased by 5% due to a lower output and higher carbon tax, but it is more than compensated by the improvement in net operating expenses following the Longannet net closure. As a result, EBITDA increased by GBP22 million to GBP34.8 million. Retail business gross margin fell 6.1%. Higher unit tariff margins in gas did not compensate 16% lower gross margin in retail power due to increase in non-energy related costs and lower volumes driven by milder weather conditions than last year. Expenses included an OFGEM customer compensation negative ruling of EUR26 million. Offset by lower levies due to the ECO extension. As a result, EBITDA decreased by EUR17 million to EUR152 million pounds. In Mexico, EBITDA fell by $29 million to $351 million affected by lower tariffs and delays in the COD of plants that are scheduled in 2016. All of these plants will be in operation by year-end. Renewables EBITDA in page 37 fell 3.3% reaching EUR1,043 million as a better performance in Spain has been offset by negative impact and weaker performance in the UK. Gross margin fell 4% and net operating expenses improved by 5%, driven by lower personal expenses. In Spain, EBITDA reached EUR410 million, EUR56 million more as a result of 7% higher output including EUR43 million of account receivable due to low prices in the market. In the UK, EBITDA fell by GBP63 million to GBP157 million as a consequence of 18% lower output, lower prices and the LECs removal from August 2015. In the US, EBITDA increased close to 1% to $460 million, [indiscernible] 7% higher output offsetting lower merchant prices. In Latin America, EBITDA was up 21% to EUR55 million. Mexico EBITDA in dollars improved 42% as a consequence of additional capacity. Brazil was down 1.4% in euros due to the real devaluation, despite growing 11% in local currencies. Finally, in the rest of the world EBITDA reached EUR70 million or EUR3 million lower due to the 10% lower output partially offset by lower net operating expenses. EBIT increased 7.6% to EUR3,257 million. amortizations fell by EUR8 million driven by the closure of Longannet and extension of the useful life of wind farms more than compensating UIL consolidation and the increasing depreciation due to the larger investments. Provisions grew by EUR10 million to EUR169 million affected by the UIL consolidation and the increase in bad debt provision. In page 39, as you can see net financial expenses improved by 22% to EUR584 million thanks first to a EUR63 million production in debt related costs driven by our cost improvement of 64 basis points from 4.10% to 3.46% and despite a EUR2.3 billion increase in net average debt mainly due to the UIL consolidation. Second thanks to the EUR101 million lower non-debt related costs including EUR100 million difference of positive FX hedges versus 2015 mainly due to the British pound devaluation. Recurring net profit as the Chairman has mentioned increased by 17% to EUR1,957 million thanks to the already explained improvement in operating results and lower financial expenses. Reported net profit was up 6.4% to EUR2,041 million less than the recurring net profit mainly due to EUR220 million non-recurring tax profit in the first half of 2015, partially offset by around EUR80 million one-off of lower taxes in the UK accounted for in this last quarter related to the 1% touch point decrease in the corporate tax to 17% from 18% from 2020 onwards already approved. Regarding the financial situation of the group in page 43, our net debt to EBITDA was up 3.7 times. Our FFO net debt strengthened to 22.5% from 21.4% on a pro forma basis improving also on a reported basis. Our retained cash flow net debt also improved on a pro forma basis and reported basis to almost 20%, with our leverage ratio of around 41.9%. The group has a very strong liquidity position in this volatile environment covering more than 24 months with an average maturity of our debt of 6.3 years and a comfortable maturity profile. Iberdrola continues to take advantage of the strong investor appetite in this low interest environment issuing long-term financing at very competitive levels as the Chairman has mentioned. To end my remarks just to remind you that in the annex you can find the scrip dividend calendar. Thank you very much. Q - Unidentified Analyst: Okay, thank you. We are going to start with the Q&A session and we have several block of questions. The first one is related to the 2017 results or outlook. And the questioner coming from Alberto Gandolfi from Goldman Sachs and Javier Garrido from JP Morgan. The first question is related to, if we can deliver 2016 [ph] earnings per share at least in line with 2016 and if we can deliver the main drivers that can describe this renewables, networks, UK et cetera or even financial results. The second one is related to, if we can clarify the 2016 guidance and what does this mean exactly when we are saying that nine-month results lead to an increase in net profit outlook for 2016. Do you mean an increase versus the regional target of 5% growth or an increase versus the upgraded guidance disclosed in the H1 results? Does this that you expect a double-digit increase in reported net income at the end of 2016? Francisco Martínez Córcoles: We are talking about the reasonable time, so I think we are yet not over the guidance, I think it’s the regional and the regional what we are saying is that we are already maintaining our guidance in EBITDA terms and we are already improving our guidance at net profit level. So I think that is what we are trying to explain.

