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

Hello, everyone. This is CEZ Group Full Year 2023 Conference Call. It's my pleasure to welcome today's speakers, Martin Novak, Chief Financial Officer; and Pavel Cyrani, Chief Strategy Officer. I will now hand over to Martin.

Good afternoon. Good morning, everybody. Let me cover first 2 sections and then I hand over to Pavel. So looking at slide #3, you can actually see our financial highlights. Our EBITDA reached CZK 124.8 billion. We exceeded actually our November 9 outlook, which was CZK 115 billion to CZK 120 billion. Positive impacts or positive changes between our outlook from November 9 and the real numbers for 2023 include trading segment, CZK 3.5 billion better results, CZK 2 billion are better results from [ Brooktrading ], CZK 1.5 billion is actually a revaluation of derivatives that hedge [indiscernible] for 2024 and later. We also had better mining segment numbers by CZK 700 million compared to our estimate and revenues from ancillary services and sales of heat in Czech Republic of CZK 1 billion. Our adjusted net income was estimated at CZK 33 billion to CZK 37 billion, and we actually achieved CZK 34.8 billion. On next slide, you can see achieved adjusted net income of CZK 30.8 billion, which actually comprised mainly or 74% of it is actually from emission-free activities. And only 26% is generation from emission facilities and mining. Our -- the level of our income when we actually take into consideration payout ratio of 60% to 80% of adjusted net income shows that we would be able to pay CZK 39 to CZK 52 per share dividend or CZK 21 billion to CZK 28 billion dividend in total. Our average or long-term average of our payout ratio since the first dividend we started to pay, which was in 2003, is 70% of adjusted net income. Average industry standard is actually around 50% these days. On next one, you can actually see that power prices are going down, and they are basically reaching levels of 2021. It is very well visible on the chart. Of course, the most significant changes in 2024, as you can see, the power price is now at something like 69 [indiscernible] quarters of 2024 and significantly lower -- was actually a forward price in 2022 for 2024, which was EUR 254. A sharp increase of the prices for [Audio Gap] caused by Russia invasion to Ukraine after LNG supplies to Europe were secured in 2022 and the power prices started to be significantly reduced due to reduction in gas prices. It was clear that there is enough and will be enough of natural gas and also the effect of uncertainty is basically minimum. Current situation indicates that actually when you look at power prices and then carbon credit prices, that we can see clear indication that coal assets will be discontinued definitely by the end of decade, in most cases, the most power generators. And there is a lot of investment into stability of transition and distribution networks, switching to gas plants, building renewables ahead of us, which also will require certain changes in legislation. On next slide, you can actually see our key highlights in energy security area, where we secured supplies of new non-Russian gas, first, through terminal [ Eemshaven ] in the Netherlands, where we have contracted the capacity for 5 years in 2022 and also actually 15 year capacity to start from 2027 in German terminals Stade. There is a tender going on for fixed unit in Dukovany. There will be a slide on it, so I'll cover later. We also continue to develop renewables in the Czech Republic. We have now investment support available of up to CZK 3 billion and for the project of installed capacity, of 728 megawatts installed. We also started and launched tender actually for a supplier of waste incineration plant in Melník that is part of our energy solution to actually burn waste and generate heat and power. And we also completed the heat pipe between our nuclear plant Temelin and City of Ceské Budejovice which is actually largest heating project of the decade, supplying heat from the nuclear plant to the city central heating system. On corporate social responsibility, our goal that we set actually in 2021 was to become the best or to be among top 20% of best companies from ESG point of view, and we actually achieved it, our ranking through ESG aggregator or CSR hub, which compares 35,000 companies, is now at us being actually in top 16% of the companies. We also -- our employees actually donated more than CSK 500 million and actually originated those projects. So the important slide actually is on the tender for the new nuclear unit in Dukovany. As you know, in October ‘23, actually, we received bids from 3 potential bidders, or potential suppliers, which was French EDF, South Korean KHNP and U.S-Canadian company, Westinghouse. On January 31, the Government of the Czech republic approved the conclusion of new amendment to the [Audio Gap] current contract [indiscernible] and actually bids were supplied by all 3 bidders, at the same time, actually 2 bidders, French EDF and Koreans were invited to participate