AB KN Energies (KNE1L) Earnings Call Transcript & Summary

Good morning, ladies and gentlemen. Welcome to the webinar of Klaipedos nafta. I'm Emilija, an account manager at NASDAQ Vilnius, and I am pleased to introduce today's presenters, the Chief Executive Officer, Darius Silenskis; and the Chief Financial Officer, Jonas Lenksas. Firstly, the management of the company will comment on Klaipedos nafta unaudited financial results of the year 2020 and guide us through the recent events in the company. Right after the presentation, we will open the floor for the Q&A session. [Operator Instructions] So let's begin. Dear guests, I invite you to start the presentation.

Good morning. So thank you, and I would like to start from the brief content of our presentation. So here, we would like -- today, we would like to touch the key highlights, which has happened during Q4 2020 to present financial results -- unaudited financial results of entire year 2020 and shortly to present investment -- our investment program. So I will start from a very short message. Since the strategy -- KN Strategy 2030 is, let's say, the first year when we were, let's say, presenting it and implementing it. We have no shifts on a mission or vision. And our goal is to operate liquid energy terminals, including oil and LNG. And of course, our vision is to become one of the top LNG operators worldwide and the most competitive oil handling hub in the Baltic region. So talking about the COVID. Of course, the impact is continuing as all businesses as well for us. And fortunately, we haven't had serious problems with the business operations continuity. We are implementing a long list of preventive measures. And of course, due to this COVID, of course, we are still suffering some impact on oil businesses due to drop in the demand worldwide in oil products. So talking about the highlights, what is really important and happened during Q4 2020. So we've got the final decision of European Commission about approval of a state guarantee to secure company's financial obligations for, let's say, biggest company's project, which is being implemented, the acquisition of a floating LNG terminal. We have one new Supervisory Council member join Supervisory Council in November. And we also have some improvement on that, which has been approved by Lithuanian national energy regulator. Important to say that we've joined the hydrogen platform, looking into the, let's say, greener future. And we'll be participating from the very beginning by trying to identify our, let's say, place and our value -- or let's say, place of a value chain in hydrogen topic. So what else? Of course, it was -- it has been announced for the market and media. Due to Belarusian, let's say, political situation, we have some consequences. And our terminal -- our oil terminal customer, Belarusian Oil Company, U.K. branch, informed us officially about temporary suspension of oil product sales for Klaipeda. Nevertheless, let's say, some cargo flow was still being handled by -- in our oil infrastructure. And it's important to say that new calendar year in Klaipeda began by exceeding another record or reaching another record milestone. So we have more than 200 LNG operations in the year. Talking about other important news. I will not read the entire presentation but what is important to say. So we got certification on ISO latest standards on quality environmental protection, occupational health and safety management. So this is a new phase of our company's existence, and it's really good news for our partners, for our employees and then, of course, for our investors. And one more important thing, we introduced an updated code of conduct, which sets out the most important standards of conduct and decision-making in the company. So here, I will pass word to Jonas and to start presenting financial results.