And if we can as well to tell something about the expectation for 2016 [indiscernible] growth? Francisco Martínez Córcoles: In 2016?

2017, sorry.

2017, well we are in this moment already just preparing our budget for next year, still I don't know the details, but I think you see the most of our investment is going to start already producing in 2018. So probably 2017, will be already more therein let’s say flat and with a big jump in 2018, but still I don’t know the detail because we have certain thing we have to analyze such as what is going to be the financial course, which I think you are coming down, what is going to be the FX for next year and the hedges that we have to make and what is going to be the labor cost in different countries. So they are very many things which is still is nothing [indiscernible] but globally I think 2018 is going to be the big jump in our results because most of our big project is going to be completed by this date. But I think we have the opportunity to give you some more details in February next year when we will have already all our plan completed. So now the machine is in this moment working and putting all these and I have not already more detailed information.

The next question comes from [indiscernible] as well and is related to 2018 results. Given that the assets that are coming in 2018, the benefits from refinancing and the rebound in power prices, what type of cumulative EBITDA growth, net income could you deliver in 2016 versus 2015 if possible to say something about it?

So, same thing. I think, we will have already, we will have in February the detailed updated all those things. So I think my feeling in the numbers, most of the product is going to be already completed from 2018, 2019 and 2020. So the jump of the results will be there, but there is not already still information of this one. So what we can already say this and our commitment and the outlook continues, in average, growth in the period of 5% either in EBITDA, either in profit. I think we have seen the first year already, first nine months of the year. So we are already almost in line with EBITDA and we already have confirmed our outlook in EBITDA for this year of 5%. And we have already given an outlook much higher for the net profit. So I think, but the global outlook for the period is to maintain what we said already in February what we make already at the investor day. So next year Investor Day, we can really give you a more update, but I think that is going to be 5% linear, so it should be yes, and got to be moved in to that one. There, it is slightly less and with net profit, there is not always that we’re already as high as we’re already this quarter, but I think by the average, it’s going to continue in the line with what we said 5% increase average by 2020 during the period in EBITDA and net profit.

Okay. We have now a set of questions coming from several analysts; Javier Suarez, Mediobanca, Carolina Dores, Morgan Stanley, [indiscernible]. And it is related to the results presented yesterday in Avangrid. Yesterday, Avangrid reduced its guidance for 2016, but in the opportunity, the group is increasing this morning the guidance for the same year. Could you explain as what divisions are doing better and therefore manage to compensate Avangrid’s negative effect, expected net income for 2016?

So Avangrid roughly represents 20% of our group result, I said roughly. So I think that means they gave already this guidance, which is roughly 7% below what they were saying. So that means it’s around 1.5% of the global group, but I think what you can see already in the presentation, so mostly in there has been affected by the lower production, which I think in global terms, is affecting to the whole group. I think the result of winds are already lower than what we had already previous year because the low production in United States, lower production as well in Britain, better production in the case of Spain and better protection in another - in the rest of the - even in United States, but lower than what was already expected. So - but I think wind represents roughly 20% of our total results. I think you have seen in other words, power generation is equal or better than the previous year and that represents 80%. So what is coming from networks and power generation, well, we have already better result in previous year, and that represents 80% of group results. So I think this indication has already been given by Avangrid and we will see later on what is going to happen with wind. I think they are giving this expectation, but you know wind is enough a couple of weeks, very windy with the result and the expectation can already change. So - but 80% of our business, which is going better is network and is generation and retail and that is what is affecting to the whole group result and that is what we are already up to now, that is what we expect by the year-end as well.

