Bolsa Mexicana de Valores SAB de CV

BMV:BOLSAA

Ladies and gentlemen, welcome. Very good morning. We are meeting today to inform you about the financial results for the first 3 months of this year. Let me welcome all the analysts, journalists. Hello, everyone. And we are meeting today at 1 conference. Therefore, we would also like to welcome the listeners online. Also present here, Jacek Koscielniak, President of Energa for Financial Affairs; President [ Piotr Schmeller ]; President [ Piotr Doriaga ]; President [ Janish Parki ]. And I would like to introduce that person to you. He have been with us for some years, but it's recently that he has been chosen for the President of -- for the company, Obrot; and also Mr. Korsak who is the Director of the office for Investors Relations and he has joined our team literally several days ago. He has 20 years experience in the banking industry and now he is on board with us. I would like to introduce him, especially, to the analysts, because, of course, the relations between you, ladies and gentlemen, are quite valid. And also the same applies to the journalists.

Let me sum up 3 months of 2018, that is Q1, in terms of our results. We have finalized 2017 with a very good financial results. 9,000 employees were with us. It was a year with the Management Board of [indiscernible] who, right now, is the Deputy of the President of the Management Board; Jacke Koscielniak was the President for Financial Affairs; and Grzegorz Ksepko was responsible for Corporate Affairs; and President Daniel Obajtek, he has also been in charge.

So now we are meeting in a little bit of a different situation in terms of the personnel composition of the management board. And this year has been very good so far. First, let me show you a film where you will see all the numbers.

[Presentation]

Powering modern technologies. And the Energa group has finalized the first quarter 2018 with very good results in all 3 business lines. Consolidated quarterly EBITDA went up as compared to 2017 by over 4% to PLN 626 million. The net earning in the first quarter was PLN 277 million.

We've been continuing our widespread program of investments. In Q1, we have spent over PLN 256 million for expenditures. Traditionally, we've been investing in the quality of our distribution grid, where most of the expenditures went to.

In Q1 2018, we've connected 12,000 new customers to the grid and 9-megawatt of new renewable energy sources. We have also constructed over 900 kilometers of new lines. We've had better weather conditions than last year. Also, we've been modernizing distribution network. As a result, we've improved the SAIDI and SAIFI indexes.

In Q1 this year, the group has generated over 1 terawatt hour of electricity gross, which is 2% more than in 2017. Retail sales went up by 3 percentage points. We are hoping that these positive trends will stay with us in all business lines in the year to come.

We focus on the relations with our customers. We have over 600 consultants and tradespeople and 68 points of sale. We simplify the correspondence with the customers and take into consideration all the remarks and comments of our customers. And now Vice President of management board, Mr. Jacek Koscielniak, will take the floor.

Thank you very much. Well, in fact, I've already spoken to you on that film. It's quite awkward to be listening to yourself speaking on a film, I must say. Ladies and gentlemen, quarter 1, 2018 has been very positive for us. So let me say, at the very beginning, that 2017 was also finalized with a good result, a sound result. But still, right now, this is history. We must be focusing on the future. We must be taking steps into the future developing the company step-by-step, implementing our strategy as well as optimization programs, in terms of costs.

Now operating result, financial results Q1 are absolutely satisfactory. Still, at the very beginning, on those 2 slides, let me show you the situation concerning the prices for electricity in Q1 this year.

In recent quarters, we've seen a growth of the price of electricity, both on the spot market and on the futures market. This might be due to the increased coal prices, CO2 allowance prices and increased demand for electricity due to a growth, economic growth.

Now the market data on that slide presents the dynamics that you observe right now. In Q1 2018, we've observed an important growth of use of electricity in the country. Simultaneously, at the same time, the generation of electricity went down. As a result, we see an increase in the import of energy. Like I said before, in recent quarters, coal has gone up in terms of prices, the same applies to CO2 allowances, and they are actually mainly responsible for driving the price of electricity, especially in Poland, where, after all, energy sector is based on coal.

After many years of dropping prices for green certificates and staying on those certificates on the revenue level, you see in the recent months a growth in their prices. Here, I must point out that the growth of prices takes place in the conditions of the excess of that product on the market.

Now let me go on to present the results of the whole group. Like you can see here, we have better results for the sales. Second of all, increased volume of sold electricity and generation of electricity, based on hydraulic electricity plants. Third of all, higher prices for certificates for coal and for CO2 allowances. Despite that unconducive situation on the market, the group has achieved EBITDA higher by PLN 25 million and as in the analogous period last year, the improvement year-on-year is due to much better results of the sales business line.

