TAURON Polska Energia S.A. (TPE.WA) Earnings Call Transcript & Summary

Good morning. Good afternoon. I'd like to welcome you to the conference call during which we will present the financial results of TAURON Group first half of this year. I'd like to welcome you present here and those online. The results will be presented today by Mr. Grzegorz Lot, the President of the Management Board of TAURON Group; Krzysztof Surma, CFO, Vice President of the Management Board for Finance; Piotr Golebiowski, Vice-President of the Management Board for Trading; Michal Orlowski, the Vice-President of Management Board for Asset Management and Development; as well as Mrs. [indiscernible], Management Board for Financial Affairs of TAURON Distribution. My name is [indiscernible] I'm responsible for communications at TAURON [indiscernible]. Let's move on to the presentation of your earnings. Mr. President, please.

Ladies and gentlemen, I'd like to welcome you [indiscernible] here, present here and all our shareholders, customers and analysts online. We promised a number of things last time [indiscernible] thing, but we'll make it within hour, I will finish in an hour. So we have a very [indiscernible] today once we get over -- extend over time, we have limit [indiscernible] much. We'll leave enough time for questions traditionally, and that is the direction we are aiming for you. So us to have more time and to put in more detail regarding Distribution. That's why we invited the President of TAURON Distribution Subsidiary to be with us, so [indiscernible] will have some information for you to present, and we are here available also that [indiscernible] you need [indiscernible] most important today is a matter of delivering. The plan is there a strategy, but what we presented to you was, I don't want to say positively received, I don't want to say that because [indiscernible] earnings demonstrate the value of our shares and the market cap of the company, but as we declared a year ago, the question that was asked when we will be tracking, whether we deliver the strategy -- within a quarter in 6 months, but the thing is to deliver what you plan and you want to declare what you promise. So today, we'll be communicating to you what we have succeeded in doing for the first 6 months of this year. Of course, also the current situation what we can communicate and what's guaranteed as -- ladies and gentlemen, I will be speaking about the capacity market. That's the first question. I would like to thank you all for that how -- what was the resolution of capacity market [indiscernible] implications for our assets. We'll be talking about the investment of renewables, in distribution as well as the [indiscernible] units, our picking unit that we showed in the strategy is an option who will be speaking a lot about the customer. This is our pride and joy. What we do in this perspective about the digitization about our offerings, for instance, the [ cheap hour study, ] for instance. So what is implication, what its impact upon the price of electricity by distribution finances and the market situation. I'm looking at the timing, here it's running very quickly, it's additional stress. It's good. Ladies and gentlemen, nI want to say that based on the outlook that we presented in the [ strategy hit decarbonization ], the growth of distribution, just transition, the growth expansion of sales, supply and renewables, under which of these directions we have specific projects and which is underway. At the same time, we are working very hard on the financing. And first, we'll present to you how we are delivering on the promises regarding the acquisition of funds, we had such conferences. But in details, we show you how we deliver this topic. And what I'm very proud of, and I'd like to emphasize that how we are managing to create a team within TAURON, how we are building the team, how we are building an agreement between the Management Board and the employees and the workforce. For instance, a share [indiscernible] yesterday the person who had a pleasure to take part in [indiscernible] so what [indiscernible] all about at the time when your business combines specific money, respect for the workforce, for the people who are employed at various sites, how the new energy, the new world of energy, as we define and takes a possibility for the energy traditional classical energy that brought us to where we are at now. Under this item, I want to also say that we introduced a lot of changes regarding our organizational structure for some time now and the company is managed by [ AGM ] that's 15 persons. These are the [indiscernible] of the business units, how we set up [ relational ] system, these are the heads all those business units. And as part of that structure, we take the most important this, of course, we have all due respect for the -- and the governance and so on. I don't have -- don't want to repeat it. And in addition, key directors are engaged as part of a TPE head office. And this is the group that makes decisions about the future of the company and the direction about the changes in the cultural changes, organizational changes as well as the business. This is a very interesting thing and gives us a lot of effects. I want also say that we place a lot of emphasis on the issue regarding to [indiscernible] Board. Today, we have 44% of winning who are holding positions in the Supervisory Board and the Management Board of TAURON Group. Enormous change. We do believe in the power of women, we do believe in the value that they bring in the organization. We face it. We see it every day. So we do believe strongly in that and we support it very strongly. So of course, with all respect for power of the men as well. So it's a full immensipation here. The subject matter provided by women is very good. So we mean a very good regarding engagement, and it's very good to be in the [indiscernible] change in that direction. Okay. That's it. So I report that I delivered the first topic. I made it on time, so I'm handing the floor over to the colleagues.

