PGE Polska Grupa Energetyczna S.A. (PGE) Earnings Call Transcript & Summary

Good morning. Welcome to our cyclical meeting connected with the presentation of operating and financial results, this time for Q1 2020. It is a joint conference for journalists and analysts. That's why you're all kindly welcome. It is, again, that we are meeting you on an online basis only. That's why we're inviting you to ask questions through the form made available. And today's conference is with the participation of Wojciech Dabrowski, CEO of PGE S.A.; and Mr. Pawel Straczynski, VP and CFO of the company. Over to Mr. Wojciech Dabrowski.

Ladies and gentlemen, welcome to the presentation of the financial and operating results for Q1 2020, our latest meeting. The 2019 results was also held on an online basis then. I hoped that we would meet in person, but for safety reasons, we're meeting again in this form. This is not the most comfortable mode of meeting. Notwithstanding, given the number of participants, you can see the interest in PGE and our functioning over that period has been great. In Q1, we had not felt the impact of the coronavirus on our business, and the measures implemented by the government have impacted the increase of electricity by 2.2%. Additionally, there was also an additional increase in demand for heat. We only had a 2% decrease and major increases in wind as well as significant imports of energy from abroad. The next quarters will be revealing a growing impact of the pandemic on our industry. R&D, we can see that the -- that was quite significant. The further developments will depend on the return of the sector. As per the Central Statistical Office data, we can see that the drop in output was by 24%. The unfreezing of the economy has already started, and the European Commission states that Poland's economy will suffer the least. This is -- makes us happy. Our economy will shrink by 4.3%. For Germany, will be roughly 6.5% of the GDP. As we've informed that COVID has changed the way of organization. And we have ensured remote channels of service for our customers. We have maintained the supplies of energy and heat to millions of households and businesses. Owing to the involvement of crisis management teams that have been active, both in the head office and other companies, the energy supplies have been undisturbed. We are monitoring this situation in PGE. The most serious situation took place in Belchatów at the beginning -- from -- since the beginning of the pandemic, with 30 affected people, with a headcount of 10,000 people plus. That's why I believe that this incidence seems to be under control. Currently, we have no cases of COVID in this location. I'd like to draw your attention also to the important role of the Ministry of State Assets and the coordination of PGE's activities in terms of conveying donations of PLN 5 million for 17 hospitals to purchase protection measures at the first key element -- moment of the pandemic. Owing to this, our resources were transferred to the Ministry of State Assets, in cooperation with the Ministry of Health, which monitored the entire process. Additionally, we lent cars to 2 hospitals in [ Rademan ] and [ Gerardo ]. Owing to such results, connected with PGE projects, the PGE Board made a decision on cutting down of projects, noncore projects worth about PLN 1 billion. This has been communicated to you. I'd like to remind you about this. This is about ICT investments, AI projects, some coal projects and low-margin cogeneration projects. We also made a decision on discontinuing the construction of an electric car. We drove this project to the prototype stage. Two prototypes were built. And today, e-mobility is looking for an investor to build a plant. We will not be involved in building the plant. The nuclear project will also be driven to the moment of obtaining the environmental decision. We believe that it's important. It will be basic for replacing coal units that will be eliminated from our energy mix. We keep analyzing different projects as well as subsidiaries for their profitability, and utility for the group. We have also optimized the sponsoring budget, which has also been communicated to you. We are decreasing the sponsoring involvement by half, owing to the impossibility of providing sponsoring activities during the pandemic. But I'd like to emphasize that we're still supporting higher culture, the Philharmonic Society, as our involvement to higher culture. The pandemic is also further motivation to intensify work on the new strategy, which we have also