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Q3 2008 Enagas Earnings Conference Call (ENGLISH) - Final.

Article Excerpt
UNIDENTIFIED COMPANY REPRESENTATIVE: Good morning and welcome to the conference presenting the results for 2008. The results were published today, this morning, before the stock market opened and they will be available in our web page, www.enagas.es.

Mr. Antonio Llarden will preside the meeting which will last approximately 40 minutes. We have changed the usual format of the conference, trying to make it as flexible as possible, and contributing added value the President will summarize the current situation of the Company, the strategic development of Enagas and the challenges and perspectives for the future. We will finally open a question and answer session which we will try to answer as detailed as possible.

I give the floor to Mr. Antonio Llarden.

ANTONIO LLARDEN, CHAIRMAN & CEO, ENAGAS: Good morning, ladies and gentlemen. Thank you for your attention. In the current economic context, which is very uncertain in the markets worldwide, there are some key points that are of concern to everybody; to the Company, to the shareholders and to analysts and experts. These aspects were taken for granted in the past but it is no longer so obvious that the companies will reach their objectives. I'm referring to the current future resolve to the achievement of the business plan and also to those topics related to financing and liquidity and to the sectorial regulations of each company.

I want to orientate this conference call towards explaining, with data, how Enagas is tackling the current situation and what our strengths are in this context. As for the results, Enagas is fulfilling its investment plan aimed at guaranteeing the security of supply of the Spanish gas system. This was a very ambitious plan, difficult to achieve, but we are achieving it even in this economic context. EBITDA has increased by 9% and the net result has increased by 14% so we can affirm that we have achieved the forecast goal.

We have fulfilled -- we have gone beyond the third quarter and I can now say that we will reach the financial objective that we established at the beginning of the year; this is an increase of EBITDA of 7.5% and an increase in the net result of 8.5%.

As for the investments, one other important point is investment. And we are moving along the forecast path and there has been some acceleration of the activities and these will help us achieve the objective for 2008 and even, I dare say, of 2009.

In the past 12 months we have achieved investments worth EUR748 million. This is what we have committed ourselves to do with all of you. And the current amount of building projects is of around EUR1,000 million. This guarantees a high level of implementation in the next quarters. The amount of installations implemented allows us to assure the fulfillment of the commitment of EUR600 million in the fiscal year.

I would like to also point out the strong growth of the gas demand in 2008. This is mainly due to the increase in the gas demand for electrical generation; this increased by 50% and represented 43% of a total amount of the demand against 33.7% in the same period the year before activities in the midst of the real economy. And it is not involved in virtual financial operations, it is based in the growth of the gas market in Spain and this is due essentially to the growing role of gas as backup of the electrical system, and therefore with low correlation with the level of economic growth.

This low relationship with the economic situation, together with the ever greater importance given to the security of supply, allows us to reinforce the strength of our investment plan for the long-term.

As for the regulatory aspects and regasification, the Royal Decree that establishes similar returns to that of the transportation activity, passed the compulsory information procedure with the National Energy Commission and it is pending the decision of the Ministry. The CNE is about to complete a proposal of the unitary standard values and this will be passed to the Ministry. We hope the final resolution of the Ministry will be published in January. As for the CapEx, we believe that the recognized CapEx will be higher in line with the cost structure of the sector.

As regards the OpEx, Enagas has been carrying out a great effort of cost contention. We hope that the new standards will allow us to continue to increase efficiency and share it with the system.

In sum, we hope that the revision will have a neutral nature in our 2008 results and in the estimations of our strategic plan.

For the financial situation of Enagas I would like to point out three essential...

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