I'm so stressed already now about the time frames that you gave here. I don't know if I'm able to say anything. Ladies and gentlemen, in a very telegraphic pace, I want to cover generation and supply portfolio assets, asset portfolio of TAURON Group. But to give them a certain framework, I'd like to refer to the situation of the national power system. Well, first of all, here on the bottom graph, you can see the pricing [ with respect to ] dropping are declining, mainly on the futures market, which has an impact upon the spot market afterwards. So in a base summary, this is the effect of [ card coal ] price dropping, the CO2 price is stable, and the renewable share energy mix in Poland and this country is going up. This is the reason for the situation. We are happy about that because this gives us the effects that we anticipate entire energy transition aim that the low carbon economy is profitable, and it will have an impact upon the prices, and the situation of balancing of national power systems, mainly European as what we're talking about. So the national physical consumption, domestic consumption is slightly lower than last year in the first half of 2024. However, regarding the production, 1.5% higher production output, we are dealing for first time with a [ bell ] exports balance. So exported electricity. This is mainly related to [ metrologist ] weather conditions, so high output production output from renewables, the [ PDs ], along with [ gas-fired generation ] means that [indiscernible] is pushed out mainly to Czech Republic out of Poland and with 1 terawatt hours of exports. That's the balance we have reported. Regarding the renewables share in the [ Poly ] energy mix, it's 28%. It's a kind of constant level, but despite [indiscernible] Despite that, we have an increase of installed capacity in renewables about PV and wind at the level of more than 17%. So you can see where capacity balance is not directly translating into production output. Regarding the negative prices in the first half of 2025, we observed more than 5x larger number of negative prices at the top, minus PLN 500 versus the same period of last year. And this will be going up all the time. It will be rising, has also meant a high degree of redispatching of unit [indiscernible] [ by the BC ]. This is 40% higher than first half of 2024. We know that this level is more than 36% higher than total dispatching level for the entire '24. And this is the situation that we'll be observing, it will be even getting more visible. In our opinion, this is the way the future is going to look. The decline of demand for coal, 2% in the National Power System also led to the decline of prices of [ hard coal ]. Now this level -- price level is about [ PLN 16 ] per giga joule is became equal [indiscernible] prices. And this means that this possibility over to the production from less efficient sources is becoming more profitable. Regarding the TAURON's balancing, we increased the production of -- electricity production by 10%. It translates into a 12% increase of [ hard-coal-fired units ] production, happy with that because both in commercial terms, we're able to contract more electricity as well as the increase of demand for our capacity from [ PSC ], from [ TSO ], means that they have more forced generation. So we were able to generate electricity from our stable electricity from using our sources. That's what Krzysz has translated to earnings and Krzysztof will speak about that, an increase of consumption of coal by 10% versus the same period last year, CO2 regarding emissions of about 12% versus the same period of last year up. I spoke about the redispatching. I want to [indiscernible] TAURON introduced already last year such a system in an almost perfect way because at least 95% eliminates the impact of negative prices on our earnings and our financial results. So we're able to manage those sources. Therefore, our share [indiscernible] at about 0.5%. So PC when redispatching generation sources, as a matter of fact, to a very small degree, in a small percentage of dispatching is TAURON's shares. We delight ourselves, anticipate negative prices. Therefore, the impact on the negative prices on our earnings is minimal or almost none at all. Regarding the [indiscernible] of the units, [ viability ] rate opportunities, it was at a satisfactory level, the main deviations in the availability rate among very conventional units were due to the increased number of planned outages. We had an overhaul of [indiscernible] power plant. We had major overhaul there so it was -- took a long time, so much [indiscernible] [ this availability rate ] is lower than last year. Regarding the renewable units, the very satisfactory [indiscernible] rate. We also -- of course, we are dealing with duration where our higher raw power plants are partly switched off is due to fact that the production of some of those [ farms ] is not profitable, so we're not bringing them back. But the [indiscernible] units, they generate 80% of EBITDA of the renewables part, have the [indiscernible] rate of almost 90%. Ladies and gentlemen, regarding the supply assets, regarding the supply assets portfolio, we're dealing with a decline of about 9% decline over to suppliers or [indiscernible] stable particularly hasn't changed. So we have 26 terawatt hours of electricity distributed, including 2% of an increase in -- but regarding the similar segment, the corresponding segment of supply is a decline about 99%, about a 1% increase of [ G tariff ] and the difference in the household tariff group is due to the increase of consumer production output whereas entire decline, the biggest factor behind it is decline in [indiscernible] like steelmaking industry, paper making industry and the coal industry in the automotive. But let me be frank that the big part of that declining demand in the supply segment is due to demand in the supply segment is due to the rest part of the bilateral trading, we are hedging securing. I would like to refer to a very important thing. [indiscernible] mentioned that. This is the statistics regarding the pricing situation, average price for 2024 was about PLN 488. Regarding the spot market, it's PLN 427. And now taking into account this portfolio of products, this range of products I'll be discussing in a moment, we achieved a phenomenal result, I can say, by observing the behavior of those customers who took the decision to choose the products that if we change the behavioral patterns when they consume electricity to lead to the lower prices, we are dealing with the following thing. But in this first half of the year, we got the price 2% lower than the spot price on average from the customers who now observe, as part of sample [indiscernible] under dynamic pricing product. However, regarding the Q2, second quarter we got the average price PLN 320. So [ 14% ] below spot average price that period. If we are talking about the June itself. And in June, we achieved the price, this is a record one, [ PLN 225 ]. So the population of customers who are taking advantage of our chosen product due to the activity cost price -- average price [indiscernible] to be PLN 225. Let me remind you during that time, PLN 436. But to that price, we have to add all sales costs. So I think that this demonstrates that this activity of our customers in combination with our product offering, definitely pays off. And we are at least almost twice below the freeze price. So a few words about the range of products [indiscernible] give me some free time to speak about that. This is important. Here, you can see the -- on 4 examples, you can see the presentation of the product, I would like to split it into the so-called peace of mind products that product chosen by customers who want to have a peace of mind, they don't want to look into the electricity bills for a long time. And the other range of products of where customers are very active who want -- active actions observing the market and electricity pricing market and the weather conditions to want to reduce electricity bills on an ongoing basis. It's clear that the advantage of each of us product, depending on our situation and the comfort of life, [ their rate ]. However, those products [indiscernible] by 90% of our customers, 45% of our customers now we are observing are choosing the products. New energy product, [indiscernible] electricity at a fixed price for 9 years in the household segment, whereas in the SME segment, it's a 5-year fixed price contract. It's a 45% now regarding the selection, customer selection. We have 260,000 customers in this -- using this product. We already secured more than 7.4 terawatt hours or more than half of the annual consumption of customers is hedged long term, in the long term, and we have a second range of products. The customers that appreciate the dynamic observation of the market. And also, we achieved the situation but also exceed our expectations, we introduced in [indiscernible] of June, a product, [ Cheap Hours ], and it's a hit product. We have now 12,000 customers applying for this product. Let me remind you that there's a product [indiscernible] a lower price than the freeze price and the lowest price, [ PLN 370 in ] summer per megawatt hour. And this product with a small activity enables you to reduce the electricity bill by 20%. Of course, we have those products, a range of products, so we generate very clear results, implications on average prices, but this requires a lot of activity because we will not deliver -- space, excuse me, for extending. Okay, this is important. A year ago, we spoke about the fact that at the end of this year, will have an option but the customer will be -- can go below PLN 400, Cheap Hours dynamic tariff -- the engagement of the customer means that we have specific results -- financial results. And what Piotr mentioned, the customers have placed PLN 400. [ Masha ], please?

Let me please provide some important information regarding the distribution tariff. The regulated revenue in 2025 on the tariff is [ PLN 13.17 billion ] year-over-year. As you can see, it's a 6% increase year-on-year. If you look at the structure of its regulated venue, we can see that the biggest item that weighs 39% is the fees paid to the TSO, to the PC. The next item of [indiscernible] our cost, of our subsidiary because dependent upon the company, upon the subsidiary. And the return on capital, 19% and the depreciation 10%. The key item for us, of course, the return on capital because it's the main source of financing our CapEx, the return on capital is a very level of PLN 2.676 billion. And you can see year-over-year, there's an amount that went up both [indiscernible] in percentage [indiscernible] and based on value itself. It's a consequence of a large regulatory asset base and a bit higher WACC, weighted average cost of capital [indiscernible] [ 10.35% ]. The regular asset base in the distribution is PLN 24.618 billion. It's rising versus last year by PLN 2.7 billion. And the additional element increasing this value is 35% of CapEx of current year, so 2025. In addition, if we can look at our revenue in the first half of this year, the tariff-based revenue comparable versus regulated revenue that we actually performed [ PLN 6.717 billion. ] Regarding our infrastructure. In the first half of 2025, we implemented CapEx of PLN 1.5 billion, PLN 190 million more than the first half of last year, almost 14% up versus last year, our CapEx. The biggest increase is in the expansion and refurbishment of distribution grid. The funds that we allocate to CapEx, of course, we are spending it very efficiently and in the customer area, we increased our renewables, grid connection to [indiscernible] by 510 megawatts up to 7.7 gigawatts. We increased the energy storage facilities by almost 59 megawatts as far as the capacity of the grid connections are concerned in the 6-month period, we connect about 23 new customers. Regarding expansion of [ publishing ], and we built 2,200 kilometers of new power lines. We increased the length of medium-voltage cable lined by [ 300 kilometers ] at the end of June, the share of cable lines is 41.6% share. We built 400 new substations. And regarding the remote readout meters, we installed in the first 6 months, 460,000 new meters. Of course, the increase of scale of our CapEx is going up as the scale increases, the involvement of our contractors goes up. We are start on -- we are conducting regular meetings starting from last year in various areas of our company meetings with counterparties or the contractors when we give detailed information or planned investment tasks, we are providing information about the changes to technical specifications, our criteria for selecting the contractors. We're conducting an open dialogue during which we're identifying along with contractors, and we are looking and eliminating -- looking, [ for nominating ] barrier that happening in our cooperation, and we introduced such procurement strategies that allow us to make the local markets more active. And regarding the customer issues, as TAURON Distribution as an operator, we offer lost charges, rates for distribution services in Poland. We perform the analysis of relationship between our rate versus the average rate in Poland and this ratio, this relationship with each tariff group is below our average. We are between 86% and 99%. What was the approach to that? We selected each group [indiscernible] excuse me, questions at the end. So life is brutal. So a final piece information regarding the customer also very briefly because Piotr already mentioned [indiscernible] The volume and delivered 26 terawatt hours, stable the biggest deviation [ non-completed ] volume was in the high and medium voltage groups and the 3% increase in the household segment.

