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

Welcome to the CEZ Group 2022 Results. At our customers' request, this conference will be recorded. [Operator Instructions] May I now hand you over to Barbara Seidlova, who will lead you through this conference. Please go ahead.

Hello, everyone, and welcome at our presentation of our 2022 results. I have Martin Novak, Chief Financial Officer; and Pavel Cyrani, Chief Sales and Strategy Officer, here with me. They will take you through the slides and then the Q&A will follow. Now I'm handing over to Martin.

Thank you, Barbara. Good afternoon, good morning, everybody. I will shortly lead you through the first 2 parts of the presentation, and then hand over to Pavel, and he will share with you our sort of market development and strategic vision. So on the first -- on our Slide #3, you can actually see the highlights of 2022 and the key event actually, which was caused by invasion of Russia to Ukraine, and it all arise to difficulties and volatility in the market. We are showing you actually a few numbers. There was a significant decline in gas supplies from Russia of 56% year-on-year compared to 2021. There was -- and as a result of it, of course, and as a result of uncertainty in the market, there was a sharp increase in prices of gas from EUR 34 to EUR 118 per megawatt hour. And of course, in line with such an increase on gas front, there was also significant increase on the power prices from EUR 91 to EUR 299 for 2023 supplies. Peaks were, however, much higher. As you will see, they were close to EUR 1,000. So what's actually done in Europe and what we did also as part of the solution, there was a significant reduction of gas consumption in EU by about 15%, increase of LNG supplies by 69% and the increase of gas supplies from other countries about 17 billion cubic meters. CEZ has withstood the crisis successfully. Volatility was high. Margin costs were high and debate about availability of gas was quite hot actually in some parts of -- or the times of last year. Nevertheless, we made it and secured in our gas. Now actually looking at today's situation, it is much brighter and basically, we believe that 2023, '24 will be without any issues. So actually, on Slide 4, there are a few key highlights of strategic raw materials and immediate anti-crisis measures. We secured LNG terminal capacity in the Netherlands for 5 years, which will actually -- which is able to supply 1/3 of Czech Republic's consumption. And we've also ensured maximum availability of coal-fired facilities temporarily to make sure that we have enough electricity, which as a net exporter is not an issue in the Czech Republic. We have also secured sufficient inventories of nuclear fuel still from Russia and also contracted the supplies for non-Russian fuel for Temelin nuclear plant from Westinghouse and Framatome. We are now in the middle of process of finalizing similar deal regarding Dukovany power plant. We also used the situation to acquire a strategic company, SKODA [indiscernible], which means nuclear engineering company that belongs to Gazprombank. And it is our key supplier of maintenance on both power plants and we managed to -- actually after years of discussions to basically acquire this company at very reasonable conditions. Zero-emission nuclear energy and decarbonization, we made record 31 terawatt hours of nuclear power generation. We also tendered for new nuclear build in Dukovany. We received 3 bids from 3 participants, and they are now being catalyzed. We are also accelerating preparation of small modular reactors projects. We accelerated retail build actually of small photovoltaics for our retail customers. We built actually 4,000 -- over 4,000 photovoltaic installations on the roofs of our retail customers' household and capacity of 27 megawatts installed capacity. We also received a CapEx support for 130 -- 173 megawatts of our big photovoltaics that we are about to build and also actually submitted another 1,000 megawatts actually into the second call of subsidies round. Energy savings, we encourage people to save energy. We have actually started a website where more than 2 million unique -- actually, people visited user-specific website. Looking at Slide #5, actually, there is more information about the LNG terminal in the Netherlands that I already covered. We actually regasified 3.6 terawatt hours at the terminal. It's a fantastic backup to our gas needs in the Czech Republic that we now have and also great trading opportunity, of course. Looking at the next slide, actually, we also -- we are showing a few highlight here. I already talked about some of them, record nuclear generation. We had an exceptional income from commodity trading, which will be covered later. We still hold on to our decarbonization efforts, although our lignite plants are running at full speed to make sure we have