CELSIA S.A. E.S.P. (CELSIA) Earnings Call Transcript & Summary

Renewable energy of Celsia sounds generating clean energy and taking care of the environment. Does it sound to you? This is what we're doing at Celsia and electric energy is renewable and it allows us to protect the basins of our regions. Everything is connected. We have connected everything with the energy that you want Celsia, the type of energy that you want. It's possible to use natural gas to have energy in drought seasons. Tesorito complements energy with other sources. It replaces the use of carbon and it delivers clean energy to go through the scarcity that we're going through. Thermal energy is better for us in order not to go off in drought or dry times. Celsia is the energy that you want. This is what a healthy and happy community sounds like. You wanted energy that prosper that pushes for the progress of our community. We're moving towards moments of without outages, a community that is well connected to electricity is a community that moves forward. We make it happen at Celsia. Everything is connected. We connect everything with the energy that you want, Celsia the type of energy that you want. Good morning, ladies and gentlemen. I want to welcome you to this teleconference of results of the fourth quarter of 2024. This morning, we have Ricardo Sierra, Gustavo Piedrahita, the financial leader of the company, Santiagga corporate issues and Co regulatory issues. Right now, all participants are listening on Zoom and we are also having the broadcast in the X platform. We will have a space right at the end for your questions. So you are all welcome to this space. Thank you for joining this teleconference, and I give the floor over to Ricardo.

Hello, Gonzalo. Good morning, everyone. We look forward to a great conference of results for the results of 2024 -- we made it public the call for the General Shareholder Meeting. We will be -- it will be held on Wednesday, March 26, at 10:00 a.m. at Plaza Mayon Medllin. We look forward to seeing you all over there. In addition, we announced the proposal of 2024 profit distribution of COP 326 per share, which represents 5.2% increase compared to the dividend declared the previous year, and it already represents a yield of 8.9% for 155 basis points above expected inflation for 2025. And we hope that complies the expectations of our dividend that has always been sustainable in the long term in spite of the issues that we've had. In our different types of results per year, but this is a promise that we want to keep. The proposed profit distribution is equivalent to a total of COP 342 billion and such is going to be paid in 5 installments. This dividend reflects very clearly the resilience of our company and the solid performance of our operation in a year, which is harder every 5 or 7 years where we have El Nino phenomenon. I want to highlight that this challenging environment, our team was able to overcome these difficulties, especially the regulatory. And in 2024, we closed with revenues -- consolidated revenues of COP 6.1 billion, which represents growth of 9.3%. EBITDA added COP 1.5 million -- and let's keep in mind that EBITDA managed is reaching COP 2 billion. The EBITDA margin is of around 22%. We will get into details. Our EBITDA margin normalizes close to 30%, but there is a specific explanation because of the abundance of thermal energy and the net controller performance was COP 222 billion. This is growth of almost 15% compared to 2023. So great financial results of a very challenging year in terms of the regulatory instability that we saw. Our action, our share was valued in 24%. We kept 890 basis points above MSSI with that represents 15.4%. Taking into account dividends, it is an important highlight that the return for the shareholder was 36.2%. Additionally, within the share buyback program approved by the assembly, we bought COP 79 billion, which corresponds to 1.86% of shares. We are making progress in closing the fundamental value gap in the communicated key information about our strategy as asset managers. So the market takes into account all these different dimensions and include them in their investment decisions. Today, we will present a program that is called Energisa , which aligns all our value creation initiatives with adequate communication, especially the ones that are underway looking to 2025. And we hope that this communication will reveal clearly the fundamental value of Celsia in the market. So let's watch a video where we are going to launch our influencer, Esteban Piedrahita. Watch this video, and we will have a conversation with Esteban about the different points listed in our agenda.

