CEZ, a. s. (CEZ) Earnings Call Transcript & Summary

Dear ladies and gentlemen, welcome to the conference call of CEZ Group. At our customers' request this conference will be recorded. [Operator Instructions] May I now hand over to Barbara, who will lead you through this conference. Please go ahead.

Good afternoon or good morning, everyone, and welcome on CEZ conference call for investors, which is today focused on the introduction of our updated strategy, which we call Vision 2030, Clean Energy of Tomorrow. I am handing over to Pavel Cyrani right away.

Ladies and gentlemen, good afternoon, good morning also from me. I am glad we can have this talk today. It is, in a way, unique in 3 ways. As Barbara said, we are introducing an updated strategy under the headline, Clean Energy of Tomorrow. Secondly, unlike for most of the other conference calls, we will be detailing out our business and financial plan, not only for the next year, but for full 10 years until year 2030. And last but not least, apart from me and Martin Novák, our Chief Financial Officer, we have a special guest today here with us, which is our new ESG Director, Ms. [indiscernible], who will report -- who is reporting since the beginning of July directly to CEO and will be instrumental in achieving our ESG goals and ambitions. Now the presentation is quite comprehensive. It has 4 parts, as you can see on Page 2. And most of you are quite familiar with parts 1, 2 and 3, which is our historical performance and this year outlook. So therefore, we will go through these parts rather quickly, and we will focus mostly on Part 4, which is, as I already outlined, our 10-year outlook, both in terms of development, financial results, ESG goals and commitments. And we will spend most of the presentation time on these topics. Now some of you are following the presentation with us on the screen, some of you are just listening to the call. So we will, at times, mention the page numbers, so we have everybody fully on board. But as I said, for the parts 1 through 2 and 3, we will really go rather briefly through them and leave the open questions for the Q&A session at the end. With that, let me start with Part 1, which is basically a CEZ group overview. Just a couple of things at this moment. We are the tenth largest utility in Europe, 12th largest in terms of installed capacity and 15th largest by market capitalization. As you -- as we have discussed before, we have refocused our geographical footprint and with the updated strategy, we are focusing mostly on the core Central Europe with Czech Republic being our key and domestic markets and the surrounding countries being countries where we achieved some parts of our strategy and our growth. In terms of Czech Republic, we are fully integrated from mining, all the way to the supply. And yet, what makes -- what I would like to highlight is that the 2 key pillars of our financial strength come from CO2-free generation, mostly nuclear. The EBITDA contribution of this business is about around 42% to our results. And then the networks, the distribution, which has a share of about 31%. So these 2 parts together make up 3/4 of our current results, and they are instrumental for our success in the future under the Green Deal assumptions. Already since our strategy update back in 2018, we have decided that we want to lead the energy transformation in the Central Europe. And now with the Clean Energy of Tomorrow, we are doubling down on this strategy. We are accelerating it and setting even more ambitious goals. Obviously, this transformation come across all 4 key segments, starting with generation with the goal to transform electricity and heat generation to 0 or low-emission generation, including a growing share of renewables. Secondly, distribution with a focus of continuous modernization and digitalization. So distribution is basically the bloodstream of the growing smart world of energy generation and consumption. Thirdly, retail, with the focus of being the leading electricity supplier of energy, which both supplies the commodity, but also helps to decarbonize the Czech industrial base. And last but not least, our energy services area, which includes also the centralized generation and heating across the markets where we function. So this is a really CEZ Group in a brief overview. And I will hand over to Martin, as I mentioned already, our Chief Financial Officer, for the performance overview of CEZ Group.