enough electricity in mainly Central Europe due to lack of gas, but our plans to decarbonize are still in place. And we obtained a permit for the long-term operation of Unit 2 at Temelin nuclear plant. We managed to secure enough liquidity, which was a big issue, as you will see later, for margin costs and we paid a dividend of CZK 48 per share. In the next slide, you can actually see our generation impact actually to both EBITDA and also our net income -- adjusted net income. Our generation has brought about 66% of our EBITDA. Our total EBITDA is CZK 131.6 billion and adjusted net income of CZK 78.4 million. And again, generation is about 61% of that. Trading, significant income from trading activities. This will be discussed later. And distribution and sales is a stable business, providing something like -- somewhat like 17% of EBITDA and 16% of net income. Net income outlook, we announced actually on 2nd of February this year, net income outlook of CZK 30 billion to CZK 40 billion, which we are now confirming. When we look actually at the history, based on net adjusted income of CZK 78.4 billion, our simple calculation of potential dividend, if we stick to 80% of payout rather than 60% because our range is 60% to 80%, but if we calculate at 80%, the dividend will be CZK 117 per share, absolutely record high. In total, CZK 63 billion for shareholders. And on the last slide of this section, we are actually summarizing how much there will be shared to the Czech Republic. More than CZK 100 billion, CZK 44 billion from dividend, CZK 30 billion to CZK 40 billion from windfall tax and cap on prices that are applicable in 2023 only. And then ordinary income tax is being paid for 2022. So now let's switch into more details in the financial part of the presentation. On the Slide #12, you can actually see -- Slide #11, I'm sorry. You can see actually Q4 financial highlights, and there is also in the backup a lot of information about Q4 itself. In our presentation, we will comment mainly 2022 and 2023. So for 2022, we operate -- we increased our operating revenues by 27% or CZK 288.5 billion. EBITDA, CZK 131.6 billion and net income CZK 80.7 billion, with adjusted net income CZK 78.4 billion, which are actually multiples of what we achieved last year as you recall. On Slide #12, there is a comparison to our latest outlook. So we actually beat our expectation fairly significantly. There are 3 main factors. Another CZK 3 billion from prop trading that we couldn't plan for. We generated more nuclear power, and we also achieved positive results on derivative trading that actually becomes part of P&L in 2023, which is bringing about CZK 3.5 billion. So -- and of course, appropriately, this is also moving from EBITDA to net income after tax. On Slide 13, important slide, actually, you can see a waterfall chart showing you the main differences between 2021 and '22. As I said, we actually doubled our EBITDA year-on-year. CZK 52.3 billion of improvement is coming from Generation segment. Power prices actually contribute CZK 46.5 billion. Then we have a higher availability of nuclear plant CZK 0.8 billion and temporary revaluation from 2021 derivatives that actually hit P&L in 2022 was CZK 3.8 billion. We paid actually levy or capital on generation revenues above gaps that were introduced in December, and we paid CZK 1.2 billion. Trading, year-on-year improvement, CZK 18.7 billion, CZK 20.1 billion coming from prop trading and CZK 1.1 billion is actually negative impact of Gazprom not fulfilling their contractual obligations. We are now actually in arbitrage with Gazprom in Switzerland. And actually, this is the loss of not -- them not supplying gas and us needing to purchase at a market price. So total overall improvement of CZK 18.7 billion, above record high 2021, and there is actually a slide that I will explain more about trading results. Then on the next Slide #14, Generation and Mining segment EBITDA of CZK 71 billion improvement. Again, the factors are fairly similar of those that I already described on the previous slide. Most important to note is that actually our average realized electricity has increased year-on-year from EUR 55 to about EUR 100 per megawatt hour. So average achieved price for 2022, including all hedges from 3 years ago, is actually EUR 100 per megawatt hour. Of course, both for zero-emission facilities and also coal plants as well. And when we look actually at the mining activities, mining activities are worth mentioning. They increased their EBITDA by almost 40% due to higher demand for coal from external customers, also from our own power plants. And of course, there is a negative effect of operating expenses because more coal means also higher expenses. But overall, there is -- we could see 40% increase in EBITDA to CZK 6.2 billion. On the next slide, you can see actually an explanation of our commodity trading. We