Hello. Today, I want to present, introduce the Energisa program. What is it about the program that we, as a company, are embracing. It has 5 initiatives. And what we want to do is to help the market to continue creating great value. Our share has a value potential that is huge. In order to help in that sense, we want to help you 5 important things, financing strengthening. Our first initiative -- there is nothing more important than making the equity of this company larger, respecting the assets that we have is by reducing our debt. Today, we want to be below COP 4 billion in debt. This is a little less than COP 1 trillion compared to the debt that we closed in 2024. We will be able to do it with the assets that the organization has right now, respecting the future cash flow, value generation and EBITDA. If we manage to do this in this initiative, we will be revealing more than COP 1,000 per share. And those come from having less debt for the same level of assets, but it comes also in the explanation of those COP 1,000 will create less financial cost of around $100 billion, COP 1,000 per share today is almost 25% more than the cost of our share -- the price of our share in the market today. Today, I am at Nova, the control center of all of our Colombian operation, displace brings together technology process shift and works in the many of our visitors. This is almost unthinkable. This is important to reintroduce, reimagine [indiscernible]. The strength of technology, thinking out of the box and acting differently will be an important margin to reduce our OpEx in COP 165 billion for every one of our shareholders. That means COP 730 per share that we will reflect in value. That is the purpose of our initiative, [indiscernible] in the context of Energisa. Our best kept secret is the platforms and entrepreneurship. One part of revealing the value of this company means revealing the value of those well-kept secrets. This year, we intend to link capital and new allies to those entrepreneur initiatives. There is a value that we don't put in there, but the market is bringing forward. We bring those $155 million that will mean COP 370 per share for our shareholders. That is our third energy initiative. We were telling you last year that Celsia today has another Celsia, which are the assets. In the model of asset management, we want to guarantee that the new capital will comply with our initiatives by $360 million, at least $360 million, which are going to be important to build assets of above $1 trillion, and that will bring new sources of income for the organization. And of course, the base of all of this, we will continue with our program of share buyback. We will continue with those BRL 300 million of buyback that the assembly approved and that last year, we were executing. We will continue doing that this year.

How did you feel there? Give a live to our video. This is an initiative that we are launching in the market, which is similar to what our cousins from Cementos Argo launched with their spring program. We call it Energisar, and this is in order to communicate clearly to the market the different initiatives that we are involved in, the impact in fundamental value of the share, which is very relevant here, Esteban. And I believe that it's going to allow the investors to do better follow-up to what we are doing and identifying the gaps. Further ahead, we will also reveal the value of the company with an exercise of fundamental value during this conference. So let's go through the 5 points. The 5 -- the first one is a strengthening of the financial infrastructure of the company. We're going to increase -- what is Celsia doing that? If Celsia is a AAA company, we do not have problems in why are we starting right there?