communicated, which will be presented in full. As you all know, there are huge challenges ahead. The energy sector faces huge challenges today. We're focusing on our core activity. We're accumulating capital. And after the stabilization of the economy, we will be investing it reasonably to increase our competitive edge. We will keep being a key investor in Poland. Investments and development, this is highly important for you as our shareholders. PGE is one of our major investors in Poland. We're consistently involved in the green direction. We're very much involved in the talks with our potential business partner for wind farms on the Baltic Sea. We have obtained environmental decisions for Baltica 2 to and Baltica 3 as well as concluded windiness measures on the Baltic. Today, we're on the eve of launching a tender for geological studies of the seabed, which will be very important for mounting the turbines to generate energy on the offshore basis. Last week, we also held workshops for potential contractors. Under this contract and from a short list of geotechnical companies, about 10 entities reported as interested in the project. Also, conceptual work is underway. We're in close cooperation with PEC with this regard. Onshore farms. New onshore farms in Western Pomerania have an installed power of about 100 megawatts. As regards District Heating, the most important element is the cogeneration unit in Wroclaw. As you well know, in PGE, we're very much advanced in the talks. Wherever we're involved in District Heating based on coal, we will be replacing it with gas firing. And we've already identified locations where we're first building gas-fired cogeneration plants. We're also connecting new recipients. As regards to Dolna Odra project, this is the most important project in terms of its advancement in the group. We're also planning on starting construction work. This here, it's key to obtain valid decisions. As regards photovoltaic, we will be launching a project in Opole. It's for energy storage. We've launched a project for energy. Regulations permitted will also stabilize the work. We can see it as one of the elements of the future. A major element of this, the side effects of firing, we're also very much involved in this. That control over 40% of the market in Poland. This is also very important. This is the future that we're focusing on. In terms of Distribution, in Q1 2020, we've connected over 17 microinstallations with a total power of 135 megawatts. We've also concluded, very importantly, at the beginning of May, with the Ministry of Climate 2 contracts to fund and subsidize investments for green energy sources. The total worth of the investment will amount to PLN 34 million, whereof the EU subsidies will amount to PLN 20 million. I'd like to emphasize that we're focusing on customer satisfaction. That's why we are focusing on the streamlined connection process to the grid. This is another moment is that we are being open to contractors. We wish to inform the contractor market about our plans, investment plans. The modernization, overhauls, the knowledge and know-how we have in the group should not be exclusive. We would like to open to the market as much as we can to obtain the best market offers, and it's important that domestic companies should have an opportunity to be prepared to have that information to prepare for tenders. Of course, we're not excluding any cooperation with international companies. We're EU members. But in this difficult situation, it's particularly important for Polish companies to have this knowledge to get organized and be part of the tenders. We're also organizing online workshops. As I mentioned, we had the first project for geotechnical studies of the seabed. We're also in for next workshops on District Heating. It's important to launch local supply chains that will be the driving force for the company. I'd like to emphasize that capital has a nationality, and the development of the Polish entrepreneurship brings benefit to this. This is also supported by the bottom-up initiative by our employees to promote the purchases of Polish products by Polish. It will be probably visible in the media. This campaign is supported by the Ministry of State Assets. I'd like to emphasize that we're, first of all, focusing on core business, accumulating cash and preparing for major investments to be able to ensure fair returns on the shares held going forward. Thank you very much. And I'd like to give the floor over to my colleague, Mr. Pawel Straczynski, who will present to you the financial results.