in improving their bids by the end of -- by April 15, 2024, and also extended to potential build of 2, 3 or 4 units, not only 1 unit. On May 31, actually, we will supply – or Elektrárna Dukovany, which is our subsidiary, will supply or submit oration report to the Czech government and the government will choose the company or the supplier actually of nuclear bond during summer '24. The contract with the supplier, with the winner should be signed during the first quarter of ‘25. The next slide actually shows more detail on our 2 terminals, LNG terminals, both on Netherlands [indiscernible] and also Stade providing some details -- and actually, the next slide shows main financial strategic targets for 2024. So our EBITDA estimate is at CZK 115 billion to CZK 120 billion, adjusted net income, CZK 25 billion to CZK 30 billion. Certain assumptions. Total electricity supply is actually 41 to 42 terawatt hours. We expect to achieve average price of EUR 130 to EUR 135 per megawatt hour. We are accelerating depreciation of our coal-fired portfolio, which is reducing our adjusted net income. And we expect windfall taxes of CZK 20 billion to CZK 30 billion for 2024. That's mainly -- these are the key elements actually of our financial targets. And we also expect to generate about 30 terawatt hours in our nuclear plants. Dukovany bid should be actually evaluated during this year. We should continue into the decarbonization of our portfolio of both power generation and also heat -- portfolio increase and further digitalization and efficiency and innovation in our both, sales and distribution processes and continue with our ESCO development. On the next slide, it's important news and kind of hot news because this was concluded yesterday. And we actually -- after quite a lengthy process, are able to acquire a 55% stake in a gas distribution company in the Czech Republic called GasNet. We are actually buying assets from Macquarie and replacing them in shareholder structure. There are 2 more shareholders, BCI and Alliance, holding 26.29% and 18.5%. As you can see, on the math, actually, this gas distribution covers a significant amount of territory of the Czech Republic -- and practically, 100% is identical to our electricity grid that we actually operate, distribution network. So we expect lot of synergies from that situation. There are some basic information about GasNet. We should be physically taking over the company sometimes during the summer after European Commission antimonopoly clearance is received, and also Czech Minister of Industry clearance is received. Only then we can actually physically take over the company. So now switching to financial results and more numbers on generation segments. So overall, on the slide of -- you can see selected financial metrics, EBITDA and net income, I already mentioned. I think it's important to say that we also increased our CapEx by CZK 11 billion to CZK 45.8 billion. Our net debt has not practically changed. It's a bit lower than it was a year ago and has reached CZK 151.3 billion. Our net debt-to-EBITDA ratio is actually 1.2. We actually produced or sold 43.5 terawatt hours of electricity at average achieved price EUR 126 per megawatt hour and we consumed 13.4 million tons of CO2 and the average purchase price per ton of CO2 was EUR 61. On the next slide, you can see changes on our EBITDA year-on-year. There are basically very few big moving parts. In generation facilities, although the variance is fairly small, CZK 700 million, we actually had one big positive fame and one negative. Positive was higher prices contribution of CZK 8.4 billion, and negative was actually a cap on power prices where we had to pay CZK 8.8 billion difference there in services last year. So in total, it was CZK 10 billion paid, but CZK 1.2 billion was paid in 2022 as well. So variance is CZK 8.8 billion. Generation segment trading CZK 12.3 billion lower, but this is really compared to a record high result, which was close to CZK 27 billion in 2022. This year, we achieved CZK 9.4 billion -- I mean, it 2023 we achieved CZK 9.4 billion only. However, a normal number under normal times would be somewhere between CZK 1 billion and CZK 2 billion. So CZK 9.4 billion is still the second best trading result in our history. Nevertheless, it is lower than in 2022. We had a positive impact of more than CZK 5 billion, actually, which is revaluation of hedging position for future years. So negative variances then CZK 12.3 billion. Mining significant contribution of CZK 6 billion, mainly due to higher coal prices, both, two power plant of CEZ and also external supplies to our external customers, mainly due to increase in coal prices that actually are linked to electricity prices. Sales segment has improved its performance by CZK 1.9 billion, CZK 1.2 billion of which is actually a result of our court case between us and our railway authority where they did not actually buy contracted electricity in 2010 and '11. And actually, now we are being reimbursed lost profit from them. So this is one-off items, will not repeat