Now in terms of distribution. Here, you can see the results and they are quite compatible. Traditionally, distribution of electricity has been the leading activity of the group. EBITDA of distribution in Q1 2018 made up as much as 81% of EBITDA of the whole group. In Q1, this year, it was lower than in 2017 by PLN 22 million and was PLN 509 million. The volume of electricity delivered in 2018 went up by 4%, as compared to a similar period last year. The largest growth in terms of volume was observable in group B and G; a slight drop in volume in group C.

Now EBITDA of the distribution. The drop in EBITDA distribution was due to lower margins on distribution services, lower distribution business despite higher volume of distribution sold with the effect of the lack of any one-off positive events like it was the case in the first quarter last year which was the adjustment of the transition fee by about PLN 12 million by PSE. Also, lower revenues from new connections, which is mainly due to the new international reporting standard 15 -- IFRS 15 and the fact that those were not built in time like it was the case in previous reporting periods.

In balance sheet, in the future periods, connected -- when it comes to connections, all that was included in the own capital for previous years. Also, higher operating costs, mainly driven by higher cost of employee funds, also growth of employment. We have taken over employees from temporary employment agencies. They have been employed on a permanent basis. We've also taken activities in order to counteract the so-called confidence gap. Also higher property tax, that was another factor.

Now the SAIDI index is still on a very good level, as compared to previous year. SAIDI and SAIFI indices in Q1 of 2018, including mass failures and without mass failures, have been improved.

We've also observed better financial and operating results in the area of sales. In Q1 this year, sales has achieved EBITDA at the level of PLN 53 million, whereas last year, the -- it was a negative. Let me remind you it was minus PLN 10 million.

The same applies to our net results. In Q1 this year, line -- this business line achieved PLN 38 million profit. Last year it was a loss, minus PLN 17 million. So you can see very considerable dynamics here which is driven by less legal and formal encumbrances that have been degrading the results last year.

This year, we are continuing our development and sales campaign of new products. It's also addressed at gaining new customers. If you join it with the growth demand for electricity by average clients, you'll see a growth in the -- 3 percentage point growth in terms of volume year-on-year.

Now let me tell you more about those smaller limitations in terms of legal and formal affairs. Here, it is mainly due to the fact that this year, we have less legal and formal encumbrances, which, in previous periods, affected the margin and our results, which is long-term agreement for the purchase of green certificates as well as duties related to the obliged filler position.

In September last year, we decided to recognize a long-term agreement for the purchase of green certificates -- sorry, for invalidating them, due to the manner in which they were concluded. In Q1 this year, this business line conducted purchase of green certificates subject to market prices. As a result, the margins have gone up, as compared to 2017. At that time, those green certificates were purchased at very high prices. Let me remind you that the decision in order to invalidate those long-term purchase agreement have been brought to court and, as a result, they will decide about the long-term effect of those decisions on the business line sales in the future.

Now let me tell you more about the so-called regulatory aspects. Here, let me remind you that as of 1st of January this year, regulations that changed the duties of the obliged seller refer only to those that have installed capacity less than 500 kilowatts, which has positive aspects and effects on our business and on prices for end customers.

Now talking about generation. We've seen here a stable continuation of results. This business line, in Q1, was comparable to the one in 2017. There is positive effects related mainly to the growth of revenues from sales of electricity as well as property rights was set off by higher costs of purchasing CO2 allowances and the cost of consumption of key fuels for generation.

Now generation assets in Q1 this year generated 2 percentage points more of electricity, as compared to the same period in 2017.

Ladies and gentlemen, growth in sales from selling electricity is the result of 2 factors. Number one, what happened was the growth of energy generation hydropower by 18%; and second of all, what we observed was the growth of the average selling price [ of the ] electricity in all the strong winter plant, the growth in the sales of selling property rights was the result of market price of this product.

And the growth has been compensated by the biggest -- [ bigger ] costs for buying the allowances for emissions and the use of key fuels. The growth was also conditioned by the increase of the market price of allowances and giving us a lesser pool of allowances for generation for 2018.