Good morning, ladies and gentlemen. I will present the most important information and ratios connected with PGE's activities in Q1 2020. As we all know, as it was mentioned by Mr. Dabrowski, Q1 was not affected -- significantly affected by the COVID. The energy consumption dropped by 2%, roughly 2%. That's less than 1 terawatt hour. The generation in Q1 decreased by less than 5%, less than 2 terawatt hours. Unfortunately, in April, we are observing much more significant drops. The consumption was about 10% lower, 1.3 terawatt hour, and the generation was lower by 12%, i.e., 1.5 terawatt hours. With regard to the prices in the electricity market, we were also facing a decrease. The base average price decreased by roughly PLN 33 and it was at the level of roughly PLN 233 per megawatt hour. We have to keep in mind that, in the period of March and April, we had to do with the drop in CO2 allowances since March. That dropped even to EUR 14. Of course, it didn't have a significant impact on our present situation because the drop in CO2 price was also followed by the energy price. The CDS versus the energy price was actually at the same level. That's the real revenue that we calculate as the revenue from electricity sales. In Q1, we accounted for a decrease in net electricity generation. That's by roughly 14.4 terawatt hours. We have to remember that we have a slightly different base in 2019. Why? Because the year-on-year generation level was maintained, owing to the commissioning of new units in Opole. If we consider this element, that in Q1 1919 -- 2019, there was no generation from the new units in Opole, the energy drop would have amounted to roughly 2 terawatt hours. In terms of distribution of electricity, we also had a slight decrease by 1.5 terawatt hours from 9.3 to 9.2 terawatt hours. As regards the sales to end users, we had a decrease by roughly 6% from 11.4% to 10.4%. And this is probably also no surprise. We accounted for the largest decrease in small and microenterprises. As regards the remaining tariff groups, A, B and G, the decreases were imperceptible there. As regards the heat sales, they were lower by 1.1 petajoule. It dropped from 20.9 to 19.8, which was affected by the much warmer winter than in the prior year. As regards to generation volume by fuel type, in 2020, it looked slightly different than in Q1 2019. The share of hard coal-based generation increased from 4.5 to 5.7 terawatt hours. As regards to lignite, in Q1 of the previous year, it was 8.9 terawatt hours. This year, we had 7.2 terawatt hours. And there was a slightly higher wind generation by 0.08 terawatt hours than in the previous year. The EBITDA for Q1 2019 was at the same level as -- 2020 was at the same level as in 2019. Let me remind you that we did not observe any significant impact of the epidemic on the group's results. In Q1 2020, the EBITDA amounted to PLN 1.770 billion as compared to PLN 1.798 billion. The EBIT dropped by PLN 86 million from PLN 859 million to PLN 773 million. The net profit dropped by PLN 127 million from PLN 612 million to PLN 485 million. The net debt increased as of -- as at the end of March. It drew near to PLN 14 billion. This was a transitory situation, with the largest impact on the transitory increase in net debt of the group. It was impacted by the significantly higher cost of CO2 purchases. They were talking about roughly PLN 2 billion. The increase in deposits for CO2 purchases, it was about PLN 1 billion. CO2 margin calls, when the emissions grew, and we had term contracts, it was necessary to supply cash to CO2 exchanges to provide security for those items. A third element was a high impact of the investment cash flow, which was accounted for in 2019 using the matching principle, whereas the cash outflows took place in Q1 2020. The amount we're talking about was over PLN 2 billion. The main development of EBITDA by major value drivers was the wholesale price electricity. That was an impact -- positive impact that increased the EBITDA by PLN 650 million (sic) [ PLN 249 million ]. At the same time, we had a decrease of the volume. The fuel cost had a negative impact by roughly PLN 90 million. And there, it was mostly owing to the hard coal costs increase by PLN 1 per gigajoule. A very important cost category that impacted the lowering of the EBITDA were CO2 costs, roughly PLN 650 million. In terms of the net impact, we had 2 major factors, the higher price and less free allowances that we obtained or will obtain in 2020. We're talking about 2.5 million tons of free allowances. The margin on the retail market increased our EBITDA by PLN 67 million. The personnel costs lowered it by roughly PLN 98 million. We also had an effect transferred from '19 -- from 2019, the salary agreements concluded in 2019 caused for a 7% increase in personnel costs. All the others, mostly consolidation adjustments, was about PLN 107 (sic) [ PLN 297 million ]. That was -- the total EBITDA amounted to PLN 1.77 billion. In terms of CapEx, CapEx amounted to roughly PLN 1 billion on a matching basis. The most important investment projects carried out is the Klaster project, that's worth PLN 82 million. [ PLN 66 million ] to the Turów power plant Unit 7, that's where -- and modernization of distribution assets of roughly PLN 200 million and new projects in Distribution segments, another PLN 200 million. The next modernization projects that was spread on a roughly 50-50 basis, 48% to new projects and 52% to modernization and maintenance. The prospects for reported EBITDA for 2020 is, unfortunately, negative. We're expecting decrease in the EBITDA in all the segments of Conventional Generation, District Heating, Renewables, Distribution and Supply. What are the reasons for this? I think everybody realizes the increase in the CO2 cost, reduction of free allowances, lower spot prices, the expected decrease in the volume as a result of the COVID-19 and the economic slowdown. Thank you very much. Mr. President, now it's time for the Q&A session. We will, by standard, focus on those items that have not been touched upon during the presentation. Let's pass on to question number one.