Another question regarding Avangrid is made by the same people that I mentioned before is related to the profit that is made this year and the drivers of this lack of visibility, something related to, we are changing our view about predictability for the company?

In Avangrid, no, I think, we are already - Avangrid for me is really a very good company with excellent quality of assets. It has already wrap, which is over 7 billion wrap in network and they are already [indiscernible] and what we have already in the construction over another 15% to 20% more capacity, which is going to be completed in the next two years. It has a huge potential in renewables that we mentioned with additional 2000 megawatts, which will be already inside of the PTC’s program for which we have already made the necessary contracts for these turbines to be already able to take this PTC's situation. It is a company which is almost zero emissions in a country, which is very much focusing in making this energy transformation. I think I’m very, very satisfied how the company, about the company. Saying that, I think we are not seeing any reason why we cannot already expect then the outlook they gave of growing 8% to 10% average by 2020 can be already modified. I think they have enough projects, there are ongoing things, they have revealed of rate cases of New York, the negotiation and the expectation of the negotiations in Connecticut, the new onshore wind farms that they are already in construction and the new ones which is going to start in the near future. The project which they are already making in transmission and the potential projects they are going to make in the future as well. So all those things gave to me that this company is an excellent company with an excellent quality of assets with an excellent expectation and there is not any reason we can already expect that they are going to not to fulfill what they have already been informed in the outlook they make already this year.

Next question comes from Javier Suarez, Mediobanca and Carolina Dores, Morgan Stanley and Pablo Cuadrado, HSBC. It is regarding the dividend, interim dividend has been increased by 8%. Could we consider this growth as a good guidance for 2016 full-year dividend?

It's an excellent question. So I would reply as I used to reply all those things. So we said in February that we will already like and the shareholders benefit of the dividend, on the remuneration in line with increase of the results. So we are giving as a symptom that we are already going better in terms of net profit and I think we're already, that's why the board decided to increase the interim dividend. So once we close the account for the year, we will already present the approval of the shareholders meeting, what is going to really complement our dividend for next year. But I think the policy has not changed in the sense that we will already adapt the dividend in line with or modify the dividend in line with how the result is going on. So and that is what I can tell you. So I think you would like to interpret the basic symptom and that's fine. And the only thing I can say now is that we have already decided to increase the interim dividend by 8% and the complementary dividend will be already announced in February this year, when the account will be closed, the board approved, in the year end shareholders meeting, approved as well this dividend will be paid in July next year.

We are now on the question number seven related to the UK and the BREXIT. Could you please update, and this is made by [indiscernible] could you please update us on your views and the potential consequences that BREXIT could have in your business in the UK, do you expect any changes in policies, do you see any risk for your investment plans in the UK networks?

Yes. So well, I think, as you know, our business in Britain is almost regulated. So, and all our business is in pounds and our debt is in pound. So I've not already seen any reason why the plants with the network, which is already a framework already defined up to 2023 in distribution and 2021 in transmission is going to be modified. I think the terms are very clear, the investments to me are very clear and the remuneration system is very clear, the RAP is very well-defined. So I think that is not going to change. So, and the second big business is renewables, renewables as well is already under a framework, which is as well very well clear defined business in this line. So what is going to be potential effect, certain is in our consolidation at the group level of the business, which is, I think, their rate of returns always in this year continues in line, which is now has already suffered the evaluation in the range of 50% if that’s in our mind. So certain in our consolidation will affect that one. But as well normally, I’m not an expert, well, I think, in our business what is going to, how the team is going to perform. But the theory is that if this evaluation can already affect to a more inflation, if they have more inflation, most of our businesses are already - has already registered formulas with 10 already upgraded and increased. The inflation goes up to certain levels. So I think that is one area. Second area, we can already internally in Britain. Second area, which can already compensate at the group level this potential devaluation is the fact that our financial cost is already coming down with partially kind of already offset this potential devaluation. Therefore, we have seen in the recent days and I told you already when the BREXIT was already decided by the British, that potentially the US dollar is going to be revaluated, so the dollar in the last few days we have seen is a trend of revaluation. We have seen then our total business in the state is similar to the business in Britain as well, that’s a scenario we can't compensate. So as a whole, we have not seen major effect in our P&L at the group level because of the consequences of this BREXIT. Internally, we have not seen that. Our investment is continuing in line. We would be already meeting all the new members of the government and absolutely are already in line to keeping and maintaining the rules as if they’re really not maintain for the case So I’ve not seen changes on that one. And in terms of our P&L, I think I'm saying the negative effect of the actual devaluation is already - can be completed, can be already compensated either internally because of this major inflation, either externally because of our lower financial cost or because of the potential in our real revaluation of the US dollar in which we have almost the same level of business that we have already in Britain.