Thank you. Good afternoon, good morning, everybody. I'll continue with our performance in general and then the one related to generation. So if you look at Slide #7, you can actually see our key highlights for -- and targets for 2021 plus actuals, both for 2021, our EBITDA is CZK 57 billion to CZK 60 billion. Adjusted net income, CZK 17 billion to CZK 20 billion. We maintain a high dividend payout ratio, 80% to 100% of adjusted net income. For 2020 actually, the dividend that was approved on 28th of June is CZK 52 per share. So almost a record high compared to previous years, as you will see on the future -- on later slides. Strong balance sheet. Our net debt-to-EBITDA as of 31st of December was 2.2 and our target is 2.5 through 3. So you will see later on, we are actually able to maintain this healthy proportion with fulfilling our strategy. Generally, one of the things that we are proud of is that we are able to meet our targets very, very precisely, very closely in the past many years, and we are showing just a few years, 3 years, actually 2018, '19 and '20 on Slide 8, where actually our projections or the midpoint of our guidance is very close to actual numbers, as you can see on those slides. So our ability to predict our results is extremely high. That, of course, provides a lot of confidence to investors building their models and doing their calculations. On the next slide, you can see our high dividend payout ratio. It used to be, 16, 17 years ago, around 40%. That was actually the time when we started to pay the dividend. And it was moving from those levels through 50% to 60%, then 60% to 80% and now it's actually 80% to 100%. For 2022 -- 2020, you can actually see 122%. This is driven by the fact that we disposed our Romanian assets, and we shared part of the cash that we received as of 31st of March with our shareholders, and that's why the payout ratio is a bit higher than 100% for last year. I already talked -- touched on our net debt-to-EBITDA ratio, meaning the quality of our credit. We are a notch above European utilities from S&P. Our outlook -- our rating is A-. Moody's rating is Baa1. Both of them are stable outlook. Our net debt-to-EBITDA was 2.2 as of the end of the year and target is 2.5 to 3. So that's the main strength, I think, of our group going forward, especially when we want to grow in new segments. Our financial performance and health was enabled by our new strategy that was launched a few years ago and comprised of 4 elements. As you can see on Slide #11, it was efficient operation of current portfolio and optimization of the assets we already have; modern distribution and customer care; development of new energy, meaning ESCO in the Czech Republic, Slovakia and also ESCO services in Europe. In all of those areas, we were successful and that's why our financial performance and the dividend available to shareholders is on the levels where it is. We also moved ahead with our divestment strategy. Now I will cover the first part, which is actually efficient operations and optimal utilization and development of our generation portfolio. It's worth mentioning that we got actually to the level of 30 terawatt hours of nuclear power generation constantly now, which is important because nuclear generation is a significant contributor into our EBITDA and is emission-free, which is one of the reasons why it is so profitable. On Slide #13, you can see actually power prices movement, which is very positive from our point of view. So as of the end of June, we were actually achieving EUR 74 per megawatt hour on electricity and EUR 53 on carbon credit. Generally, EUR 1 movement in carbon credit is moving power price by EUR 0.5 to EUR 0.6 per megawatt hour. So generally, the increase of power prices is good news for CEZ Group. We often get actually a question. Is it not harming you too much because you have part of your fleet -- or significant portion of your fleet in lignite generation? But no, actually, on the next slide, you can see that it could be the case a decade ago. But now it's not the case anymore. And actually for simplicity, you can take into your calculations a factor of EUR 1 increase in carbon credit price as CZK 320 million increase in EBITDA, something like EUR 12 million. And it is definitely driven by one-off effects. And the most important effect is that our average carbon need to generate 1 megawatt hour of electricity has decreased significantly. We are showing only past few years, past 5 years, where we went from 0.4 ton of CO2 per megawatt hour produced to 0.33 in 2020 and 0.28, which is a target for the end of 2021. The calculation for 2020 can be seen on the right -- in the right table, actually bottom right table on the Chart 14, where you can see a simple reconciliation of terawatt hours produced, which is 57.1 and emission intensity of better source of power. So in general, we are already for 2020, and we will be continuing to be below marginal power plant in Germany, well below. And that's why we are benefiting from increase in CO2 prices. But we are also significantly below new CCGT plant in Europe, which is at 0.35. So now our portfolio is actually cleaner than the average CCGT plant. On Slide #15, you can see actually our generation portfolio, both in terms of installed capacity and in terms of power generated out of this capacity. So our installed capacity is almost 12,000 megawatts, generation 57.1%. The green bars are actually almost 60%, and those are basically carbon-free generation bars, which is nuclear and hydro and renewables. Lignite, 34%; black coal, only 1%; and natural gas 7%. On the right side of the slide, you can actually see our marginal costs, with nuclear marginal cost being extremely low, EUR 8 per megawatt hour produced. Lignite is EUR 10 plus EUR 46 for carbon credits, and those are the price levels actually when the carbon credits are EUR 46. And you will see later on how it is changing and what is actually the impact of higher carbon prices and also higher power prices. And CCGT EUR 68, comprising EUR 49 for fuel and EUR 19 is a portion of carbon credits related to generating of 1 megawatt hour of power made from gas. Nuclear plants. I already touched on nuclear plants. They are very extremely important part of our generation portfolio. You can see our 2020 EBITDA on Slide 16, and nuclear generation takes a big part of it, 34% of our EBITDA. So we definitely want to keep it on the level of above 30 terawatt hours per year constantly. Good news is that we have secured a 60-year lifetime for our power plants from the point of view of -- regulatory point of view. So we have another 30 years to go until the commissioning of the plant. Capacity increased by 568 megawatts to almost 4.3 gigawatts of installed capacity due to various technical improvements. There is information on the next slide, actually -- on the next 2 slides on the nuclear project. There is no change actually compared to what we discussed during our last conference call that was related to first quarter results. So still same picture. We are in charge of our first phase preparation and supplier selection. That should be finished by the end of 2024. And then remaining 3 parts are actually to be financed by the government directly through repayable financial assistance, which means 0% loan during construction period of the power plant. At the same time, we will be entitled to offtake contract, which today seems to be in the range of EUR 50 to EUR 60, which with us being insulated from, so-called, legitimate ground risks that will materialize over the construction, so that we would not be taking any risk related to that project and we would be secured our return. So that's all for the first bucket of our strategy -- current strategy. And now I will hand over to Pavel, who will lead us through the remaining 3 parts. Okay.

So if you are looking back and reviewing the progress over the past few years, let me start with distribution on Page 20 for those who follow just on paper. You see that we have increased the regulatory asset base by around CZK 20 billion or 20% over the past 5 years. We have also last year for this year on, secured very kind of supportive regulatory conditions for the, so-called, fifth regulatory period, and we will discuss this further. And also through investment, that is the driver behind the regulatory asset base, we are working hard on digital transformation and preparation of the distribution grid for the centralized generation. In terms of the retail business, it is one of the anchors of our financial performance, third by size after nuclear generation and distribution. We maintain the portfolio of our customers, actually grow it a little bit together with also the volume of supplied electricity and gas. And through stable and healthy margins, we maintain a stable contribution of this segment to our financial performance. Now the area which is growing significantly is the energy services, energy savings and decentralized generation, driven, among other, by the both increasing CO2 prices for the industrial customers as well as the explicit target for energy efficiency, which were introduced by the European Commission already back many years ago and are being made stricter with every update. So also now the Fit for 55 strategy has its challenging and strict energy efficiency targets, which we try to address with our services. As you see on Page 23, we've grown the revenue from these services significantly. We are at around CZK 22 billion, being the #1 player in Czechia, within the top 3 in Germany and by helping our customers decarbonize, let's say, simply [indiscernible]. We will talk more about it when we discuss this in the 10-year outlook in our vision. Now Martin, back to you on the 2021 outlook.

Yes. Thank you, Pavel. So before we actually get to our vision, we will spend a little time on our 2021 outlook. So for those of you who follow the paper presentation, we are on Page 25. Financial guidance is maintained at CZK 57 billion to CZK 60 billion and adjusted net income, CZK 17 billion to CZK 20 billion. We can see actually a comparison between 2021 estimates and our original targets and estimates. On strategic assets, we are aiming at CZK 55 billion to CZK 57 billion. On assets for sale, actually, original estimate was CZK 7.6 billion, now it's CZK 2 billion to CZK 3 billion. The main reason is that we managed to sell our Romanian assets earlier -- significantly earlier than originally anticipated. So we are kind of "missing" EBITDA from our Romanian assets. Sale of Bulgarian assets is in the process. Should be completed during Q3 and Polish assets are just now being analyzed, I mean the offers that we received or bids are just being analyzed. Main year-on-year effect between June '21 and '20. Positives: higher prices of electricity, higher generation at nuclear plants and stable of retail segment after COVID-19 situation in 2020, when many companies were uncertain. So especially many escrow activities were postponed. Now the companies have learned to live with the situation and the market is picking up. Negatives: sale of Romanian and Bulgarian assets, obviously. So no EBITDA from those assets. On the other hand, cash on our bank accounts; higher expenses on carbon credits; lower revenue from ancillary services; and temporary effect of new regulation distribution. And in 2021, we will have actually a little decrease, but then due to very favorable regulatory framework with our RAB, Regulatory Asset Base, going up in the following years, we will basically catch up and be even better -- achieve even better results than in the past. So it's important to hedge our position in electricity sales and also carbon credits. On Slide 26, you can see our level of hedges as of 31st of March. So this is something you've already seen in our quarterly presentation. Updates will be provided at the beginning of August when we have our Q2 results. But what's important to note is definitely the fact that the average electricity price is growing. On the other hand, also price of carbon cost -- or carbon cost is growing as well. We are also showing actually a hedging policy for CO2-free sources, which is nuclear and renewables, and then for coal and then for natural gas. So you can see natural gas is basically hedged only 1 year ahead due to, I would say, the gas plant taking opportunity in the market and the development -- long-term development is not as predictable. On the next slide or last slide of this section, you can see actually interesting information. What would be the impact of -- on 2022 results, should we not hedge anything? So just the change in the power prices, what will be the positive effect? And the impact would be of CZK 22 billion positive due to higher power prices, so increase from EUR 49 to EUR 74, which would be very -- offset very little in terms of reduced lignite spread, meaning that power prices don't rise as fast, as I said already, than carbon credits. So we will be losing actually EUR 4 per megawatt hour on our carbon -- or on our ignite spread, which would cost us CZK 2 billion. So CZK 20 billion positive effect of the power prices increase should we not hedge anything for 2022, of course, for simplicity. So now I will hand over to Pavel, who will guide you through first part of our vision for following years, that is also supplied with financial information.