Hello, everyone. I haven't had a chance to say good morning. There are 2 things right here, what we have thought around the initiatives of lowering debt is twofold. The first one is we have done a lot over the last 8 to 10 years to grow the company. And we know that debt because of many things that we had in the pandemic time and the 2021 strike we have those issues. We want to lower debt in order for the value to reveal. We know that we are AAA, and we have huge power. And when we manage that power and we decreased the debt in $1 billion I have 1,000 as equity. And now the mortgage will be much less. It's just as simple as that. That is going to help push one of the variables that we are working the hardest, which is that we have a lot of value in the results. We will talk about the share. What we call energy service, we're going to change the name again in this teleconference, but that's the most important metric. Lower the financial costs will help us push the net income with other information that is more in line with those points. But the block #2 is that we want for the organization at the end of this year to end with strength and financial vigor, the phrase was coming. What we have revealed in -- many of the teleconferences, the growth of demand is going to bring a great opportunity ahead. The best way to be ready to capture that opportunity of growth is by being light in terms of debt. So we are targeting 2 things: financial flexibility to find the opportunities that are always under the world of crisis and COP 100 billion. The financial solidity has enabled us to explore other opportunities of growth that are complementary now, and they open new windows to receive new income in the mid and long term. Let's see what we have and what we call the assets in escalation. -- Escalation businesses are what we call investment platforms. This is where we see our own capital as well as third parties. At the closing of 2024, the assets work here were about COP 4.4 trillion, and they created an EBITDA of COP 629 billion. And they enable a very interesting growth with capital of very qualified allies. We have Caoba, the transmission in Colombia. We developed 12 projects in 2024. We added COP 2.7 billion of assets, and we will move -- we will overcome. This is the third transmission Energy, the solar farms at large scale grew 46% of the years in the income. This becomes like a snowball. It has around 600 solar megawatts between what we call operational and advanced stage of construction. And we hope to go above 1 gigabyte over 3 years. Laurel, which is the one of the photovoltaic systems, those are 134 systems, 51 megawatts of installed capacity, and it's in different stages of development, another 56 development. Our partner, Bancolombia is helping us achieve our goal of 100 megawatts in half the time. This is a great energy efficiency company. When you consider all of these initiatives, it's important to understand that the value of the company needs to be contemplated in a sum of parts, including Ca Colombia, the platforms, Mer Electrica, Central America and the financial assets that we have that are different from operational ones. When you look at everything we have and you do a value exercise between what we have between Cost Chara and Escalar, the company has an average equity of COP 6.1 trillion and COP 7.4 trillion. This means that the fundamental value of the company reaches around COP 6.5 and COP 7.5 per share. It's clearly more than double than what it is in the market. And if we add initiatives that we have just introduced in the Energisa program, it's clear that the company should be by the closing of 2025, a fundamental value of 8.5 -- sorry, between 8,500 and COP 9,500 per share. The Board of Directors is pushing for us to communicate all of these to the market and for them to make the best investment decisions when we see the share of the company. There is another horizon is the horizon of development where we have innovative avenues of growth, producing exploratory stages where we have based the future trends of the sector will allow us to pioneer in disruptive technologies. And when we have the renewable energies, nonconventional renewable energies, batteries, green fertilizers that we have developed for the last 3 years and digitalization. That type of thing that you know requires lots of experiments. They need time to see whether they are actual good proposals initiatives. The assets that we have in Cost Chara and Escalar, everything is included of what our comprehensive strategy represents. We want to be a good management, good manager, asset manager in the regions that we operate. And that closes this chapter of Valeo. Moving on with Esteban to the detailed financial results of the last quarter of 2024 and to see how we close this 2024 with very good news. I'm going to give the report of the prices of stocks. Remember that the analysis is available in our website for our investors and all the information that is relevant is published here. We are going to go through the quarter. I know you always want to know how well we did during the quarter. The income of the quarter were COP 2.0 trillion. This is 39% more of generation and the positive deviation on reliability as a whole, COP 204 billion. At the end of the year, we show the prices of scarcity that we didn't see on the first part of the year when we had El Nino phenomenon because of the accumulation of the 2024 factors. We also sold more energy, both in contracts -- in commercialization, we registered 5% growth explained by higher rates in the regulated market and a greater demand in the 2 markets, the effect of high temperatures and the incorporation and transfer of new clients. In the use and connection of networks, there was a decrease of 8.2% compared to the same quarter of 2023, explained because since 2024, the income from Tuluviejo will transfer the Caoba platform from other operational services, COP 292 billion what we had in that area. This is 109.7% above the fourth quarter of 2023 due to higher sales assets in the BOT contract with the Caoba and Laurel investments. In Caoba, we had sales for COP 163 billion and Laurel worth COP 14 trillion. Consolidated numbers were COP 6.8 trillion in 2024 as of income, that is 9.3% more than in 2023. On the sales cost for the quarter, this reached COP 1.74 trillion with an increase of 41%, driven by higher generation costs, increase of energy purchases and the higher costs associated with an asset sales of Caoba and more cost of everything associated with fuel and the sales of the sales of Caoba and Laurel because we sell these assets, we need to go through the variable costs. So far this year, sales costs recorded COP 5.33 billion, which are 21% more. Here, not in the income, but in the cost is where you actually see the effect of El Nino phenomenon in our performance. The larger purchase of energy in our energy balances when they are shortened, we need to comply with our contractual obligations. This is when you actually see. The administrative expenses were of COP 117 billion with an increase of 30.5% compared to the same quarter of the previous years. This increase were totaled of COP 390 trillion, out of which they were product of the variation. The EBITDA was COP 355 billion with a decrease of 19.3%. Remember that in 2023 in the last quarter, we had a spectacular growth with peculiar conditions. And what we have right there is conditions of El Nino and the El Nino market. That was the impact and the EBITDA margin was up 17%, influenced by the amount of income that we do of transit to platforms and the activity of sales of assets. EBITDA went to COP 1.49 billion 19.4% compared to -- decrease compared to 2023. Many variables remember 2023 EBITDA of the Central America operation in our figures. And the traditional generation distribution marketing business contributed COP 1.42 billion to consolidated EBITDA for the year and the asset management business contributed 72.9%. Total managed EBITDA includes consolidated and platforms almost were COP 21.6 trillion. This is compared with other net expenses of COP 79.6 billion in other expenses associated with the sales in Central America. In the accumulated of the year, we have other net expenses 9 billion, that is 50% less than in 2023. Net financial expenses reached COP 165 billion, 11% less, and this is an important part in the cost of debt. The total of the year, we moved to reduce 29% in that area, and we closed in $617 billion. In the accumulated, there were 119 million in provisions of taxes. I want to highlight the fact that in 2024, we provisioned a capture of COP 75 billion of tax benefits for investment in our nonconventional investment energy that we'll show here in April. This is the highest tax benefits that we have had in the history of our company. Net profit for the quarter was COP 58 trillion. And during the year, 21.9 billion during the year. In the conversation, I told you that we would be talking about this topic. It was of 1372 in the energy, that is the only one where we measure this indicator-- sure the WACC calculated of 1201, almost 200 basis points as a difference we capture in terms of value, then that is translated if you want to see it in EVA of our COP 131 million of EVA in 2024. In terms of debt, the company closed with leverage of -- the average life is in 417, and we closed with a consolidated box of COP 316 billion. And with that, we went through the main numbers.