Let me take over the baton. Regarding the financial results, they were very good in the first 6 months. The revenue dropped slightly versus last year, but PLN 17.3 billion came in at [ just remember ] in that revenue also had a compensation payments and the compensation payments year-over-year dropped substantially from more than [ PLN 12.1 billion to PLN 630 million ]. So the compensation payment also declining -- due to the decline in tariff price, but also due to the number of customers subject to price [indiscernible] have been limited. Regarding EBITDA and net profit, we have a historic outlook, both the historic results, EBITDA first half of 2025, topped PLN 4.2 billion, and probably some of you can remember that 2020, we're talking about such EBITDA for the full year. So this EBITDA definitely went up and it's moving closer to the promises that we gave in December, presenting strategy [indiscernible] . So we topped by more than [ PLN 400 ], the [ concentrated on EBITDA gain net profit ]. We're talking about the profit of more than PLN 2 billion, and the net profit in this first half of year has not been charged with [ any right or we didn't ] have any impairment charges related to coal assets. Remember, when last year, we had such impairment charges booked. Regarding the CapEx, I don't want to discuss it in more detail because we'll -- I'll leave it to Michal. However, the CapEx came in at PLN 2.3 billion. The net debt-to-EBITDA ratio is at a very stable level. The net debt-to-EBITDA ratio was mainly brought down, but lower due to increasing EBITDA. Regarding EBITDA comparable EBITDA year-over-year, here not too many one-off events happen. This EBITDA -- the reported EBITDA versus comparable EBITDA is very close. Last year, we had a single one-off event. This was a [indiscernible] regarding VAT tax. It led to an increase of EBITDA by PLN 100 million. This year, the event that we identified as partially one-off is the settlement of [ G tariff ]. Remember that the G tariff was typically approved for 1.5 years. So on July 1, 2024, tariff was introduced for 1.5 years. So last year, 6 months and the full year this year. And this has, in fact, meant that we have a nonuniform spread of revenue and cost over revenue tariff prices, uniform of entire period where the cost of purchases last year was higher than this year. And here, we identify an additional revenue for this region -- in the region of about PLN 200 in the first 6 months this 2025. Moving on the next slide. So here, one can say [indiscernible] a long time now, but distribution is our key segments, 60% of EBITDA generated by TAURON Group. Over the last 6 months, this EBITDA came in at close to PLN 2.5 billion. Regarding the next [ part ], the change that happened when this half -- first half [indiscernible] subsidiaries that gave more than PLN 0.5 billion EBITDA generated -- was generated by supply segment in the generation segment. I will elaborate a bit later. And the renewables was out of the top 3 this time. Moving on to the next slide. Here in detail, we'd like to show you which segments generated additional EBITDA versus last year, the first half of last year versus this first half year. You can see clearly the distribution generation or the 2 segments that really gave big boost for our EBITDA [indiscernible] close to 0 or slightly negative year-over-year. And moving one by one, 1 factor led to our high EBITDA year-over-year. In the distribution, Mrs. [indiscernible] already mentioned, the higher regulatory asset base is the main factor in combination with slightly higher of a WACC by 4 percentage points led to an increase of the margin [indiscernible] and the other important factor in the distribution is the regulatory accounts. Let us remember, [indiscernible] was negative last year. This year, regulatory account is positive. What does it mean? But 2 years ago, the volume actually distributed in real terms of [indiscernible] It was lower than the 1 approved under the regulatory office. Next year should be the reverse. But this year, the EBITDA is boosted by significantly due to that because almost PLN 180 million in the first 6 months of this year. Regarding renewables, a simple situation, the declines on the market price has led unfortunately to a decline of revenue in this area in this line of business and the drop of EBITDA regarding volume. As [indiscernible] mentioned, is a bit lower due to weather conditions. So the [ wins ] were weaker, the [indiscernible] deteriorated. But in the meantime, we commissioned new capacity of volume, slightly higher year-over-year. Regarding generation segment, one can say the very big positive surprise. All factors had a positive impact upon being increase of the margin, the [ CDS ] was better. So the decline of the coal prices that [indiscernible] mentioned. The second one is the increase of the volume that was already mentioned as well. And the third thing, the increase of revenue from the balancing market. Remember that the balancing market in the new dimension was launched in June last year. So these factors had a uniform roughly the same impact upon EBITDA positive impact. Additionally, we had a better margin on sales of heat and a positive factor of the composition from the insurance companies for the damages from previous year, 2022, if I remember correctly. Here, the next segment, the Heat segment. Here, we are dealing with a better result due mainly due to a better volume, the heating season was colder for higher volume of sold and distributed heat, [indiscernible] in this segment. When the supply segment volume, we also mentioned there was lower, but we cleaned up the portfolio, but the margin in the business segment [indiscernible] the large caps and SMEs, but negative impact is a higher cost of a balancing in the G segment -- G tariff and one of the events that I mentioned year-over-year, there was no [ positive preservation, of ] course, the departing [indiscernible] results of last year in this segment. Let's move on to the next slide, please. So the financial debt. As I mentioned, the net debt to EBITDA ratio declined significantly mainly due to EBITDA because if you look at the net debt what we calculate based on the [ bank ] definitions, it went up slightly year-over-year. If we look at financial debt, this financial debt declined by close to PLN 1.5 billion year-over-year. What was the main driver? The main driver, as you can see here, was the decline of debt due to the need to pay for CO2 emission [ allowances ] this year. In contrary to last year, we purchased a special part of the [indiscernible] end of March, beginning of April. I'm talking about the certificates [indiscernible] September, beginning the year, and this led to the more than close to the PLN 1.5 billion shift on this financial debt. Let me draw attention to 1 new item. It didn't [indiscernible] , namely the National Recovery Plan. [ Why I'm doing attention to that ]. It's probably not very significant this year, but definitely be significant in the subsequent years. And the difference between the nominal debt due to national cover plan loan and the debt that could be included in the balance. The balance, as a matter of fact, we include -- we look at international [indiscernible] [ IS 20 and ] receive a major portion of loans under the recovery plan is very much different from the commercial. So we discounted the market conditions. We look at the [ preferential ] terms and the [ difference between both ] is placed in the accruals and prepayments and only the main portion of a certain portion of the debt is placed -- is listed as the nominal debt in the financial debt we offset the difference, and we show the entire national recovery plan loan under the nominal value. So difference is there. So in the first half of the year, almost PLN 600 million we drew in the balance is about PLN 200 million sitting as debt, whereas the other almost PLN 400 million is listed as an item in the prepayment accruals. Difference between the net debt and the nominal debt according to the bank definitions based due to national capital loans will be increasing in the subsequent year due to the fact that as you remember, a higher level of funds acquired. But I will elaborate on the next slide. So let us move on to the next slide. Let me show you now what the President mentioned at the very beginning. We are delivering on our strategy. As we promised in December, generally, whether a major portion -- a substantial portion of our funds, 20% to 40% or 30% will be acquired from preferential source. We mentioned [indiscernible] plan is PLN 100 billion [indiscernible]. And out of that -- between PLN 20 billion and PLN 30 billion will be acquired from the preferential funds and subsidies. And we said that this will be our main area of interest. Of course, later, supplemented with other financing such as product finance and the traditional financings, and in-house funds, of course, own funds. But I want to say that only after a few months since we announced our structure, we acquired subsidies and the preferential financing in the -- at the region of almost [ PLN 7 billion ] only a few months have passed and 70% of almost -- at least [ 20% was ] acquired. First of all, [indiscernible] distribution, digitization and a number of smaller assumptions also in the distribution line of business, a preferential loan for renewables. That's situation as of now, plus the subsidy in quite a new area, namely the construction of production of hydrogen facility, production facilities. So as I said, we delivered on our strategy, and we have the right track to deliver it in the financing area and small, not important fragment. First, historically, in the history of TAURON, the project financing probably will not only be focusing on the traditional financing, but some of finance will acquire under the off-balance sheet formula. And over the last few weeks, we signed the first agreement based on project finance. We [indiscernible] very beneficial favorable market [indiscernible] and we signed a financing in the renewables for slightly more than PLN 200 million, first finance projects. That's all for me here. Let me hand over the floor to Michal who will speak about CapEx.