When it comes in to the growth in the production of key fuels was the result of bigger unit prices in buying coal per unit. The impact over EBIT was also exerted as in the view of year-to-year was in the following domains: water plants, PLN 12 million; wind, plus PLN 5 million; CHP, minus 6; followed by a strong income, minus PLN 30 million. The growth in generation pertained predominantly to the hydropower. Those was compensated by the -- a drug in production in the remaining sources among others, in the [ planting or in [indiscernible] the plant ] in CHP as well as in the wind sources that we've got in our portfolio, and the bigger production of energy in hydropower growth by 47 gigawatts per hour is the result of the meteorological conditions when it comes to Ostroleka and its drop. It was conditioned by a lesser generation of energy that was conditioned and determined by the operator of the transmission system, or the transmission operator in our country.

Wind less 10 giga -- minus 9 gigawatts was conditioned by less windiness. The generation of heat power was conditioned by the lesser production of heat powering oil plants.

Now let's look at your capital expenditures and global outlook day in the current quarter of this year. They were equivalent to PLN 256 million. And let us be frank with ourselves. Traditionally speaking, nearly 90% of this amount considered the expenditures in the distribution line and a grand chunk was dedicated to the modernization of the grid and connections with new customers. And thanks to this, we managed to connect 11,700 new customers and furthermore, we managed to streamline and modernize and a total of 931 kilometers of high-voltage, medium-voltage and small-voltage line. In terms of business line, it was less by PLN 20 -- PLN 12 million, and we managed to adjust ourselves to the environmental conditions and there was also the modernization and [indiscernible] in the Ostroleka plant.

Furthermore, in [ block No. 1 ] we are conducting at project setup to streamline the biomass boiler and just to -- just in closing factors, which are of essence for the development of the group, with the view of the following quarters. Another one that we have supported is the one related to and impacting the results of the following quarters is on the growth of the prices, for allowances for CO2 and at the same time, we've got less and less of the free-of-charge allowances. There is certain dynamism in terms of the electricity prices under market, and as for the ones to be realized this year and in the consecutive years. There's quite a stability of prices and this may impact negatively the results of the group. In the consecutive quarters, this notwithstanding, we are working on the minimization of such risks.

Ladies and gentlemen, as said, we are very much looking ahead into the future. We are rigorously abiding by our plans pertaining to boosting efficiency, we have equally rigorous in terms of maintaining our strategy. We are at a full steer of all our financial determinants, and we are very hopeful in terms of looking into the future.

For the time being, ladies and gentlemen, as far as the presentation of the financial results is concerned, that would be actually it. You've been delivered a version containing detailed information. We are completely at your disposal here. My humble person and also Mr. [indiscernible], as well as President [ Mr. Dorav ] and [ indiscernible] and [ Piotr Schmeller ] and then [indiscernible] generation, plus our dedicated experts should you have any questions, we are more than ready to reply to them instantly. Thank you, President and President [indiscernible] is also ready to take your questions. This goes beyond saying, but I am ready.

[Operator Instructions]

Piotr Dzieciolowski, Citibank. I would like to ask a question as the results are flat or have been flat, what about the [indiscernible] so that we can have a better grasp of like-for-like in terms of business? So that will be question #1. And question #2 relates to your possible explanation of your headcount structure. Now 150 people were employed in the business line. What are those people? Who are those people? What do they do? What do they stand behind? And how much does it cost you? Followed by my question #3. Could you please illuminate a bit this impact of IFRS in terms of recognizing the revenues from new connections? A couple of years back, as you reckon we split those revenues pro installment, live of a certain customer. And what has happened now in this respect? And is this all going to be reinstated? Could you please be more detailed in your -- in delivering us explanation in this respect?