itself clearly in 2024. The next slide, you can see the main causes of year-on-year changes in net income. We have higher depreciation and amortization due to increased depreciation of our coal plants and also our mining company. Asset impairments, we have a negative impairment or impairment of CZK 5 billion, which is related to impairment in our coal mining business where actually last year, we had a reversal of impairment due to significantly better outlooks in mining industry. It has changed very rapidly. So now we actually have an impairment of CZK 5 billion, total variance of CZK 8 billion. Other expenses and income, actually, what is worth mentioning is that our -- despite the level of debt of CZK 151 billion, we basically have no interest expense because all interest income from our free cash is covering or was covering our interest expense from the -- on the financing. Interest from nuclear and other provisions is significantly higher than last year or than in 2022, and it reached CZK 7.3 billion. This is due to higher interest rates. Significant variance actually is in income taxes line, CZK 13.5 billion higher tax due to tax windfall profit tax. it was introduced actually in 2023. So now we are getting down to a net income of 29.6 billion and adjusted net income, which is adjusted for CZK 5 billion impairment in mining companies, so CZK 34.8 billion adjusted net income. On next slide, you can see actually our generation of nuclear and renewable side. We had 1% lower generation compared to 2022 with 2% lower nuclear due to scheduled or plant maintenance. Same will be the case in 2023 for nuclear segment. In renewable segment, we had a 9% better result, mainly due to better hydrological conditions in the Czech Republic, and we are planning to increase our renewables generation by another 10%, mainly due to new photovoltaic power plants, wind power plants in France and also biomass availability in Poland. When we look at our emission, generative electrical and natural gas, you can see a decrease of 13% year-on-year between ‘22 and ‘23 and another 9% between ‘23 and plans ‘24 to -- in '24 to total 16 terawatt hours, mainly due to market conditions, both in the Czech Republic and Poland, where it is less and less profitable to start the power plant, especially when you have a free or a cheaper alternative of importing cheaper power from Germany,, for example, during [indiscernible]. The same applies for natural gas, where actually it is difficult to predict power generation from gas as it is really [ peaking pond ]. So our estimate stays on the level of 2023 numbers, which is 2 terawatt hours, but can be actually different depending on how market conditions will work out. Now on next slide, we have details of generation mining segment. I want to go through all the details that you can read by yourself. Actually, the total EBITDA from this segment is CZK 90.4 billion and mining segment, actually CZK 12.3 billion, so a significant contributor with zero-emissions contributing CZK 59.2 billion and emission generating facilities, CZK 21 billion and trading CZK 9.9 billion actually. On the next slide, you can actually see year-on-year change between 2023 EBITDA and ‘24 estimate, we expect lower income from generation due to the details that are provided on the right side of the chart, the same with mining with following power prices, we would expect also coal prices to go down, better contribution from distribution sales, 0 to CZK 2 billion positive. And that's how we think it actually to our estimates of CZK 115 million to CZK 120 million. Next slide, important slide, we actually can see the level of electricity sold as of 31st of December 2023. For 2024, ‘5, ‘6 and ‘7, same actually with contracted emission allowances for the same period or purchased carbon credits. And to provide you even a fresher number, the number below actually in the bottom part of the slide shows the level of hedged power for 2024 through '27 as of the end of February. So as of the end of February, we're basically sold out other than 6%, that we have for potential peaks and potential spot market to be sold during 2024. Next slide, we have a reconciliation of our Vision 2030 project where in 2021, we actually announced that we would like to increase our EBITDA from CZK 61 billion to something like CZK 80 million to CZK 90 million in 2030. And this is just to demonstrate that we are on a good track, even in 2025, we are actually expecting the column showing the impact of the hedges of our power prices higher than normally anticipated in the plan, which is additional benefit of CZK 26 billion, but the baseline, comparable baseline will be 79 to 89. And on next slide, actually, last slide, you can see the share of our zero-emission activities in EBITDA, will be increasing to 97% in 2025 and by 2030 actually our goal EBITDA should be replaced with gas, with leaving minimum actually coal assets in our portfolio. So that's all for my part, and now I will hand over to Pavel to guide you through customer segments and fulfillment of our 2030 Vision.