made almost CZK 27 billion, which is a combination of 2 factors: one is experience of our trading team, but it would probably not be enough if there were not extraordinary high volatility in the market. Under all times your daily volatility could be a few tens of cents per megawatt hour. In an extreme case, we actually had a volatility of EUR 500 during 1 day. So our trading was able to spot the trend and actually made almost CZK 27 billion. You can see some numbers almost [ 200 million ] transactions. We traded 419 terawatt hours of electricity and 1,900 terawatt hours of natural gas and 618 million tonnes of emission allowances. So pretty significant trading activity on prop trading side. You can see also geography of the trading team and CZK 27 billion is -- actually, as you could see year-on-year, about CZK 20 billion more than we achieved in 2021, which was a record year as well. Under normal years, trading was able to deliver CZK 1 billion to CZK 2 billion. So CZK 27 billion is a really extraordinary result, but we don't plan to be repeated this year. Distribution and Sales segment, very similar as last year. There is basically slight distribution that is regulated business. On retail and ESCO, meaning B2B business, there is a decline of CZK 1 billion or 19%, mainly caused by lower gross margin on sales of electricity and gas in Czech Republic due to increased prices of -- purchasing prices of commodities. So the segment actually achieved CZK 4.4 billion. Changes on net income side, I think what is worth mentioning is actually asset impairment. As you can see, in 2021, we had negative or impairments of CZK 15.5 billion. This year, we actually did not have any impairment. We had a positive impairment of CZK 3.1 billion, mainly just due to value of mining company. Mining company was doing so great that actually, it is impacting -- 2021 has impacted cash flow model that we used to predict, basically future cash flows that we [indiscernible] part of the originally booked impairment back. And then having a lot of cash for margining, we also received due to increased interest rates, more interest income. So our net is actually only CZK 1.2 billion negative versus almost CZK 4 billion negative in 2021. Important slide actually, 18. Here, you can see what was happening on our margining front on 26 of August when prices have doubled within a few hours from EUR 500 to almost EUR 1,000 per megawatt hour. We had to provide during intraday calls, CZK 50 billion in 1 day. Having 200 -- almost CZK 200 billion in cash deposited with power exchanges and -- which compared to our annual sales that include everything, including distribution and retail, whatever, all activities we do that CZK 288 billion is extraordinary high number. It is -- for most of the companies, it's difficult to keep their annual sales in cash on the bank accounts and we had to take many measures, about 20 measures to overall secure enough liquidity in those difficult times, including receiving EUR 3 billion from state as many other companies did. But we managed, as of 13th of March, we are actually having about CZK 173 billion of liquidity. We may be slowly reducing it, but still would like to have a buffer for unexpected situation. And the last slide of -- the slide before last, Slide 19. The financial section is actually confirmation of our EBITDA outlook for 2023, CZK 105 billion to CZK 125 billion and adjusted net income CZK 30 billion to CZK 40 billion. You can see that it is lower than our 2022 reported numbers, but -- and there are factors that actually show you what is the variance. Average achieved price today is estimated to be EUR 130 per megawatt hour. So the price is going up, but we have a few negatives. We don't expect the prop trading to be able to repeat CZK 27 billion. And actually, there is a variance of CZK 22 billion. So we would expect it to make more like CZK 5 billion, or 127, which was a record high result. Then we have also gaps on power prices from nuclear and from lignite plants. They will cost us CZK 8 billion to CZK 12 billion and then went for profit by CZK 20 billion to CZK 25 billion. We also have a relatively high open position 17% to 23%. As you will see on the next slide. On the next slide, you can see actually our hedging. Due to high requirements from -- on the margin front, we actually slowed down and stopped selling through power exchange in last 6 months of 2022. Actually, we redesigned our risk model that also takes into consideration possible development of prices, liquidity requirements, and we again started to hedge as originally straightforward line 3 years actually as of first quarter of this year. So you can see actually average achieved prices so far. Amount of power sold as of December 31 and the same also for carbon credits that we are purchasing. So this is all for me now, and I will hand over to Pavel Cyrani.

