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Dear ladies and gentlemen, welcome to the E.ON first quarter results 2018. At our customer's request, this conference will be recorded. [Operator Instructions] May I now hand you over to Mr. Alexander Karnick, who will lead you through this conference. Please go ahead, sir.
Thank you very much, operator. Good morning to everyone. This is Alexander Karnick, Head of Investor Relations. And we published this morning our Q1 financials as usual. You will find all the documents on our website and today joined by Marc Spieker, our CFO, and he will have a short presentation. And as usual, you will have the opportunity to raise some questions thereafter. And with that, I hand over to Marc, thank you.
Thank you, Alex. Good morning, dear analysts and investors, and a warm welcome to our first quarter 2018 results call also from my side. After the excitement around the transaction with [indiscernible] , I'm pleased to [indiscernible] operations and present to you our strong first quarter results. Compared to previous year, EBIT is up by 24% while net income increased even by 38% helped by a low base admittedly in the prior year. On the back of this strong performance, we are fully on track to achieve our full year guidance. We also confirm our dividend proposal of $0.43 per share for 2018. You may have noticed that for the first time, we report our results in the format of a quarterly statement. This will be the new norm for our first quarter and 9 months result reporting from now on. The new format is much shorter and clearer and will help you to extract important information more easily. Before I go into details of Q1, I would like to highlight some important points around the innogy transaction and provide an update on recent operational development.We launched our voluntary public takeover offer, the so-called PTO, for innogy's minority shareholders on 27th of April. The acceptance period for the offer will last until July 6. Please note that we might see a substantial part of the tender action only in the additional acceptance period, which will last until July 25. We regard our offer as highly attractive for innogy shareholders. The total offer value of EUR 40 per share represents a premium of 28% to Innogy's share price, before it was affected by takeover speculations towards the end of February. Compared to the average broker target price before the announcement, the offer represents a premium of 23%. After the recent distribution of Innogy's dividend for 2017 of EUR 1.6 per share, the total offer value now amounts to EUR 38.4 per share. This amount corresponds to the total offer value of EUR 40 per innogy share at the day of the publication of the transaction, which as you know, took place on March 12. E.ON is in a position to offer such an attractive premium due to the high synergies this transaction offers. The offer price does not only reflect the standalone value of innogy, but also a part of the synergy value that we expect from the full integration. After merger clearance, which we expect not before mid-2019, we will have the choice between different routes to implement control over innogy, depending on the acceptance rate of the tender offer. However, let me highlight the very important point once again. The roughly 77% stake that we acquired from RWE already allow us to implement the integration. There are various ways in which control can be implemented. I want to quickly summarize the most important ones. With the 77% from RWE, we are able to enforce the domination in profit and loss transfer agreement. With a domination agreement in place, E.ON would be able to give binding instructions to innogy, thereby assuming control in being able to implement the synergies. Upon the conclusion of the domination agreement, E.ON is obliged to offer a compensation payment and as an alternative, the so-called guarantee dividend to innogy shareholders who have not tendered. These compensations would typically be based on the rigid and highly formalized valuation standard of the Institute of Public Auditors in Germany, the so-called IDW S1 standard. Such evaluation will not consider the synergy potential we expect from the combination of both companies. That means, that the compensation payment could be also lower than the value offered in the takeover offer. In addition to this, the guaranteed dividend could be structured to primarily reflect a bond yield based on the value of the compensation payment. Such a bond yield would reflect the current low interest rate environment and E.ON's strong BBB credit rating. In case the acceptance, in the takeover offer, would bring us to a stake of at least 90% in innogy, we could execute various ways of a squeeze out. The required cash compensation for shareholders who have not tendered would again be based on the IDW S1 valuation standard. In all the mentioned cases, the integration cannot be blocked or delayed by minority shareholders in a meaningful way. Only the level of the compensation payment or guaranteed dividend can be challenged in a judicial appraisal procedure, the so-called [Foreign Language]. [indiscernible] in German after this call. Such procedure -- proceedings may take up to several years with