Okay. Well, thank you, Martin, and hello, everyone. Let me walk through the information on customer-facing segments. First, on page 23, there's a recap of all the trading activity as Martin already mentioned. We had a very good result. It will be the second biggest in history of CZK 9.4 billion, yet quite a drop from the very extraordinary year of 2022. Still, just for comparison, you see what is the volume of transactions. It's about – on the natural gas, it's more than 10x Czech consumption and on electricity, it's about 5x the Czech consumption. And the reason being that a large part of the profit is made from trading in other markets. In terms of distribution, there's a slight decrease year-on-year, partially driven by the decrease in adjusted distribution, combined with higher fixed operating expenses driven by inflation. If you allow me, I'll comment on the consumption, there's a 4% drop. It's actually driven by kind of 3 things combined. One is we still see effect of people saving electricity driven by the higher prices of the previous years. Secondly, year 2023, it was a very warm year with the record highest temperature on average, which has effect on especially heating use. It's more so with gas, but also on electricity. And last but not least -- there is a surge of people installing roof top solar, so obviously roof top solar goes out of the distributed electricity through the grid. On the other hand, we are considering this temporary because we are already seeing the first signs of both people or households and companies switching from other fuels to electricity. So overall in general, we actually expect the electricity consumption to grow significantly. So this trend of downward or decline should distribute, it is temporary in our perspective. On the following page, there's a recap on the activities in the sales and supply segment, a drop in the retail segment, which was mostly driven by the very high wholesale prices last year, which obviously creates a push on the margins, which was even more so driven by the fact that basically we had a regulated price last year for the all segments with the price ceilings where the costs of suppliers above price ceilings were then offset by subsidies from the government. Again, this is in our perspective, a temporary -- I think that will not repeat itself this year as the price savings are no longer in effect. On the other hand, we saw a surge in both revenues and profits for the energy services with companies asking for all kinds of measures to self-produce or reduce the consumption of electricity and gas. And also, we had a very good year in terms of purchasing electricity from all the distributed renewables that have been installed in the past 2 years. In terms of the volumes on next page, I already commented on electricity. You see even a higher drop on gas. This is mostly driven by the average temperature; gas being used mostly for heating. So this is what we see. In terms of the number of customers, there is a slight drop. Obviously, it needs to be seen in the perspective that we have gained several hundred thousands of customers over the past 2 years. So there was some correction last year, but we aim to stabilize the portfolio this year and keep it stable or even slightly grow it going forward. On page 27, is some more detail on the revenues from the energy services. I mentioned that we see increased demand for the staple services. Obviously, the 32% is not only the growth in demand. There's also inflation factored in because these are nominal revenues from these services. And again, we aim to continue, although not at such a pace in year 2024. We wanted to -- because this is an annual call, annual presentation, we wanted to set some of the achievements