Okay. Well, thank you, Martin. I will have a quick review of the market development and also of our Strategic Vision 2030 accomplishments to date. So starting on Page 22, there were a quick review of the prices in the region, which are basically Czech/German prices. By today, we are almost back through the start of the year of 2022. Actually, when I look at the screens this morning, the electricity price was EUR 129, so almost to the euro same as at the beginning of the year. So -- which means that we have most likely overcome the hottest part of the crisis. However, I have some comments of what we have planned and what we think needs to happen in the energy sector going forward for the midterm and long term. Now how did the sector overcome the situation? It was a combination of things: number one, the LNG imports through Europe have been increased significantly, replacing most of the Russian-originated gas. Number two, a lot of gas was unused through savings, so people and companies using lead gas. What support these savings were also warmer weather, warmer winter, both before the year-end and also at the beginning of this year. The situation is similar across kind of the broader Central Europe. Czech Republic being in the middle of the map. On Page 23, what you see that the prices are well correlated with Germany, Poland, also Slovakia, now Hungary being less self-sufficient and electricity prices being higher. And also France still sticking out with higher prices given the low availability of the nuclear power plants. Actually, 2022 was almost a quarter -- 25% below the normal annual generation and '23 looks better, but still not back to the standard. So that drives -- that keeps the prices in France higher. Now what is also a good measure on how Europe and Central Europe stands at gas supplies is the filling of the gas storages. You see the gray area, which shows the 5-year interval of gas storage fulfillment. And if you look at the red line, that's the line of the last year, starting extremely low. We're out of the gray range, but then slowly catching up until in November, it was actually a record high. So last year, by November, Europe was well set for the winter. Actually, you see even anomaly where the gas storages have been filled again before the year-end driven by the very warm temperatures we had. And then starting again at the beginning of the year with green line, which for 2023, you see that we are following the upper bound of the 5-year range. So I think Europe is well set also for the winter of '23, '24. Actually, the German Tank Storage Association expects the gas storage to stay more than 50% felt all the way through the end of this winter and beginning of the spring until the refilling starts again. And Czech Republic is similar. Today, [ 62% ] of the gas storage is filled, and also we are almost finishing the winter season and starting [ the resting ]. I think this good news translates into stabilization of the electricity prices. We discussed on the previous graph that these were prices for 2024 delivery. But you see that the situation is similar for the '25 and '26 delivery with the gas prices dropping down to around EUR 40 per megawatt hour and electricity prices. On this drive, EUR 110 but actually, again, looking at the screens this morning, there are just slightly over EUR 100, which actually looking at all kinds of predictions of analysts. These prices around EUR 40 gas and about EUR 100 electricity seems to be the stable level of prices for this decade. Now how does our Vision 2030 kind of fits into all of this? It was announced, obviously, before the war. It was announced in the notion of achieving clean energy. I think we still believe that this vision holds and for 2 reasons: number one, clean energy is still needed, but also clean energy for Europeans and for Czech means energy not based on importing fuels. So it actually fits well into getting rid of the supplies of all kind of fossil fuels from Russia and also from other regions. So I'll just remind you of the 2 strategic pillars. One was the decarbonization of our generation portfolio and reaching private neutrality. The second pillar was providing the best energy solutions. So our customers can achieve also their decarbonization and climate targets. On Pages 28 and 29, they summarize the achievements. I think the company has done quite well. Many of the things have been already mentioned, including the record nuclear generation, also progress on the long-term nuclear projects. We are also already getting more active in the renewables, actually construction, getting the first batch of support from the modernization fund and applying for a much larger batch in the second round, but we're also building renewables in Germany. That's on the generation side. Now on the customer side, Page 29. Also, we saw a significant demand growth in the solutions from our customers. So both connecting PV plants by our distribution, also building them for our customers either by just per day in the retail segment or ESCO in the B2B segment. All of these numbers are record high, never seen before. And we see not necessarily this trend in terms of like the quadrupling, but we do see still a trend of these numbers growing also into year 2023. We've also worked hard on improving our ESG rating. We always believe that we've done many more things than were reflected in our ESG rating. So we worked on the communication of these achievements, and they were reflected by improving all of our main ESG ratings, as you can see on Page 30. And apart from the fact that we can -- we are glad -- it is reflected in the ESG rating. We're also able to issue first Euro-denominated, sustainability-linked bond in Central and Eastern Europe in April last year with EUR 600 million with that coupon linked to sustainability targets. Now the next few pages, they recap the overall financial targets. These pages have been already communicated in February. So this is just a quick review. We were originally basing our EBITDA long-term targets on basically stable, flat price. So all of the growth was driven by our kind of internal growth, growing our generation portfolio, growing our customer base and so forth. Now with the prices going up, let's say, towards EUR 100 by 2030, let's say, as the middle of the internal forecast, there is about CZK 40 billion on top of the original numbers. So we are now looking at CZK 125 billion to CZK 135 billion by 2030. And obviously, we were ready to fulfill our Vision 2030 investment plan, even with the prices at around EUR 60, and we are more comfortable fulfilling these goals and doing the investments with higher prices. You see that our forecasted net debt-to-EBITDA ratio dropped to 1.5x, so well, well below the 3x target. And now on Page 33, it's the final recap. I think along the line that we have been working in 2022, we also plan to work in 2023. So increasing our emission-free generation, working on the solutions for our customers, growing our customer base, continuing on our ESG priorities and altogether, being ready to achieve EBITDA of CZK 105 billion to CZK 125 billion with CZK 30 billion to CZK 40 billion adjusted net income and overall paying over CZK 120 billion to our shareholders through dividends and to the government through various taxes. I think we are well set to achieve these targets.