Recently, we've heard a lot about the segregation of hard coal-based assets. Does it mean that PGE wants to get rid of GK?

Ladies and gentlemen, it has given a rise to some emotions. We have presented it as one of our concepts, as one of our ideas about the transformation of Polish generation, talking about the hard coal asset base. We talked about the portfolio that could be transformed to a separate vehicle or another company to allow for obtaining lower funding for development for investments. As you will know, the fact that we have hard coal assets on our portfolio, that will probably still be the basis of electricity generation in Poland for another PLN 25 (sic) [ 25 years ] limits the possibilities of obtaining funding. Hence, the idea presented seems to be sensible. This is not a new solution in generation. We were the first ones to talk about this out loud as the Board of PGE. Hopefully, this will be approved by politicians, by the government as well as by the European Commission. Because we're expecting that hard coal-based assets that are necessary for energy generation, that will be necessary for the system to be able to work. That will be supported by the EC to be able to modernize them and, consequently, to be able to wind them up over the next 25 years. This is a sensible concept. We're against a forceful transformation. We're not powerful enough as PGE to be able to carry out such a transformation on our own. It's most important to cooperate with the social side. We're talking about our employees, people who generate the profits for PGE as well as other groups. This should be done in close cooperation with the social side. I'd like to declare that, if this concept is approved by the government, we will start dialogue with a social -- with the society, but our social dialogue seems to be at a good level. I'm personally involved in this, mostly on communicating with our social partners. Of course, the devil is in the details. And that's a question about ensuring safety to our employees and the safety of energy supplies for Poland, but it seems that this is the only idea to obtain cheaper funding for us as PGE and to ensure energy supplies for Poland and secure jobs for our employees. I think this -- which is very important. I think that's it. If you have any further questions, please send them to our communication office.

Let's pass on to the next question. What are the current threats to the investment projects and the risk of delays connected with COVID-19?

These are actually -- well, actually, the Unit 7 in Turów seems to be under the greatest threat, which is an investment which we're almost finalizing. The deadline is under slight threat. The contractor -- subcontractors are people -- are not Polish nationals. And as you will know, there's a problem with traveling among EU member states and that only. So we can see certain threats that might impact the timely conclusion of the project. However, the advancement after Q1 represents 96%. There is a slight risk of a failure to meet the deadline. We're working on this, along with the contractor, trying to make sure that this is carried out on a timely basis. The next investment is on Odra. Here, we don't identify any risks because the project is at an early stage, and that's a question of taking care of the documentation. So this project is being carried out as planned. As regards the Klaster project, which is the construction of wind farms, as I mentioned, Karnice, Starza and Rybice with a total installed power of 100 megawatts have already started generation. So there is no risk. The licenses have been issued in May quite recently. So there are no risks. And as regards the offshore project, which is the most important one from the group's point of view, here, we're involved in negotiations with the potential business partner, and we're not identifying any COVID-related risks. That's a question of those geological tests, very important ones, and the coordination with PEC with regard to power installation, but this is not disturbed. As regards the investment projects and the pandemic risk, that's roughly what it looks like from our perspective.

