Tauron Polska Energia SA

WSE:TPE

Earnings Call Transcript

[Lukasz Zimnoch, executive]

Good morning, ladies and gentlemen. Welcome to the conference for media, investors and analysts on the TAURON Group's Q1 2023 financial results. The host of today's meeting are: Mr. Pawel Szczeszek, the President of Management Board of TAURON Polska Energia; and Mr. Krzysztof Surma, the Vice President of the Management Board for Finance, the CFO.

Good morning. My name is Lukasz Zimnoch, I'm the press spokesman of TAURON Polska Energia. Ladies and gentlemen, traditionally, the presentation will be conducted in Polish along with a simultaneous interpreting into English. Outside of this broadcast, you can also listen into today's conference using the teleconference mode of operation. I'd like to invite you already to ask questions using the form available on the broadcast website. That's the only way to ask questions. If you have questions, please use the form. Mr. President, the floor is yours.

[Pawel Szczeszek, executive]

Thank you very much. Ladies and gentlemen, it's a great pleasure to welcome you to conference on the financial results of TAURON Group for the first quarter of 2023. In my part of the presentation, I will discuss the overall financial situation of the Group, the most important highlights of the first few months of this year and CapEx projects. On the other hand, Mr. President, Krzysztof Surma, CFO, will present the macroeconomic situation and will discuss the financial results in the first quarter of this year, broken down into the individual lines of business.

Let's move on now to the second slide, please. On this slide, we are presenting the financial results and the operating data achieved by TAURON Group in the first 3 months of this year. The EBITDA generated by TAURON was higher by 14% year-on-year, and it was more than PLN 2.2 billion. On the other hand, net profit topped PLN 1 billion which represents a 15% increase year-on-year.

In the reported period, we spent PLN 780 million in CapEx which is 28% more than in the same period of last year. The net debt-to-EBITDA ratio came in at the end of this quarter at 3.2.

With respect to the volume of electricity distributed, we can see a downward trend 4% year-on-year. This is a result of economic slowdown of electricity supply and the heat production were almost flat versus last year.

The sales revenue in the first quarter of 2023 came in at PLN 13.5 billion and it was 38% higher than in the same period of last year, mainly due to the higher electricity prices, gas prices -- higher gas prices and the higher prices of CO2 emission allowances, which was the result of this market situation. In parallel we also report -- posted significant increase of operating expenses.

On the next slide we are presenting the highlights of the first few months of 2023. 2023 for TAURON Group will be a breakthrough turning point for TAURON during which there will be -- structural changes will be implemented. First of all, we started this year [ without ] the 3 coal mines which on the 31st of December last year we divested to the State Treasury.

Secondly, we also have a process of transferring the coal-fired generation unit to the National Agency for Energy Security. We implemented all of the planned reorganization activities, including the integration of the assets within the TAURON Wytwarzanie subsidiary, and we are ready to spin them off into NABE, into the National Agency for Energy Security.

With advanced works underway related to the [ details ] of the transaction, thanks to the spinning off of both mining and coal-fired generation assets, the perception of our group on the financial markets, capital markets will significantly change, which means a much easier access to the funds for the expansion of the group.

In parallel, we are systematically increasing -- expanding our [ low and ] 0 emission sources. In the first quarter, we started working on Gamow and Mierzyn, 2 wind farms and in Warblewo in May, when the commencement of the next wind farm, which is -- these projects are a confirmation of steadfast approach, Green Turn of TAURON. We are planning to complete those transactions in the first quarter of next year. And in this way, we will increase our capacity by more than 120 megawatts.

It's also worth adding that we are currently analyzing several wind projects as well as photovoltaic projects. On March 31, we completed the mediation in front of Arbitration Court at the Legal Counsel of Republic of Poland related to the contract for construction of a 910-megawatt unit in Jaworzno. We signed within our contract a settlement agreement defining the way -- the method of completing this contract and making mutual settlements related thereto.

According to the provisions of the signed agreement, the TAURON Polska Energia received PLN 240 million that was paid out, out of the performance bond for the contract. And this way, the settlement agreement came into force. Currently, the completion of the works on the Jaworzno unit is up to TAURON Polska Energia subsidiary. We started working on the optimization, the tune up of the unit aimed at preparing it for acceptance test with PACD, the TSO.

Also at the beginning of the year, we signed agreements with a Polish mining group for production needs over generation units owned by TAURON Capital Group, TAURON Wytwarzanie, TAURON Ciepło subsidiaries. With [indiscernible] contracts with TAURON Wydobycie [indiscernible], we secured our requirements for coal for the 2023 as well as for the subsequent years.