Thank you, Esteban. And now in the wrap-up, we are happy having moved with very high grades to the global. We have 85 points out of 100, 4 points more than the previous year. Congratulations to Santi Arango. He is our leader in that area. This is very important. We're the first company in Colombia in that index and #9 globally out of 263 evaluated in the sector of electric and utility. So this is amazing that Celsia achieves good financial results, and they have such leadership in sustainability. Very good. So here is where we open the floor for questions and comments and to talk with you a little bit about the whole message of our call.

[Operator Instructions] This is a question from [indiscernible].

What is the status of Porvenir 2 and whether the same expectations of sales of reactivations are the same. This is in the east of Antequa Santiaguarango can tell us about that, about the status of Porvenir 2 -- thank you, Ricardo.

The process of Porvenir 2 that has suspended the development... In September last year, and the file is in the court for decision. No one can actually appeal this process. So we are expecting this process to evolve in the council of the state, and that's where we will take actions of whether to move ahead, sell it or make a decision about it. We are expecting the final decision. For those who don't know it, this is an electrical project in Eastern Antioquia. This is a project of 370 megawatts. And unfortunately, because of a legal process, it was stopped.

On -- or as in the mid and long term, what is the strategic objective with the Interpimentas to sell them, to develop them with some partner or do you do what?

It's a good question. The Interpimentas have... Different characteristics. I will talk about the third one we call energy efficiency. For example, today can consolidate all services and products that we have beyond the accountant, beyond the counter. I will give you an idea of what types of assets, solar energy generation in dedicated farms, light air conditioning, compressed air, heat pumps, thermal districts and many other types of assets, also electric charge, all that is going to be in a big vehicle of energy efficiency. When you consider that as a company, you are selling over COP 330 billion a year. When you see everything that is happening in the world in terms of decarbonization and people who are interested in investing there, that is the great frontier that touches all of our industrial and commercial clients, the ones that we have in the region. So we are very hopeful with that. When you create that type of company that was incubated in Celsia, anything can happen. You can bring partners or we can have it here and look at it as if it were a private fund -- private investment fund and with this an offer in 5 or 7 years, we will do the best for our stockholders. Look at Celsia with a chance of not being a buy-and-hold, a traditional buy and hold, but lots of its portfolios and its assets can be rotated that in terms of EnerVid and optic fiber for homes. Esteban, would you like to make additional comments about what we think about our interptimentas?

The last thing, it depends on each new enterprise, it has its own route to materialize and capture the greater possible value.

Ricardo Santiago Rafael Castillo asks these shares of Energisar, what type of horizon do they have 1 year and the projection of cost of sales for the 2025 would have a decrease because the El Nino phenomenon would not be understood as Esteban, you explained it. And what is the projected reduction of that?

The first one is about the horizon of Energisar. So I am the influencer of everything. Rafael is a good question. The goal of these initiatives is actually the one that has a little bit of a broader horizon is [indiscernible]. We will give you more news about how our think tank is moving forward, but we'll be materializing all this. [indiscernible] will be completely active in 2026, but all of these initiatives that we are letting you about of [indiscernible] are 2025. This is our custom told us, this is like E 1.0. This is the part that Stan applies. And the second question, very quickly, Gonzalo tell us that we are answering.

The variable cost needs to go down at least for the generation -- energy generation.

How much Rafa?

We are going -- we are overcoming the condition -- the critical conditions. The volume of the decrease. It depends on how the system is done and how much generation we will need to go through to the summertime or to the dry season. It will depend on the real conditions that we achieve for 2025. Regulation about the resolution [101066 and 0.69] -- what are the impacts in the short, mid or long term for Celsia and for the market?