We've got [ WTA ] President, Marek Pertkiewicz for -- responsible for financial affairs and Energa operator and therefore, he's the one to be taking the floor to relate to this. As far as what is concerned. And as far as IFRS, we can be lengthier in responding to this. As far WACC is concerned and the split between 2017 and 2018 as you well reckon in 2017, we had some 27.4%. And, in terms of 2018, we've got 6.21%, so there is a certain increase. And you were also asking about the assets. There isn't growth yet here. When it comes to the regulated revenue, there is a split equivalent to PLN 70 million year-to-year. So there is this growing tendency that we have easily registered. In terms of this regulated market, we've got PLN 100 million that we are talking about. The answers that are not spoke into the microphone cannot be interpreted by interpreters, unfortunately. Why is this flat? Please let us bear in mind that we were listening Q1 in 2017, it was burdened with certain positive one-off events, which were not reiterated in Q1 2018. That's reason #1. If we then took into consideration the purified margin, then this margin goes in plus. So in this year-to-year perspective, as it appears, there is a result deemed to be comparable. Furthermore, what we are confronted with is the increase of OpEx. So this WACC and RAB are not the only determinants. After calibrating the result, there is a broader spectrum of factors that that need to be -- come in play in this respect. Plus OpEx has to be equally taken into account. Sorry, I need to be turning on the mic. As for other people, are they increased? How much does it cost? It is equivalent to a dozen to a couple of hundreds of million. We're not painstakingly analyzing this remuneration base for people who we've employed. [indiscernible] and in cooperation with the temporary work agency. There's going to be some turnover. We have proposed any concrete tangible work agreement. These are older people connecting to the servicing of the sales processes, plus these are old people, additional people who are going to be playing supplementary a role in terms of compensating this competence gap. Educating a seasoned electro assembler takes 2.5 years at minimum. It is not that easy a task to educate such a person, leave them unsupervised and provide them with highly responsible task at high-voltage or even medium-voltage grids. Plus they need to be at once demonstrating a determined set of qualifications. Are they coming from the distribution field? Should please speak to the microphone. I kindly ask to speak to the mic. I'm asking about this number of people because you're referring to your -- to fitters, and is your headquarters enlargening? Or perhaps what do those people, 150 people do? Would it not to support them in the additional costs we see them in the people's costs. The actual headcount of [indiscernible] has not changed or perhaps it shrink-ed substantially? That would be first of all. And second of all, the amount employed by Energa SA, but by subsequent business line -- business lines. And third of all, these are all the people have been working for the protection of Energa SA. We are now withdrawing from the outsourcing model in favor of doing things ourselves, including security. Therefore, we would wish to have employees in the security field that would be doing their tasks in security as diligently as possible, paying service to the critical infrastructure, which we have. If [ Piotr ] lets me, [ Piotr Doriaga ] the President of the Board of Energa and distribution, earning up one bit of information not quite relative of distribution, but maybe slightly connected to it. Our very company, Energa Invest SA, also registered an increase in employment as they conduct for us the projects in terms of GPZ, that this energy lines, a very substantial enterprise. I'm not speaking on behalf of Energa Invest SA, it's very hard to say what exact numbers we are referring to. This notwithstanding, this may have its right share in this pool. And now splitting of the division of connections revenues. What has IFRS modified in this respect?

Well we are trying to build that in time and not as a one-off cost. We are trying to break this down on years. We are not including and recognizing these costs right now. So they will not impact just results right now. So 5 years ago, we recognized that proportionally, as far as I recall, in 2010 or '11, we've conducted a change. In the past, all the companies decided that this will be recognized on an upfront basis and then we showed all the positive results but now, we decided to return to the previous way of recognizing it. This is all due to IFRS. It has been entered into force in 2017 and that's why we have changed the presentation, the manner of presentation of the data. Last year, we were able to have one-off write offs and when it comes to receivables, and now this is no longer the change.

Can you tell us more in figures, is it PLN 150 million revenues from connection? I mean, it has been very variable in different years?

If you look at us in a quarterly perspective, it's PLN 3 million to PLN 4 million. This is the impact rate per 1 quarter. If you look at the yearly impact, it will be about PLN 100 million.

Can you please explain to me why is it PLN 3 million per quarter and PLN 100 million per year? I mean connection will be depreciated within 10 years' time. Why is it PLN 90 million and not PLN 10 million?

Remember the revenues from connections are not even spread. They depend on how much connections we are able to perform so we can't break this down evenly per quarters. It happens that, for example, right now, we have connected 11,000 connections, but last year, it was 8,000 in the whole year. So the revenues from that activity are spread in time.

I understand. This is clear to me. I just want to understand it on a yearly perspective. If we have PLN 100 million revenues, according to the old methodology, this would go straightly to the results, but right now, it's PLN 10 million, so the difference will be PLN 90 million. Am I correct?

Yes, you're correct. Simply speaking, you can calculate it this way, but it's not really the case. The change has entered into force this year. That's why in the quarter 1, we had to recognize it using IFRS 15. We know that in due course, this we will be 6 months and in just a moment, we will also present the review that will be conducted by our auditor and we need to arrange this with the auditor.

I understand. And let me tell you why I'm asking. I believe that the market overestimated the value of energy. You showed PLN 150 million of EBITDA resulting from revenues that was not going straight into RAB. And that's why the market had not a very clear idea about this. Right now, it turns out that this result might go down by PLN 90 million as well. Who knows? Or let's see at the end of the year.