Yes. Thank you, Darius, and good morning, everyone. I will continue with our financial results. So we will start from the results of the quarter. In the last quarter, the group and the company earned EUR 19.7 million of revenues, resulting in EUR 8.8 million of net profit and minus EUR 1.5 million of adjusted net profit. In terms of turnover, it is slightly lower than during other quarters of this year, the bigger difference, we can see against Q4 of 2019. The main reason is security supplement reduction that has been started from the beginning of 2020. Also, we can see the drop in quarter suggested net profit result, which was due to several nontypical reasons for the company, EUR 3.2 million of deferred income tax expenses and EUR 0.7 million of impairment of trade receivables. Also, we can see net profit fluctuating substantially quarter from quarter, which is due to the currency exchange rate influence, which emerges due to IFRS 16 application starting from beginning of 2019 as lease payments for FSRU are denominated in U.S. dollars. Euro will continue to appreciate also during Q4 further on. Therefore, we see the gap between net profit and adjusted net profit increase as additional positive impact to the net profit from currency exchange rate has been registered in Q4. One more news in Q4. Having aligned it with the regulator and having its approval in order to mitigate U.S. dollar currency exchange risk, in Q4 the company concluded forward transactions for U.S. dollars purchase needed for FSRU independence lease payments for the whole 2021. As currency exchange rate influence coming from financial, this liability is not realized by the company and will not be realized in the future because it is related to regulated activity for which the costs are compensated at an actual exchange rate. So the company, in order to explain real result of the activity, is calculating alternative performance measures like adjusted net profit, adjusted EBITDA and so on. So just to remind, calculating adjusted net profit, the company eliminates a realized impact of foreign currency exchange rate, also deferred income tax impact related to the same unrealized impact of foreign currency exchange rate and the unrealized impact of financial derivatives transactions. So going to the yearly result. Speaking about the whole 2020, sales revenues of the group and the company comprise EUR 80.5 million against EUR 104 million in 2019. And again, the main factor here, as was mentioned in the previous slide, is the reduction of security supplement. During 2020, the company has faced a number of positive and negative factors which, generally speaking, have offset each other. So the year was marked with lower oil products and shipment volumes, followed by increasing oil product storage and shipment of crude oil and high volumes of LNG regasification and also essentially better result of commercial LNG activities that, in overall, have amortized the decrease of income from oil products and shipment. In terms of adjusted net profit, the result is lower than in previous year. Apart from commercial factors, important factors for these results were deferred income tax expense in amount of EUR 4.3 million and the impairment of trade receivables in amount of EUR 1.8 million. In terms of IFRS-based net profit result, significant impact but the result was also from nontypical factors like previously mentioned unrealized impact from foreign currency exchange rate, which amounted to a positive impact of EUR 28 million; deferred income tax with a negative impact in amount of close to EUR 11 million; and negative effect in amount of EUR 1.9 million from financial derivative transactions. So here in this slide, we show how we group our activity. We group our activity in 3 segments: oil terminals, regulated LNG activity and commercial LNG activity. No changes in this regard. The grouping remains the same as in the previous quarter. In this slide, we split also our result into the business lines and provide comparison between IFRS-based and adjusted results. From net profit result, we can see that all our differences in LNGT or regulated activity segment. Also worth to mention that, as we can see, oil terminal and regulated LNG activity business lines are the main ones, for the moment, generating the results for the group. And now I'm passing the page to Darius.