My proposal is let's set up a chapter for regulation. Here he is more specifically for that. Let's move together to the next one, and we will -- we'll talk about the regulation questions later on. Thanks for all this information. Four questions. Why the increase in debt for 2024? Second, the company has financial covenants with indicators of debt. Number 3, I understand the objective of reducing debt and taking into account that. How would that process of reducing debt without having an impact in the cash flow? And fourth, what are the perspective in terms of value in the Peruvian market? Why more debt?

We increased our debt, the audit market COP 61 billion. We will begin with the one that we have repeated over and over again, the one that has effects around COP 22 billion is the delay in the payments of subsidies that comes from the delays beyond the cycle of working capital, COP 230 billion. Another 1/3 of that corresponds to the balance that we have for asset development for platforms. We had delays as to what we were expecting in terms of cash flow. We have COP 100 billion sales of assets that we did at the end of the year, but didn't pay. There are like COP 100 billion and another almost COP 150 billion that were ready by December as we expected that should be doing transfer in this quarter. We have like another 1/3 of those COP 200 billion. And the other 1/3 of that amount because we have been supporting the development of Peru. Just as Ricardo said, we are in the process of the fund, especially because of the importance of Carabelli to move forward decisively in the case of Peru, we have contributed cash flow for Peru. And those don't belong to our support to the fund. Those resources that are around COP 200 billion should also come to the immediate assets of the company. These are big issues, but that are well identified in our exercise. That COP 1 trillion is reachable, is doable. It's not easy, but it's doable. And the interesting thing is that what is the impact of that in our CapEx and our cash flow, the decision of the company of expansion CapEx of the business in Colombia other than platforms, it should be taken to its minimum necessities as a CapEx of reposition to fill. Those should contribute to the cash flow. If you see our capital -- working capital last year is that our inventories went up a lot because of the concerns about the supply chain. We had a lot more conservative view in terms of the inventory management. This year, we will be able to use resources that come from the line of inventory in our needs of working capital. We're going to give you reports every 3 months of how we are doing with that reduction. We want to achieve all of that without having an impact on the quality of service. In terms of covenant, in terms of the huge debt of the company, they don't have covenants because they are in the program of ordinary bonds. That's senior debt in some of the exercises that we have done. But in none of our results, make our covenants. There is no concern in that aspect. Ricardo already mentioned that. I did not understand very well the question in terms of the value for Peru. I will repeat.

How do the investments see the value when we create capital funds?

The capital fund that we want to create are going to be $300 million of commitment investment. We will sign that with the investors. That will help us to deploy investments. Those are not going to be consolidated in our numbers. Those need a manager of a capital fund. The first one, we are going to see it from the standpoint of income of what we call the management fee. Those are about $4 million per year. And the second is we are going to see every year how our position how the value of the fund increases. That's the first time that one of our management vehicles is going to have an actual marketing market exercise. Lastly, in liquidity moments, just as Ricardo said, the year 7 and ahead, we will see the carry. We should all do the thesis work of what our minimum is with the investments. That's why -- that's how Peru is going to look like in our numbers.

Now another question, a live question. Katherine Ortiz from Corredores Davivienda is going to ask a question.

I have a couple of questions. The first question, just a moment ago, they were asking about the time of these shares that you talked about today. It's interesting the topic of [indiscernible]. Those COP 165 billion in costs and expenses are this year plus the other year. And from then on, those savings are going to remain there? Or how can we incorporate and understand better that? And is that effect represented by the sum of platforms and everything? -- or what companies, Celsia SA, where do you see the savings of the COP 165 billion? And the other question is to add to the next question that we have in terms of regulatory issues. I would like to have an update in terms of regulatory issues. What has happened with the payment of subsidies, the report that says that you have been recovering from tariffs. I would like to know what is the balance. And we see that there are companies that have been impacted that haven't paid actually their debt. I want to know whether Celsia has receivables that is exposed. And also among those things, I don't see the intention of diversification, geographic diversification. I know that you have the activities in Peru. But earlier on, I heard that the company wanted to diversify geographically. With everything that we see in the sector in Colombia, it sounds like it would be a lot more relevant. I don't know whether there is a specific reason why you are not conceiving this within this plan or -- and whether you would like to tell us about that.