Let's pass on to the next question. What does the situation look like with regard to the cabling, grid cabling projects?

Ladies and gentlemen, I'd like to emphasize again that the most important goal of our activities of the Board and all the employees is to build company value. Company value for the sake of our shareholders and to ensure energy safety and security to Poland and distribution is hugely important. And in this respect, this is manifested through ensuring stable supplies to our recipients. And customer satisfaction is our priority. That's why it's very important to ensure timely connections. We're focusing on this, on the new connections. This is very important for us from the distribution point of view. And after some investments such as cabling, we have decided that the priority will be investments to streamline the new connections because this translates into their greater satisfaction and, consequently, into value generation.

I think we can pass on to the next question. Does the organization of work at PGE change in conjunction with the uplifting of austerity measures?

We're still working on a special basis. We're working in our headquarters, head office as well as on our locations. We're monitoring the situation in the individual plants of the group on an ongoing basis. And we have implemented strict rules to limit the risk of infection. We're sticking to this. And since out of the headcount of 40,000 employees, we have not a single infected person, we believe this is a huge success. And I'd like to thank our employees for maintaining the discipline and for observing our guidelines to use masks, disinfection liquids to reduce the infection risk. We're generating energy and heat, trying to make sure that there are no -- electricity supplies and hot water in Polish households. So safety is our priority. And nothing has changed and nothing will change. Thank you very much.

The next question, is PGE still importing coal?

Ladies and gentlemen, our company -- our subsidiary, PGE Paliwa is carrying out a long-term coal import programs based on long-term contracts concluded many years ago. And the imports of coal from Colombia is for external customers as well as for the cogeneration plant in Zgierz. So I'd like to emphasize that the projects carried out by that company were mostly directed at third parties, our customers, and only in a small proportion to the Zgierz cogeneration plant. This is not true what you can read in the media. Why are we importing? Why have we imported? I'd like to emphasize that, as regards the imports from Colombia, this is decided by the parameters of coal. This coal has such parameters, which are -- which is not available in Poland. That coal is characterized by high calorific value and low sulfur and ash content. This is expected by our customers. This is not -- such coal is not available in Poland. That's why we've been involved in this. We're contemplating at large whether we will continue to do so. As you will know, our direction is towards renewables while maintaining the base that will be provided by coal for many years to come. But since we're changing the policy, we're thinking whether that company will be needed in our portfolio.

The next question from you, in March, Turów obtained a small 6-year license. What about the large concepts?

To ensure the possibility of functioning for the Turów compound until -- while still there is lignite, PGE Górnictwo, our major subsidiary, has applied for a license. So first, we applied for the smaller license. At the same time, we're trying to extend the concession -- the license for 25 years, well, until exhausting the lignite resources. So this is not trying to expand to areas that have not been agreed on, but we're trying to extend the license in the same area that was covered by the 1994 license. Thank you very much.

The next question, what -- where did the next increase in personnel costs increase PLN 90-plus million year-on-year?

Yes, ladies and gentlemen, I presented -- I mentioned this during the presentation of the results. This effect of roughly PLN 100 million results from the remuneration agreements in all the capital group entities concluded in 2019. Today, given the looming recession, the situation is being radically changed. We are trying to optimize personnel costs. We will basically not be capable of funding such large increases. Of course, it's necessary to cooperate closely with the social -- with our social partners. We believe the fact that social partners perceive the problem in the same way. They can see the decreasing EBITDA results and other ratios. We will all sit down together and discuss the situation because, today, it's not feasible to manage PGE in the same way as it was prior to the COVID pandemic and before what's going on in the EU climate policy. Mr. Dabrowski has also announced on several occasions that we needed to conclude a form of a social pact. We cannot envisage implementing any changes or putting forward any changes without consulting our social partners, the trade unions and our employees. Let me emphasize, we, as the Board, believe that we can perceive and see the situation -- this difficult situation in much the same way and that, together, we will be able to develop the best solutions for the entire capital group, for our customers and, of course, for our employees. Thank you very much.