and results in the framework of our strategy Vision 2030, which obviously was announced pre-war in Ukraine, so it was more articulated in terms of the protection of climate, but given that it reduces the use of a need for fossil fuels, which are important to a large degree from abroad and historically have been mostly imported from Russia, it also increases the energy independence of Czechia and the region. So on the next 2 pages, 29 and 30, let me just quickly recap things that you have seen in the presentation. We obviously still focus on 2 pillars, the first one being the reduction of emissions in our power and heat generation where we exceeded again the 34 watt hours for nuclear and the 34-hour combined nuclear and renewables and our emission intensity of heat end power generation declined year-on-year in all the measures, both CO2, SO2 and NOx. We have also, apart from the comments Martin made on the nuclear tender, we have received a zoning permission for a nuclear facility in Dukovany, and we have completed the documentation of our environmental assessment impact notification for the small modular reactors in Temelin, and have also completed -- we have completed the preliminary feasibility studies for our locations. The LNG terminals already mentioned. We've also started a pretty significant program of replacement of the lignite heat power plants, heating power plants. The first one, where we already started construction in [ Burkaloa ] a small town, but others lined up, we are already running the supplier selection -- and all of these will be enabled by two types of support. One is an investment subsidy drawn by -- from the modernization funds. So all of these projects have won or will be -- will apply for an investment support from modernization fund. And the second measure is being the combined heat and power support program, which is now being notified in the European Commission. Hopefully, that will be finished soon and will be swiftly succeeded by first auctions run by the Ministry of Industry in which we obviously plan to participate with these projects. Last but not least, is the construction of new photovoltaic based on the investment support that we've won from the modernization fund. In terms of the second pillar, it's a combination of providing new services, increasing capacity and also focusing significantly on digitization of our activities. I'll just highlight a couple of things. We have connected more than 50,000 new photovoltaic -- mostly rooftop solar power plants with capacity over 600 megawatts to our Czech distribution grid. We have also built more than 4,000 rooftop solar plants with our own hands to just [indiscernible] another almost 100 through just ESCO. We have put out new applications, kind of smartphone applications, which increased the share of [ contacts ] that we run through digital channels. Maybe last comment on this one is that we are also continuing in building up our e-mobility charging stations, adding more than 145 last year with the total capacity reaching almost 50 megawatts. All in all, both these activities are being recognized by the ESG rating agencies, all of them increased our ESG rating year-on-year, with us falling in the 84th percentile of ESG companies or ESG rating of companies. And on the last page of the presentation, we obviously aim to continue with these strategic priorities, both in transforming our generation portfolio and providing secondly, the most cost-effective energy solutions. And this is also supported by our sustainability priorities. And the financial targets, Martin already mentioned, we aim to achieve CZK 115 million to CZK 120 billion EBITDA and adjusted net income of CZK 25 million to CZK 30 million. And with this part back to you.