Well, that's it so far. Very good questions. I will start with the one of R. And I will let Carlos Solano to set up his page of regulation. The energy measures of the program that we are launching. All of them are due for 2025. Rimainar, which is OpEx. -- see how we are facing that. The first installment, that's what Esteban says. This year EPA in Celsia Colombia is very important that clarification. Celsia Colombia, which is like the aircraft carrier, OpEx did not grow there. There are savings there of MXN 160 million this year. The [indiscernible] that we are proposing is an additional one. Of 165 million savings that should be presented in the data of 2026 for your financial models. How are we going to achieve that? As of June, moving into the capillarity of the operation in order how to capture in order for you to see how the seriousness of how we are dealing with this. All the teams should configure the way they are going to be able to do what they need to do in order to add to those 165. From now until June, all the initiatives need to be well planned, execution plan and so on. Many of them will be executed in the second semester. But they will be seen in the 12 months of 2023 completely executed and reflects in the execution of costs. And as you see -- as you said, they will be reflected in Celsia Colombia, costs and expenses in Celsia Colombia. And now geographic diversification. In terms of geographic diversification, we clearly sold the Central America assets. We are opening the Peru operation. And what is coming in terms of geographical diversification. Energy efficiency starts to take a more important role in many countries. Energy efficiency is going to be present in Central America. We're starting with energy efficiency, 2 additional board frontiers. One is Peru and Mexico. These are all the products that I mentioned beyond just the counter, different returns. We expect to give them a lot more color next time. We will have additional geographical diversification from Peru. And the NRB company, which is our digital commercialization is like our, our platform -- payment platform like fintech in the energy sector is going to be supporting with this energy, the commercialization that we are implementing in Peru. So those are the first steps that we're doing in geographical diversification with the entrepreneur operations. That's what we have in terms of divers.

Now in terms of the regulatory chapter, what about the subsidy payment, the tariffs and the air receivables? -- under resolution 16. I will begin with -- in terms of subsidies as a country, we closed with a debt of around COP 2.8 trillion. At the beginning of this year, the Ministry of Energy and Mines create a system of COP 200 billion, and they did another payment that we understand is going to be of about COP 560 billion. With those, the Ministry this year has paid COP 660 billion, the Ministry of Finance... Has committed... To pay COP 1 trillion. Our calculation is that we have a balance of COP 6.6 trillion. But if they told us that we have out of the COP 60 to go to COP 1 trillion, our monthly accumulated in our CMR COP 330 billion, we are going to accumulate more than what the government is contributing. This is highly concerning in this sector. We try if these payments are positive from the Finance Minister, we want them to increment these payments in order for debt to go down. In Celsia, the accounts that we have here, the balance that we have after that payment at the beginning of this year, we have a pending balance of COP 330 billion. Last week, we had COP 23 billion payment, and we cross around COP 26 billion in terms of subsidies. And we continue with a balance of debt of COP 230 billion. In terms of the tariff option. As of January, we have receivables for COP 334 billion, COP 330 billion correspond to the Tolima and 4,300 to the Tulua market. In Tula, we expect in the second quarter of this year to complete the recovery of those balances in Tolima. We are doing that in a more diluted manner over time, and it's going to take us a little longer to complete the recovery of those balances. Now the question about the resolution, 0.66 of last year and 0.69 this year. Those are resolutions that basically modify the scheme of the charge for reliability to the price of scarcity. One is the superior -- it's just the same as today that applies for the thermal plants that use as fuel, natural gas and liquid fuels. And the other one is the inferior scarcity, all renewable and carbon and COP 360 per hour. But with the indexation in those resolutions today, it's in COP 299 per kilowatt hour. This is a negative change for the sector because it disincentivize the investment in renewable technologies. It disincentivates the participation of buyers in the contract market, and it distorts the working of the market because it gives a signal that we need to create water to generate energy before using natural gas and liquid fuels, which is the logic of what the market -- how the market should operate in scarcity situations. Recently, the regulatory agency for gas and energy, they are proposing to increment that inferior value to a value of COP 540 per hour, which improves a little this situation, but the fundamental effects remain there, and there is a need for a greater magnitude adjustment. These changes would apply for the larger plants, the ones that have power of only as of December 1, 2028. From here to that date, it is going to be just volunteers. We want to apply that scheme. We are analyzing the situation. We are in the process of analysis of response. As I just explained, that change is negative. For the minor plans, this modification doesn't have -- doesn't carry a greater impact. As a summary, as a company and as a sector, we will continue having dialogues with the government for them to understand that these modifications are not good or not beneficial for the market in order for them to put in place the necessary adjustments so that those impacts -- negative impacts won't materialize. Let's see whether anyone wants to -- wants clarifications about any other points, but I think it was highly comprehensive, all the regulatory issues.