The next question, which ERO of rate of return from Distribution segment is expected by the company?

If the ERO methodology doesn't change, the WACC can drop to roughly 3 -- 4%. Well, distribution is a largely regulated activity. And as regards to the profitability of all sorts of CapEx, by determining the WACC, it's decided by the ERO. It's hard to envisage that, given the decrease of WACC to roughly 4%, we will be able to be involved in a greater investment program. A 4% WACC, that's about 25 years. That's the return of investments. That's the payback period. It's hard to envisage large-scale investing given this ratio. I hope that ERO is aware of this problem and the impact of such proposals on potential investment plans and CapEx plans. We're working on a new CapEx plan, long-term plan, because we have to plan the investment cash flows, that has to be aligned with the operating cash flow. In a situation where we have an indebtedness of roughly PLN 12 billion to PLN 14 billion, it's hard to envisage further increasing of the debt. Also, given the situation that we faced in March and April, where we needed to provide deposits worth roughly PLN 1 billion, if we had no free cash, the situation could have been tragic. Let's remember one more thing, especially in distribution. The current tariff does not fully translate the operating cost of the company. In 2019, we accounted for PLN 60 billion stranded costs. We could not transfer them to the tariff. Only a proportion, 80% of the costs, are transferred. That means that we -- that the remainder of the costs have to be covered from other types of business. At PGE, we're trying to limit all those, the other costs that ERO does not recognize as a variable cost. Thank you very much.

What are the good results for supply despite the G tariff? Can you expect similar results in the next quarters?

Yes. So tariff G is -- well, I hate to use a bad word. It's a certain encumbrance. It's a liability. Of course, we're carrying out our mission of stable supply, so please don't get me wrong. No customer -- none of our dear customers are treated as a liability to our group. The only problem is about the tariff and the realities that we're facing these days. Also, as I mentioned during the presentation of the results, in tariff G, we have not observed any major decreases. The margin has increased slightly. Of course, it's not very large, but the situation is slightly better. What is probably which is worrying is the increase in the overdue receivables, although I have to say that, as regards our G tariff customers, we are not observing any major increase in overdue receivables. So these are loyal customers. Yes, these are loyal customers who pay their electricity bills. The largest decrease in proceeds, the highest increase in overdue receivables was in the segment of small- and medium-sized enterprises, but we can understand the situation. Also, there were increases in overdue receivables in A and B tariff, but you can see the effects of the next support programs because as a -- as at the end of March, the structure looked better there. We have observed a decrease in overdue receivables. So let's hope that, as the economy gets unfrozen, electricity consumption will also be growing and the liquidity of our customers will also be improved, and they will be able to pay their debts on a timely basis. Thank you very much.

Next question, can you observe higher District Heating tariffs in Q1?

Yes. Actually, let me split this question to 2 parts. What we can observe today is an impact of the reference prices for 2019. As far as I can remember, it was roughly 13% for gas. In terms of coal, 10% or 11%. These tariffs will apply for most of our companies from May onwards. There is a new tariff regulation, which will be applicable from May 2020, and it allows us to make adjustments during the year. And since the COVID impact -- and first of all, CO2 emissions or allowance impact -- allowance price -- prices are growing, well, based on this new tariff regulation, we will be applying for such adjustments. Additionally, the regulation allows one-off coverage of CO2 emissions from 2018. The effect of the new tariff regulation, the reference costs and the recovery of the cost will amount to roughly PLN 80 million. And in 2020, PLN 144 million, unless I'm mistaken.

Let's pass on to the next question. What about the coal price for 2021?