an uncertain outcome. Finally, there is also the possibility that there will be no cash compensation at all. This option will be available to E.ON already with its roughly 77% stake from RWE and could imply the merger of E.ON and innogy into a new company. Through such a merger, innogy and E.ON would cease to exist as legal entities and both shareholders would receive shares in the new company, but no cash. In a nutshell, we are confident that our attractive offer for innogy allows for a high acceptance rate of the public takeover offer, in particular, against the background of the alternatives with highly uncertain outcomes. Turning to the next page. I would like to shed some more light on the timeline of the transaction. The only condition precedent to implementation of the transaction is the merger clearance from antitrust authority. In our case, the EU Commission is the most relevant competition authority. We continue to expect the EU clearance not before mid-2019. This is the base assumption and it's also the primary reason for the considerable length that this transaction needs for implementation. The chart gives you a better understanding about the typical steps of an EU merger control process. In general, the process begins with informal preparatory discussions between the notifying party, that case E.ON, and the case team which handles the transaction for the EU Commission. In parallel, first notification documents are being drafted. With the filing of draft documents, the pre-notification phase starts. In this stage, the process is still informal, draft documents are being discussed and request for information by the EU Commission are being responded. With the official filing of the notification documents, the first formal notification process starts, which is called Phase 1. This phase generally has 25 working days for the EU Commission to decide whether to grant the antitrust clearance. If the EU Commission considers it necessary to examine the transaction in more detail, so called Phase 2, may be initiated, which can take up to 90 additional working days. Both phases, Phase 1 and Phase 2, can each be extended, Phase 1 by up to 10 working days and Phase 2 by up to 15 working days. Because of the relatively tight time restriction in Phase 1 and 2, the prenotification phase is often extended by the case team to clarify as many points as possible before the formal start of the proceedings. Given the complexity of the transaction, our planning and the corresponding timeline assumes that we will have to go into a Phase 2. Regarding our transaction, we are currently in preparatory discussions with the case team. Following the announcement of our transaction, we immediately applied for an EU case team and engaged in first discussions with the commission to introduce the transaction and discuss the time plan in order to ensure that the proceedings will be conducted swiftly and as timely as possible. The filing of our first part of the draft notification is aimed for this month already. Over the next month, we will keep you up-to-date about the progress of the proceedings.Let's get to operations and start with the German network business. Most noteworthy is the positive decision by the Higher Regional Court of Düsseldorf, OLG, Oberlandesgericht, regarding the allowed return on equity for the new regulatory period in gas and power. The court concluded that the regulator BNetzA has set to return equity with 6.91% too low and does not adequately reflect the current period of exceptionally low bond yields. According to an independent expert commissioned by the court, an adequate return on equity would be 7.7%. The court ordered BNetzA to revise its return on equity determination. BNetzA appealed against this decision at the last instance, the federal court of justice called BGH, Bundesgerichtshof. Nevertheless, until the BGH takes its decision, which could take at least 1 year, the return on equity of 6.91% remains valid, which is fully in line with our guidance. Regarding the general efficiency sector, there has already been a decision for gas. The sector has been reduced from the previously valid 1.5% to 0.49% for the new period. Although this is a meaningful reduction, we still regard the general efficiency sector is too high and have filed a legal complaint against it. For power, we expect the determination of general efficiency sector in the third quarter 2018 at the earliest. Currently, BNetzA collects the necessary data. All in all, there's still a lot of moving parts. We will get more and more clarity over the coming months.Looking at the innogy safe business. I'm quite satisfied with the recent development of our customer numbers in our main markets, U.K. and Germany. In the first quarter, we gained more than 50,000 additional household customers for both markets combined in a continuously intense competitive environment. This follows the strong gain of more than 100,000 customers in Q4 2017, which in turn was based on the stabilization in the second and third quarter of last year. This underpins that our strategy of innovative tariff offering and focused sales channel is starting to bear first fruits. In the U.K. for example, we could reduce our churn rate meaningfully to 15%, which