So this concludes our presentation, and we are now ready to take questions.

[Operator Instructions] Our first question comes from the line of Piotr of Citigroup.

I have a couple of questions. Firstly, I wanted to ask about your new guidance on Page 19. You've said, this is based on the average realized price between EUR 120 to EUR 160. So should I understand that this is the top and the bottom end of the ranch, and you currently look at it at EUR 130 based on the mark-to-market assumptions? So just a clarification if this is the right figure. And then how much will be the guidance to include the contribution from the LNG terminal that you have, as a follow-up? And then thirdly, I wanted to ask you a question about whether you have any local route to this, potential takeover of the company via government. Have you been doing some internal analysis, whether that makes sense to split the company and so on, have you reached any conclusion on this? Anything you can add would be helpful.

So first, guidance. Yes, today, we expect, given what we know is actually EUR 130 is the best estimate. And as you could see, EUR 120 to EUR 160 was something that we hit as a range. Things are -- can be still extremely volatile. We still have about -- or significant portion of power actually to be sold during the year in the spot market. So that's why we provided such a wide range. If it were EUR 130, then we would be comfortably selling into CZK 30 billion to CZK 40 billion, but I don't want to make a speculation how much would it exactly be. So I would wait for the main numbers, and we will probably narrow the band. LNG terminal is included, but basically, everything we know so far is included -- so including LNG terminal. But again, what could be an income from LNG terminal, it depends. Similar question, if you asked me last year whether trading would ever make [indiscernible] accounts, would never expect it and also that's difficult -- very difficult to predict.