Krzysztof delivered 11 minutes on time. Okay. Regarding the CapEx, our investment [indiscernible] went up year-over-year by [ 25% ], up to PLN 2.3 billion, our biggest and most important segment from the CapEx point of view remains to be distribution line of business. The details of distribution was elaborated upon by [indiscernible] . So let me move on to the renewables. Here in the first 6 months, we invested about PLN 400 million, out of which 60% was allocated to the construction of 3 of our largest wind farms, but I will elaborate on -- in more details and the construction of 2 PV farms that we spend about 25% of our CapEx in this line of business. Year-over-year, also generation segments CapEx goes up. Here, we are dealing with a natural overhaul [indiscernible] overhaul of the units. So this year, we are dealing with an overhaul, yes, no 910 megawatts in the capital, a major overhaul of our second largest unit in [indiscernible] a part of a certain cycle. And so this year and next year, this CapEx will be higher than in historical years due to [indiscernible] Last year, we also had a planned major overhaul of [indiscernible], which will require a higher spending. Regarding the Heat segment here, about PLN 50 million CapEx, mainly the commission of [ the up to now ] investment products as well as the network related projects in the next year, probably this will accelerate, especially by the -- big investment decisions regarding the larger sites we are facing now, we [indiscernible] of preparing to mission that will be launched next year. And the last one, supply and the other segment here totaled PLN 140 million, the biggest portion being the IT and customer service investment and the lighting in the region of PLN 30 million. And now, regarding our largest investment projects in renewables, line of segment, let's start with the [indiscernible] project. This is about to be completed this project. The installation of the turbines have competed. We got occupancy permit. So we are acquiring so-called [indiscernible] operator from the temporary operator for the operation of installation connected to the grid. And we assume [indiscernible] in Q4, we are at the final stage. [indiscernible] completion date, Q4, but closer to the end [indiscernible] here, we have 6 out of 8 turbines already mounted. We have 2 are being amounted now then move on to the technical acceptances, occupancy permit. And we are planning to complete this process this year. The [indiscernible] Wind Farm, which is our largest project launched last year. Now we are at the stage of having completed the full foundations. We are about to mount the turbines. We assume mid-October, the process will commence and the completion date is scheduled midyear 2027. Regarding the PV farms. The bulk of PV farm, we had the state of final finishing works regarding the access roads and the site. We are acquiring the final permit soon. And the [ Postamino PV Farm ] also, we have the [indiscernible] permit from the construction side, the final [indiscernible] project will also be completed at the end of this year. However, what's important, we launched 4 battery energy storage facilities, probably [indiscernible] very impressive, but rather very important, first of all, due to the testing of certain contractual solutions, we managed to contract those projects at a competitive price. These were products that could have been -- could be quickly connected to the grid below procurement law threshold level. And from a personal point of view, we'll be able to test the management and maximizing our operating margin, such investment products and we'll have more of those investments as time goes by, but we started wanted to do [indiscernible] early and to test the commercial operation management, however [indiscernible] the storage facilities, and we [indiscernible] will be commissioned Q1 next year. Regarding the strategic options, you can't see everything in CapEx right away out of things happening ahead of time, so we want to show you the outlook for implementation of the options that we outlined in the strategy. I already spoke about the renewable [indiscernible], indicated a very big option regarding the energy storage facilities, the picking and backup [indiscernible] have completed the basic engineering design, we have a general design. We have a better estimate of the CapEx for this project that could come in at more than PLN 6 billion for this project. I hope fully soon, we will get the great conditions. And connection conditions and we'll be moving on with the next step of this investment. We also have secured all of the land for main installations. So we do assume that this installation could be [indiscernible] investment ratio in 2027 on the condition that the support mechanism that will be in place, will be sufficient for this project to make it sufficiently attractive from its profitability because the level of CapEx is very high. What's very important regarding the Heat segment, we filed request for 187 megawatts grid connection in the power [indiscernible] technology. In our case, with [indiscernible] [ broilers ]. So logic is we want to have warm water, hot water based on the [ electrode base ]. So we use the cheap power from [indiscernible] fill up the energy storage and then use the hot water to the [ final ] users during the summer season, taking advantage of lower [indiscernible] price but the majority of the investment decision in this segment, but we mentioned in the strategy will be made in 2026, so especially the biggest unit [indiscernible] next year. Regarding the relations segment, here, we indicated that we'll prepare an option of transition for this segment, the biggest option from my point of view, maybe the construction of the peaking [indiscernible] case, we chose [ the CGT ] open cycle gas turbines. We have grid connection conditions for the units 1,400 megawatts, the 600-megawatt uniting [indiscernible] 400-megawatt unit in [indiscernible] scab, 400-megawatt unit in [indiscernible], launching of our storage will be dependent upon the acquiring of [ best efficient ] revenue from a capacity market to make sure the [indiscernible] economically profitable. But it happens, it depends upon the final decisions and the final permits of capacity market auction. But however, this option is ready from the point of view of grid connection conditions. We also acquired [ Edva Generation source citing ] good connection conditions for facility, energy storage facilities. We are talking about the [indiscernible] . We are talking about considering [ 8 sites for ] this location, but we're assuming going to be [indiscernible] projects. Also, we try the products of [indiscernible] we are preparing, but we got the PLN 240 million in subsidies. In our [indiscernible] indicated, one of the important elements for renewables to the acceleration of in-house development projects, looking at the implementation of strategic objectives. Now we have a gap in all technologies. However, first time we are showing also our pipeline of projects under preparation using our in-house resources. And you can see that this gap does exist in all segments. However, the projects, especially regarding the wind product, whereas PV projects and energy storage facility projects, we have a big portfolio in house portfolio, we can implement a large portion of our strategy. And moving on to the details of our pipeline products and the development we have 3.6 gigawatts of projects that are currently in our preparation portfolio, majority vis-a-vis energy storage facilities. We also have about 400 megawatts in wind projects and more in the PV projects. What we did recently, increased the capacity of our team preparations, procedures, [indiscernible] solutions, systems solutions that can scale enable us to scale our own development, we can [ see ] in-house development. We see some effects already, but the key is to increase the number of wind products in our pipeline to meet our strategic obligations, commitments. I promised to return for 1 slide, the outlook slide. So far, we have shown to you the outlook only once a year during the full year earnings conference. This year, we decided to change the [indiscernible] to now practice, and we decided to show what's the view of the outlook of [ our bid ] outlook and the ratios after the first 6 months. And here, let me note -- let [ me attention to ] what has changed versus the previous outlook. [indiscernible] account earnings in the generation heat lines of business. We changed the direction of those arrows, especially in the [indiscernible] we do believe that the EBITDA year-over-year will be better here. All the factors that I mentioned when I spoke of before, will be the same for the full year. So the CDS issue due to the decline of the fuel prices and they show revenue generated from the balancing market in combination with a better volume in our opinion, will allow us to achieve better EBITDA year-over-year. And the second issue is the Heat segment. Here also we are improving, maybe not going straight up in the area, but from the expectation of a decline in this segment, we expect EBITDA to be stable, to be flat year-over-year, especially due to the volume that I mentioned, the [ lower ] outdoor temperatures in the heating season -- better results in this segment. Effectively, EBITDA overall for the group should be better and -- net debt to EBITDA, we do believe that we're going to be close to being flat year-over-year. So much regarding the updated outlook. The other thing [indiscernible] changed beyond the thing that we have changed is the expectation regarding the supply volume. It's lower, but as Piotr mentioned, but it doesn't have any backup on the deterioration of segment itself. It had an impact the balancing issue or a balancing [indiscernible] segment had an impact upon the earnings. So that's all regarding the presentation. It seems like we made it within the promised hour.