Yes. Thank you, Jonas. So I will briefly go through the key messages and factors related for our main business segments. So of course, year 2020 was full of challenges, which put pressure on energy markets. And the main reason for that is, of course, a significant drop on consumption. So during the first wave of COVID-19, this drop was really close to the same what we can see during the second wave. And especially, we are talking about drop on a consumption and on demand in oil side. Due to restricted mobility, we have much less consumption of, let's say, both diesel and gasoline. This is causing, of course, eroding refining margins. So -- and because the situation lasts already a year and even more, let's say, during autumn 2020, more-than-usual number of refineries have been closed for repairs. And several of them closed down refineries altogether, switching to biofuel production or storage services of oil products. European refineries, we're operating at minimum possible refining capacities. And we took October as an example. The average of the capacity utilization was about 69%. It's worth to underline that such low capacity utilization had been seen decades ago. I mean so it's almost a record of all the times. So due to ongoing growth currently and restrictions in European countries and not -- actually, not only European countries, it's a global problem. This figure -- or, let's say, capacity utilization increase is not visible or forecasted even for 2021. Of course, everything depends on pace of vaccination worldwide. But due to the fact that when COVID has started and refining margins started to drop down, a lot of oil products and even feedstock for refining has been, let's say, locked for long-term storage both on a land-based and floating infrastructure. So all this actually full of stocks. And those stock levels, we are not decreasing due to the fact that we are still suffering, let's say, a significant drop in demand for all grades of oil products. So about our customer from Belarus, I already mentioned. So it is a temporary suspension of trade of products. And what is worth to mention and actually what helped us to mitigate negative consequences, so negative fundamental factors to our oil business. We have successfully extended our cooperation in biofuel handling, which actually rose by something almost 10x comparing with 2019. So meaning, we are utilizing our newbuild tanks, which are made from stainless steel, which are maybe small in size. But they are providing more flexibility to our potential customers and balancing, let's say, a loss of some conventional flows. And also, it's important to say that KN is joining the bitumen market as of second half in 2021. So we have already some commitments from the market and started, let's say, construction or adaptation of some of our infrastructure for this perspective, I would say, product handling. About the capacity, we are always showing this. It's a comparison of throughput versus tank capacity of the terminals which are operating in our region. So here, we can see that we are still -- from this angle, we are still the most utilized oil -- marine oil terminal infrastructure. Talking about LNG. So main business factors, we already -- Jonas has already said that this LNG security supplement reduction impact -- which is not actually influencing our profitability. Its, let's say, revenue line, it has been successfully reduced. And this gain is collected by all of our gas consumers in Lithuania. And of course, let's say, very attractive LNG price which, as you can see from the last bullet point was, let's say, almost double, less comparing to 2019 in average. It was caused more interest on natural gas as an energy source, and it has been really competitive. So that's why we, let's say, also got a record in capacity -- in utilization of the floating regasification and storage unit. Actually, the average utilization was about 49% from theoretical maximum capacities. This has not taken into consideration, let's say, logistical capabilities, weather conditions, et cetera. So its comparison with maximum technological capacities, which this terminal got. And about 2/3 of natural gas in Lithuania was imported using our infrastructure in Klaipeda. So what is as well important and where we can see that those connections with -- pipeline connections, gas grid connections with the neighbor countries and neighbor markets works pretty well. We can see that during 2020, growth on, let's say, export from Lithuania to other Baltic countries increased by actually 52% comparing to 2019. And probably, this was due to the fact that the new pipeline started to be -- started operations beginning of 2020, connecting Finland and Estonia. Talking about the customers in our, let's say, LNG FSRU in Klaipeda. So we here also recorded growth. So we have 1 more user comparing to 5 users in 2019. We've got 6 of them during 2020, and 2 of them were from Estonia. I talked already -- mentioned about the natural gas index. So here, you can see the EBITDA and net profit and revenues on the graph on the left side. So I will not be reading that. It's visible. Now talking about, let's say, benchmarking ourselves, how those capacity utilizations in Klaipeda looks like comparing to European terminals. So we are, let's say, on the average of the capacity utilization, as you can see on the graph on the right-bottom side of the slide. We are actually following the trend, which is visible in entire continent. So utilization rate of Klaipeda LNG terminal has grown about 150% during the last 2 years, which is clearly showing that we are creating value with this infrastructure and the customer. And the price of LNG is competitive to the grid price. On the left-bottom side of the slide, we have provided split by origin. So still, let's say, majority of LNG cargoes comes to our customers from Norway. And we have significant growth of the LNG, which is coming from U.S. And of course, Russia is also taking some part in this pie. Mainly, it's small-scale delivery, so-called, which is smaller feeder vessels. So talking about the other business factors. So I would like to remind that KN is an operator of FSRU terminal and infrastructure, connecting terminal with the power plant in Brazil, Açu, Port of Açu. So talking about our other commercial activity related with LNG. So we are owners and operators of the small-scale terminal in Klaipeda. And as it was already presented a few times, we have signed a long-term agreement with a Polish, let's say, company, PGNiG. It's a 5-year agreement. So we are happy that it's continuing its successful implementation of that. We see that the customer is really using our infrastructure. So -- and of course, it's our strategy. We are following all possible public and private floating LNG terminal tenders globally. And currently, we are assessing business development opportunities, not only in Europe but as well in Southeast Asia, South America. So on the left side, you can see the numbers. I also will not be reading that. But of course, we have here very visible improvement both on revenues, EBITDA and on net profit. So Jonas, I will pass to you, let's say, presentation talking about the ratios.

Yes. Thank you, Darius, once more. And I will proceed with some other financial information. So in this slide, we provide some of financial ratios, which are based on adjusted results as these results that are disclosed company's result and affords comparability between periods. So for 2019 and '20, we see a significant increase in gross profit and dividend margin. Ratios for 2019 are influenced by application of IFRS 16. And into 2020, additional impact comes from capitalization of FSRU as at end of 2019. And also, reduction of security supplement started from 2020 -- beginning of 2020. And as profit per share decreased compared to 2019, price earnings ratio slightly increased, too. Going next, structure of our balance sheet. So no major changes we see in the structure of the assets; however, some changes on the liability side. So I will comment shortly. So after the application of IFRS 16, the major portion of the assets still consists of rights to this property and -- property, plant and equipment. Decrease of both items are due to calculated depreciation. And property, plant and equipment depreciation is partially amortized by finalized investments. Right to lease property consists of FSRU independence lease liability till 2024 and the purchase option of FSRU. On the other hand, on the liabilities and equity side, the biggest portion are also lease liabilities of the same items, FSRU lease till 2024 and purchase option of FSRU. On the liability side, we see a decrease in noncurrent and current lease liabilities, increase in equity and loans. So noncurrent lease liabilities decreased as part of liabilities were paid by the company during the course of the year. And another reason is U.S. dollar depreciation against euro. And the same reason of U.S. dollar depreciation against euro is for a decrease of current lease liability amount. Equity value increased substantially due to net profit, which is recorded in amount of EUR 33 million. And the main reason for which is unrealized positive influence from change in foreign currency exchange rate, which is positive in the amount of EUR 28 million. And loan balance increased as the company continues to use new loan to finance reduction of security supplement and new tranches are drawn over the time. So that's all from financial side. And I'm giving the word to Darius.