Martin, thank you. This is the fourth chapter, which I mentioned at the beginning. So we will slow down a little bit here, so everything is well explained and well understood. Our updated strategy with the headline of Clean Energy of Tomorrow basically works with 2 strategic priorities: the first one being decarbonization of our generation portfolio and ultimately reaching carbon neutrality; and the second strategic priority, working with providing the best energy solutions and the highest quality of customer experience on the market, which also in return, you can understand as enabling the decarbonization for all of our customers and consumers. I mentioned that we have already set forth to transform the energy sector back in 2018. So the way you can understand this priority is putting even more focus and speed also on the decarbonization targets. And we have realigned the 4 areas that we've used in the 2018 strategy under these 2 main strategic priorities. So even through the numbers, you can see -- not numbers, colors, rather, you can see how we realigned and refocused our business activities under Clean Energy of Tomorrow. Now on Page 30, you can see that together with significantly lowering our CO2 footprint, ultimately reaching carbon neutrality, we also aim to grow our business, measured by EBITDA. We aim to grow the business by 40% between 2020 and 2030. And as you will see further on, while maintaining a very healthy financial situation as well as a healthy dividend policy. Now it is clear that especially for our assets, it is crucial what power prices are assumed because with the increasing share of 0 or low-carbon electricity generation, the power price effect on the results is very direct. You see in the low right hand side -- bottom right-hand side corner, the wholesale electricity prices assumed in the model in the EBITDA outlook. Just for you to understand how this came around. When we were finishing the 10-year plan, then to be further approved by the Supervisory Board and presented at the general assembly, that was in March 2021. So we took the market prices at that point and where the forward prices ended. So after 3 years, we assumed a simple inflationary growth. And this is how the EUR 55 to EUR 60 per megawatt hour came around, for example, for 2030. In a little bit, I'll show the sensitivity of our results and the upside that there are still from electricity prices growth on the following pages Because, as of today, we are obviously seeing much higher prices in the market. What I would like to highlight here is that out of this 40% growth, the #1 driver is nuclear, and we will comment on it a little bit later. Then the second spot, I would say, is the renewables and energy services. Third spot is distribution. And we will see a decrease in our fossil fuel generation EBITDA that kind of offset some of the growth, but obviously offsets it only to a limited amount because already today, the share of fossil generation on our results is quite minimal. As I mentioned, we always have been and we are very cautious of financial strength and health. You see here that all of this growth will come, obviously, through investments. But the overall assumed CapEx -- planned CapEx is in such a way that the positive operating cash flows covers it more than enough and we will continue to generate positive free cash flow. And we still maintain the net debt-to-EBITDA target of up to 3x EBITDA. And we also are and always will be a somebody -- a company that provides a healthy dividend policy in the upper ranges of the profit and distribution share. Now I already mentioned that we are quite sensitive to the power prices. Martin showed the sensitivity to year 2022. As a sales director, I have to say that the -- especially 2022 year may not be fully representative. The power prices that we see today may not be fully representative of the long-term future. Next year provides both very high electricity prices and increased or a very good lignite spread because, as of today, we see quite high prices of gas and hard coal price, which drive the electricity price up beyond just the CO2. If we look at the forward prices that we see in the market, and again, use the inflation growth after the last year of the forwards, then you see the sensitivity on Page 32. You see that if we did this modeling, we would see electricity prices of around EUR 11 to EUR 12 per megawatt hour higher than we used for our modeling back in March. And this, combined with a same exercise done on the CO2 price, we would see our EBITDAs for 2025 about CZK 11 billion higher and for 2030, even CZK 15 billion higher. So this is the sensitivity to give you a sense for what is the upside from growing electricity prices for CEZ beyond the growth and the targets that we've introduced in the updated strategy. Now let us go through the 2 strategic areas one by one. And within those, by the main strategic kind of levers. And Martin will start with the decarbonization of our generation portfolio.