Yes, delivered. So 51 minutes. I do hope the shareholders, investors would appreciate that. It was ideal. Okay. One more thing that is highly important regarding [indiscernible] Michal mentioned regarding CapEx. Projects, very courageously and we [indiscernible] by a local impact issue. We are looking over the products that we do, we try to do around our core being the distribution grid and the places where our conventional energy is implemented. So for each side of our conventional energy projects, we have prepared and working development projects for the new energy world. [indiscernible] in each of those sites, we are working today in order to be able to take part in the '27/'28 capacity market auction. This is competition [indiscernible]. But irrespective of what we know about past beyond '28 is going to get more and more difficult. Therefore, my colleagues mentioned already this year, very specific works are being carried out to build new life there. So the new world could replace what's [ better ] today. So the local community could have a job so that people could work on the other hand to develop business there. This is for us is natural, and this is applicable to the Upper [indiscernible], we are implementing an enormous project of upgrade of [indiscernible] Dam that combines safety with the business being the production [indiscernible] from renewables, hydro in this case. Let me put it this way. But we are showing the economic result, the financials [indiscernible] of the group, we are very good. Sometimes the questions are why these results are so good? Very good earnings mean that such companies is able to invest, but it's a natural thing. If there are no good financial results automatically, it has an impact upon the investment capabilities. So the fact that we have good financial results, and we are stable, gives us a chance that we can build economy, not only in Poland, first of all, in the areas that we operate in. [ This normal impact ], but any money that we spend on the distribution [ grid, 99% ] goes to local businesses, all the [indiscernible] grade in the [ heater generation ]. This is a supply chain of local businesses, and this is very important. So if you look at the financial results that we are showing the numbers, [ EBIT profit is not interesting ], but please take [ note effect ] but during that time the actions related to the customers [indiscernible] interesting questions, [ Piotr ] have very nice challenge, but this is a matter of improving the customer service investments in customer service [ in normal systems, ] new rates that are much lower than what was offered before. [ This enormous investment ] in the distribution line of business versus the work later to flood safety solutions in [indiscernible] These are the programs that [ we'll launch for ] human associate development, [indiscernible] development today. That's one of the most important projects that I have on my shoulders work for development, but this company could operate not only in the subsequent years, but also over the next decade because of the best investment that we can make in their competence and the engagement and we're developing corporate culture that will be long lasting for years. This is a matter of people [ and also a just ] transition. As you look at that if we took part in the capacity market auctions, [indiscernible], [ not only we do money ], of course, but has to be in place always, but also issues related to Poland energy security, also taking in account [indiscernible] related to the fact that the transition that we are implementing could be -- could find social approval. This is quite simple and clear [indiscernible] generated by people for people about the social acceptance, society's acceptance, we can't implement the transition, social transition requires social acceptance. People who will follow us, they see that we deliver our promises, and we convinced them. The example of -- examples of our meetings of our workforce on the hydropower dams on [indiscernible] means that those people when they see [indiscernible], they can see what we deliver on our commitments and then [indiscernible] help us. So [indiscernible] high inspirational thing, a new experience. We also gained over last year, and that's what I'd like to leave you with. Thank you very much.

Thank you very much for the presentation. Now the time for questions. First of all, I'd like to ask the questions from the persons present in this room. [Operator Instructions] Probably some have already been sent [indiscernible].

I have several questions. And the Management Board's report for the first half of this year, we can [indiscernible] although later turned out what I missed in the report from the full year last year that out of impairment test [ overgeneration ] units, we are planning about the [indiscernible] will be operational until 2040. Let me remind you what the market is that until 2035, [indiscernible] '30 I can remember the capacity market doesn't [indiscernible] regarding this power plant. I want to ask where is your optimism coming from [indiscernible], but these [ patents ] will be operated for so long. And regarding the capital market, you have managed to contract everything that you submitted, but did you submit everything that works until the end of this year? So which units out of the 4 sites will be shut down by the end of this year because you simply didn't report and submit them for the market auctions? And also, I'd like to ask about the issue related to the cost of balancing the renewables. I'm talking about here the cost of production profile in the system cost, your market competitor is estimating this currently at the level of PLN 100 per megawatt hour. Regarding the renewables, I want to ask what is your situation, what's your point of view on that. Thank you.

Let me start. I'll hand over to [indiscernible]

Three questions. The topic regarding the optimism regarding [indiscernible], you are right. Noting that the capital market do we have shorter than period of operation, but we [ assumed ] these let me remind you high efficiency units and in account our analysis, we think that they can economically generate electricity as they do it now. The support from the [indiscernible] market is not necessarily here to -- for such a unit to make money, to cover its costs. So that's the answer to the first question regarding the capacity market. Here both the questions that we can see on our screens and [indiscernible] are interrelated. We submitted 10 units to the supplementary auctions. And within our strategy of this -- of using those units here, I take into account our backup units, none of the units that have not been submitted to the auction will not be liquidated, that's the answer. And to add to be in front [indiscernible] slide regarding revenue contracted under capacity margin, we contracted [ 53% ] more revenue for 2026 than in the year 2025. We have 5 auctions, a lot of auctions. So we have additional supplementary catch-up auctions, second supplementary in the [indiscernible] of 2030. So the activity is very high in this area. Now unless have a handful to completely -- so far, we've been successful.