Now let's move on to the slide that presents the capital expenditures of our group. Ladies and gentlemen, the CapEx incurred by TAURON Group in the first quarter of 2023 came in at PLN 780 million, and it was -- that were more than 28% higher than in the same period of last year. The increase of the CapEx was reported by all the operating segments of the Group. Traditionally, the biggest amount, almost PLN 600 million was allocated to the distribution segment, and the majority of that was spent on installing new grid connections as well as modernization and replacement of the grid assets.

For the whole 2023, we plan to spend on the expansion of our grid, PLN 2.4 billion, which will represent more than half of this year's CapEx of the group, which will be the biggest financial stream allocated to the distribution segment over the last few years.

Let me emphasize that the successful transition of power sector is dependent upon the expansion and modernization of distribution grid, towards the so-called smart grids. Without the restructuring or refurbishing of a grid, no matter how much electricity we produce, the system will not work efficiently.

The renewable segment came in second as far as the CapEx is concerned. To build the 6 wind farms and the PV farms and the [ modernization ] of the hydraulic power plants, we spent PLN 75 million in this -- first quarter of this year. Similar funds allocated to Generation segment. Mainly it was spent on the replacement and refurbishment works as well as investment in the new capacity, construction and the connecting of the new facilities to the heat network.

Let's move on to the financial part of the presentation. So let me hand over the floor to Mr. Vice President, Krzysztof Surma. Thank you very much.

[Krzysztof Surma, executive]

Good morning, ladies and gentlemen. The first part, I will discuss the macroeconomic situation and the key data that have an impact upon the operating activities of the Group. As far as the macroeconomic decision is concerned, in the first quarter of this year, we were dealing for the first time since the pandemic time with a decline of the GDP quarter-over-quarter, year-on-year. This drop could have been predicted already based on the PMI indexes that have been below level of 50 for a long time. An important comment, those PMIs continue to be at the level that indicates the economic slowdown, not so much a recovery.

This economic slowdown, the weakening of economic sentiment has a significant impact upon the consumption of the [ goods ] in Poland. In the first quarter, we're dealing with a 3.5% decline of electricity consumption as we compare quarter-over-quarter. And at the same time, this decline of consumption has a significant impact upon the production. Last year, we were dealing with a situation which was a bit different than in this year.

First of all, we had a growth of the consumption. And secondly, the price of the neighboring markets were markedly higher than in Poland, and France-Poland was an exporter of electricity to the neighboring countries. In this quarter of -- first quarter of this year, in fact, we are dealing with a completely different situation. Not only we are dealing with the decline of electricity consumption in Poland, but on the other hand, also the prices in the neighboring countries were lower than in Poland and France. Poland became an importer of electricity.

This led to major changes in the energy production mix. General decline came in at 7% and was mainly based -- or allocated to the coal-fired as well as lignite-fired generation units. We only grow what we had observed was the increase of electricity generated from the renewable energy sources. And here, a large number of renewable sources commissioned last year means that our generation from this line of business is getting higher and higher.

And secondly, which is also not surprising, the generation from the gas-fired units went up significantly. The prices of gas worldwide dropped significantly, which had an immediate impact upon the profitability of the generation from these units. Last year, those units were producing less because of limited -- constrained access to gas and the higher prices. This year, we had a completely different situation and the gas prices dropped significantly both worldwide, in Europe and in Poland.

The generation from these sources has increased substantially. And therefore, the entire generation mix markedly change year-over-year, which had an impact upon the results of our group, which I will expand upon when discussing the individual segments.

When we look at the revenue, as it was mentioned in the first part of the presentation, we had observed a significant increase of revenue year-over-year in the region of around 40%. This increase was mainly due to the price of electricity contracted already last year because today's market price is a bit at a different level, but the prices of electricity this year are significantly higher year-over-year, and this leads to the greater increase of revenue.

Also, the rates went up both in the heat distribution and the supply segment. And let us remember that as those -- that revenue went up, the cost of operating -- business operations of the group operating expenses went up, which I will elaborate on later.

Net profit, this result came in at around PLN 1 billion. We have a quarter here where there was no impairment charges, therefore no write-downs. So net profits directly reflects the operational situation of our group. With respect to EBITDA itself, an important issue, which we also will be discussing in detail when we look at the individual segments, the comparable EBITDA year-over-year went up by around 9% comparable, which means adjusted by stripping out the one-off impacts and effects and the result -- effects that are due to the value -- and [ non-typical ] because last year in 2022, we had a typical one-off effect, namely -- we reorganized as a matter of fact, the CO2 emission allowances, which was a -- which we had a surplus due to the fact that the Nowe Jaworzno unit was shut down.