Thank you so much, Jonas. Shortly about the divestment -- our investments. So here, you can see, let's say, the trend, what amounts have been invested during the last 7, 8 years. So on the right side, you can see the real photos of the investments which we are now doing. So one of the most important ones is, of course, reconstruction of the berths together with the seaports authority. So it's a Phase 1 construction of a new berth and installation of a superstructure from our side. So construction award works are underway. There is no, let's say, significant delay. And fortunately, this COVID hasn't caused significant delays in this investment side. So expansion of a Klaipeda oil terminal tanks park. So the tanks are, let's say, built, and final equipment tests and adjustments are underway. Other investment projects which we are not maybe showing here but it's important to mention. So we are also continuing our, let's say, investments and commitments against the societies, municipality and environmental institutions. And we are investing into the system to collect all possible vapors and odors from our, let's say, tank farm. And also, we are now investing into exchange of our, let's say, boiler house burners into the more efficient ones in order to actually radically reduce emissions from the power plant from the boiler room. So that's probably all about the investment program. And additional information, so we already touched a bit, but it's worth to describe in a more detailed way. So since 2016, KN has a contract with Belarusian Oil Company, U.K. branch, for the transshipment of light and heavy oil products produced in Belarusian oil refineries and exported to the seaborne market. And in December 2020, we've been informed by our customer about temporary suspension of oil product sales through Klaipeda. And in the future tenders announced by BNK Klaipeda, we will not be indicated as their sales point. And all contracts between BNK and the company still remains in force. In the tenders announced in January by Belarusian Oil Company, Klaipeda port was not named among other alternatives as a route for oil product transshipment. Moreover, the annual tender for the sale of heavy fuel oil at the Mozyr refinery is no longer organized by the BNK Limited. But other company named Novaya Neftyanaya Kompaniya, New Oil Company, to translate it into English, has appeared. So -- and this company is, let's say, in that case, arranging a tender. The later company is organizing more and more tenders of oil refineries in Belarus. And currently, no transshipment of oil cargoes from Belarus are nominated through KN oil terminals in February or later periods. In our opinion, it can be assumed that oil products from Belarus will not be transshipped through KN oil terminal in Klaipeda. And accordingly, the company follows such assumptions for planning 2021. And in order to balance the foreseen loss of both cargoes, the company will cancel or postpone for the future planned investment projects, for example, railway trestle, which currently do not correspond to changing market context and which are not essential for business continuity. And also, we already initiated a list of efficiency initiatives internally and, let's say, focusing on a cost reduction and all the possible efficiency improvement in all areas and all segments. Also, we will explore new business opportunities and will develop new services for the clients and focus on further diversification of products and services. From our perspective, strategic assumptions of the company in all segments, they remain relevant. Nevertheless, this year, this -- mid of this year, we also will have a strategy revision process before the stakeholders involved, meaning representatives of the shareholders, Board and supervisory council. So the company will focus further on the business directions established in the long-term asset strategy, first of all, development of LNG terminal projects worldwide. On the right side of the presentation of the slide, you can see the share of Belarusian cargoes in our portfolio, oil transshipment portfolio. It's worth to underline because we're operating also additional terminals where we are providing long-term storages. So here, we are comparing only, let's say, transshipment amount -- or transshipped amount of petroleum products in our Klaipeda marine terminal. And as you can see, in 2019, Belarusian cargoes were 23%. And respectively, in 2020, it was about 25% of the entire transshipped volume. So that's all from my side. So we can switch to the questions/answers list. And we have received some advanced questions, yes?