Let me just add, there was a question about [ Wargisha ] calling that Wargisha is large 460 megawatts of installed capacity. So the [indiscernible] unit are much lower. But first of all, it's [indiscernible] has an added heating component that is in fact, is a combined [ hidden pipeline ] and feeds the entire system between [indiscernible] on a large heating [indiscernible] has a large load and therefore, it operates in the cogeneration mode for the majority part of it. So economics of that is closer to the combined heating pipeline, but [ strictly ] system power plants and for the needs of heat generation will be operational until 2030 subsequently will be replaced through the cogeneration gas-fired unit. That's our investment plan. That's why the economics is different than for classic traditional system of 200-megawatt units and 110-megawatt units have mentioning that we are doing to assume that the power plant will generate a major value between [ 2025 and 2040 ]. We had a lot discussions and on that regard technically, the unit can be operational in a much longer until [ 2060 ]. We have [ KPK ] a certain portion of generation from coal -- because this is the highest efficiency rate in Poland at the gross level. So from this point of view, it could be the last [indiscernible] unit shutdown in Poland. 2026, technically, it doesn't mean that it's going to be [ operated in the conditions ] permit it could work longer from a point of view, [ we limited it to ] 2040 as of today. But if it was to be shorter until 2035, it will not have a major impact upon its value because you assume that this part plant will be generating major additional inflows.

What Michal mentioned, let me just confirm if we look historically at the impairment -- historically, we are supposed to operate until 2060. Then in early 2024, [indiscernible] durability of the life cycle -- the economic life cycle of the [indiscernible] counted by revenue until '24, '25 will be very similar. So irrespective of which we picked where results in the impairment test will be very similar, the difference will be very small. That's the answer. But we assume very well the highest efficiency rate units will be operated in Poland until 2040. That's our assumption.

Cost of balancing for -- farmers, PLN 50 per megawatt hour and for wind, it's about [ PLN 15 ] per megawatt hour. If you are kind enough to give more details. If -- I'm not sure if I understand correctly [indiscernible] mentioned, I mean here, the cost of balancing the production profile and the cost for the system.

Let me put it this way. Regarding the cost of the profile of the farmers, 1 parameter and for the system, it [ seems the best is ] in the region of PLN 50 up to PLN 100 per megawatt hour. I don't have detailed information, but what's the number for our fleet in this regard. Thank you very much. Next question, please, from the audience?

[indiscernible] Santander. Let me start with the question to the CEO. So PLN 60 billion by '25 or 2040? I misspoken. I confirm what the strategy said. So once we know it, so it's one must notice that up to now, the CapEx spending are not overwhelming. So I'm not dazzling -- so a question to [indiscernible]. So what increase in regulatory asset base and what [indiscernible] do you expect for next year, [indiscernible] year, you took into account PLN 1 billion, which is 35% of next year's spending, which would suggest that next year spending is PLN 2.8 billion. So that's what we [indiscernible] says and your slides. So we are getting lost here. So please ask next year's regular asset base and next year's WACC, some early estimates.

Well, let me respond to that. WACC that we have guaranteed to start with. We guarantee the minimum level is 8.5%, the base is 7.5 plus, 1% premium for reinvestments and the level of the WACC is dependent, of course, upon the CapEx agreed upon with the President of Regulatory Office and the [indiscernible] office. So we are in the process of agreeing upon the expansion plan, development plan. And I think this level we know once we approved a tariff for next year. Regarding this CapEx, 35% of CapEx, this was the value of 35%. This is the CapEx that we have in our expansion plan, but in [ '23/'28 ] plan B, [indiscernible] updated, at least, we applied for such update in the new plan.

Okay. [ To further questions ] and how difficult it is the position of the company is in this situation. I will not be pressing on this topic. So I understand that 1.4 gigawatts of [ CGT ], you will take part of that submitted in the December auction. And the second question, whether development because you are showing [ the percentage ] of the expansion of your renewables capacity is equivalent of CapEx spend. CapEx spending on do we have divergent with you account differently for how [indiscernible] 33%. So that means that 1/3 of the CapEx was spent or you calculate it differently somehow?

Okay. Regarding the gas [ peaking units ] gas fired from the [ permitting ] point of view, we are ready for certification. We can take part in the December auction. The final gateway is payment and auction deposits, payment, which takes place in November. So by the time you need to make a decision on the project, ready to take part in a auction expected conditions are for us an attractive and we have such option. We are ready to take part in the auction. Regarding the program, like progress, well, I would have to confirm. Basically, it's based on the outlays that's spending, reporting, some advanced payments are also included in [ the best projects ]. So in fact, from the spending point of view, this progress is higher for the renewable products. From the outlays point of view, side, it reflects the [indiscernible] assets. Let me confirm that in the renewable segment, the fact that you have to [indiscernible] ahead of time on the turbines is advanced payments. So generally speaking, spending is not equal to be outlay. The distribution is a very similar level, up PLN 100 million for distribution CapEx. However, in the renewables is the difference is [indiscernible] The platform could be in place, cash versus outlays. Now we have [indiscernible] difference of first 6 months. We have more spending than outlays.

And the final question from me to Mr. President, because after Q1, there was a statement made in the subsequent quarters are solid. Then we will consider accelerating the payout of the dividend. So we can see how you're boasting, how good results you have. I do not expect anything bad in the subsequent 2 quarters. I understand that dividend in 2026, we can already discount it and put this way. But at that time, I said that we'll be considering and I promise we will be considering very seriously.

We spoke before about the fact that the addition of every manager that runs such a business as ours is the ability to persistently pay out dividend. This is the best encouragement that's incentive for shareholders and customers to invest and link with this company. So I uphold our [indiscernible]. But I cannot give you such a direct question. I give you a straight answer, but we are considering very strong and this is definitely our ambition [indiscernible] ambition.

[indiscernible] from Citibank. I have several questions. First question regarding accounting treatment of National [ Recovery Plan alone ]. It's a very interesting that once you spend it, can I [indiscernible] assume that you have PLN 5 billion coming into net debt and PLN 10 billion will be somewhere in the prepayment and accruals and back to about PLN 10 billion net in fact, will be -- not have an impact will be shown in the net EBITDA ratio. My question [indiscernible] so in your strategy, you showed 3x the ratio. At that time, you had in back [indiscernible] [indiscernible] and you found the PLN 10 billion space, but you can allocate to something else, not to linking it with a question that was followed by [indiscernible] do you have all of a sudden PLN 10 billion in your balance to be spent or not?

Let me answer first question. Theoretically, it may happen so -- but it's not obvious because, as I said, we are looking at current interest rate difference. So if interest rates are declining, but difference, of course, will be declining. So we cannot ahead of time, I assume it's going to be the same ratio. But the method will be the same. So generally speaking, a major portion of it will be an item under [indiscernible] . So I confirm that the numbers, there could be a different.

So regarding less than 3x, if you said 3x, you had this [indiscernible] you realistically thinking about the addition of [ 3.5 ] or now you land on [ 2.5 ] have room for -- on the balance?

Generally speaking, of course, in the strategy, we're thinking more about -- in this case, about financial debt, not to be [indiscernible] However, more we're thinking about including the nominal amount of national recovery plan debt. I have a completely different question about this picking pump storage facility, how big [indiscernible] pump storage project to make it profitable to spend the PLN 6 billion, how many times you have to turn it over and what spread you need to generate [indiscernible] make a commitment to spend PLN 6 billion on this pump storage product. Regarding capacity, we have the stage for which we have a minimum [indiscernible] capacity or a tank reservoir, but we have a [indiscernible] It's mainly the moving of land masses and that's the product, depending upon the structure underneath then we adjust the size, but the [indiscernible] more than 3 gigawatt hours between 3 and 3.5 that's the range that we can speak of elastically in the most probable variance. But our final knowledge will be there once [ the go tests ] are finished. We're looking from 2 sides. Economics of the [ product sale but ] also looking at the [ economics of the sale of ] lithium ion batteries. So here, the batteries are sufficient, cheaper technology pump storage pipeline [indiscernible], [ but want to make this easy area would ] be to close this gap, we can see in [ Western Europe ] about discussions in place and [indiscernible] support schemes moving beyond our batteries horizon can be heard in discussion about the spot mechanism and the solutions that we presented in the [indiscernible] market. So in the past [ 2030 time ] frame is our key importance of business are going to be doable. So we have a financial -- we have quite a lot of strong interest for investors. It's allowed investment products relatively bigger and this did not want to do single wind farms and on onshore wind farms in Poland, [indiscernible] financial solution and support mechanisms [indiscernible] the longer construction process and commissioning roughly around 2033. So before the investment decision, we'll have a question marks resolved.