These carbon credits were transferred to other units and the result on this transaction was recorded in 2022. It was a one-off event. However, we're dealing in the first quarter of this year with non-typical events, partially one-off, but non-typical mainly due to the magnitude.

The first event is a matter of settling the regulatory account due to the fact that the volumes in 2021 were substantially higher, but this typical electricity volumes were significantly higher than the ones that we reported in -- would have been on the tariff -- under the tariff. So part of a surplus according to the regulatory regime was deposited in the regulatory account.

And what is the deviation -- volumetric deviation in the Distribution segment is settled, is accounted for, in the [ N ] plus 2 year. Similar situation will take place this year. We are dealing with the reverse situation, but with respect to the second one-off event, the balance of the upward adjustment of the grid losses, here, I must say it's a non-typical event, I will be elaborating on that on the slide when I discuss the distribution segment here. We'd like to emphasize that we -- recurring EBITDA, a repeatable EBITDA is 9% higher if you compare quarter-over-quarter.

Now let's move on to individual segments. Here, all the segments have reported positive earnings on the operations. Both on the EBITDA and EBIT level, we have positive results. Traditionally, our key segment was the Distribution segment. In the distribution, we posted the highest EBITDA result. The second biggest result was generated by the Generation segment. Here, for the first time, we are showing the results without the mining segment, which I mentioned at the very beginning.

The coal mines we sold -- we divested on the last year of December of 2022. So the first time we are showing our results without the coal mining segment.

Let's move on to the EBITDA comparison quarter-over-quarter. Here, we can see that the 2 segments had the biggest impact upon those results. The first one, a significant increase in the distribution line of business, more than PLN 400 million. And on the other hand, the generation result, by more than PLN 400 million was [ worse ], but let us remember that these both events are either one-off events or they are burdened with one-off events or the non-typical events, and I will expand on that when I discuss the individual segments.

And now let's move on to the first key segment for our group, namely the Distribution segment. And this key element that had an impact upon the earnings of this segment, especially if we compare quarter-over-quarter, is the balance of upward adjustment of grid losses. As I mentioned before, this is the element that was recurring in the successive years.

The previous years, however, never came in at such a high level, such a magnitude. So, this balance was -- tops several -- [ that's a ] million in the previous year. So it was not so clearly shown in the results of this segment. But this year, due to the very big price difference between 2022 and 2023, we were dealing with such a non-typical event, and that's why such a high amount, more than PLN 600 million as the value of this balance of upward adjustment.

This difference is due to the price difference. The higher the difference on the plus side, the higher the one-off effect, and that's what we are dealing with this quarter. However, if in the subsequent years, the market price will be falling versus the price of the current year, then this effect will be acting in -- the other way around.

So looking at what is happening today on the market, seeing the electricity prices -- average electricity prices are dropping versus -- declining versus the level last year, one may expect that in the following periods, so at the end of this year and beginning of next year, we will be dealing with a reverse effect.

So as matter of fact the reversal of some of this increase -- of some of this growth that we are showing in the first quarter of 2023. This is the -- an element which is a noncash element -- noncash item, and this is not so much a one-off event, but a non-typical event due to its magnitude. As far as other elements, they have an impact upon the results of distribution, the ones that I already mentioned is the volume.

The volume both in terms of the settlement of the regulatory account -- as I mentioned, this regulatory account is getting credited in a -- positively at times when the volume of electricity distributed is higher than the one assumed under the tariff and then it is accounted for -- settled in the [ N ]plus 2 years and we have around then…

This year, we're dealing with an actual decline of volume, a decline versus what we have under our tariff and this effects also will be reversed, but in the [ N ] plus 2 years. So one may say that these effects have a direct impact upon the results in the given quarter, but from the distribution model point of view, we are neutral over a medium term.

The last element that is worth emphasizing here in distribution, well, in spite of a significant increase of distribution rate after we strip out the increasing cost over transmission service and covering the cost of -- having covered the balancing difference at the operating level, the results of the Distribution segment quarter-over-quarter are weaker due to the fact that, despite such a strong increase of rates, this increase could -- were not able to cover both growing costs such as the external service cost and the labor cost. That's all regarding the key issues related to the Distribution segment.