Yes. [Operator Instructions] The first question is from Anna Webb.

Anna Webb from UBS. I've got 2 questions for you. Firstly, on the dividend, you've said this morning that the 60% to 80% dividend policy would imply a dividend of CZK 39 to CZK 52 per share. Are you ruling out paying above that policy as you did in 2022? Or does that still remain open and this was an indication of what it would be inside the current policy? Just trying to find out what flexibility there is there or not? And then secondly, maybe digging into the 2024 guidance, which came a little bit below consensus and seems to be driven primarily by the generation division, which you're guiding for CZK 5 billion to CZK 15 billion lower EBITDA in our business versus 2023, despite obviously a better achieved price, given the lack of levy in place there. Can you discuss the main drivers of the lower expected earnings? I think you put a few on the slide, but could you kind of quantify one of the most significant impacts year-on-year offsetting that higher achieved progress?

Okay. So I will comment on those questions. Actually dividend, we provided a calculation of 60% to 80% as this is our dividend policy. However, of course, shareholders can propose a different number as it happened, for example, last year. And actually, majority shareholders, if I'm not mistaken, proposed a higher dividend actually, close to 100%, which was approved at the shareholder meeting. So our proposal will fall, I guess, to 60% to 80%, but this is no guarantee that this is how it will end up at the end. And second, actually, 2024 guidance compared to 2023 actuals, our generation segment where we expect 15 to 5, again, relatively large spread or large actually interval is given by the fact that we don't budget really such a high level of proceeds from trading which achieved actually CZK 9.4 billion. And as I said, this is the second best result and this not reasonable to assume that we would be able to achieve something like that. Of course, we'll be happy to do if it happens, but we have no guarantee. So quite a few billion are actually attributable to this one item. And actually, -- we also assume which is about CZK 5.6 billion, I think, lower estimate. Then we also expect close to CZK 4 billion lower actually ancillary services, which might be [indiscernible] later, but I really don't know. We also have higher costs due to inflation pressures. And we also have -- we have a currency hedge at lower levels due to stronger grounds in the past. So we actually received less Czech crowns for our euros, so -- and it's about CZK 2 billion. So those are the main effects actually in generation segment.

We have the next question from Arthur Sitbon.

The question is on the potential group reorganization of CEZ. I was wondering if there had been any development on that? Obviously, the market environment has changed quite a lot in the past months with lower power prices. We're also closer to the conclusion of the tender on the new nuclear plant. So I was wondering if you could update on that and if it was still on the agenda.?

This is a question that should be more directed to the government. But our current understanding is that exactly in the face of what you mentioned that a larger organization is currently not being discussed. Obviously, there is the interministerial commission that is looking on financing one nuclear unit if the government decides to actually start construction of more than one, which has some effect. But the -- as I put it, kind of the more general or larger organization is currently not on the table as we understand it.

Okay. As I see no raised hands, I just read the question that came from chat from Michalak, He's asking, what are the main assumption changes that lowered your expected 2023 EBITDA forecast? Is there anything else causing that apart from the energy prices revision?

I assume that when we took out forecast actually 2024, right?

Yes. In 2023 EBITDA target that was updated. And it was caused mainly by the different power price assumptions. And we have the next question from Petr Bartek. Okay. I think we lost him. So I'll ask Wierzbicka.

So, regarding the GasNet acquisition, generally, I'm pretty positive on this, it's a good Czech business, but I'm curious on management, if you're able to give any sort of feedback about how you expect this to feed into your capacity to pay dividends from ‘24 earnings and onwards? Is it going to be a tailwind, a headwind?

Look, I think, in general, this is -- the gas network is a good cash flow generator. It is definitely under less demand growth in terms of new CapEx converted to the electrical distribution. So I do not expect that it should have any adverse effect on our ability to pay dividends. I hope it answers your question. I could not say now it has like a positive effect. Obviously, we expect this to pay the dividends in line with its ability to kind of generate cash flow and in line with the return on capital.

So overall neutral.

Yes. I would say at worst neutral.

And we have the next question from Robert Maj from [Audio Gap]

Yes, hi, it's Robert Maj from Ipopema Securities. Just a follow-up on this gas acquisition. You stated that this company makes around CZK 10 billion year in ‘22, I believe. Should we expect that this is like a recurring result which should just plug into the CEZ forecast, CZK 10 billion a year? And does your forecast for 2024 includes this CZK 10 billion from this new acquisition? This is question number one. Question number two is, what would be the impact on your net debt? I mean, is this company -- I believe this is a debt-free company as it generates cash, but correct me if I'm wrong. And the third question is, as you said that you would like to be -- to have 97% of your EBITDA in 2025 carbon-free in respect of emissions, what would that mean for your Polish assets? Do you -- would you like to try to have another attempt of disposing it? Or are you just going to shut it down?