Katherine, you are raising your hand, please.

Yes. I only have one question and it is what is being talked about the new formula that will go into force in March this year. Is the incorporation of 0.69 or an additional one?

We've had confusion because of the way this topic has been expressed. The tariff formula, which is the way how the tariffs in the sector are, the only form that is being modified is the price of scarcity that has to do with the purchases in the stock exchange. That would not happen immediately, but in the midterm as the norm is applied. The application is voluntary from now until December 2028. But that is not going to have a significant impact in the short term for the prices. It is the application of 0.69, yes, great.

A question from Juan Muñoz from BTG Pactual.

This topic is important because it has come several times. Could you give us more details about the leverage of 0.6x and repeat the plan that you have to reduce debt?

How did we get there? We already explained that. It was all about -- Ricardo explained the multic-causal plan. The cash flow or the organization, Ricardo already said that because we are rethinking our own CapEx, and we are prioritizing value and leverage. Secondly, we said that we had a cash flow that we shouldn't capture in 2024. We didn't do it and the idea for the company is for that box, not to go somewhere else, except to lower debt. We have those 2 big blocks in order to deleverage. Obviously, there might be other opportunities, associated opportunities with new investors that will help us have a CapEx so we can have more resources. So those are several of the elements of how we're going to leverage this. For our future call, investment call, this question has emerged several times. Probably they don't understand very well how we are going to achieve this decrease of COP 1 trillion of debt. It's important to mention the most interesting milestones that we have throughout the year. So they can also include those in their value scenarios in terms of that initiative, -- we will do follow-up to the 5 variables in the teleconference. Maybe we could incorporate that additionally to this call.

[indiscernible] asked, what is the current state of the energy projects, solar energy in the country and the horizon, the time window.

We have around 300 megawatts in the farms, solar farms. We are building another 300 megawatts that will be functional in the next 12 months, the large farms that are ours. And we are also waiting for what we call, which is advanced development of other projects to be able to develop between 500 and 600 additional megawatts in our solar platforms. We expect to be able to deploy them in the next 3 years, more or less. What make is giving drop-by-drop point of connection. And we don't have -- and that's not very good news in terms of photovoltaic issue. What we see is that there is very low approval of new projects as if it was impossible to connect more projects in this country. We are surprised less than 5% of the approvals that have been requested in every point of connection, and they have delivered this thing little by little. There could be a great bottleneck for the generation the distribution generation in Colombia. The 300 that we have under construction, 250 extra and others that depend on connection points that we hope them to be allocated. That is what we have in terms of the solar component.

Now from Ricardo Sandoval from Bancolombia.

I'm sorry about to insist on the debt, but I would like to have 2 clarifications. The first one is you talked about the increase of the COP 600 billion this year. And I would like to know that deleveraging plan, do you expect the government to pay the balance for subsidies that they have for COP 230 billion. That's the first one of whether you expect that payment to happen in order to lower that leverage that we have. And the second one in terms of the debt, and I am sorry, I apologize if probably I missed one part of the call. I think Ricardo said that there is a decrease in CapEx of the platforms and an optimization of the working capital. If that's the case, I want to know whether this is creating cash flow that will enable you to deleverage.