is below the market average of 18%. In Q1 2017, our churn rate was still significantly above the market average of 15% at the time. Just recently, we went live with the first version of our new so-called digital attacker platform. We are building shared infrastructure that fundamentally reduces our cost to serve, with improving our customer experience and time-to-market with new products and services. However, looking at the political development in the U.K., there is no change. The environment stays tough. U.K. market develops from a leading to a lagging position in terms of energy policy. The work on the price cap just continues, nevertheless, how this will be set exactly remains still highly uncertain, especially regarding the level of the cap. Despite our progress with respect to customer gains and the work we are undertaking to significantly reduce our cost in the energy-[indiscernible] business, we cannot rule out that an SET price cap will hurt in a more short-term perspective. However, in the longer term, I'm very confident that the business will be able to regain its earnings strength. Now let me focus on the operational performance in the first 3 months of 2018. EBIT increased 24% above prior year levels and the strong quarterly performance adds to the solid financial operating performance of the last 2 years. Now the strong development in the first quarter has been helped by a relatively low base in the first quarter of last year. Key driver was the EBIT in Customer Solutions, which in the first quarter is up more than 20% over the same period last year. Our customer business in Germany had a particularly successful quarter. EBIT increased by EUR 90 million year-on-year, mainly driven by price increases in the second quarter 2017, that compensated the negative effect of sharply risen transmission costs that burdened the first quarter last year. In addition, lower gas procurement costs supported the development. In the U.K., EBIT is down slightly versus previous year, despite price increases implemented in the second quarter 2017. The positive effect was overcompensated by charges for our restructuring programs SWAT that we have presented with full year 2017 results as well as negative effect from the regulatory price caps on prepayment meter tariffs and vulnerable customers. EBIT in Renewables improved by 7% in the first 3 months, the positive contributions from our newly commissioned onshore wind farms in the U.S. as well as pre-commissioning income of our offshore wind-farm rental in U.K. were partly compensated by the end of subsidy periods or high-priced power purchase agreements from the past, mainly in our U.S. onshore portfolio. Energy Networks declined roughly 5% year-over-year in line with our expectations and full year guidance. The positive development in Sweden, where EBIT rose 14% year-over-year, was not able to fully compensate for the absence of the positive regulatory effects and the loss of the gas concession in Hamburg in our German network operations. The corporate functions and other line was supported by Phoenix cost savings. In addition the results to some extent supported by rather high-cost base in the first quarter last year. Earnings of our non-core nuclear business increased by almost EUR 100 million year-over-year. As you might recall, we had the unusual situation in Q1 of last year that all 3 nuclear reactors were scheduled for maintenance and refueling. Full availability of all 3 power plants plus positive one-off effects that relate to last year's Brokdorf outage overcompensated lower hedging prices in Q1 of this year and led to the increase. The result of our Turkish generation business, debt-free for the first time reported as part of the non-core business, improved significantly on the back of the non-reoccurrence of the one-off book loss from the sale of a hydro SF in the same period in 2017. Now let us take a brief look at the bottom line. Our adjusted net income came in at EUR 727 million for the first quarter of 2018 and was up 38% over prior year. Obviously, the strong increase in our book EBIT translates the bottom line and is amplified by slight improvement of our financial expenses. Let me now turn to the development of our economic net debt. Economic net debt increased somewhat over the end of 2017. This is mainly due to seasonally low cash conversion rate of 21% in the first quarter. Higher energy consumption during the winter period as well as last year's price increases led to an expected temporary increase of our working capital in the sales business. These seasonal effects will be offset during the remainder of the year and we expect a cash conversion rate of, again, over 80% for the full year, fully in line with our guidance. Pension provisions are approximately EUR 700 million lower versus year-end. This is more of an accounting effect and has a minor impact on economic net debt. This effect results from the liquidation of our last on balance sheet pension plan. Accordingly, assets were transferred from our balance sheet to the CTA, reducing at the same time our liquid asset position. Pension provisions were reduced at the same time by similar amount. We expect to reduce economic net debt significantly over the course of the year. We