Okay. Next question is the seventh, this is right now and it’s coming from Stefano Bezzato, Credit Suisse. Would you consider future acquisition outside your current core markets, in particular, I'm referring to recent reports on the Spanish press claiming that you could be interested in Australian networks?

So I think it is a goodish question because I was surprised when it was also in the newspaper that one of our guy has already gone to Australia to know what is already the Australian government is thinking and planning to do with the potential privatization of certain assets. So I think the only thing we have already done there is to go, to see what is the plans of the Australian government to privatize partially certain companies. I think that said, I think our people is, as you can imagine, a company like Iberdrola, we have already been, we have to be updated, what everything is happening worldwide, especially in countries and what we have already, they are already a stable and good rating. So and that said, I think they are not anything else more that for analyzing and studying and knowing what is the Australian government plans for privatizing, certain of their power generation or their network asset. That is it. There is nothing else than that.

Now, we are passing to the Spanish. [Foreign Language]

[indiscernible] And it has to do with investments at nine months, they’re up to 3 billion in investments and can we expect by the end of the year that this would be sustainable, or even increase in 2017?

Well, I think that the plan we have consists in having a figure in excess of EUR5 billion and these investments, of these investments that are 40% higher than those that we've been making in the past, this means that we've had to hire new people and I said that we've hired nearly 2000 people in the group, but apart from that, many thousands of jobs have been generated amongst out suppliers, and we've seen an example very recently, in the case of Navantia in Spain, because they’ve not only built substations for our wind power facilities in Germany, but we've also just placed an order with them for another substation in the [indiscernible] substation and more than double of the so-called jackets or platforms for these substations in the Baltic Sea. And in this case, in their particular case, it’s got to guarantee a few thousand jobs for people over the next few years and I also have to say and this is something that I mentioned in my presentation that these new investments in new developments like the offshore wind power sector on the digital world or in the world of big data, all of this means that we have to focus much minimal resources on reading so that we can trade our people for the future, which is no longer the future, it’s the present. This is why we've made such substantial divestments at this training center close to Madrid in the place called [indiscernible] and with capacities or capabilities that I think that many other universities will be jealous about because we’ve got some wonderful equipment there to trade our people.

We have now a question regarding the liberalized business in Spain, and it is coming from Carolina Dores, Morgan Stanley and Jorge Alonso, Societe Generale. Can you update us on your hedging levels for Spain, liberalized business in 2017? Based on current forward power prices for Spain and the recovery in coal prices, is the outlook for 2017 improving or has the energy fully hedged, this will have the full impact in 2018? José Sainz: As we told you in H1 result presentation, we have 2016 completely closed at a price of 58.4 and concerning 2017, we have 87% of the forecasted production closed already hedged or closed. The price is 59.9 and concerning that question related to the possible evolution of the prices and improvement from that, obviously, if we have 87% of forecasted production hedged, that means that most of our results are already done. So is there any possibility of improving, the answer is yes, and this came from the ancillary services and it will depend upon the demand and all the evolution of the market, but partly if there are better prices because of the coal prices updated, we will take advantage of this via ancillary services.