Thank you. I will try to answer your questions. It's good to say hello to you. To give you clarity, we are waiting for the government to pay its subsidies because they owe us that money. I will explain the mechanism of subsidies, which is very important. Every day, we are giving receipts to our clients. We are talking about 15% for the Social level #3. We take that cost of working capital, expecting for that subsidy that we already gave, you expect for the government to give it to you, and we are expecting to receive that money. Within our financial plan, which is a very different thing, we have different scenarios. The reduction as if these payments were late. We want to achieve the reduction of strengthening as the number -- point #1 of our assess in order for you to have that clear. And the government needs to pay that money because otherwise, they put us in trouble just as the electricity distribution issues in the country. And about CapEx, I want to be clear. I'm sorry if I weren't clear enough, if we weren't clear enough. We have platforms, accelerated growth, Caoba, they continue with their growth programs, and they are incorporating new assets in construction mode. There is no CapEx mode, where we are limiting CapEx is in Celsia Colombia. That's our operational aircraft carrier, bringing it to its minimum necessary where we won't compromise the quality of our service. We will continue serving everyone properly, but not bringing any expansion CapEx of very, very small compared to the levels that we used to have. That gives us a margin, an operational margin to have a cash flow where we can actually bring down debt. And that is the explanation that we were giving, but it's important not to confuse the platforms. The platforms are our growth vehicle and our yield vehicle, Celsia Colombia, where we handle them separately and strategically, very well differentiated. Let me complement something that about the question is the working capital. We mentioned 2 things. The first one is that in the CapEx plan, we are going to take advantage. It helps us in terms of cash flow and execute assets. We're going to use a lot of the inventory that we already have. The inventory that was built over the last years of being conservative and to be cautious in terms of supply, we will put that for the growth of the organization. This is not going to use CapEx. And the other part of the working capital is under the head of development and construction of platforms that is the assets that we want to recover and that the platforms because of different reasons, haven't paid. So those are 2 working capital blocks to contribute to the best cash flow and how to reduce debt.

There is a question from Juan.

Two questions actually. In the past, in past assemblies, we approved donations to the foundation of the matrix. Do we have an estimate of the donation? And can we ask for the foundation to create campaigns for the freedom of enterprise and institutionality.

Thanks for the question. Yes, we will keep our level of donations on IPC. Yes, exactly the same as last year, COP 6,530 million for the foundation.

That's great. We are fans of enterprise freedom and in many of our publicity campaigns, we have tried to showcase those clients of ours that basically 90% of our commercial businesses are medium and small companies. And we highlight the role of those entrepreneurs. We have had many companies, Gonzalo. Can you remind us of some of the slogans that we have?

Clearly, they are in the direction. Looking at that client base in Vidalcaucantolima... A company is a place where everyone wins. We have that type of slogan, win-win. Highlighting the work that we do with companies when an enterprise wins are bid and another thing, our Orange directory. We put at the service of our entrepreneurs, our social media. This is an ecosystem that renews through Facebook, where we have talks, webinars and initiatives, training initiatives, and we take them into account as suppliers. This is a very interesting ecosystem because we are working around those MSMEs. There are 2 or 3 activities, all activities. that the private sector will be able to work freely in terms of the trade, we sent a lot of messages. We are in several sectors of energy in, and we are also in another one, which is less known, which is the Private Council of Competitivity, where we work hand-in-hand with many entrepreneurs, business men and women led by Maria Fernanda Masca where all the competitivity issues are worked in order to eliminate regulations, simplify everything and to give the ideas using data and arguments that will help these decision-makers to make the best decision. This is a silent work that is done from the Council of Competitivity. And there is a think tank that is called lever tank that we are also supporting. We have supported some of these initiatives, such as what we call leader labs, training sessions for young people in terms of economic freedom. We have supported some of their campaigns. And we believe that is part of our responsibility. The environment, the protection environment to private property and economic liberty allows us to thrive.

Thank you very much. Lastly, next, there is another question about the margins. Last year, there was a drop from 29% to 21% because of the cost of fuels. Is there a strategy to improve the profitability in that sense and to improve the operational margin?

Yes, we have what we said before. The margins are affected by El Nino and the amount of purchase of fuel and the purchase of energy. El Nino hit us hard because we do not have energy. We're like an water aircraft carrier. And when we -- El Nino comes up, we are buying energy. And that, of course, has an impact in our margins. The first thing is to try to abandon that extreme condition that we saw in 2024 should help our margins recover to more normal levels. Secondly, reimagine these margins because we are talking about issues that will contribute the organization's OpEx to go down. And thirdly, we have a lot of short margin, but we contribute a lot, and you see that in the income, the transfers of assets and the recharge of platforms, those values have an important impact in our margin. And the cost -- we have calculated that, that can cost between 400 and 500 basis points. It's only the exercise of selling assets and the income of platforms for further transfer. If there is a plan, going back to normal conditions should give us return to margin in a more stable conditions and also doing the exercise of eliminating the manager, especially development and commercial representation.

Right now, we don't have any other questions either on Zoom or X.

Great. Thank you so much for joining us for this report of results, and we wish you all a year full of energy and let all of us energize. Thank you very much.

Thank you very much.