Of course, we will see at the end of the year. We've been recognizing all those changes.

Sure, I just wanted to understand the mechanism behind it.

No doubt about this. Like I said, this is the half of the second quarter and the trend shown in Q1 has stayed with us. It's very optimistic. We are looking into the very bright future. We will be publishing the results on 10th of August, for 6 months, as far I recall and then we can get back to the topic. Okay? Sure. Now let me know refer to the question about employment. This year, distribution business line, now logistics is no longer under Energa, are now at -- it's different. It used to be part of distribution and now logistics serves the whole group of Energa SA.

Thank you very much. Ladies and gentlemen, let me remind you that this is transferred and broadcast online. We've received some question from our online viewers. No, they seem to be asleep, so the questions are quite few. Is the company aiming to continue its investors and dividend policy and when we will investors be informed about potential dividend payout?

It's a very good question. The decision about the dividend has not been taken yet. This is something we are still working on. We are conducting our ownership audit right now. Please be clear that our situation is quite difficult in the management board. We want to reconcile the interest of the owner and of the investors, but as you know, we've had some serious investment processes going on, and we will be taking the decision about the payout of the dividends in days to come. You will be notified of it in due course. That's it. I'm not able to tell you anything else today about this.

Any more questions? please use the microphone. And there is one more question here. Of course.

[indiscernible] Two things. First of all, sales. Last year, EBITDA was PLN 150 million. Then the company, in August, after the substitution fee was lowered, communicated a different method like changing the provider and the lower subscription fee. Well you should have generated more EBITDA like an -- and also then the -- those there were other factors that should also increase your sales EBITDA to the figure of PLN 300 million. And I can see PLN 150 million in Q1. So I'm thinking where is this the result of PLN 300 million? It should have been PLN 300 million, looking at all the factors, positive factors. Can you respond to it?

Of course. Like we communicated right now, this is half of the second quarter. We still observe positive trends, but it's not as simple as we presented it. The situation, you must know, on the market is far from easy. We are doing our best to minimize all the results of high prices for CO2 allowances and coal prices. That's one thing. Second thing. We keep running proper processes and their results will have impact on our EBITDA. And the financial results, it will be published after first 6 months of this year. We hope that some settlement issues will be taking place in the market and we will be able to inform you accordingly. Unless [indiscernible] would like to add anything to it, please?

Hello, ladies and gentlemen. Let me just say the following. When it comes to -- when it comes to settlements, we are running talks, running negotiations, but let me be very conservative and prudent here. These are very difficult talks, that's why I'd rather focus on facts and not what is going on right now, because we are not yet there. But believe me, we are doing our utmost to finalize the negotiations. And these are difficult topics, difficult negotiations, but we are optimistic.

There is another question. We've seen a series of some very exotic communication about power plant in Ostroleka. You changed the contractor, JV company took some decision, which is not binding, according to the what the company has communicated. So have you, in the end, chosen officially the new contractor? Where are we in this process?

A short comment. I don't know what you meant with saying that they were exotic. The communication was very clear. Our position was presented very clear by the -- of the power plant of Ostroleka. That if we are running that procedure, and I believe everyone gathered here -- well, maybe not all of you. I believe you did not expect that right now, we would be so far in the tendering process. This is nothing exotic, nothing extraordinary. This is a substantial investment. Even though the weather is beautiful, we would like to talk about exotic weather. But we need to take a very businesslike approach. We are in the process, and most of the critics on this process actually never believed that we would have gone so far and we have, and we are according to the schedule. That's it. I can't tell you anything else today. If we conclude an agreement with the contractor, you will be informed accordingly. Thank you.

And [indiscernible], journalist.

Three questions. First of all about the integrated permit for a power plant. It will terminate in June. What are you going to do about this? Second question, capacity market and first bid, first auction. Are you going to allow all your projects to be subject to the auction like the [ Grudanz ] project or will it happen next year? And third question about the [ Grudanz ]. What type of gas power plant will that be: open cycle or CCGT? And third question about court processes -- this is the fourth question actually, sorry, about the stage of court procedures. I know that witnesses have been questioned and talking with the process with investors of wind power plants. I would like to know more. Where are we there? And can you expect that those trials would end quickly? Are you going to have a settlement or are you going to end the process in the first court instance?