Next question is coming from Pablo Cuadrado, HSBC and is regarding the renewables situation. In the next month, the Spanish regulators should review the performance of the Spanish fuel prices in the last year in order to adjust the premium in the remuneration of the renewable assets. I would like to ask which is your perspective about this review, and which is the positive impact that can imply for the domestic assets, indeed, press has commented that the Spain may launch a new renewable option in the next few months, would you consider to participate on it?

So I think, and related to the press, I think it is clear framework. I think we have to adjust it according with the real prices that have been in the market. So I think that represents certain amount of money have to be given to the renewable business to all the players. I think this money is already now needed to make anything, I think you’ve seen enough surplus in the tariff for paying. We expect this amount of money. Related to the future, we don't know which is there. They have to make already a plan, what is the expectation in terms of prices for the future, validating the profitability according to this one. So we don't know what is going to be made and I think we will have already, we have to wait to the new government come and one day, new government will be here, we will have started the conversation and the discussion with them to make the things in a reasonable manner. Related to the next bid, we have to see what is going to present. So I think certain, we have a lot of projects in the country. In this moment, we had e already, we won in the last some megawatt in Canary Island. I think, we are building at present. We will see what is going to be. I think we have enough projects and we will see the condition and according to the condition, we will see how much or how many of those we are going to present in good terms and good conditions, et cetera, et cetera, but certain we have projects and I think if the conditions are interested, of course we are going to be full.

Next question comes from [indiscernible] and it is regarding the Spanish politics. We expect some changes in the energy policy that the new government could bring just in case?

So the market is to discount the things in advance, but still I think we have to wait up to Saturday for already being confirmed the Prime Minister as Chief of the government. I think he is expecting the government will be already nominated by next week and once the new Minister will be nominated, they have to nominate their own teams. So if we don't know still so many things, we have to weight when that happens, but we cannot say anything because in this moment still, we have no news who is going to be the members of the government, which is going to be responsible for the sector and how it's going to be organized, the new government.

Next block is relate to the financials and the first question comes from [indiscernible] refinancing in the nine months 2016. The cost of debt dropped by 64 basis points to 3.46% or 8% less, do you expect this trend to continue, and was this already in your target presented this year. On your debt maturity profile, can you please tell us what is the percentage of debt over 2016, 2018 denominated in euros? José Sainz: Well, in euros, we have around 45% of the debt, which is in line with our FFO coming from in euros, okay. So we have today a little bit more about as investments call through and in 2018, we will have, as the Chairman has said, we will have new investments, giving cash flow that will decrease to levels of around 40%, okay. So the average is around 45%. Regarding the cost of debt, obviously, and as the Chairman has said, we are expecting that the cost of debt will continue to fall in the following years. On a quarterly basis, it may fall a little bit, but for sure, the cost of debt will improve in 2017.

Next question on financing is coming from Carolina Dores from Morgan Stanley and Stefano Bezzato, Credit Suisse. Are you still unhedged for the sterling in 2017? If not, what is the level of hedging, how do you expect the change in the British pound to impart your targets from 2017 once the hedge expires? José Sainz: Well, obviously, as we said, we are not hedged in terms of the derivatives, because that expire at the end of the year, because you know that it is a mark-to-market, so obviously the hedges just for 2000 - due 2016 don't have an affect into 2017, because you have to recognize the mark to market at the end of the year. What is true is that also will be mentioning around 25% of our debt is in British pounds, so that will obviously have a positive impact in our financial expenses. So there is around a natural hedge due to our debt in pounds that will bring around 20 million, 25 million less of cost due to the British pound devaluation in our financial expenses and as the Chairman was saying, our view is that the lower financial expenses will, in the lower part of the P&L will compensate the lower revenues in British pounds or the lower EBITDA in British pounds.

Next question comes from Jorge Alonso, Societe Generale is what is the cost of debt denominated in US if we can deliver that figure? José Sainz: 485% but again most of that debt is direct pass-through in the right cases so that is why it’s higher than the others because normally they find themselves in very long-term, so we have higher cost of debt, 485%, but the cost of debt is passed through, through the rate cases, so it has a neutral impact.