Yes, we have. So gentlemen, thank you for the comprehensive presentation. [Operator Instructions] So let's proceed with the pre-received questions. So the first one is how big is the share of Belarusian client in sales revenue of the company's oil terminals for the year 2020?

Yes. So thank you for the question. Of course, there is always a part of confidential information in such answers. But in general, we can briefly or broadly comment that here in our oil segment revenue part, it can comprise something about 30%. But of course, it depends year-by-year. It depends on many factors, such as, let's say, composition of Belarusian products because pricing and verification of the light products or all, let's say, unheated products and heated products, such as crude oil differ significantly.

Great. Thank you for your answer. And will the Belarusian oil products be further exported by Klaipeda?

We've commented a few times in media, and the answer is very simple. We don't know, but we know what is a fact, yes. The fact is that Klaipeda as a, let's say, destination is the closest and most convenient. And KN is definitely a competitive service provider for any oil product or refining feedstock handling services. So -- but as the reasons are beyond of our control and even logics, economical logics, we cannot elaborate and answer and say yes and/or no on that.

Thank you for your comment. Another question would be please comment on whether the long-term assets of Klaipedos nafta are currently making a sufficient return on your investment compared with the European and global companies in this sector. Maybe you are planning any changes due to the ROI on the long-term assets?

Okay. Good -- very good question, actually. And I just would like to remind you that the company has a few -- let's say, 3 business segments in which we are, let's say, working and generating value. One from them is related to regulated activities. So return on investment is defined and approved by the state regulator. I have in mind the Klaipeda FSRU infrastructure. Talking about other assets which we are operating and the comparison of them with, let's say, European and global companies. So in general, we are benchmarking ourselves with the terminal operators, global ones, especially those who are presenting, let's say, who are publicly listed and where we can get information. And the general answer can be that yes, we are, let's say, on -- following them. And on many -- not only return on investment and on many other ratios, we are meeting the market benchmark. So -- but talking about the new investments, we are always making them and deciding to go or not to go in case if there is a business plan behind, which must generate returns which are not less than expected by the shareholders. So I just would like to remind that we are, let's say, provided by the return on equity expectation from the biggest shareholder. And we are also measured by this ratio, et cetera, et cetera. I think that's all from my side.

Thank you, Mr. Silenskis. Another question would be, most recently, Klaipedos nafta concluded an agreement on the reconstruction and adaptation of 2 storage tanks for bitumen loading. What are other investment projects planned by the company that aim at increasing the efficiency of the oil terminal? Thank you.

Yes. So -- one second. Just to clarify, question #4, about bitumen loading, yes?

Yes, please.

So talking about our investments, I touched briefly during the presentation that we're investing on, let's say, construction of a new jetty in order to be more flexible and be able to accept for loading or discharge of 3 tankers at once. And also, company is continuously seeking ways to improve efficiency and safety. So we are investing in both areas. And both -- the special bitumen-loading project is one of several projects that will be implemented. Light oil tank park investments, as I already mentioned, jetties. And we will be, of course, continuing with further projects to help to improve profitability and, let's say, resilience of Klaipedos nafta oil terminal -- marine oil terminal in Klaipeda.

Thank you for your answer. Another question would be, is Klaipedos nafta planning to build the pipeline from Mažeikiai to Klaipeda?

No, there are -- there is no such plan in our agenda.

And are you aiming at widening its LNG bunkering services in 3 to 5 years?

Good question. So we are doing a lot of advocacy and, let's say, adding a lot in order that actually a regulation of such, let's say, operations will be in place. And -- but in general, as I already mentioned, the LNG terminal operator and the small-scale terminal or so-called reloading station from the bunkering can be performed is actually dedicated or, let's say, granted to PGNiG. So we booked 100% of the capacities. So therefore, sale of LNG for purpose of LNG bunkering is actually scope of our customer, not ours. And I just would like to remind that in accordance to further energy package from EU, KN cannot trade LNG. And this is the restriction, legal one. We are just operator.

Thank you for your answer. Also, could you please comment more on the predictions of the LNG terminal utilization rate for the next 3 to 5 years?