Okay. I'll respond to the first question. Hadn't we had the integrated pyramid, we would have never entered the investment process of a Ostroleka power plant. I mean what you're saying is far from true. I'm saying -- and I'm demanding it. We have all the permits but your permit is valid and as you know, they are unlimited in time. They are unlimited, let me reiterate this. They are unlimited in time, the permit. Talking about the capacity market. All generation units that belong to us, unless [ Piotr Schmeller ] can tell you more about this, they will be notified, and we are in the process. They will take part in the auction. And the process is running according to the schedule. Now third question, talking about wind power. This is actually question #4. Wind power plants. You heard about hearing of witnesses. Up here, let me say the following. Please let's focus on facts. Those processes are ongoing and that's it. Everything looks very fine today. That's it. We can't tell you anything else today. Now question #3 was about the power plant in [ Grudanz ]. Unless you would like to say more about this?

Yes. Hello, ladies and gentlemen, once again. Indeed, when it comes to certification for capacity market, we've notified all our generation units, including the projects which are being developed right now, that is we are waiting for construction permits. Now talking about the [ Grudanz ] project, it is especially critical for us. That's why we are preparing very intensely to that project. Our schedule shows clearly that it would have been viable if we had to enter this project in the third auction; that might be profitable. Or -- so like I said, the third auction. Now as to whether this will be CCGT or OCGT, this is still an open question. We haven't decided yet. Now we are running the feasibility study, it is being updated, and we will decide later on which of the setups will be better from the business perspective. And of course, shifting to such a system of generation for [ cut ] fuels would be difficult from the point of view of all the permits that you need to acquire. So truth be told, as seen CCGT is, by far, something most desired. And this is also something that we are aiming for, and all of that, we are attempting to have but it has to be all and well business balanced. We're at the stage of analyzing the feasibility study of this particular enterprise. Thank you very much indeed.

Are there going to be some questions from the Internet broadcast? Right, so we've got questions related to the validity of permits for Ostroleka plant, but this is de facto of the article that was published, so it has already been vastly commented on.

And now what about litigations for recognizing those contracts as invalid, the Americans [indiscernible] for this? So where are we with this?

So it's PLN 700 million [indiscernible]. As said previously, these cases are ongoing, let us limit our deliberations to France for the time being revoking the question that you yourself asked and the legal thing is one. And another aspect is about reconciliations and agreements is a separate story. These are 2 stories that are going on in parallel to each other. We are focused on thing #1 and thing #2 equally. We are also in the area of judicial proceedings that are in the court, so I wouldn't associate #1 with #2, as of now. Thank you. [ Piotr ] the floor is yours.

Thank you for the ability to -- for the possibility to ask you 2 further questions.

[ Piotr ], as promised, we are at your disposal. We are open to talk. Please do not be [ gulped ] by that. We are totally interested in the processes that are progressing.

So there is a certain info, a symmetry those -- there's 4 entities with whom you're close to achieving reconciliation. Are these foreign ones or national ones, with whom do you leave more favorable consultations and can you provide us with a bit of a knowledge from behind the scenes? Are those open for negotiations or perhaps they are not that open for negotiations? That will be my question #1. Followed by my question #2, that is would you have any impact over the [ BTE ] decision about the pay rises for miners and this loss on [ PNN ] is not something that it is a pain, as you see it next year?

Yes, you're asking about what does this cast behind the scenes? So speaking of such negotiations, you never disclose what is being talked about preceding the actual finale of the conversations with a conclusion in this respect or another respect. The very fact, a mere fact that we into talks with so many entities that you yourself named and delivered those talks, sophistication and progress is making evident of the fact that there are 2 partners partnering and talking with one another. We're convinced that our decision has been right. It has been the result of plenty of analysis not just 1 analysis and we're sure as of our standing and others are subject to judicial proceedings. So let me just limit to what I have just uttered. So let us wait, let us wait up. And I'm sure, Presidents, that will be openly communicating to what we have agreed with our partners. Can we stick to this? Business requires some more time.

The capital market does not like such silence in the market. American investor coming that would like to have PLN 700 million, one have an agreement really and they don't quote. So I think that this may produce certain ramifications for the share price. And could you just tell us whether these that we're talking about are foreign or domestic candidates?

We have been totally delighted to be having your questions. Oh you know, you totally know that these are not easy talks; they are very cumbersome. Our interest merge. We want to have agreement. We want to have some level playing field. Both our opponent and us want the market to regulate it all. That's notwithstanding this has not always been so and therefore, we are incurring losses because of it. So we will attempt to reverse this trend. We are going to refer to [ PGT ] and [indiscernible] who wants to have his say on it.