Final question to give more time [indiscernible]. I ask about your opinion of the PV market. You can see that something broke in this market, and various developers are much more cautious than they were 2 or 3 years back. In your presentation, you are showing that you want to build the capacity developers capacity. Is it possible in the structure [indiscernible] company to compete against the fast-running independent developers? How do you see with a share [indiscernible] cost of generation, [indiscernible]. That's my first question. And the second one, whether you have second [ fold ] [indiscernible] to develop this pipeline and invest in the PV business.

And well, let me start and you will comment as well afterwards. First of all, regarding PV from investment by [indiscernible] we can confirm there's an oversupply of projects. A few people are buying PV projects. The prices for the paperwork and dropped 3 or 4x versus what we observed 2 or 3 years ago. So that's true, there's an oversupply, we can see that as well. So definitely, we will be cautious here. Now we are trying for our PV business, first of all, to take advantage of in-house development. We have some synergies, look for preferential solutions from the financing point of view. So our PV project that will be developed even with price trajectory perhaps that assume further [ deterioration of the profile ], it could remain competitive. What we can see in parallel at a small -- from procurement sector CapEx is declining once the lithium and iron batteries come in, they can ensure certain stability of spreads in the system. So we are not big enthusiasts of PV other projects that we have ready from [indiscernible] development reviews of the preferential financing, we can see that they could make sense. Regarding in-house development, I think are we able to be flexible enough. I think the market regarding in-house development is changing, namely the project to have the grid connection and conditions already issued 7 gigawatts, [indiscernible] about 50 gigawatts. So it stops being a rare resource. In the short time, we demonstrated that we can deliver in-house development project to be ready to build more on a larger scale to [indiscernible] 70 megawatts [indiscernible] capacity auctions came in from a further 500 megawatts we obtained on the generation side. So we're able to develop those projects. But we can see that it's more and more important for persons that lease the land and [indiscernible] matter of social dialogue and the probability of completion of investment from a technical point of view only start the development of the wind product, we are paying a small upfront fee or we pay nothing. And we are promising the person there is a leasing rent that will pay the merit of money once we physically start the construction, and [indiscernible] operational. And from the point of view of such a person of [indiscernible] the other side, makes it probable [indiscernible] but a certain point to ensure a further cash flow for this. So in this respect, I think we are in [indiscernible] that could be much more stable, much higher property we guarantee a [indiscernible] that in case of wind farms are becoming more and more a bigger problem as a matter of convincing the local authorities [ also projects regarding ] PV also started to appear [indiscernible] we can see that we believe that we are able to be an entity that is able to a better way to convince the local community to demonstrate that we're able to carry out sustainable projects and to be an active part side in this social [indiscernible] So we have this competitive [ advantage here, but point of view ], we try to ensure sufficient scalability, flexibility of solutions and the conditions that will not be far from difference from the market reason. It probably will not be very aggressive in bidding for plots, but that's not the point. At the end of the day, a development is to make sure that there are a large portion of the value creation for the entire renewables product will be -- will come to us and we try to do that. We have to make sure that we do product that enable the [indiscernible] mix and based on our [indiscernible] we're looking for partners here that we -- I invite you on the 23rd of September, we are signing the letter of intent with cover regarding the compression regarding [indiscernible] has regarding the development of wind farms. So we can see certain competitive advantages that we want to base our operations on, and we believe we can win in the segment.

Let me just add to what [indiscernible] have mentioned as well, emphasizing how the CapEx dropped over [indiscernible] 2 or 3 years, the CapEx went down by half on the PV products. [ The big change in the market. ] And the second thing the fact that [ CAP forwards ], a couple of competition opened under the [ National Cover plan ] there was possible to submit petitions for financing for renewable products, of course, PV and possibly wind projects. And let me just say that government has actively submitted as many petitions as we could. What will be the final outcome, we don't know, but it's definitely help the economics of finance projects. [indiscernible]

Two questions. The [indiscernible] if I understand correctly, due to the results of a supplementary auction talent by the end of 2026 at least, will not shut down any co-filed units, but let me ask how many co-filed units you had? What capacity that could have lost the capital market as of the end of 2025, how much of that has been submitted to the supplementary auction. And 1 and as a consequence, and how many are the left of those coal-fired units outside of the capacity market and will stay out as of the beginning of 2026? And Ms. [indiscernible] a question regarding what, roughly speaking, is happening in the grid, [indiscernible] regarding renewables connections, what was the level of connected capacity, as of the end of June? If you remember, you have some data, what may happen [indiscernible] how many active connection agreements were signed, but not implemented both capacity and grid connection conditions, what was the capacity under those conditions. [indiscernible]

We submitted 10 installations referring to the level of profitability topic, but is a precondition for [indiscernible] of a unit. As you know, all units under this auction, except for the [indiscernible] [ the price taker ] status. None of those units could not leave auction before the price taker [indiscernible] of the auction price [indiscernible] The forefront supposedly some units left, which enabled the closing of auction. From my point of view, everything that we submitted, one, will have a capacity contract [ both our ] units as well as the other units. [indiscernible] [ 67 and 4 units left ], but we'll be providing backup [indiscernible] in place is depending upon the strategy of dispatching the unit. Let me remind you for the 2026 auction capacity, we have other units. [indiscernible] I mean here, the 1 that they lost, they didn't win [indiscernible] about the capacity market, correct? But the total capacity, I think, I think 1 important thing by definition, we do not submit all of the units for [indiscernible] because there is some [ backup summary [indiscernible] 4 200 megawatts submitted [indiscernible] because [indiscernible] capacity market. But the way it is planned, it's going to be repeated sequentially for '27/'28. Nothing changes in our analysis that those 4 units we foresee will be backing up the units better under the -- market. So we'll be able [indiscernible]. The 910 units as well, and we have 4 units by end of 2028, [indiscernible] capacity markets. These are the upgraded refurbished units that have a 5-year capacity markets since 2024. Regarding end of June, [ micro installations ] we -- [ 467,000 micro installations ] total capacity to [ 4.2 gigawatts. ] The total entire renewables, including already provided, give me a moment, on the slide, we gave this information, 510 entire renewables in the first half up to reach 7.7 gigawatts at the end of -- but I don't have the information about the grid connection conditions exact date. Thank you.

Talk about the write-offs on coal. We didn't have them as the first -- for the first 6 months, and [ conditions not change. I can assume ] [indiscernible] end of the year, there'll be no impairment charges that make things more probable. There will be no reason not to pay out the dividend because there will be a net loss for the entire year. That's 1 question. Second question, what's your understanding what will be the change of capital markets beyond [indiscernible] we are talking about a substitute mechanism? Or do you have any opinion on that? What may be introduced and what -- how it will change, what will be its impact upon your cash flow versus current years and beyond '28? Thank you.