Thank you. Very good question. As far as utilization of Klaipeda FSRU terminal, it's very dependent on the market structure and on pricing and actually on competitiveness of LNG comparing to the grid supplies. So for us, the forecast midterm -- and to be precise with such forecast could be a tricky or even impossible exercise to do. But in general, utilization rate of Klaipeda terminal correlates with the average utilization rate of European terminals, as we've shown. And so, of course, influenced not only by regional but also by fundamental global factors, such as I can mention, the temperature -- the average temperature during the winter, meaning the demand during the cold or heating season with stock levels of, let's say, natural gas storages, et cetera, et cetera. So nevertheless, gas infrastructure development by building the pipeline connecting Lithuania and Polish grid is very important, so-called GIPL project. And this interconnection raises interest in Klaipeda LNG terminal definitely because giving an access to a really big market of natural gas. So -- and this, of course, might affect the utilization of the terminal positively. Taking into consideration that we already have a good cooperation with the Polish major natural gas market player, PGNiG, I really expect that -- I hope that we can expand our operation as well in a big scale, not only on a small scale. So thanks.

Thank you a lot for your answer. And another -- the last one, actually, pre-received question is asking if you could comment on the project in Cyprus.

We don't have actually any participation in that project. So it's -- we are not in.

Thank you. So now we will move to the recently received questions. [Operator Instructions] Now we have received several questions, and let's proceed. So the first investor is saying, dear all, thank you for the material presented. It seems that Q4 was quite a month for the company, not only from the corporations, main clients. But also a lot of adjustments, impairments were made by management. Have management foreseen those technical financial risks in advance proactively? Looking on company's existing dividends policy, what is feedback from shareholders regarding planned dividend payments for year 2020? Thank you.

Thanks for the question, and I will try to comment it. So regarding adjustments and impairments, yes, the management foreseen that. And regarding adjustments, that's why -- as they are related to nonmonetary items and related to IFRS 16, which, in some way, distorts the real result. That's why the management decided to introduce alternative performance measures and to calculate adjusted results in order to show real result and comparability with our period. And regarding impairments, yes, this moment is a negative one. But it's made based on accounting standards and is recognized in the period when it occurred. And regarding dividend policy, we are having valid dividend policy for the moment. And there are no changes foreseen for that. Thank you.

Thank you for your answer. Let's proceed. Another question says, financial KPIs show negative trend within all 5-year period. They are all decreasing. What is the main comment from management upon this? Does it show business opportunity being decreasing over the time? Or does it show inefficiency in the infrastructure dedicated to Klaipedos nafta management? Thank you.

So thank you for the question. Talking about the 2 main reasons, I won't say that we are inefficient. Actually, we are paying a lot of attention to efficiency improvement, et cetera, et cetera. But talking about the equity, so we are keeping some reserve of our strategic goals implementation. We are looking for investment opportunities in the global LNG markets. So this is probably one of the reasons why we see some decrease on return on equity. And another ratio, return on assets ratio, Jonas may elaborate a bit on that.

As this ratio also has a negative trend due to some accounting issues due to IFRS 16 application, we are forced to account into our asset base lease payments and also purchase option of FSRU.

And just to add, if you look on Slide 17, where we provided this information, what is very important that net profit margin actually is quite stable during the last 5 years. And also price earnings ratios as well, we are keeping the same level from 2017. So I wouldn't say -- I wouldn't agree that all the ratios is going down. Thank you.

Thank you, gentlemen, for your comment. You are doing a great job. And we have several few questions left, so let's continue. Another question says, increase in total stock level of Klaipedos nafta only for majority shareholder. Could you please share main reasons of it? And does it follow worldwide best practices? Same also for stock price level, return on shareholders. It seems that company's results are performing way much lower than the benchmark of NASDAQ as stock management is responsible for it. Could you please elaborate on it? Question linked to slides information in 24, 26 slide. Thank you.

Yes. So if we understood question correctly, you are trying to compare KNF stock, let's say, price level with the market. And it's hardly comparable because market price or share price depends on the industry in which you operate. And during the last year, it also very depends on the effect to particular industry of the COVID circumstance. So I think it's very broad answer. But to be more precise, we would like to understand -- or to clarify with what and from which angle of you we are compared. So -- and of course, we are responsible. But what was the part of the question?

Actually, I will -- just to give a short comment because I see that the author of the question is writing the broader explanation. So basically, this investor paraphrased the question. And maybe it will be easier if you would simply comment on Klaipedos nafta price development versus other benchmarked companies in Europe in this case.