Thank you, Pavel. So first part of actually of our new Vision 2030 strategy is related to generation. And basically, it's about decarbonization of our generation portfolio and reaching carbon neutrality. First, there are actually 3 parts of our generation portfolio. Clearly, one of them is nuclear, where you would like to achieve -- to operate our plants as long as we can and prepare ourselves for possible construction of a new nuclear power plant. Then efficient management of coal portfolio that we have today, especially those that are just located at the edge of our coal mines, and then decarbonization of our entire portfolio in the near future. And the last part, it's actually about new power generation sources, and it's about developing of renewables, mainly in the Czech Republic. So when we look at nuclear on Slide 34, you can see that our target is to achieve 32.5 terawatt hours by 2030. Our 2020 baseline is 30 terawatt hours. So constantly keeping our power generation above 30. The way how to do it is actually prolonging fuel replacement cycle, optimizing maintenance and adding another 50 megawatts of capacities through technical improvements. We also plan to start construction of Dukovany power plant with the government support scheme that I described earlier today. And also prepare potential for construction of small modular reactors after 2040 at the capacity of about 1,000 megawatts. So on Slide 34, you can actually see the orange bars, which show you the nuclear generation in terawatt hours that is planned for 2020 through 2030, with wholesale power prices being at those levels that Pavel described, so basically levels from March 2021. These days, the power prices are higher, so the positive impact on EBITDA would be even higher. And actually, EBITDA growth can be seen on the left part of this slide, so growing from CZK 21 billion to CZK 31 billion. But significant part of the growth should happen between today and 2025. Annual CapEx would be about CZK 10 billion every year. Regarding our renewables growth, we are planning to add 6 gigawatts of renewables capacity by 2030. 1.5 actually would be a target -- adding 1.5 would be target for 2025, mainly in the Czech Republic, supported by the so-called Modernisation Fund that has a significant amount of money prepared for CapEx subsidies. And that's the reason why we are actually developing the projects last year, but not really investing into anything because it would not be wise to start construction without Modernisation Fund support. Our portfolio of -- our capacity of our portfolio should look like it is shown on the chart in the middle of the Page 35. So basically growing from 2.2, with 2 on the gray color being hydro plant and 0.2 being current renewables growing from 0.2 to 6.2. Again, based on the power prices that we are using in our model, we will be moving our EBITDA from CZK 5 billion to CZK 10 billion, doubling between 2020 and 2030. With average annual CapEx, in the beginning first 4 years being CZK 6 billion to CZK 7 billion a year and then construction accelerating and CapEx CZK 14 billion to CZK 15 billion. Modernisation Fund, that I touched on actually is set up to support development of renewables and modernizing energy in the -- energy business in the Czech Republic. Modernisation Fund has dedicated something like CZK 66 billion for grants to support renewable projects, where the maximum CapEx subsidy can be up to 60%. And at the same time, 60% is actually dedicated to existing electricity producers. And we have submitted 296 or almost 300 projects for photovoltaics to so-called prequalification round. And now there is a first round of qualification that will end in October, and then the subsidy will be granted and construction can start. There will be one round every year. This year, the first round started, I think, in May. Next year, it is assumed to start earlier sometimes in February because the process is already up and running. So that will be much faster. You can also see that out of Modernisation Fund scope, a significant portion is actually dedicated to renewables. And also to heat, which is something that has also impact on CEZ Group because we would like to convert our heat plants from coal to gas technology, as I will mention on later slides. On Slide 37, you can see actually the third pillar of our -- part of our generation portfolio, which are coal plants. We are actually -- again, on the middle section of this chart, you can see development of our coal and gas generation in terawatt hours, with clearly coal generation moving from 21.7 to 6.5 terawatt hours by 2030. Gas and biomass generation from 3.9 today to 10.5 in 2030. Our coal and gas capacity will grow from 1 gigawatt hour -- our gas and biomass capacity will grow from 1 to 2 to 2.5, and installed capacity in coal will be reduced from 4.8 to 2.2. In financial numbers, our EBITDA in 2020 was CZK 10 billion from existing assets. It will move downward actually to 50% -- by -- to CZK 6 billion. But it will be all generated basically by new assets, and existing assets will generate only a very, very insignificant part of the EBITDA that we produce. On the next slide, actually, you can see our 2020 versus 2030 power generation. So basically nuclear grows a little bit, but then there is a big change in coal generation, as you could already see on the previous slide, from almost 20 terawatt hours per year to 6.5. And we can see significant growth of the gas and bio segment from 3.9 to 10 terawatt hours. Hydro basically flat, and significant growth of renewables from 1.1 to 6.4. So significant decarbonization of our portfolio by 2030 with keeping same level of power generation of 57 terawatt hours. Important slide, actually, on -- which is -- important charts are actually on Slide 39. Those are the targets that we have actually set. So our share of coal generation should fall by 2030 to 12.5%. And completely -- we would completely exit coal generation at latest on -- in 2038. You can see that development between 2015 and 2020 has been quite significant. Actually, our coal portfolio was reduced from 8.1 gigawatts of installed capacity to 4.8. Good news is that big part of it, out of 4.8, actually 2.2 is of new lignite or refurbished lignite. So much more efficient plants that are around our coal mining activities. By 2025, we should maintain basically only those lignite plants plus 1 old plant. And then by 2030, we should have only those new lignite plants. And by 2038, nothing. Share of coal on overall revenue will go down from 18% today to 2% by 2030. And share of coal generation, and that's import number, from 36% in 2020 to 12.5% actually in 2030. On the last slide that relates to power generation, you can see actually the same information, just recalculate it on a per ton basis of CO2. So as you can see, our 2020 number was 0.33 ton of CO2 per megawatt hour produced. 2025 should be at 0.26. 2030, of it basically only refurbished -- 3 refurbished lignite parts up and running, 0.16. And by 2050, absolute carbon neutrality, so 0. Speed of carbon emission reductions is in line with Paris Agreement well below 2 degrees. Now I will hand over actually to Pavel, and he will guide you through the second part of our strategy.

