Press office

22.03.2018
General Shareholders’ Meeting

José Folgado assures that the Red Eléctrica Group is prepared to be a great infrastructure manager

  • Red Eléctrica has presented the Company's Sustainability Commitment for the 2030 horizon and which has been linked to the business strategy.
  • Investment in transmission grid development in Spain and in the management of fibre optic networks reach 60% of the total foreseen in the Company’s Strategic Plan.
  • Energy transition will only be possible with the support of a robust, sufficiently meshed and interconnected grid, and with adequate management mechanisms.
  • Significant advance in investments in Chile and Peru.

The Chairman of the Red Eléctrica Group, José Folgado, assured that the Group is prepared to be a great infrastructure manager and is capable of successfully facing the challenges linked to the role it will play in the energy transition. These challenges represent a source of new opportunities that will help shape a stronger and more profitable company, as highlighted by Mr. Folgado at the General Shareholders' Meeting that took place today in Madrid.

For the Chairman of the Red Eléctrica Group, the three major challenges are, first of all, to continue fulfilling the difficult and exciting objective of excellence in the field of sustainability in its three axes: social, environmental and corporate. Secondly, successfully face the challenges posed by the energy transition, fulfilling the ambitious investment goals linked to it. Thirdly, intensify the Group's commitment to expanding the business base, both internationally and in the telecommunications sector.

Mr. Folgado confirmed that the need to strengthen the existing transmission grids and to build new lines and substations that enable new generation sources to have access to the market, together with Red Eléctrica’s role as system operator, ensures a clear future for the Company.

Also, Juan Lasala, CEO of the Red Eléctrica Group, stressed that the Company will focus its efforts on generating value for its shareholders and for society as a whole. He also stated that the Company will continue to firmly drive the regulated business in Spain and on growing the Group's activities; a mission for which it is technically prepared and maintains a solid financial solvency.

Approval of agreements

The General Shareholders' Meeting has approved to keep the remuneration of the Board of Directors for 2018 unchanged with respect to 2017, in all its concepts and amounts. It also has approved a dividend per share of 0.9188 euros, which implies a year-on-year increase of 7%, as set out in the Strategic Plan and the re-election of Socorro Fernández Larrea and Antonio Gómez Ciria as independent directors, as well as the ratification and appointment of Mercedes Real Rodrigálvarez as nominee director.

Sustainability Commitment

Mr. Folgado presented the Company's Sustainability Commitment to shareholders, which is linked to the business strategy and was designed with a long-term vision for the 2030 horizon, indicating that it is the result of the Group’s philosophy to become a worldwide reference.

This commitment establishes four priorities: be proactive agents in the fight against climate change through the decarbonisation of the economy; promote a responsible value chain; contribution to the economic, environmental and social development and anticipating change and taking action.

Red Eléctrica works together with its stakeholders, sharing common values ​​and goals, and thus generating a responsible value chain. Similarly, it takes on its responsibility to contribute to the economic, environmental and social development by providing an essential service to society that is both secure and efficient, promoting environmental conservation and involving society in order to improve the quality of life of people.

Lastly, in a constantly changing business and social environment, such as the current one, the Red Eléctrica Group maintains an attitude focused on anticipating change and taking action, detecting the opportunities the future offers, using innovation as a lever for growth.

Main milestones 2017

For Juan Lasala, the milestones achieved in 2017 indicate that the Company is on the right track to achieve the goals set for the year 2019, and which are aimed at contributing to an energy model based on security of supply, sustainability and competitiveness.

Regarding the area of regulated activities, the CEO highlighted the investment in new transmission grid facilities which totalled 411.8 million euros and the commissioning of nearly 150 kilometres of line, which has enabled Red Eléctrica to increase the km of circuit line of its transmission grid to 43,800 kilometres.