We are not able right now to compare trends and effect of the COVID to, let's say, other terminal operators. So -- but that can be communicated separately if it is needed on later stages. It's a subject of additional investigation, so to say, and additional comparison. But what's seen, in general, let's say, companies which are related with the refining and the logistics of our chain of the oil products, they all are actually suffering not the best times. So -- and of course, market shares or stock level of the share price is reflecting that. So it's nothing new.

Thank you a lot for your comments. We have several few questions left. So let's proceed until the time is over. So another question would be, how does Klaipedos nafta see itself in the context of green transition? Is LNG infrastructure compatible with green gas alternatives?

Yes. So thank you. Very good question and highlights part of the presentation we presented that we joined a hydrogen format, Lithuanian hydrogen format. But in addition to that, I would like to assure that we have dedicated resources. We are contacting even our global partners on the development of so-called greener alternatives or less pollutive alternatives. And yes, hydrogen is one of the topics which is being investigated. We have R&D team created within a company, which is actually now working on purification of, let's say, our strategy amendment. But talking about suitability of our LNG infrastructure to so-called biogases, meaning biomethane. So it's -- this is the same methane just produced from degradable material. And yes, our infrastructure is 100% suitable for biomethane -- or liquid biomethane. And I believe this is really, let's say, a good perspective for us to develop in this area. Otherwise, talking about hydrogen due to the specifics of the hydrogen, meaning a much lower boiling point. The, let's say, technological abilities to adopt existing infrastructure to pure hydrogen transshipment, they almost -- they are almost impossible. I'm talking about FSRU. But nevertheless, to make some blending in the future, to add some share of hydrogen in the grid -- into the grid, those are the topics into which we are looking at.

Thank you for your comments. So as there is already 10:00 in Lithuania, we are stopping the registration of the new questions from the investors. Nevertheless, we have 5 more questions. So dear management, please be prepared. And thank you a lot for your comments and feedback. You've been talking for already an hour. So another question would be, what can you tell us about the progress in other commercial LNG ventures abroad? Thank you.

I can tell that we are successful with vessel project. Otherwise, as I said, we are targeting majority of LNG let's say, projects worldwide, subject region and, let's say, potential returns from the projects meets our appetite. And we already named the geographical, let's say, regions, which are in our target or focus right now. This is Europe, this is Far East and it's as well South Americas.

Thank you for your comment. And this question is for Mr. Silenskis. So all financial KPI, ROE and ROA are decreasing. So the investor is asking if Mr. Silenskis could comment more clearly on these figures.

Actually, we already commented on both of those ratios. One is related with the regulated asset base and increase of it in our balance. And talking about equity, as we said, let's say, the cash flow was positive. So we are accumulating additional cash. The profitability stays almost the same. And we are kind of keeping reserve for possible investments in accordance to our strategy.

Thank you. Another investor is thanking you for your presentation and asking you to comment on the debt. Do you see it growing within 3 to 5 years, or you aim to decrease the long debt? Thank you.

Thank you for the question. And yes, talking about our debt -- or long-term debt, we are mainly related with long-term LNG project. And as we already mentioned, we've got the approval of European Commission on a state aid for acquisition of a floating regasification and storage unit after 2024. And previously, it has been announced that we have signed an agreement with the Nordic Investment Bank on financing of this project. So till the end of 2022, we must select, let's say, FSRU, and yes, activate with Nordic Investment Bank, let's say, debt agreement or credit from them.

Thank you for your answer. And another question refers to the -- to your web page. So the question would be as following: Following company's performance and dividend policy, can shareholders expect same level of dividend size versus yearly return? And the investor is referring to the information from the web, your website, which is valid only until year 2020, according this official information. Thank you.

I'm trying to understand which question, looking in the list of that. 9:54, question 16 about dividend policy?

Yes. Yes.

Okay. I think there is some misunderstanding on this dividend policy. Since last time during last webinar, we was answering the same question. So we will check how it's presented. But in general, dividend policy, which is published, if -- to go into the document, it has no, let's say, termination period. So it's valid. It's in place. And as I already commented, no changes from the dividend policy or dividend payout approach planned from our side.

Thank you a lot for your comments. And as all the questions are answered, on behalf of NASDAQ Vilnius, thank you, everyone. Thank you, presenters and investors. It was a pleasure being with you today. Recording of the presentation will be available at NASDAQ Baltic YouTube channel. Dear gentlemen, thank you once again for the presentation and quite an interesting Q&A session. Have a good day, everyone, and goodbye.

Thank you, Emilija. Goodbye to everybody.