Yes, Martin, thank you. So the second strategic pillar is defined as providing the best energy solutions and highest quality customer experience on the market. At the same time, we can also view it as supporting our customers in meeting their energy needs while reducing CO2 footprint. The key pillar of it is modernization and digitalization of our distribution networks and retail activities; and secondly, providing energy services, including the centralized generation of electricity and heating. Now let me start with distribution. I already mentioned that's starting this year. We are in a new regulatory period, the so-called fifth regulatory period, which gives us a clear visibility for the conditions for our investments. They are actually quite good. So we plan to invest in the transformation -- digital transformation of our distribution grid. The annual average annual CapEx plan is CZK 14 billion to CZK 15 billion. Actually, overall, if you look at distribution, it has the highest share of our CapEx over the next 10 years. Through that, our regulated asset base will grow to CZK 180 billion, around 4% average annual growth. And the EBITDA of the distribution assets will grow by CZK 4 billion to CZK 22 billion by 2030. Now as a part of the digital transformation, we aim to provide 80% of our customers, at least 80% of our customers with smart metering. We also aim to have at least 80% of our transformer stations remotely measured and remotely controlled. And at the same time, we are also building up a significant optic fiber network using our electricity networks, and we aim to almost triple the optic fiber network length compared to today. Now in terms of our supply retail business. We have already a very significant market share and market position, so it does limit to some degree our growth, but we still aim to grow the number of customers, as you see in the middle of the page. Similarly, we still aim to grow the retail EBITDA, and that is even being mindful of the fact that the current margins may get under some competitive pressure over time. So any decrease in retail margins is offset in this plan by growth in revenue and margins from the additional energy services for the retail plants and by efficiency improvements through digital processes and digital offering. The third area, the energy services, which are built on the energy efficiency targets of our customers and also the European Union as a whole. We aim to continue and to grow. As you see in the middle of the page, we aim to grow from the current CZK 22 billion, about 4x by 2030, while maintaining a healthy EBITDA margin. And through that, we aim to grow the EBITDA from ESCO about 8x. Now 2020 EBITDA was impacted by COVID. So the multiple may seem extensively aggressive, but it is -- the growth is in line with the historical performance we have so far should there be not COVID effect -- significant COVID effect last year. I already mentioned that the energy efficiency is one of the key 3 targets coming from the Fit for 55, and the EU target is 39% to 40% efficiency improvement. So this is what is driving the customers who seek our services, together with the same happening in the heating sector and also transportation. Now speaking of transportation. This is obviously a field which historically has not been of our focus. However, we see a convergence or linkage of the 2 sectors, energy as such and transportation. We tried to display it on Page 45, where electromobility value chain, as we now call it, e-mobility value chain, represents an additional source of growth. And along kind of the value chain, starting from generating electricity in a green way, so then the full mobility is actually green. But then going further, providing charging services, providing Battery as a Service, cars as energy storage systems. And then in the middle, actually developing battery manufacturing and battery material mining processes in the Czech Republic. We have been, to some degree, lucky as a country by having one of the largest lithium deposits in Europe and in the world, and CEZ through its mining subsidiary, Severoceske Doly, has secured a controlling stake in this project, and we are developing it so that we can start mining probably at end of '23, beginning of '24 or actually start construction of the mining and then start actual mining about 2 years down the road. And similarly, we are developing a project of battery production, the so-called Gigafactory, as it is sometimes labeled, which are now growing across Europe. There is none in the Czech Republic, although Czech Republic is one of the largest car producers in Europe with about 1.1 million cars produced last year and 1.4 million cars even produced before COVID. So -- and for that, we are partnering up both with car manufacturers and technology providers. We see ourselves as somebody who has for the mining the mining skills and for the manufacturing, somebody providing the site. Actually, one of the sites that we have in mind is that we would reclaim the current [indiscernible] station, which is actually the commission that would be taken down and would be used as a site for Gigafactory construction. Now all of these services together, obviously, as you see on Page 46, they contribute very little or actually here 0 in terms of billions of Czech crowns, but they should grow, and by 2030, we expect about CZK 2 billion coming from these services. At the same time, they also complement the other, especially the energy services, the ESCO services. So they stimulate and support part of the growth in the ESCO. Now you may ask why there is no hydrogen? I mentioned here. We do follow the hydrogen development very closely. We see and we are preparing pilot projects. However, we did not want to put any specific targets for hydrogen in this strategy yet. I think both us and the industry as a whole must work on the pilot projects a little bit more to see where exactly and how hydrogen would be deployed in mass scale in Europe. And then we will be ready to deploy it in our markets as well. Now I already mentioned that we do have a I would say, a special guest today compared to other conference talks and that is [indiscernible] our new ESG director. And I would like to ask her to comment on our ESG goals and commitments, which make an important and very challenging part of our -- ambitious, rather, part of our strategy.

Thank you, Pavel. Good morning, good afternoon to all. I'm honored and happy to announce today our newly established ESG office, which I lead. As Pavel already mentioned, I report directly to the CEO of CEZ Group, Dan Beneš, which should demonstrate our -- the importance and our commitment to ESG principles. For me, personally, this is literally day 14 on the job. But I would like to make it very clear that CEZ Group has a long track record in sustainability. We've had a comprehensive 5-pillar sustainability strategy, which enabled us to achieve a number of significant milestones, and I'd like to take a minute recap them. The gentlemen next to me have already mentioned some of these things. But just very quickly. We've been able to steadily lower emissions of CO2 and other greenhouse gases, not only in generation, but also through projects with our customers and help them in this. We've lowered share of coal generation. We've lowered water consumption, lowered wastewater production, increased share of renewables and increased nuclear generation capacity. We support e-mobility. In social sector, we are the top donor in the Czech Republic. CEZ Group has contributed more than CZK 7.4 billion since its establishment in 1992, and that excludes contributions of Czech Foundation, which is approximately CZK 2.9 billion since its establishment in 2002. We dominate the top employer rankings in the Czech Republic. We have whistleblower hotline, which is 24/7 available. We have ombudsman office. And we're working on increasing proportion of women and diversity issues. We have strict code of conduct and training in that area. And we have transparent remuneration policy and published our first remuneration report in 2020. So we're not starting from scratch. And the big point here is that we want to accelerate the sustainability strategy and align it with ESG principles, which we understand as holistic approach to risk and reward management. Now I would like to guide your attention to Slide 47, which shows our current ESG rating. And as you can see, it does not fully reflect what we've been doing. So that's something we want to work on. And we set an ambition for ourselves to become a leader in ESG, and we aim to exceed 80% rating by 2023. I would like to explain that number. As you know, different rating agencies have different methodologies and matrices, so that is the converted number. We have just -- for your information, our rating -- current ratings by MSCI is BBB and current rate -- ESG risk rating from Sustainalytics is 37.6. So it's really hard to compare different ratings. So that's why that number has been converted and currently, we're around 50%, and we want to jump ahead by the year 2023. How do we want to do that? Both Pavel and Martin already mentioned a lot of plans. So they're summarized on Slide 48. You've seen these numbers before. You have them in front of you, so I don't want to read it out. I just want to stress some themes or topics. In environment, clearly, this is decarbonization. And we have goals to lower emissions of CO2 in line with well below 2 degrees initiative. Also, we want to continue to lower other greenhouse gases, nitrogen oxide and sulfur dioxide. The second big part is, of course, lowering share of coal generation and increasing share of renewables. Lowering share of coal generation is closely linked to our social goals because we want to provide fair and just transitions from our employees affected by coal exit, and we don't want to leave anyone behind. So we are committed to retraining, reskilling and compensation packages for them. And we take that as a starting point to actually continue build and develop good relationships with all communities and stakeholders, whether it's our employees or our customers. So we want to continue to be among top employers, we want to create best customer experience and quantify it by the highest Net Promoter Score among Czech electricity suppliers. And we want to do all of these things smartly by using digitalization and smart solutions. In governance, our focus will be on diversity and ethics and transparency. So we hope to reach a 30% share of women in management, and we want to increase or accelerate training in code of ethics for our employees, which we have, but we do want to accelerate that. So that's all from me.