Let us move on to where -- but wait, a few words about the indicators -- quarter indicators. If we look at [ various ] parameters, the key distribution quality parameters, they basically were complied with. We do not expect any significant negative impact upon the tariff in the subsequent years. Besides our works between the PTP and the President of ERO about the model and the quality permits, maybe in the subsequent years, the quality permits will also be slightly changed, the ones that the President of Energy Regulatory Office in the case.

Moving on to the Renewables segment. Here it's a non-typical situation. The EBITDA year-over-year or quarter of last year versus the first quarter of this year is practically flat. However, here, we have been dealing with certain events that allowed this to happen. As far as the volume is concerned -- the volume of electricity is concerned, generated from the renewable sources, it is higher year-over-year.

And remember, within this segment, we are not showing the biomass-fired sources -- [ energy ] sources. As far as the hydroelectric [indiscernible] better quarter-over-quarter. The wind condition was a little bit worse quarter-over-quarter. But remember that we commissioned last year 2 wind farms, the Majewo and the Piotrkow farm. Therefore, the volume of electricity generated was a bit higher.

In addition, we were dealing with the decline of price of the green certificates and the reduction of production. As I mentioned, the wind conditions were a bit worse year-over-year. And as a result on the wind farm is covered by -- [ up to ] now support system we generated. Slightly smaller quantity of green certificates as a result of this segment will improve by a one-off event. We finished court dispute, a court litigation that we acquired along with the position of the [ Aventus ] Group, 2019, of [ Aventus ] assets. So it was a positive resolution of this case. So it had a positive impact upon the results of the segment.

Let's move on to the Generation segment. Here, first of all, one needs to emphasize a stable operation of Jaworzno unit, thanks to the stable operation of this unit in the first quarter of this year. Let us remember that in the first quarter of last year, the unit didn't work, didn't -- so we didn't have to buyback electricity. And if they did take place, it only takes place due to the market situation that was favorable to such moves. Therefore, although on the market we are dealing with the falling CDS, so the margin on generation on the coal-fired units is declining due to the increase of the price of coal and increase of carbon credit prices. So the lack of a buyback operations or potential buybacks. Whenever the market situation supports such moves, means that the general margin year-over-year is positive.

The second element that I already mentioned at the very beginning, which had a major impact upon the earnings of the segment is CO2 emission allowances. As a matter of fact, those CO2 emission allowances, it was a surplus of the allowances which were not used due to the lack of a production of -- in 2021 of energy NGT.

And if we approach this as a typical one-off event, if we stripped those results out of the results over 2022, the first quarter, one may -- say might say then the result of Generation segment year-over-year is very flat. In the first quarter this year [ of ] the margin heat generation was not fully covered by the profit increase of the tariffs and [ as ] this margin declined year-over-year by more than PLN 60 million. It was also due to a result of increase of coal prices and the increase of the carbon credit prices.

Let's move on to the Supply segment here. This segment also is worth emphasizing that finally, this segment arrived at the certain [ stabilization ] of market price. This position is very important due to the ability to cover in-house costs. It's not expensive. Last year, we were dealing with a very strong growth of prices on the market. And they need to buy more electricity in order to secure an open position, prevent it practically [ immediately a] possible to cover all the -- for full cost -- justified cost and the full cost of Supply segment. And therefore, last year, this segment generated a negative result.

This year, thanks to this achieved stabilization of prices on the market, it is possible to have a full cost of operating of this company to have it fully covered. Last year, the tariff G not fully covered the justified costs of the company. This year the tariff G covers this cost.

It's also worth adding that the supply subsidiary in terms of EBITDA [ turning to ] first quarter, PLN 145 million, generated only 1/3 of that result for the -- the balance was affected very -- possibly by the commercial activities, trading this at TAURON Polska Energia level and was a very good result as far as the scale of the operations of the Czech subsidiary.

Additionally, those results were also supported by the TAURON new technologies subsidiary, mainly in the lighting area. It's also worth emphasizing here, due to the centralized trading model in our group, a key part of chart that we are dealing with due to the acts of law at the end of last year, the majority of charges is paid for -- in the segments. Out of PLN 300 million that PLN 290 million comes -- is related to the Supply segment.

In terms of issues related to the debt and financing, here, of course, we are dealing with a significant increase of debt, which you can see in the results of our group the net debt ratio went up significantly to 3.2. But it's also worth mentioning that debt level and leverage level and the net debt-to-EBITDA ratio was to a large part related to the settlement of the CO2 emission allowances and the significant worsening of net working capital, a substantial increase of accounts receivable and the increase of inventories.