expect to receive EUR 3.8 billion of proceeds in relation to the sale of our Uniper shares to Fortum by mid-2018. In this respect, we have noted the approval of the Russian government commission for monitoring foreign investments. The remaining regulatory clearances should be received until mid-2018 and the transaction should close as expected. Furthermore, the transfer of our EUR 1 billion stake in Nord Stream 1 into our CTA should go ahead as planned later this year, and will reduce pension provisions accordingly. Following the strong first quarter, we are fully on track to achieve our full year guidance. For the remainder of the year, we are expecting to return to a more normal growth trajectory -- Q1 '17 as I highlighted was negatively impacted by an unusual combination of various negative developments, which were compensated in subsequent quarters. When modeling the remaining quarters for 2018, you should keep in mind that such a catch-up effect will likely not repeat. With an unchanged operational outlook for the remaining 9 months, I confidently confirm the guidance for 2018 of an EBIT between EUR 2.8 billion and EUR 3.0 billion and an adjusted net income of between EUR 1.3 billion and EUR 1.5 billion. We also confirm our dividend proposal of $0.43 per share for 2018. Now I would like to thank you very much for your attention. And on over to Alex for the Q&A session.
Thank you, Mark. Operator, over to you for questions. [Operator Instructions] Operator, back to you. Thank you.
[Operator Instructions] The first question is from Mr. Alberto Gandolfi, Goldman Sachs.
My first question is on the guidance. I know that typically your numbers are highly skewed towards Q1. But cannot help noticing that your Q1 net income is more than 50% of the mid-range of your guidance. So can you tell us why you might not narrow down your range, let's say, to mid-upper end? What could go wrong? Is the Customer Solutions really the division that makes you a little bit more nervous, I imagine? EBIT margins are close to 6%, you're gaining customers in the U.K. Is this the main question mark for being a bit more specific on your guidance, I assume? And the second question is on your combined entity. You have announced a 7% reduction in workforce as part of the deal. You would have like 70,000 employees pro forma and the question here is about natural attrition. Can you maybe tell us what percentage of these employees would be, let's say, within 10 years of retirement? Because you have the same workforce of [indiscernible] , but analysts twice your EBITDA or put a different view of like twice the workforce of Iberdrola, [indiscernible] a very barbarian approach, very back of the envelope would suggest like quite a lot of margin here for improvement, perhaps, through natural attrition and so I was wondering if you can maybe give us a little bit more about the profiling of your workforce.
Alberto. Let me start with the guidance question. At this stage, I think, normally you should not expect that roughly months after we've released the guidance that we will not significantly know of the guidance. I think what you should take note of is that I have a lot of confidence in confirming the guidance range. So you should get used to that whenever we put out guidance that E.ON is able to deliver. As always there are upside and downside risks. You mentioned the safe market, the Customer Solutions business. In that respect, I would actually also highlight upsides, which can result from our efforts to work on efficiency and improve the cost base in anticipation also of negative impact as a price cap the most fully significant next year. So the Customer Solutions shall not only be good for downside surprises, it can also be good for upside surprises. But that said, overall, you'll find us very confident with regard to the full year amount. But I need to ask you for patience for us narrowing the guidance in any way. For the combined entity and workforce. That's obviously, from an investor's point of view, an important question. I also understand your efforts and to do benchmarking, which is always difficult as comparing big stock-listed companies in very different markets with very different degrees of outsourcing and so on and so forth. It's a tricky exercise which I ask for your understanding that now on the telephone call here, I can't give you any more specific guidance. But I think we can take this offline. But I just want to be cautious, it's not so easy, because we're doing that constantly but it's not always so straightforward to compare ourselves on group-level consolidated numbers also with the mentioned company. In terms of natural attrition indeed, I expect that and the past has shown that during the last 5 years, we've reduced the workforce at E.ON with -- at almost 15,000 positions. That has worked out softly without any disruptions in full alignment with our workers. Workers council and natural attrition, of course, always is a part of that. So while I do not now want to talk down the concerns and uncertainty, which [indiscernible] of course are now present among innogy employees, I think there is a lot of reasons to believe that we will manage also this reduction in a very fair and socially acceptable manner.