So, many questions. In terms of -- our forecast for ‘24 does not include -- or any of the forecast that we have ‘25 and ‘30 outlooks for the Vision 2030 does not include GasNet because the final steps in the acquisition have been made only late last night. In terms of the forecast, I think using the last 2 years as an indication of the next year is a good approach. Obviously, similar to the electricity business, the next potential change will come when there is the new regulatory period, which is aligned with the electricity regulatory period. Now in terms of the debt, it's actually -- it's not a debt-free company. There is quite some debt. There's about CZK 55 billion of debt on the whole company. And the reason is not that it will not generate cash flow, but the reason is, obviously, the cash -- I mean, the capital structure optimization. And I think that's why I assume that the previous shareholders have done or the reason they have done it. So it will -- after consolidation, it will increase our net debt to EBITDA ratio. At the same time, it will obviously improve our risk profile. So we believe that the rating agencies should recognize that the share of the regulated and stable business is increasing, and therefore, they should also recognize it.

Then there was actually Polish asset – yes, actually, we don't count on our Polish assets in our EBITDA because we will definitely start another round of disposal process. And should it not be successful where we believe it will -- but should it happen, we will definitely think about basically discontinuing the operations because we don't want to operate costs, and it will not be very economic either. So we have to find another solution.

So we could take the next question from a person who dialed in, I don't know exactly who it is.

It's Piotr Dzieciolowski from Citi Bank. I have 2 questions, please. So first of all, you said in the morning, there were some couple of headlines that you may accelerate the coal phase-out. So I just wanted to understand, can you please tell us about the economics of running the lignite at the moment? When do you think that could break even or that was positive? Or how is the basically operation looking from the kind of EBITDA perspective as well as the cash perspective? And second, on your GasNet, I just wanted to clarify, so we have a limited numbers for ‘22 performance and the valuations based on the ‘22 [indiscernible] or EBITDA looks a little bit punchy for a gas distribution asset. So I just wanted to understand how this business developed between '22 and expected ‘24 as we are kind of ending first quarter now.

Well, in terms of the business development, obviously, we do not control the business yet. We have only signed the SPA. We are now going for the regulatory approvals by the European Commission and the Ministry of Industry. So I think on this, it's a better wait for GasNet to publish its annual results, which I think should happen sometime like in the spring. And the numbers will be public. But as I said, I think looking at the previous 2 years is a good indication. In terms of the price and the multiples, just not to mix up kind of 2 perspectives of the numbers, the numbers that we published that we are paying, the purchase price is a 55% stake equity, right? Now if you look at the kind of multiples type of valuation, you are typically looking at the enterprise value, 100%. So this is an opportunity to -- on how you need to look at it. If you want to look at the multiples to [ RAP ] or to EBITDA, you need to take our purchase price, extend it to 100% of equity and then add the -- as I said, roughly CZK 55 billion of net debt.

Yes. But I was just referring that if I do the math, I get to almost 40% premium to RAP, which for the gas distribution assets -- I mean in the public market, you typically would see a lower number, in the private market, maybe people kind of can get it. So I was just thinking whether the business based on what you see, improved between ‘22 to ‘24 and this multiple is a little bit lower or better.

I wonder how -- obviously, the simple RAP multiple, obviously, first of all, it needs to be compared to the '23 and '24 RAPS, which are now like in the making. And I don't want to publish these numbers, although, obviously, for the valuation, we had access to them. This is to be published by GasNet and by us once we consolidate in the accounting. And then yes, I guess that's all I can say at this moment. So -- EBITDA multiple, which -- and the coal phase out. Look, we -- in general, what we say is that by 2027, the coal assets get under significant pressure. In our specific case, the situation is better through a couple of things. One is we have a pretty high share of assets which are also delivering heat, where the heat average is not hit by the reduction of electricity prices. And the heat prices are basically rising kind of roughly with inflation. Secondly, we also supply other heating stations with coal and lignite. So actually, we can amortize part of the lignite mine costs, fixed costs and operating costs to the lignite supplied to others. And then there is the power station. So it would be difficult to say like and pinpoint it to exact date. It depends a little bit on how other players also, how they offtake lignite for their heating stations and also exactly the spreads develop. But as we put it, ‘27 is the year where really it hits the lignite significantly and between ‘27 and ‘30, it's basically when you really start looking at closing it down. Obviously, for the heating, it needs to be replaced by new heating stations because otherwise, you will never have no other ways to supply the heat and also as long as we have offtake fully for third parties, we also are in a better position.