These accounts receivable are also related to the compensations fund. And as a matter of fact, in the subsequent quarters, we are expecting a gradual decline of debt and also a decline of net debt-to-EBITDA ratio. So this quarter, we're dealing with a very high level of this net debt-to-EBITDA ratio. But in subsequent quarters, this leverage ratio should decline.

And let me add where the group has an adequate level of liquidity and secured social financing. So the group didn't face any problems meeting its financial obligations.

That's all regarding the financial data with individual segments, and let's move on to the questions-and-answer sessions.

[Lukasz Zimnoch, executive]

Ladies and gentlemen, a few questions we have already received. Let me repeat. [Operator Instructions]. According to a Polish association of utility scale heat generation plan, the expenditures in order to comply with fit [indiscernible] will come in at PLN 276 million and PLN 400 million. According to the company, will this [ all ] be fully passed on or included in -- covered by the tariff?

[Unknown Executive]

Well, today, practically another coordination [ Congress ] was finished in [indiscernible] done in August, July, whatever, organized by the Polish association of utility scale heat generation plan. It's difficult to imagine that such enormous costs could be fully included or covered by the heat tariff that would lead to excessive increase of price of heat for the consumers. We'll be using various funds among others -- just transition fund in order to have smallest cost -- to charge our final consumers will the smallest part of that cost.

[Lukasz Zimnoch, executive]

Another question. How -- What's the situation now regarding the structure of electricity after wholesale electricity price at TAURON Group? What portion of electricity is sold via the exchange? What part -- what portion is sold [ intra ] group? And what is -- Poland sold via the OTC contracts?

[Unknown Executive]

Well, I'll try to answer. Let us remember that the trading obligation -- exchange obligation was about the end of last year. So some of the electricity was sold last year still under contract. So this year we sold via the exchange. Some of the contracts we already concluded directly. We -- of course, we are using this option and we conclude those contracts directly between us, namely between the generating subsidiary of TAURON and TAURON subsidiary, but we are not disclosing, of course, the percentage, what percentage we sell via exchange and what portion -- which percentage we sell via under OTC contracts.

You know very well that we are exposed on the sales side. So we sell much more electricity than we generate. So we have the ability to fully transfer -- to stay within the group. So secure the electricity generated by the group, by the sale contracts outside. But of course, we are observing the situation in the market, the liquidity, and here, the group is basically on the other side. So it's looking at liquidity so as to buy electricity on the market for supply needs, for the needs to deliver electricity to its customers.

[Lukasz Zimnoch, executive]

And another question, the question is from BiznesAlert. What are the TAURON expectation related to NABE? What are the plan -- the CapEx in renewables this year? What are the challenges related to the financing valve? How do you see the potential of CCS?

[Unknown Executive]

Well, let me answer this question, ladies and gentlemen. TAURON Group is a great supporter of NABE project, National Agency for Energy Security. We have strong leaders in that because power system is so -- designed in such a way, but in a way, the power plants of TAURON are the final piece of the system. So the stability and the predictability of contracting of coal is much more difficult in case of other power plants. Therefore, we hope that in accordance with the statements, almost the Prime Minister of this project will be launched as soon as possible.

Regarding the CCS potential, this type of technology probably will be more interesting for NABE. Although our sales -- because the conventional generation is retained by us, which will require some modernization in the heat line of business. And we are looking at the technologies so -- that are used to capture carbon dioxide, various type of technologies, including CCS. So we haven't made any final decisions yet, which technology, if we do apply which technology, we will choose.

[Lukasz Zimnoch, executive]

Ladies and gentlemen, and that's the last question today, unless something came up -- comes up yet. What is the exact mechanism of the rising of more than PLN 600 million of upward adjustment of grid losses due to the price in the distribution line? Why is not this the amount of reflected in the supply segment as a loss, since the Distribution segment buys own -- it from the segment. So will it be reversed somehow, with PLN 600 million reversed in the subsequent quarter?

[Unknown Executive]

Partially I tried to answer this question during my presentation, but let's walk it -- over it again. The amount itself is -- as I said, is a consequence of very substantial price change year-over-year. And that's why it was a non-typical event. In the previous years, we were also dealing with this mechanism. It's a model that's been in place for a number of years in the Distribution segment. We never dealt with such a large increase year-over-year.