We have received another question from [indiscernible] Crédit Suisse.
First question on Customer Solutions, very, very barbaric, as Alberto just said, calculation on -- if you take the EBIT in Q1 '18, you're on 6.3%, if you take the same number for Q1 '17, 1.7%. Could you please help us understand, you think, the first one is by how much did you increase your average? I know it's an average, it's not a good number, but still average tariff in Germany. And the second thing is how sustainable should we see that number for Q1? And my second question is as much as you can share with us, it would be interesting maybe to hear what's the EU in your first discussions with them has raised? How concerned are you that EU may do before the CMA's doing on innogy, in other words, be a bit more difficult than expected.
About the Customer Solutions, I can't give you now an average tariff increase, as last year's tariff increase was based on significantly increased costs for the transportation grid -- for the transmission grid. And these are charges which are regional and hence vary from region to region. The TSO charges for tenant, for example, were raised by 80% 8-0 percent last year. And so this translates then into a very meaningful tariff increase. But this is then, kind of, weird through the distribution operators in terms of [indiscernible] . So it's [indiscernible] of tariff increases. But I think if we find [indiscernible] an average increase, we can let you know. On the EU Commission, please understand that -- first of all, we should expect that the commission will take a very close look and it's also clear -- and this is not surprise this is not concern. I think, we're very clear that we expect Phase 2 to happen, not because we think that EU Commission will be particularly nasty. We just think they will do their job and be very diligent. And yes, also ask a lot of questions. We will be very constructive. I don't want to anticipate now and interfere with the ongoing work. I think this would not be wise. But our confidence, overall, which we express upon announcement, has not changed that this deal with go through.
We have received another question from Ms. Deepa Venkateswaran from Bernstein.
Two questions from me. Firstly on the deal timetable. You have stated that it doesn't take into account any referrals to national authorities. Do you see any situation by which the entire process takes more than December 2019, which I think is the absolute time limit by which you need to close the transaction and the offer document? Second question is on the question of change of control of innogy. There has been articles in the Handelsblatt about some of the local concession areas of innogy, which may need to be re-tendered or which can be re-tendered. So I was just wondering if you can walk us through what your contingency planning for that? How you would deal with it? And is there a situation where, I don't know -- maybe you can quantify what percentage of the innogy concessions have this? Is there a situation that a bulk of the innogy concessions just vanish? Or how we should look at it?
Yes, Deepa. Let me start with the second question. Innogy themselves on the AGM have clarified that change of control clauses, which may be triggered by the transaction i.e., the change in the shareholders on innogy at the top core level. Those COC clauses only refer to a limited amount of concessions or subsidiaries. And in fact, I have nothing to add to that. So overall, we expect this to be of limited nature. Secondly, allow me to make a generous statement, that working together with a German municipality is core part of our business already today in all 4 regions are distribution companies. And the same will apply then going forward with the portfolio in innogy, of course. This is something -- it's a collaboration which we're looking forward to with a lot of good experience in our existing portfolio. So it's actually something which we're looking forward to and nothing which innogy sees as an opportunity rather than a threat. Then on the new timetable. No, any potential refer to national authority does not have the potential to delay the timeline further and in no way beyond the end of 2019.