Finally, regarding financials, we have a question from José Javier Ruiz, Macquarie. Do you have a new guidance of net debt at the end of 2016, given the volatility of the foreign currencies? José Sainz: Well, we will be around 29 billion. We have to say that there is around - an impact of around 400 million, which we didn't expect due to this new obligation of the Spanish authorities to pay in advance, okay. So we would have on a normal basis, we have been around 28.5, but this is due to the 400 million will be around 29 billion, okay.

We have an additional question from Jorge Alonso [Technical Difficulty] provide color on supply business based on the new commercial offers, are you capturing clients from the regulated tariff, any figure? José Sainz: Yes. I will start with Spain. I’m sorry. Starting with Spain, we have more than 300,000 tailored plan tariff or products already sold and we expect to finish, we already have in this nine months, 400,000 more customers that we have at the beginning of the year. What means in net, I mean, less in regulated and more in liberalized and that means 3% more portfolio of contracts that we had when we began the year. In the energy, the expectation is to increase by 3%, also 1.6 gigawatt hours, that means about 3% within this nine months and probably more by the end of the year. And in terms of margin, we have about 80 something million euros more margin than we had in this period of the last year, within this nine months. And in the United Kingdom, we are the only company of the big competitors that are not losing market share. We have in fact increased our market share in Q3 and since the last five years, we have increased our customer base in 450,000 more customers or contracts than we had five years ago. So the perspectives of retail business are quite good. We are doing very well the things, and in fact we have the less expensive or the more competitive cost to serve operator in both markets, Spain and United Kingdom. So everything is positive from the retail standpoint.

Okay. And the final question comes from Virginia Sanz, Deutsche Bank and is related to the renewal business in the US, from Avangrid? She is asking from the new 2 gigawatts of Safe Harbor payments in the US and perhaps some additional offshore pipeline, may we see some of those additional projects already operating in the 17, 2020 timeframe, could this drive further growth or maybe offset some US network projects that you have not been awarded?

So I think this network project not awarded for the time being. I think as far as I know which I am not very much detailed of that one, so the decision is that they have already, instead of, they have not re-contracted as much energy we have seen initially, and so for that, it is only 20% of the contracted energy what we have already planned to acquire and for this 20% only energy, they will not need any transmission so that there is no reason for that one. But there are plenty of projects in the area which they require, I think they have one in Massachusetts will require almost 10 times more energy than what has already been awarded now. And so I think this project probably is going to be executed later on. So I think on the other one. Nevertheless, in our projection, there it goes already, not only this one, but percentage of what we have contemplated. So I think this 2000 extra megawatt, all of them, we plan to be already, have to be before 2020. We would like to obtain the credit, which is already involved and that's why we are already buying now this equipment to secure, then we will be inside of the PTC programs. So 2020, before 2020, this extra 2,000 will have to be completed. So that is why, I think, that is an extra thing. Another one, in any case, so another transmission project. What we are contemplating have to be already by the end of the period, so probably most of the project we were already contemplating were not ready at the beginning or at the latest, even some of them after 2020. So one is the beginning, one is the delivery. So I think what we can say is this, 2000 megawatt for your numbers will be fully inside of the 2020 period, which is an extra ones of those 744 were in construction and that another one is going now to erode that result we were stating. So because, those were at the end of the period, they’re not related inside of this period. Francisco Martínez Córcoles: Okay. Thank you very much to all of you for your question and interest, and now Mr. Ignacio Galan will do the closing remarks.

So, thank you very much for attending this presentation. So I’m very pleased that as I anticipated in the previous quarters, results are low to confirm the achievement of our outlook for the year end at the EBITDA level and to beat at the net profit level. Also, because of this, we are pleased as well to increase our internal shareholder remuneration by 8%, reaffirming our commitment to improve shareholder remuneration result. The investment plan, as I mentioned, is very well on track and is very possible that we might increase our 2020 investment outlook. I think we will let you know by February next year. So in this February next year, we will make already this update of the plan and what we can say already we are optimistic about the achievement of this. So we will have the opportunity to meet ourselves in February and we can already talk about it in detail. If there are any questions related to nine months results, I think our investor relations team are, as always, at your disposal for whatever question you would like to pass. So thank you very much for your attendance. Thank you.