And on the transformation or on the changes, I think the situation remains the same in the sense that we, as a company, have been kind of discussing and thinking about how to best finance the development of new nuclear and state ownership of the nuclear assets was one of the options. I think the government is looking at it, at least from what I understand also from the public speeches made by the various members of the government, but there is no -- nothing new that we could share with you at this moment and that we would be aware of.

And just a clarification on this one. So is my understanding correct that this change of the law would actually enable a scenario in which you could directly sell nuclear reactors to the state and it allows for a split, not necessarily -- nothing to do to take over the premium in the market?

I'm not sure I understood the question. First of all, which law are you talking about? And which -- what selling you were talking about?

There was a change of a law that would lower the requirement of AGM thresholds to split the company. Those are proposed law, those like at the end of last year. And from then onwards, the share price moved upwards in response to this kind of anticipation that this law was done as pre-requisite to split the company. And therefore, when we think about the transaction structure, one of the options would be a takeover of a company. But yes, there is alternate degree just to offer you a certain price for -- to reactors, right? And then you'll just pay a fair value for the assets. So -- but as I understand, you don't have any conclusions on the fleet at the moment that you can communicate.

Exactly on this one, we have no conclusions.

And our next question comes from the line of Arthur Sitbon of Morgan Stanley.

The first one is on the European power market reform. We saw that the proposal of the European Commission opens the -- or creates the possibility basically of implementing 2-way contracts for differences on new low-carbon investment and that includes the life extension. I was wondering if that could be part of the plan for your reactors that get -- your nuclear reactors that get a life extension in the Czech Republic. So that's the first question. The second one would be on the debt. It has increased a lot in the last 3 months of the year. I was wondering if you could walk us through what is temporary and what is more structural in that debt increase. And if you can provide some indication for debt at the end of 2023, that would be helpful. And the last question would be for -- on the LNG terminal. I was wondering how much of EBITDA was generated on that in 2022 and if it was included in the trading division.

Okay. Well, let me start. First of all, on the market reform, well, I guess, 2 statements. We welcome the fact that the proposal by the European Commission includes long-term contracts and CFDs that are also applicable to nuclear. So it's not only the renewables. So I think it's a good news for nuclear operators. At the same time, we, at this moment, did not or are not considering to use these tools for lifetime extension. At least the way we look at the lifetime excision of our nuclear power plants, they don't require such an extreme investment that we call for a CFD type of contract. I think they are well, well in the money at the current prices and development at the lower price of the [ free war ] crisis. So that's our perspective at this moment. Obviously, it may change in the future, but at this moment, it's like this. Now on the LNG terminal, yes, it is in the results. It's part of the trading results, but we don't comment on the internal split of prop trading results between the different kind of strategies...

Okay. And that's actually debt level is -- there are quite a few temporary factors in our debt numbers. So I would expect that actually it will be reduced during 2023. But nevertheless, net debt to EBITDA is actually fairly low number, and so that's the short answer.

And Arthur, you also asked about why the debt increased in the fourth quarter. Just remember that this year, we paid the dividend only in November. So that explains the increase compared to end of September.

Okay. If I may, just a follow-up question on the first one on the power market reform. I was also wondering if -- so I understand you would not be so much interested in having a CFD with the life extension, but I was wondering as well if there is a possibility that the CFD could be forced upon you.

Look, at this moment, there was no word about this. No discussion about this. So I'm definitely not going to ask the regulatory what they think about it.

Our next question comes from the line of [ Jeremy Lander ] of [indiscernible] Intelligence.

I was just interested, given the market turbulence arising from recent banking failures and your comments on net debt-to-EBITDA falling this year, do you still expect to be able to refinance upcoming Eurobond maturities, especially the EUR 50 million, 0.875% note due in November? Any thought would be much appreciated.