We have received another question from Mr. Nick Ashworth, Morgan Stanley.
A couple for me as well, if I may. Firstly on [Audio Gap] solutions, can you tell us how many standard variable tariff customers you have in the U.K.? And at a bit wideness of that, you touched on the digital platform and the changes you're making across Customer Solutions. Can you give us a bit more of an indication around how quickly that's progressing, if the customer base you're seeing is shifting in Germany and/or the U.K., and where you want to get to over the next 12 to 24 months? And presumably the customers that you're winning are all going on to fixed price online tariffs so presumably these new customers are all on this digital platform anyway. And then secondly, just on e-mobility, because I know that you've changed the accounting slightly and moved some of the cost around some of the divisions. I think it's says in the report today as well that you're -- you start a new business up in Norway. Are there more country new entrants that you're going to be making this year? And how much do you expect to be spending on that part of the business this year, next year?
All right, Nick. Let me take your questions in the order you asked them. On the SET customers, first of all. It's roughly 50% or 2.8 million customers in absolute numbers. From the household customer, residential portfolio, with regards to [indiscernible] and our attempt to develop the portfolio going forward. And so first of all, the [indiscernible] [indiscernible] is a completely new software platform where our target is to gradually move over, essentially, all of our retail businesses, even the core markets, to this platform. It's a pretty ambitious target to reduce cost to serve meaningfully and it means by more than 50% compared to our today's structure. At this stage, what I can tell you is that the launch of this platform has the on time and budget, which if look at IT project, is already a great success. But I also want to give a realistic note in the sense that we've just seen the first launch and this is really just 2 weeks ago. We're adding now some thousands of customers. Yes, you may say just thousands of customers, but this is part of the natural ramp-up of an IT system. This is why at this stage for the Capital Market, I would say, it's too early now to really celebrate already a successful implementation. But all signs are positive and green, the steps which we are taking is necessary step is working and going on the right direction. With regard to portfolio that, of course, should help us and our target specifically in the U.K. for example, was within the next 4 years to move everyone from SET to a non-SET contract. And we always said that this will require a step change in the cost base in order to make sure that our pledge to keep profitability stable financially works out. If now, the price cap interferes or not, is a different question. But from that, I think, you can understand our confidence that regardless of the price cap longer term, we're looking positive and optimistic at our retail businesses. On e-mobility...
Sorry, Marc, just on -- is it the same system in Germany and the U.K.? Is it all Customer Solutions or are you doing it country specific?
No, it's a solution, which we started the development not for the core markets Germany and U.K. So with these figures combined rollout for those 2 countries. And if it works in the large markets, I think, then there's also good grounds to roll it out in further markets. But just in terms of sheer numbers of customers, it's those 2 markets which are the key. But it has the potential them to be ready to roll out to other markets as well. And it's actually the litmus test in terms of amount. If it works in U.K. and Germany, I think [indiscernible] . On e-mobility, it's always a question of -- are we talking OpEx? Are we talking CapEx? Are we talking combined spent terms? I think with regard to CapEx, we said that for the midterm period, we were willing to earmark 3-digit million Euro amount of CapEx, a low 3-digit million Euro CapEx. But I think still a meaningful amount of CapEx. We're also very clear that we focus in our investments on very specific segments in e-mobility. So there's not just charging of any nature, but that we're focused, specifically, on ultrafast charging along motorways. And also talking about e-mobility, I cannot resist to always repeat, again, that for our networks business. In our CapEx guidance, earnings guidance, we have so far not included any positive impact from e-mobility. But at the clearest and most straightforward business case like on the regulated networks side because e-mobility will bring a significant need for network reinforcement. And those numbers, which I just mentioned, are not included, I mean also in our guidance. It's not included at this stage.
We have received another question from Sam Arie, UBS.