Among the projects carried out during 2017, Mr. Lasala highlighted the work performed on the Lanzarote-Fuerteventura axis; the commissioning of the Arkale phase shifter and the strengthening of the transmission grid and the feeding of the high-speed train, with the commissioning of the Tábara substation in Zamora. Other noteworthy projects are the new facilities in the Campanario-Ayora-Cofrentes line (between Castilla-La Mancha and the Community of Valencia); some of the facilities included in the Venta de Baños-Burgos-Vitoria axis and the works in the Plaza substation, in Zaragoza, to improve the electricity supply to the largest logistics platform in Spain.

In addition, he mentioned the public consultation and participation phase regarding the submarine electricity interconnection project between Spain and France across the Bay of Biscay which has recently been completed.

Regarding system operation, Red Eléctrica has continued to guarantee the security and quality of the electricity supply whilst making it compatible with the maximum integration of renewable energies. In 2017, 33.8% of the energy integrated into the peninsular system came from renewable sources.

With regard to the Company's international activity, 2017 saw the definitive consolidation of the Group in Chile and a significant advance in its investments in Peru. In Chile, noteworthy are the commissioning of the 500 kV Mejillones-Cardones line, which is 600 kilometres in length, and the awarding of a project in the north of Chile, to build a 250-kilometre line, which positions Red Eléctrica as one of the main agents in a future interconnection with Peru.

In regard to Peru, the Company acquired the 45% of the share capital of Red Eléctrica del Sur (REDESUR). Once the projects currently underway are completed, Red Eléctrica will manage more than 1,300 kilometres of transmission line in southern Peru, where the Company has established itself as the main transmission grid operator.

Regarding energy storage, Red Eléctrica continues to advance in the project of the Soria-Chira pumped-storage hydroelectric power station in Gran Canaria, which will become a tool for system operation that will enable to guarantee the security of supply to the islands, as well as to improve the security of the system and optimise the integration of renewable energy. Similarly, preliminary studies are being conducted to identify the location of a possible pumped-storage power station project in Tenerife.

Results obtained in the telecommunications business, whose contribution to the Group’s revenue has amounted to €85 million over the last three years, makes it a long-term priority for the Red Eléctrica Group and a clear path of development.

Sound results and strengthening of the main solvency ratios

As for the results of the 2017 financial year, the CEO showcased that the revenue reached €1,941 million, a value that is 0.5% higher than the previous year. This figure includes the remuneration of the transmission activity in Spain, which includes the infrastructure commissioned in 2016; the resources associated with the provision of telecommunications services, €86.5 million; the regulated revenue linked to system operation, €56 million, and the revenue derived from the transmission activity  abroad, €19.6 million.

Profit for the year totalled €670 million, 5.2% higher than that registered in 2016. Regarding investment, €510 million, somewhat lower than the previous year, which included the disbursement corresponding to the acquisition of 50% of the share capital of the Chilean company TEN, was earmarked primarily for transmission grid development, €411.8 million.

The average cost of financial debt has been reduced to 2.78% and solvency ratios have improved, with an improved EBITDA ratio which stands at 10.3 times and funds from operations to total debt ratio of nearly 25%.

Last June, Red Eléctrica formalised a bond issue in the Euromarket for €200 million, and in December, it transformed its 800 million euro syndicated loan into green financing, becoming the first sustainable syndicated loan of its kind in the electric utilities sector.

Update on the 2014-2019 Strategic Plan

The CEO gave a summary of the 2014-2019 Strategic Plan that incorporated an ambitious investment plan of just over €4.5 billion, of which €3.5 billion is earmarked for the transmission grid in Spain and the fibre optic network and €1 billion for energy storage facilities and international business.

Mr. Lasala pointed out that at the end of 2017, investment in the development of the transmission grid in Spain and in the management of fibre optic networks reached 60% of that set out in the Plan, while 77% of the investment foreseen in the area of ​​business diversification has already been made or committed.

In terms of business diversification, the active search for opportunities continues, both internationally and in the field of telecommunications. Currently, Red Eléctrica is evaluating the potential acquisition of a stake in the share capital of Hispasat, with the aim of converting the Company into a global strategic infrastructure manager.

 

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