Okay. [indiscernible] thank you, and we'll be more than happy to answer any questions related to it now. Let me -- before we actually do get to the Q&A session, let me quickly summarize what we have highlighted here today over the past hour. We mentioned that we are accelerating our transformation -- our strategy to benefit from the energy transition and transformation, both on transforming our generation portfolio to low emission as well as providing the energy solutions to our customers to help them out to transform their businesses. We set forth and even emphasized and also accelerated our aim to develop CEZ Group in a responsible and sustainable way. We have set for ourselves new ESG targets. And through those, we aim to increase our ESG rating to 80% by 2023. And one of the drivers of that being reducing our emissions intensity by more than 50%. Why do we emphasize this is that the reduction by more than 50% is in line the Paris Agreement targets. And finally, doing all of that, we still aim to offer an attractive dividend and maintaining strong credit rating at the same time by increasing our EBITDA by 40% by 2023. We aim to kind of maintain the target leverage of net debt-to-EBITDA between 2.5 and 3.0 and maintaining a healthy dividend policy and dividend payout. So with this, I think we are ready to take questions.

[Operator Instructions] We have a first question. It's from Ekaterina Smyk of Bank of America.

Yes. Can you hear me?

Yes, we can.

Wonderful. I have several questions. The first couple of them are on your new growth strategy. What is the hurdle rate for renewables in Czech Republic that you're targeting? And just to confirm, the CapEx number you have on Slide 35, annual -- targeted annual CapEx, that's before any subsidies from the Modernisation Fund? And on the CapEx side, the -- I just roughly calculated the implied sort of CapEx per megawatt is CZK 22 million, while the CapEx subsidies kept at roughly CZK 6 million to CZK 7 million, which means that the subsidy can only cover just over 30% of your CapEx for the project. Is that the right way to think about it? And in terms of -- generally, can you just speak about the returns that you plan to achieve in Czech Republic in terms of renewables expansion? How the competition looks like? And what sort of -- what share of growth of renewables in the market you plan to capture with your 6 gigawatt of plant installed capacity additions by 2030? And the last question is on the ESCO growth. What is, again, the targeted market share given that you expect quite significant revenue growth in the segment, and both in Czech Republic and in the international markets?

So the renewables hurdle rate, we really don't want to discuss it in too much detail just because we are just ahead of auction. So really releasing any numbers on our expected profitability would not be good thing to do. Regarding CapEx numbers, yes, they are without CapEx subsidy. So they are CapEx, no matter how far -- how it will be financed. The rule says that actually the maximum CapEx that you can receive CapEx subsidy is 40% for standard projects and up to actually 60% in terms of the projects that are in areas that require special attention, kind of, environmentally difficult areas and so on. But general rule is that the maximum is 40% that you can actually ask for in the auction. And total number of projects or capacity that Modernisation Fund has announced to support is somewhere around 14 to 15 gigawatts of installed capacity by 2030. That's those sort of numbers. Pavel, maybe if you have anything...

No, I think this is it. Just, we basically -- what do we internally, we benchmark our cost estimates, again, the Bloomberg New Energy Finance, BNEF, benchmarks, and we are -- our plans and our cost estimates are at par with these benchmarks. What kind of -- and they are lower than what, as you calculated, what skews a little bit the -- and that is before subsidy. And what skews the average is that this overall budget also includes money that goes into maintenance of our kind of hydro stations and some other renewables that we already have in the portfolio. So it is not -- all the CapEx that goes there is not only the development CapEx for the new solar. Now in the ESCO market growth. Look, being responsible for this area, I have always said to my managers that we do aim at, for the smaller markets, at least 20% market share and for the large markets, at least 10% market share as an ambition. I have to say that specifically in Germany, even the 10% is very ambitious. We are well below that. This number, the growth that you see there, like in revenues, 4x, basically represents a number that get us close to the 10% in Germany and well above 20% in Czech.

Understood. And in terms of competition in Czech Republic in terms of who is bidding into auctions to get subsidies from the Modernisation Fund. How heavy is that?

Look -- like, the first regular auction will only -- or the deadline for the first submission of the bids is only in the fall. There was a prequalification. And you would see basically all the other energy companies as well and also kind of private developers, a really wide variety of people. We don't see, honestly, like anybody bidding in a significant way from like -- from outside of the market.

Understood. And I assume that apart from CEZ, considering other players in Czech Republic, there are no explicit 2030 renewable targets like in yours?

No. No. At least I'm not aware of those. Obviously, the private individuals don't publish them. And the subsidiaries of the, let's say, E.ON and so forth, they publish these targets typically on a group level and not specifically on individual markets.

Our next question is by Wanda of Credit Suisse.

Wanda Serwinowska from Credit Suisse. Four questions from me. On the first one, on Page 36, you show a breakdown of the Modernisation Fund. Can you talk about the CapEx opportunities or subsidy opportunities in the heating business? So what is the scheme? Would it cover kind of CapEx? Or how does it work out? Or what is the potential for you guys? The second question is on the nuclear production growth that you are guiding for. What should we assume in our model? Should we assume leaner growth until 2025? What would be the best estimate in your view for us? The third question is on the ESCO business. I mean, your 2030 target looks a bit on the bullish side, I would say. You're targeting 10% EBITDA margin. I think in the past, you were targeting at least 7%. So do you -- what makes you so optimistic on the business? And do you assume only an organic growth or M&A as well? And lastly, on your -- on the CapEx in your grid business, you assume a flat CapEx by 2030. I mean, when I compare the targeted CapEx versus the lows that you invested in '20 or 2019, 2020 -- 2019, there's a clear growth. So what drives the growth in the CapEx in the CEZ distribution business? Do you see any upside from there? And then if you could just remind us if you need the approval from the regulator to increase CapEx?

So I will maybe start with the first question on the heat business and Modernisation Fund. I think the scheme is very similar, so it will be a CapEx support to heat projects where you would convert actually coal assets into cleaner assets. In our case, it would be converting our coal heat-based assets -- coal-based heat assets into CCGTs or natural gas assets, but with an option -- all of them with an option to burn hydrogen. So basically, all will be hydrogen ready, so that they would not only be kind of temporary technology to be used in transition period, but they could also use clean hydrogen in the future. So a very similar concept. I don't think it is as far as it is in case of photovoltaics, but it's underway as well.