Just, firstly a quick follow-up on that discussion there on electric vehicles. I think, so far you've been very cautious, understandably so, on your communication around the potential here. But I think since we last spoke, you also announced that you have a board member joining from BMW development, if I'm right, which looks like quite an important appointment to me. And given your comments just now, I mean, is it fair to say that electric vehicles is starting to look like your most important area of opportunity? Or in any case, could you give us a bit of an update there? And then very quickly, my second question is, just going back to the U.K. retail business, we had news again today on the [ SSE and power] spinoff and I think your arrangement with RWE protects you against any downside, if that demerger doesn't go ahead as planned. But can you just walk us through how that works, again? And what exactly is the option you have there?
Sam. On the second question, I can keep it short. As I, unfortunately, can't walk you through now any detail, but I can confirm what you said that there are contractual arrangements in place, which means that independent of the outcome of that review and that our transaction will not be affected by this. I think this is the important part, but otherwise I don't find direction by the CMA now, surprising that they ought to take a close look. So our expectations still remains, this will go ahead. On the first one, Supervisory Board, you're right. It's in the supervisory board as Germany has a 2-tier governance system. The [indiscernible] will hopefully be, kind of anticipate of the AGM vote. But, of course, I expect that he will be voted. And it's a great enrichment for the Supervisory Board. The e-mobility -- our expectation is will be a core area, but I will not now say it's the most important, by far not the only. There are a lot of attractive parts in our portfolio and e-mobility clearly is one of them. But again, here I reiterate that we will explore that business decisively, but at the same point in time also with the adequate discipline in terms of capital allocation and capital commitments.
Okay. And on the BMW question, I mean, does it follow that there might be any sort of further co-operation between E.ON and BMW? Or is that a completely separate question?
Yes, I would not now interpret anything in terms of concrete co-operation and so on and so forth. But I think it stands [indiscernible] that those 2 industries are actually moving closer together. But the nomination of a supervisory board member is a completely independent and it's also independent from BMW as a corporation.
We have received another question from Mr. Chris Laybutt, JPMorgan.
Just a couple of quick ones for me. First of all in the U.K., you mentioned in your Q1 report that U.K. Customer Solutions performance was adversely impacted by accounting changes that relate to grid usage cost. I was just wondering if you could give us an idea of how significant that change was? Or I guess some more detail around the story there and the impact on the first quarter. And then maybe just a general comment on weather. It was a cooler quarter, particularly in the U.K. How much did weather benefit the Customer Solutions segment in general this quarter? If you have a figure in mind, that would be very helpful as well.
Yes, Chris, the U.K. accounting topic, so to say, predominantly third-party costs, which are then put on us and isn't always a timing question when you translate it, not every translated into your own pricing for customers. Overall, as we have not included or executed what our price adjustment, that isolated has a low to mid-double-digit million euro impact. On earnings, it's kind of first-time introduction of certain elements. So it kicks in this year, but then expected to level off. It's certainly nothing which you should now be extrapolating for the remaining quarters. And the second question was with regard to weather effect. For the group overall, it was actually -- it was a mixed bag and hence almost kind of netted off. So that -- if I look at weather category operating effects, it was neutral. On the U.K., where you asked specifically -- we've shared a negative earnings impact predominantly for this very cold spell. Actually, internally we call it the beast from the east. I don't know whether that is a standing phrase in U.K. It simply mean that temperatures went down, prices went up, volumes went up. So we sold more volumes. But then we're also exposed to higher procurement cost in the very peak hours and it left a low double digits million Euro stance on the U.K. profit.Other market [indiscernible] benefited from the cold water -- cold weather. So overall for the group, no particular weather effect in Q1.
Thank you. I hand it back to the speakers.
Yes, thank you very much. That concludes today's call. Thank you very much, Marc. Thank you very much for everyone on the line. And as usual, the IR team is ready and stand by for any further questions. Have a good day all.
Ladies and gentlemen, thank you for your attendance. This call has been concluded. You may now disconnect.