Unfortunately, we must not disclose it. We would be more than willing to do it. Once we've got some facts for you to communicate, we will communicate them. These cases are very complicated, very cumbersome and these are lengthy judicial proceedings, for which we are prepared on our -- from our side, we are determined, which we know, as that right is ours and therefore, we are going to until the end. But as far as the contracts are concerned, please let us leave it as it is. We'll bring a bit of the information to table once we've got it. I'm quite optimistic about that. As for [indiscernible] , we're closely following the situation and as said on numerous occasions, we've got our representatives and, indeed, in [indiscernible] Supervisory Board and the situation of the company does not look totally nice. It might be better as always and this is something that we are also referring to ourselves, despite the good results that we've manifest. We are bettering ourselves and ameliorating our results. Constantly, we are in the dialect with them. We see that their actions are good. Their programs in terms of boosting the financial efficiency are satisfactory. As for the pay rise, I'm not -- it comes as no wonder that the mine or the mining community has appealed for a pay rise, because the very work of miners is harsh. And my colleague has been with Energa as very recently, we were down there in the mining plant. Going down, it's not a pleasant business, but there is some potential for pay rises, which hasn't been out and talked yet. And also, in the context of sayings that we may produce, this all makes us willing and ready to enter into this pay rise scheme. And I think that mining has also witnessed the competence gap. There are many of those who -- with -- drove from other industry and educating a miner is not an easy feat and this goes beyond any doubt. It goes without saying that many schools or the majority of the mining schools have been liquidating and therefore, there is no proper educating base. There is AGH University in Kraków and one more in [indiscernible] so that will be it to exhaust the topic of [ PGG ].

And to your left, a question to your left?

I'm sorry, [indiscernible] asking question from BZ WBK Bank. Many questions have many answers. Let me start with a minute detail. You presented a relatively weak result in CHP, a bit year-to-year. What has impacted it, relatively high coal prices or CO2 allowances might have had its share in it? What has happened in this respect?

You've answered yourself. High prices in coal and CO2 allowances have been determining factors.

But still, this decrease, it appears to be too big, taking into account the fact that this segment does not [ devour it, sort of eat ] vast share of CO2. My understanding is that there haven't been any other issues involved and along with the ones that I have just named.

No, but perhaps weather conditions.

Question #2. Let me reiterate the sales situation. First quarter PLN 55 million and now the question arises. Q1, are there any reserves for potential settlements that [ will forgive it ]?

Responding to your questions, this is just an operating result.

So I grasp it that Q1 is it representative of consecutive quarters?

Yes it is.

Okay. So I know a lot about this. Last thing, if i may. You mentioned the issue of settlement. In my views, the settlement is equivalent to a smaller or bigger reserve of a company. So Q2 or Q3 will mean releasing that reserve. And now we want -- if we want to settle then, the settlement would mean that you would divide or share your potential profits. Is there going to be a reserve for settlements?

We haven't been releasing the reserve and it hasn't been consulted with. I want to try and -- this is not envisioned in this respect so we have some [indiscernible]. Because to me, settlement means just this.

Okay, so you concluded the settlement was not valid. Yet you [ indiscernible] before the rise and you have full profits, whereas your partner is left with 0, empty-handed. If I settle with somebody, then we meet halfways, or somewhere. It would mean to have some cash pay off, perhaps not from the reserve resource, or perhaps that would be a single occasion pay off once those settlements have come in to me.

Let me formulate it in the following way. I should disclose certain actions and that we do, and at this stage, i.e., this is something that they would like to do, especially out of respect to our partners as these talks are very cumbersome. So once we've got some facts, we'll be discussing them freely.

So this is a cyclical-based agreement? And in the aforementioned context, the crux of the settlement would be for 2 parties to settle and for the -- over the course of the conduct of business that 1 party recognized as invalid. And in this respect, I wouldn't mind that you defined yourselves a definition of a settlement, which has already been included and the civil code and in the code of civil proceedings. And therefore, there are certain legal regulations, of which are binding and that have come into force and so this is not our job to define settlements as we wish. Would it be mirrored in accounting on the revenue side or on debts and cost sides, or perhaps we should be created some reserve?

This is another story. Let me remind you of the following fact. Reserves are also rigorously defined in the [ parish ] accounting [indiscernible] international reporting standards. And so let us stick to it for the time being, if we may. Thank you.