Yes. The question was about the growth of the nuclear generation, right? Well, it has 2 parts to it, I have to say. One is, it is actually faster in the 5 years. We will do a lot of work in the 5 years. And then most of the things should be captured already like what we do within the next 5 years and then a little bit more after. But what we -- what will complicate a little bit your modeling, I have to say is, that part of the growth is driven by the fact that we want to go from 12 to 18 months fuel campaign, which in -- then for the modeling purposes will mean that you will see a growth of the average generation, but you will see more fluctuation of the generation between years depending on whether the campaign will be that year or not. So there will be years without an outage and years with outage. And then we are working on this. And when this is ready, and we exactly know the year when this all starts and how it goes, the campaigns that we will share it with you. We don't know this now by exactly which date we will be able to do the first kind of long campaign. Now on the ESCO. You are right that we do have -- we have a target of 5% to 7%. Now we have -- because when you say ESCO, it basically has 2 parts. One is really the services, such as kind of energy performance contract or heating but as a service, cooling, providing the services and so forth, which falls into the 5% to 7% -- rather 7% category. And then you have the centralized generation and -- of heat and electricity where you actually keep the asset on your balance sheet or you share it with the bank where the EBITDA margin is well above 10%. And we're basically looking at what needs to be done in terms of transforming the heating business, both in the Czech Republic and also other countries as well as the growth of kind of local generation on-site, so like us installing a rooftop solar for Škoda Auto factory. We see an increasing share of this part of our energy services, which drives the average EBITDA margin to be higher than the one that is for services only, so the 10%. And this is reflected in the CapEx plan. And then speaking of CapEx. In terms of grid CapEx, there are 2 parts to it. One is the fifth regulatory period obviously offers an attractive return. And why is it that it offers this attractive return is that the distribution grid needs the modernization. So as I said, the 80% of substations being remotely controlled, the -- more than 80% of customers having smart meters and also installing all the backbone of optic fiber. So all this basically -- investment comes on top of the normal kind of maintenance CapEx, which grows the higher CapEx budget. Now the regulated return is 6.54%, more than 6.5%, which we consider these days very attractive. Now -- and you also asked whether this is approved by the regulator? And yes, for the fifth regulatory period, this is approved by the regulator.

And actually, our RAB is growing quite fast between 2020 and '25 because regulator used the rate to 6.3%, but on the other hand, allowed us to increase RAB to 100% of the assets, which was not the case in the past. And that's why there is significant growth between 2020 and '25, most of which is actually in 2022 and '23. So overall, regulatory framework is more favorable than it was before, even with decrease to 6.3%, which in today's world, as Pavel said, is still very interesting return on regulated assets.

That's super helpful. Can I just ask one quick follow-up? When you talk about the conversion from coal to CCGT, what is the CapEx guidance? I mean, what will be the best CapEx estimate for the conversion per megawatt, for example?

I don't think we have it here on a per megawatt basis. But I guess, we have a number on average CapEx in our -- on Slide 37. And there, you can actually see that our average CapEx within 2021 and '21 would be CZK 9 billion and fossil fuel generation. So new CapEx mainly, of course, being converted into gas plants, and then CZK 4 billion to CZK 5 billion between 2026 and '30.

Our next question is by Boh Trampota of KB.

I have a couple of questions, if I may. Do you plan to increase your ratio -- net debt-to-EBITDA ratio to 3x by 2030? What impact do you expect this to have on your ratings? And also, can you give us a little bit light of what funds will be used for, renewables, nuclear, dividends or something else? And I have also questions about the new nuclear. Does this leverage ratio include expected loan from the government? Or if it doesn't, how would that loan affect the numbers? And one more thing, CEZ probably comes with replacing current nuclear reactor with new ones. And what if state failed to provide under the framework agreement? Or what if EU policy refused -- will refuse the sustained supported nuclear projects? Can you imagine your future without nuclear?

Net debt-to-EBITDA moving from 2.2 to 3, no impact on rating. We discussed it many times with rating agencies. And if we stay around 3, there is no negative impact on the rating, which is good news. We already have been above 3, I think, something like 3.1, 2 years ago, I guess, temporarily. So now we are actually well below this target and moving to 3 is not an issue. New nuclear. There is not much actually by 2030 anyway, but it is not consolidated in those numbers. So the scheme that we are trying to set up or setting up actually should not view it as the debt that we are liable for, as we already said also at the shareholder meeting. And we are now having -- we're going through discussions with rating agencies. But nevertheless, by 2030, the need for financing from whatever sources it is would be relatively limited. And Pavel, replacing -- or not allowing replacing reactors.

Look, this is obviously very difficult to predict. Many things can happen. We can see a significant speed up of new renewable technology. We may see also a faster development of small modular reactors. We always have gas stations as a backup option. So these are the technologies that we are aware of today that would need to be leveraged in case the large reactors could not be built and through building kind of replaced and renewed.

Our next question is by Mr. Sitbon of Morgan Stanley.

Arthur Sitbon on the line. So you talked about your positive exposure to the recent rising power prices and in some other countries, we're seeing measures being considered in order to mitigate the impact rising power prices have on consumer electricity bills. And in some instances, it can impact utilities earnings. So I was wondering how confident you are that such a measure would not be considered or taken in the Czech Republic?

Well, it has never been discussed. So like to the point you are asking whether we are confident at this moment? W are. I never had the discussion for the electricity bill. There is discussion going on for the heating bills. And the discussion actually is in such a way that the heating companies or heating stations would be compensated. And through them, the customers would be protected from CO2 price growth. Now this is a law which is now in the process of being approved. And if this is the case, then for the central heating, the consumers would be protected, but not at the expense of the generation companies but rather through a subsidy scheme.

Which also helps generation companies because, of course, the higher the central heating prices, the less competitive they become compared to other sources of heat, for example, decentralized gas heating. So I think it will be beneficial for everybody. But relating -- but regarding the power prices, never ever such a discussion on our core market. And we actually had higher prices 10 years ago, attacking EUR 90 per megawatt hour and even at that time, and the average income was, of course, lower than it is today and never ever, it was a significant issue.

Our next question is by Bram Buring of Wood & Company.

This is Bram Buring from Wood & Company. Most of my questions have been asked. But I would have -- if you could help me out just with a couple of numbers. I've been updating the CapEx numbers in my model with the numbers from the presentation. So [indiscernible] where would you be on CapEx for 2025 and for 2030? Just a total number, please?

Look, what we are using as an average number -- I'm just flipping through the pages. I think it's around CZK 50 billion, right? 50-ish levels. So around CZK 50 billion annually. I think there was some number like CZK 50 billion to CZK 55 billion actually in the presentation. It's on Page...