Moving on to the answer whether -- will anything change in the subsequent quarters? Let me say, yes, generally, we are looking at what's happening on the market, as I mentioned. And once this price year-over-year -- the average price year-over-year is declining, then we will be dealing with a partial reversal of this amount.

What amount is difficult to answer at this point in time, depending on what will be its price of this year, not -- probably not with a whole one -- will not be returning probably to the prices of '20 to '21. So partially, it will be reversed. It will be reversed probably at the end of this year and the beginning of next year.

In terms of Supply segment, it's alone -- Supply segment there are various models of buying this, so you can buy intragroup, you can buy this electricity outside of a group. Let us remember that we are dealing with the unbundling issue here. So the Group's approach this issue in different ways.

Meanwhile, the Supply segments apply various mechanisms, various models to value -- to price this item. The mechanism that we have in our group is more referring in the Supply segment to electricity purchase on the market and electricity delivered to Distribution segment, and the valuation -- the pricing of this electricity is reflected then in the results of the segments.

Therefore, it's not an automatic reflection of results from one segment in another segment. Although we know that various groups have played different models. We have observed the financial reports of our utility groups. And you can see based on these report that each group has a bit different method, model of reflecting the result between the Distribution and the Supply segment. Even in the Distribution itself the different models. We're just guessing looking at the results reported by the other utility groups.

[Lukasz Zimnoch, executive]

During this answer, we got another question. In terms of transferring generation to NABE, what is the current status of the relocation of some of the [ finance ] group to NABE and the timetable for the transfer of the assets?

[Unknown Executive]

Let me answer this question as well. At the moment, we are working -- we are finalizing works regarding the NABE itself. We completed practically all internal works, preparing us -- preparing those assets for the transfer. We completed the due diligence reports. Now practically, the valuations of these assets are being finalized. The work is underway on the -- delivering the materials to the banks. While if we talk about the financing itself, just remember that we are talking about the transfer of financing intragroup, financing to NABE and a potential repayment valve. The discussions are still [ be on ] this topic.

They will be finalized once the final approvals of banks' credit committees are received. In terms of a timetable of the transfer, we do hope that -- according to what the Prime Minister mentioned, we do hope that over the next few weeks, we will complete the works related to the valuations. The work sort of related to obtaining the approvals of the credit committees of the banks and the works related to the negotiations of the provisions of the SPA agreements are being finalized. So we do hope that over the next few weeks, we'll be able to -- at least the first agreement regarding the transfer of those assets, we'll be able to conclude probably that one would include some suspensive, some precedent conditions.

Prices -- about the coal prices, [ oil ], price of coal in 2023 in terms of the ARA decline to PLN 15 per gigajoule. That is -- the company secured its prices for the coming year. The prices of coal are not, of course, open. It's not open data, confidential. But we are responding during the year in case of strong fluctuations of coal prices, and we negotiated. We negotiated those prices. If there is...

[Lukasz Zimnoch, executive]

Can you please provide a comparable adjusted EBITDA from the Distribution segment for first quarter '22, with the adjustments for the same items as like for first quarter 2023?

[Unknown Executive]

In terms of comparable results of the Distribution segment year-over-year, I would like to refer to Slide #6 of the presentation. That's where we are showing those one-off events and non-typical events. They are fully applicable to the Distribution segment. So one may say the result of the Distribution segment should be adjusted by about PLN 550 million. And thus, if we move to the Slide #9 of the presentation, so from the level of [ PLN 1,265 million ], you should strip out PLN 550 million, then we would come in have -- we would have -- we would arrive at a very flat results year-over-year.

[Lukasz Zimnoch, executive]

Another question, where is the problem of NABE project now? Is the lack of political will or financial legal problem? Or do you need a notification of European Commission? Has -- the application has been -- has the application been submitted? Does the company know the valuation of the assets of the [ Mysłowice ] transaction?

[Unknown Executive]

There are no problems regarding the NABE issue, regarding the political will. There is political will to go ahead on in this project. So we do expect that according to the earlier announcement, I mentioned it before, this project will soon be launched. But notification of European Union Commission is not required for the NABE project.

[Lukasz Zimnoch, executive]

Ladies and gentlemen, having refreshed my screen, it turns out that it was the last question that the President answered. Thank you very much for meeting with us over today. I'd like to invite you to the next meeting that we'll be hosting directly after publishing the report for the first half of 2023. And we will notify you about the date of the conference in a traditional way. Thank you for attending this meeting, and have a nice day.

[Statements in English on this transcript were spoken by an interpreter present on the live call.]