Yes. So we -- I will say that we don't expect any issues. We have a very -- we have only one maturity actually in 2023. And when I look at it, actually, it's on Page 55. So 2023, we have about CZK 5 billion to refinance. So immaterial amount, nothing to refinance in 2024, so very comfortable position.

Our next question comes from the line of [ Gary Thompson ].

Against the backdrop of the release of the Critical Raw Materials Act last week, I wanted to ask about the Cinovec's lithium project that you have a majority stake in. So 2 parts to the question. First part relates to permitting. And in April last year, you signed an MOU with the [ HC ] regional government, which was focused on progressing that project, but particularly of note was the references to concluding the environmental impact assessment. I think that was first submitted in 2021. Can you give us an update on how you are progressing with the EIA? And more broadly, when do you expect this project to be fully permitted? And second part to the question really related to that. In your February investor presentation, you show Cinovec's making an EBITDA contribution from 2025 onwards. Are there any changes to that? And can you talk about some of the key milestones that you're working on relative to the project that lead us to getting into production?

I will -- look, first of all, we, again, welcome -- the main highlights from the Critical Raw Material is focusing on making it easier to develop mining operations in Europe for the European companies, especially for those that would produce critical raw materials. At this moment, we focus on 2 things. One is, doing a detailed feasibility study with all the -- testing of both the mining procedure and mainly kind of extraction, the refining of the lithium cell. And then also on permitting, we are still discussing with the regional government and working on changing the regional zoning plan so that later we can change or implement the projects in the local zoning plants. Now the key milestone that we focus on is that in this year, we would like to finalize the detailed feasibility study. We would like to finalize the regional zoning. And based on these 2 outputs, we want to basically give go ahead or not, but we hope we will give go ahead for this project for the next phase, where we already start the siting and the construction permit development. Now in terms of timing, I think I have to say, I don't recall materially, we would mention 2025 being a year where it already produces EBITDA. I think that would be rather aggressive. I assume we will start mining and producing lithium if everything goes well, about 1 to 2 years later, depending on all kinds of things. So this is what we are now looking at.

We currently have one further question in the queue. [Operator Instructions] And the next question comes from the line of Jan Raška at Fio Banka.

The only thing I corrected is...

Sorry, Jan, we are having trouble hearing you. Your line is a bit muffled. Are you able to get closer to the mouthpiece of the speaker?

Do you hear me?

That's sort of better. Thank you.

Yes. So my question is, I understand it correctly that your estimates of levy on generation revenues between H2 CZK 12 billion is related only to forward contracts on the year 2023. And the second question, of course, you are continuously selling electricity on other years '24, '25. Is this levy on generation imposed also on other forward electricity contracts? I mean contracts on the years '24, '25.

The way the levy works, actually looks at -- like it will take almost every day, it looks on the average achieved price through all contracts related to this delivery on this date. So it takes into account all the forward sales historically down and also the spot sales on the day, and it calculates your average achieved price. Then it looks at what power plants you used for the production and given that each type of power plant has a different cap -- then it makes basically -- average specific cap for the production of the day and then compares too and then basically, this is the levy that you pay. Now to be very specific, I made this example of 1 day, but what it also does, it takes an average. So if you are 1 day below the cap and 1 day above, it takes the average of the 2 and it looks at the average, is above the cap.

And we actually pay monthly allowances. However, the levy goal based on 2023 full year weighted average for each part of -- or each source of power generation, meaning nuclear and lignite, in our case.

And it applies only for 2023.

Yes. So there is nothing in 2024 and '25, it's applicable only for 2023. Windfall profit tax is applicable for 2023, '24, '25.

As there are no further questions in the queue at this time, I'll hand back to our speakers for the closing comments.

Okay. Thank you, everyone, for taking part. If some additional questions come up to your mind, do not hesitate to contact Investor Relations. Thank you, and Buh-bye.

Goodbye.

Thank you. This now concludes the conference. Thank you all very much for attending. You may now disconnect your lines.