Ladies and gentlemen, the ARA coal price is very well known to us. It's $48 times 4 divided by the calorific value. That's roughly PLN 8 per gigajoule. We're obligated to collect coal also based on long-term contracts. No serious enterprise. And I couldn't imagine us as PGE being -- operating based on short-term contracts. That would not ensure fuel supply security. This stability and security costs some money. And it's hard to argue with such statements that, today, coal costs PLN 8 per gigajoule. And if you check our prices, it will be roughly PLN 12 per gigajoules. It costs money to ensure stability, safety and to transport. And you have to pay that premium to our suppliers. Let me remind you that you can also infer it from the financial statements. Our inventory levels of coal is -- are worth about 2 -- we're talking about 2 million tons in Rybnik, Dolna Odra. That inventory level should be sufficient for roughly 3 months. However, we have to keep in mind that the market reality that we have today, energy imports, which are higher than last year, the low demand -- actually, lower demand for energy in the domestic market and the high hard coal price determined the fact that generation, especially in the older units, is becoming unprofitable because we've had such situations on a spot basis that the primary energy costs and CO2 allowance price were actually at the same price or even higher than the energy spot market price. Thank you very much.

I think we can take 1 more question. That will be the last question. What about the dividend payout for 2019?

With your permission, let me answer that question. Of course, this is a very important question from the point of view of our shareholders that -- who we respect very much. I'd like to emphasize with full responsibility that what the Board is doing, looking and turning around each zloty to build the value for the future so that you can derive the right profit going forward on the capital invested. Of course, the decision on dividend payout is made by the general meeting. As the Board, we will be recommending the distribution of profit, but I'd like to emphasize that we're focusing on our core activity, accumulating cash. We will stay -- we'll keep being one of the most important investors in Poland. We're trying to stay on even keel in the situation so as to be able to generate appropriate profits going forward. And to do so, we have to change our direction, invest in new source -- energy sources, renewables, gas; and to modernize coal resources. We will be focusing on this. As I said, the ultimate decision on dividend payout or distribution of profits will be made by the general meeting. Let me add a couple of syntheses to this. One of the most important factors when we're talking about both operating optimization, investment flow optimization, one of the most important factors that we always take into account is the net debt-to-EBITDA ratio. We pay a lot of attention to this, and we cannot afford in these difficult times to run an additional risk that in emergency situations, market breakdown where we would not be prepared for this. Hence, also, we are carrying out a strategy of cash accumulation and avoiding to increase our indebtedness beyond what's absolutely indispensable. The decision on the dividend payout should always be preceded by an analysis of 3 most important ratios: the group indebtedness, cash flow and the potential acquisitions. With your permission, I'd like to add that potential acquisitions are very important to us. We're very active in the potential acquisition of new assets. We're submitting offers for wind farms. We're interested in acquisitions in District Heating. We're leaders in District Heating. So we're very much active in this respect. And hopefully, we will be able to finalize some contracts very soon now to be able to convey such information to you. So we're favoring value building for the future so the group would cope very well in the changing market, which is highly specialized. You very much know that energy enterprises in Europe have made a decision on specializing. Actually, the concept of multi-energy groups has been discontinued. So we also wish to specialize in energy rather than focusing into other types of business. We're interested in acquisitions to ensure the right return on your investments. Thank you very much.

As I mentioned, we're drawing to a close. Unfortunately, we haven't been able to answer all the questions sent to you. But as always, we're at your disposal after the conclusion of the conference, both the press office as well as the Investor Relations. Thank you for your presence in front of our screens, and we would like to invite you to the presentation of the results for the first half of 2020. Thank you very much for your time, for the time devoted to listening to us. Hopefully, next time, we will be able to meet on a live basis, to basically meet -- I'd like to emphasize that we're turning around each zloty to be able to ensure the right return on your investment. Thank you very much. Thank you. [Statements in English on this transcript were spoken by an interpreter present on the live call.]