And there was -- there appeared to be one more question to the right side.

[indiscernible]. My question concerns PGG that is the stock exchange. Do you -- is there a situation that due to the increases of prices, the company will need to take on new loans or credits? And if yes, would that be not in line with the agreement that you have established with PGG authorities?

I have already said before, you see the programs for improving efficiency. The management board is really doing its utmost and I can't tell you anything more. So insisting on PGG to take on additional credit or loans will be difficult. That will be actually hardly feasible right now.

Why don't you ask about new projects, about electro mobility? We have an expert with us on that topic. And this is just such a village topic. This is off the mic, unfortunately. However, it's about electro mobility. Apparently, experts did not have time to meet with the market side and the participant says he's sorry that it's so late that they had the opportunity to meet. Let me say the following. Electro mobility is something else for us. You were talking about the company, ElectroMobility Poland. Vice President of Energa Obrot, Dariusz Chrzanowski, is here with us. He is member of the Supervisory Board in this company. At the same time, he's the plenipotentiary of the management board for Energa SA and for ElectroMobility. It is actually our ambition, ladies and gentlemen, to cover [indiscernible] and the north of Poland, with a docking station for electric cars. This is ElectroMobility how we define it. That's why we've entered into negotiations with local governments in order to agree on which plots of land could be leased out or purchased, so that we can establish our docking stations there. In Gdansk, we've had so far 7 such stations and you see a lot of traffic, and we are making money on it, believe me. Let me end, please, what I wanted to say. I'm sorry that the management board of ElectroMobility Poland greeted you this way. They didn't want to meet you like you claim. In 1 or 2 weeks' time, there will be an opportunity to meet with the management board and we will ask a question about this. How many electric cars do we have in Poland? Well, I don't know. Maybe [ Dariusz ] knows? But I see more foreign such cars than Polish ones in Gdansk, believe me.

There was one more question here?

Robert Maj. I wanted to ask about the segment of sales, where the result of PLN 53 million was declared. You said it's something that will be a benchmark for the new quarters. Do you feel any pressure here, pressure for the price accepted by customers? I'm talking about end customers because the spot prices are over 200 right now. The energy is purchased on high -- at high prices. So could the result be better in the next quarters?

[indiscernible] why don't you answer that question please?

The answer, like I said yes, it is quite measurable. It is quite telling for the next quarters, but we are considering many taking up new measures aimed at maintaining that trend. One of them includes the fact that we have a dynamic growth of prices, like we have told you. Maybe we will transfer those higher prices on our business customers, in order to be able to keep up some certain solutions, initiate it in Q1.

So you're saying that it shouldn't be worse in the next quarters?

True. It shouldn't be worse than it is right now.

Ladies and gentlemen, one more question by [ Mr. Safran ].

So about this integrated permit. The decision of the Marshall. If you could please explain to me how you interpret the decision of the Marshall.

I have already exploited the topic. I can't add anything more. We have all administrative decisions, and they are all valid, and they will be valid.

Let me read out to you a passage of that decision because I would like you to respond to it.

No, no, really, please don't do that. Everything is valid and binding. Like I said, this project has aroused many comments. Hadn't it been for those comments, we really could end up all the discussions. Believe me, we are doing our utmost and so Ostroleka is running the process. We are sponsoring this process, and we are at a very advanced level, and according to the schedule. Believe me, there are no issues concerning the environmental decisions or any other decisions by authorities.

Thank you very much. Mr. [indiscernible] Those words are included in the text because you wrote it yourself, right?

No.

You wrote about the decision of the Marshall.

It's not really like you present it. The decision -- or what is written in this decision does not limit us in any way in fact, because we have fulfilled all the conditions. And you might talk about certain forms of wording in that decision, but believe me, we have all the permits to continue the investment. All administrative permits are binding. They are in force and this will definitely not limit our investment, neither will it stop it.

Ladies and gentlemen, thank you for that meeting. Please have some coffee with us and some snacks. The point is that we can still talk to in a less formal way. I would like to thank our online viewers, all the journalists, all the members of the management board, [ Piotr Schmeller ], President of Energa; [indiscernible]; [ Piotr Doriaga ], President of the management board of the operator; [ indiscernible], President of Energa Obrot; and Aleksander Korsak, office for Investors Relations. Any other questioner that you see President of management for Energa SA. Thank you and let us meet over the coffee. Thank you.