On Romania and Hungary, I think it’s important to give the context right we had — and this is true for both Networks and Customer Solutions a weak performance last year. I mean, networks driven by network losses and in Customer Solutions partly driven by also extraordinary unfavorable environment and so this year, as we promised and guided for we are seeing largely recovery so a normalization of margins. In that context, I think that as it should be. So both of these countries are moving back, where they should be operating in a normal environment. And on top of that, we do see that regulators honor their commitments to also ensure a faster recovery of network losses. So there’s a certain element of abnormally good, but the performance this year but that’s just the recovery of the losses last year.
So I think that’s just the context for Eastern Europe. So I think this is largely as it should be — it shouldn’t come as a surprise.
Iris Eveleigh: Thank you. Next question comes from Vincent Ayral, JPMorgan.
Vincent Ayral: Hi. Thank you for taking the question. Thank you, very much. I’ll ask the key question regarding ’23 has been asked. I’ll come back on the angle of growth and the funding of the growth. So, you said quite clearly that you will stick to a growing dividend understandably. And the question will be, how much growth do we have? And how do we finance it? Is it auto finance? Yes, no? And if not, do we need a capital increase? Or the other alternative is noncore assets. So, I’d like to have a bit of an update on that one. And a few years back, you were saying that district heating assets which are long-term contracted capital-intensive energy networks were noncore, which was somehow surprising to me at least and supply was core.
How do you look at it? You still got a couple of assets in Turkey sale. But what about Eastern European assets? Do you — would you consider a refocus geographically speaking? And what is the updated you on basically district easing assets and the supply activity which in a way brings some volatility to your earnings and some discount to the way you trade. Thank you.
Marc Spieker: Yes Vincent, thanks for questions. It’s tempting, but — you don’t understand that at nine months stage, we’re not giving kind of the strategic update. That is for March and that also includes anything with regard to portfolio measures and so on. We have the €2 billion to €4 billion balance sheet optimization target stands. I think if you look at our rating metrics, if you look at our target that we have now given a 4.1 debt factor. There is ample headroom, an ample headroom not just in our perception, but also in the perception of the rating agencies to deliver further growth and to what degree, we then will deliver this growth or not will come in March. So it’s all fair questions, but against the strength of our balance sheet, the least thing that I’m right now worried is, are we able to fund or not? I think that is the least concern I have and the rest then in March.
Vincent Ayral: Thank you.
Iris Eveleigh: Thank you. The next question comes from Rob Pulleyn from Morgan Stanley. Hi Rob.
Rob Pulleyn: I’ll just have one question. Apologies by the way video is not working. The one question, just following that theme is, we’ve seen finance costs increasing each quarter. Could you please give an update on where you expect it to land for the full year and also Marc, if could you give an indication of where you can issue debt? It seems to be trading quite well, but I’d love to hear your perspective, given obviously the financing needs for this growth going forward. Thank you.
Marc Spieker: Hi Rob, a fair question. So first of all, in terms of guidance for net interest, it’s going to be slightly above €1 billion. So no change to what we communicated. The run rate as of nine months looks a bit kind of that we’re ahead of that, but that’s actually technically affected — as I said the fourth quarter contribution or addition will be somewhat lower again. So we’ll end up slightly of €1 billion. So that’s all on track. Secondly, debt issuance I think first of all, in terms of market capacity, there is ample of capacity for us in the euro markets alone to cover our funding needs going forward. So, I think that’s the first message. The second message is if you look at our new issuance premium that we show in our emission stakes, extremely thin so that shows that — I mean it underscores that there’s a lot of capacity for us in the market.
It also means that we are highly competitive if you look on a like-for-like rating basis with other utilities and definitely other corporates. And in that sense — and last point actually as most of our funding is dedicated to cover investments in regulated networks. The lion’s share i.e. German, Swedish regulation is not fully reflective also of moving interest rates going forward. And in that sense our exposure to interest rates from an earnings point of view is actually neutral. So, wherever rates now go that should have any — it should actually only have a very minor impact on our sustainable profit level. Of course, with the regulatory formula, we have these — but generally, we are set up in an interest-neutral way.
Iris Eveleigh: Next question comes from Ahmed from Jefferies.
Ahmed Farman: Yes hi. Thank you for taking my question and congratulation on a great set of results. To maybe just to start out with very helpful if we could get an update from you on the German regulation. I think in the past you’ve talked about various key moving parts cost of debt equity efficiency factor on old and new asset base. It just would be helpful what visibility do you have betting parameters have now been locked in? And any potential comments on how they compare versus your original expectations? Then my second question I just want to clarify the comments around margin expansion or sort of potential margin expansion in the Customer Solutions business. Is that sort of — you used the word of timing alongside it a little bit, so is that just sort of a specific timing?
Or do you see potential upside to your longer-term customer solutions EBITDA target as well? Just to clarify that. And is that — I mean are also trying to think what are the fundamental factors? You mentioned a little bit churn-rate a little bit of cross-selling of products. Are these the main factors that have led to this better outlook on the Customer Solutions business? Thank you.
Marc Spieker: So, I mean on German regulation, just briefly transparency on the status quo. So, cost of debt and with it the second return on equity component that’s kind of ticked off so formally announced and clear. And that means that there is no interest rate exposure for upcoming investments. On the return on equity side, still no kind of formal announcement, but a key expectation and high confidence that for new investments it will be the 7.1%. Treatment of legacy investments, you have seen that the German regulator now has appealed against the positive core decision for us. And so I guess the market risk premium and whether legacy assets will be adjusted is something which will be clarified in the court. And on the efficiency side, which as you all know is for us highly relevant.