30.

On Page 30.

30.

Exactly. CZK 48 billion for the period '21 through '25 and then CZK 50 billion to CZK 55 billion for '26 through '30.

Yes, sorry. Yes, my bad. Okay.

[indiscernible] plus or minus.

The next question is by Teresa Schinwald of Raiffeisen Bank International.

Teresa here. I have 2 more coal and carbon emission-related questions. The first one is the plant coal capacity -- lignite capacity by 2030. It seems unchanged versus your earlier announcements 2 years ago. But I was surprised about the lower output. So is this in line with the potential shift in strategy how the electricity could be sold? That would be the first part. And the second one is, could your plans be changed? Or it might they need to change in light of the Fit for 55 package that was presented last week? That would be it.

Look, what we see already today, and we also expect that in the future is that the coal stations will really be necessary in the market mostly in winter and less so in the summer. So the utilization will go down compared to our previous estimates. So that's why you see the same capacity but lower generation. And in terms of the Fit for 55, look, this plan is fully compliant with the Paris Agreement. So it does not have to be updated immediately, plus the Fit for 55 numbers already were floating in the discussion, in the trial so forth and so on. So they have been factored in the kind of our upgraded renewable target in the ESCO targets and so on. Look, in terms of the coal, what we say is that it will be a maximum of 12.5%. Can it be that the high prices of CO2 kind of remain and more gas capacity will come online and we will not need them that much anymore? Yes, this can be the case. But this is very difficult to predict. We always make the prediction based on the past 6 months, but the past 6 months changes over time so much. So here, we are basically -- we'll have it ready, and we plan to upgrade it after 2025 to see how we should treat these stations. Whether, we should basically already kind of start decommissioning them or if they are actually still needed for the security of supply over winter within the Czech Republic. So that we will see. Now in terms of the financial result. Honestly, it doesn't really matter because they will -- assuming still CO2 prices will be used as a measure to reduce CO2, they will make a very negligible contribution to the profit. So it's more about security of supply of Czech Republic.

[Operator Instructions] The next question is from Jocelyn Andre of Generale.

Can you hear me?

Yes, we can hear you.

Okay. Perfect. I have a question regarding -- so you are -- it seems that if the CO2 price rise up, it's beneficial for your EBITDA. And I understand that your financial projections are based on a prudent price of CO2 around EUR 46, if I remember. Well, I don't have the slides in front of me. However, it seems that the higher the CO2 price -- I mean the higher CO2 price goes, the less profitable coal plants are. Therefore, do you have -- on the other side, for a prudent approach for coal plants, do you have another range of CO2 prices that would make you decommission coal plants earlier than you're projecting now?

Look, the way this behaves -- when you look at the spreads, you typically have a baseload in mind, right? But the thing is that the plants are not anymore already today operated on a baseload basis. And they are now operated already now more winter than in summer. And what we expect to see is that we expect to see like to the point that the plants could be basically shutdown for the summer, like fully, not really -- not even being available and being available only in the winter. So this is the line of thinking that we have, and we are working on making sure that we can make this kind of flexible approach, both on the generation side and on the mining side. So this is kind of what we see as a challenge for us, and we are working on it and our kind of operating people are working on it. In terms of like making long-term decommissioning plans, we are not doing that because the thing changes so much that what we really need to plan is that every time when you have like a larger CapEx -- maintenance CapEx period coming up, this is when we need to make sure whether we do it or not. And for the stations that we have upgraded historically, and those are the ones that theoretically could be still available by 2030, the 3 stations, we will need to make this decision around 2025.

[Operator Instructions] The next question is by Robert Maj, IPOPEMA Securities.

It's Robert Maj from IPOPEMA Securities. I'd like to check up on the story behind Polish assets on the disposal process. I mean we hear that one of the bidders -- potential bidders have withdrawn from the transaction. I just wonder what is your determination in disposing this process? I mean how low you can go with the price? I mean the coal-fired obsolete power plants are not that even the Polish state utilities are looking for. So -- yes, and how long could the process can take place?

We are just now analyzing another round of offers from many parties, and we really don't want to comment on anything that relates to price and our expectation and hurdle rates and so on until it's finished. As we communicated earlier, our plan is to, if we dispose the asset, to dispose them by the end of the year or beginning of next year. But now we are really -- we just received a second round of offers. So it's too early to comment.

Okay. But anyways, you are not going to your base case scenario on the left with these assets if -- even if the assets are [indiscernible] go ahead with them?

No, I really didn't understand now. There was some noise in the communication. Could you repeat it, please?

I just wonder, in your base case scenario, just you're just selling these assets, I mean you don't want to keep them. So that can imply that no matter what you are going to go ahead with the transaction.

For now, we are going ahead with the transaction. Everything depends on the valuation, of course. So you can -- until there is a winner and until the price -- the money is on your account, you can never say that it is -- you will sell it at any price. It depends.

The last question is by Chris Johnson of S&P.

Chris Johnson, S&P Platts. I just wanted to come back to your earlier comments on the lithium mining. You gave some dates for construction -- possible construction of the plant and later -- the mining 2 years later. I just want to double check, there still is no actual decision on going ahead with this mining project. And just when will that decision be or has something happened in between that I don't know about yet?

Look, we are now working on the so-called definite feasibility study, both on the mining side and the -- and we are doing quite a lot of work on the ore processing side. And we always keep repeating that we have just gone through some internal milestones, and we still consider and that's why we are working on it at a very attractive deposit with a very attractive ore, which, by the way, can be seen even through the valuation. Obviously, our share -- our part of the project, controlling part, is not being traded. So you're cannot see price rate. But the other half, smaller half, is being traded and you see the price has tripled since we've entered the project. So that's where you see the market valuation of the deposit. But we will make the final construction decision only in 2023. That's when we actually...

Sorry, what was that date? 2023?

Yes.

Yes, fine. Okay. Fine. But from your earlier comments, things look positive. That's the takeaway maybe. Is that fair to say?

The things are going well.

We have no further questions and so I hand back to you.

Okay. Thank you, everyone, for taking part in this call. As always, please do not hesitate to reach out if you have some follow-up questions to Investor Relations, myself, Barbara and Zdenek. And thank you, again from joining, and we will hear you again at our quarterly call in August, if not earlier on individual basis. Thank you very much.

Thank you very much.

Thank you.

Thank you. Bye-bye.

Goodbye.

Ladies and gentlemen, thank you for your attendance. This call has been concluded. You may disconnect.