We can take the next question from --

My question is on the CapEx guidance for 2024 and an average ballpark figure, if you can provide for the Vision 2030, so annual figure on an average that we will be looking to spend as CapEx for the next 6 years -- 6 to 7 years.

Yes. So actually, CapEx is presented in our financial statements. You will find it actually on our last page on the financial statements, it's note 38. And our estimate of CapEx -- total CapEx for 2024 is CZK 56.9 million, 2025, CZK 73.9 billion, '26 CZK 81.4 million. ‘27 is CZK 75.4 and ‘28, CZK 70.5. In total, for following 5 years, CZK 358.1 million. There is a significant CapEx devoted mainly to renewables. Photovoltaics in the Czech Republic and also in Europe, in Germany, for example, where we own company Belectric. There is also a significant portion going into Czech distribution as always. And of course, to development of our new gas portfolio as well. And of course, there is a lot of kind of same business CapEx. The CapEx growth is significant. The investment period is clearly starting. So this is what can be seen actually on those numbers.

We can take the next question from Petr Bartek.

So 3 questions. First, back to the dividend. You said a dividend payout ratio 60% to 80% it's fine. But in previous years, we always hinted at the higher end of the range of 80%. So there is any change in your approach? Or are you still leaning, let's say, towards the 80% payout from 2023 profit? And then a second question would be to nuclear. So the government asked to extend the tender from 1 unit to potentially up to 4 units for the conventional nuclear, let's say. So what is the plan? Or what is -- what will be this financing scheme if there are, for example, 2 units in Dukovany, which in my view would make completely sense from a technical point of view, but what would be the financing background for that? If you would still go for the contracts for difference or would be anything different considered, like I don't know, regulated asset base or something like that? And also, you mentioned small module reactors that you are accelerating the development of this field. So if it would be purely on CEZ balance sheet as just investment? Or would that be some kind of SPV and potentially looking for joint ventures or some, again, contracted revenues or prices? And fourth question, maybe I didn't get the comment regarding the potential support for the new gas units and biomass units versus the modernization fund. And second, what's the scheme, which is our pending notification if you can repeat it?

So I'll start with the dividend. We actually say 60% to 80%, as you noted. I don't really say more than that. I think it is too early to make any commitments. So -- and as you can see, we are entering investment period. So we will be announcing our proposal of the dividend later during the spring, that's all I can say.

In terms of the nuclear, the committee of the Minister of Industrial, Ministry of Finance that should evaluate and design the financing of the additional units is now kind of working and they should come up with a proposal by the end of the year. So I think by only then we will know how the financing should happen. Obviously, what we just keep always in mind is that we need to retain our rating and ability to finance our other businesses. And this is always for us a #1 priority in any type of design of financing of the additional units. In terms of the small modular reactors, again, also the discussion on financing spending, what we are now looking for is what would be the best technology or the best technology partner for us because especially on the small modular reactors, we want to also include our company such as [indiscernible] into the supply chain. So, the partnership we are trying to select is a broader than just an offtake of a unit. And then once we have it, obviously, we need to also discuss with the government and with the partner on how to approach financing. And the clarification question on the additional support where the European Commission notification is spending, it is so-called the support for combined human power production, [indiscernible], which is basically a subsidy scheme where electricity produced in this high efficiency combined heat and power gets a per megawatt hour subsidy. And this will come on top of the investment support in the modernization fund Maybe there is an indication what will be the level of this subsidiary? No. It will actually -- the notification is for 4 auctions. So it will be auctioned.

Okay. It seems we do not have any further questions, so let's conclude the call. As always, Investor Relations Department is available just after this call or any time you come up with some queries. Thank you very much, and goodbye.