Well, regarding the impairment charges, as we said, major impairments others were booked in previous years, the main balance values [indiscernible] about any change because the capacity market has changed. It will not change until 2035 of course, [indiscernible] inflation. However, the other [indiscernible] units, the 910-megawatt unit. We also measure the market component. So that depends upon the price trajectory -- in the subsequent. So if capital market hasn't changed, nothing will change regarding impairment [ other ], but the market is relatively stable. I don't want to determine the decision, [indiscernible] the end of all the impairment or not definitely the impairment test will be conducted. However, the major portion of those assets have already been written down, as you said, if you look at the balance, stand-alone [indiscernible] [ balance shows such is have ] been written down to 0 was only loan value, but for the assets, we're looking at the [indiscernible] statements, PLN 2.8 billion, the gross amount of that is -- portion of that is [indiscernible] We want -- would like to know what's going to be like [indiscernible] about the substitution for us in the strategy will align with what is going to happen. On one hand, what we're discussing now and thinking about now, and it's nationwide, as a matter of fact, over the next 3 years that you already have established Capital Market is clearly laid out until the end of 2028. Subsequently, there will be a capacity gap there. So depending upon what will happen on the supply side in the near future, I think the discussion will be conducted about the '29, 2030. We look at our assets. We are able commercially, of course, to provide such [indiscernible] defining our strategy, but we are looking the first supplier, you can always try to trade if it's okay. That's the first -- that's 1 view, 1 point. However, we are counting on it and [indiscernible] be interesting, solution [indiscernible] demand for service of such units as a 100-megawatt units then. [indiscernible] have a system -- subscription system market, subscription market is going to be the [indiscernible] different scheme, but with an account that [indiscernible] security, a lot of things are happening now. We know what's going to happen in the month or 2, 3 versus demand on the capacity side or -- prospect that may turn up. So it seems to me that the development of such a model and maintaining commercial research unit in exchange for the -- plans regarding the construction of those [indiscernible] solution for us because we have this [ continuity of operations ]. So we're building assets in form of [indiscernible] facilities. So building [indiscernible] entire system. And in the meantime, we have still operation functioning on ongoing basis in [indiscernible] technical way, guaranteeing to take advantage of those units. Talking about spinning reserve or some kind of different names could be used depending upon the technology and the needs. That would give us a chance to build, maintain security. On the other hand, also transition the entire part related to the human resources because there is an opportunity to take advantage to use the human resources to take part in the construction shutting down. It's an interesting project that thanks to that could be put in place. If I were to make a choice, I would choose something like that building in the future, maintain security here. Now from my point of view, would be an ideal solution. What will happen, we'll see. For us, this capital market mechanisms [ of critical ] importance, we are beginning to work on that because for [ 2 or 3 weeks, ] we are working on 2027 because capacity auction when it comes in June or September. But first thing is we had to prepare or take part or not take part. We have the economic justification take part and submit the bid. I assume there's going to be a [ price taker market ]. That's 1 element. Second then, if we take a decision that we take part in the capacity market when we have to -- the optimization efforts to increase the probability of winning the capacity market auction. So that's a big challenge that we have in front of us. Let me just tell you, but we've been doing it for several weeks now.

Let me just add regarding substitution -- we took part in because of this [indiscernible] carried out by the Minister of Energy in developing certain assumptions for the system so that you could confront it with the [ European commission ]. We are saying that [indiscernible] we meet the criteria based on what we know. So speaking directly, we want to build instead of liquidated conventional units, gas-fired units and the substitution mechanism and make sure that this event can happen. It's feasible until the time the gas fired unit is built, the conversional unit is the financing for a certain part of its cost [indiscernible], which part it is. So that is a mechanism. Our intention is to get [indiscernible] comes up before the [ section of the ] capital market, we assume very initial continuity. But next year in September [indiscernible] 2030 auction under a new mechanism, but those mechanisms, but separate. So I can imagine -- or in our gas pipe unit that want to build in 2035 has taken part in this auction. But also, we can imagine that gas-fired unit is taking part in this auction built in place of a liquidity or a shutdown until, give us an opportunity with subscription mechanism is already implemented in place, would enable maintaining in the deficit '29, 2030 time frame will enable maintaining a unit that could provide support for the security in this location in this hub. Excuse me for [indiscernible], but a very important mechanism what we said for us and for the power sector in general, I think. Thank you very much.

Any other questions from the audience? So let's move on to the questions asked online. Some of those questions [indiscernible] So let me read the ones that are new ones. The first question, what is the criteria for maximizing the expansion product in the distribution segment. In case of 5%, 6% cost of capital, the decline of WACC premium for investment up to 8% to justify the maximizing our investment efforts in this area.

Ladies and gentlemen, I think that it's worth remembering 1 thing about [indiscernible] products in the distribution [indiscernible], on paper. We're not building any empty buildings, anything like that. The process goes like this, but we'll talk to the regulator of effective, efficient transition of a [ grid car ] [indiscernible] investment needs and the mechanism of compensation for those CapEx. So you can see that from a basic point of view where a need for investments, both strengthening grid to make it more flexible, more [ variability ] will be renewables production [indiscernible] investment and it's growing in age from the upgrade refurbishment point of view, these needs due to the sudden historical legacy. So it's needed required [indiscernible] as well. So proposed a certain compensation of premium for investment and for -- so we are functioning [ this main place the ] grid requires investment and forward investments to take place where compensation must be sufficiently attractive. This mechanism is aimed at reducing those historical legacy [indiscernible] security point of view [indiscernible] key importance regarding the security of the operation of the power system benefit the physical [indiscernible] level. So we can see by the way a flexible grid that is robust, resilient is of key importance of the system to expand for the transition of energy sector to take place.

If -- as of today, [indiscernible] were to update [indiscernible] objectives, what would happen versus the time of publication of December last year?

Nothing. Well, with full [ automation ] as we deliver the strategy that we presented, [indiscernible] fully determined to implement and we can discuss it to go more to the left or more to the right, but the strategy doesn't define -- it's not an excel. It's a certain assumption faith in certain changes, certain actions as we are showing every quarter and every day, with our own work. We believe in what we have written and we [indiscernible] carried out. We are more determined and [indiscernible] strategy, just a strategic option is we're talking about the picking units. At that time, we already anticipated that it was going to be [ interesting in business. ] [indiscernible] stage where we believe more and more and we want to implement it as we mentioned in this [ November decisions will be ] made, whether take part in the capacity market, but in a moment, it's going to be specific money behind it. So thing that we include [indiscernible] we spoke about something like that [indiscernible] option we already taken part in the technological dialogue discussing various solutions. So we do believe in the technology, we are waiting when we can go to the store and ask for 2 SMRs, [indiscernible] do a tender for [indiscernible] or waiting for the time when we can trade, not just discuss. Thank you.

Well, [indiscernible] regarding [indiscernible] component of [indiscernible] that to be lower next year. [indiscernible], we know nothing of -- well, we're not conducting to any [ deregulatory ] office in this topic. Regarding the second part of the question, we expect such a WACC that will enable us to implement our CapEx projects.

Another question, who are you buying from the remote readout meters?

Let me start by saying that all contracts active as of the end of June, purchase procurement contracts, 99.7% contracts [indiscernible]. First of all, from Poland, only a few from the European Union and 0.3% of our contracts are from outside the European Union [indiscernible] to meters. Thank you. Meters are selected by way of specific tenders.

Regarding dynamic tariff, do you have a lot of profitability in the trading segment [indiscernible] entire tariff price [indiscernible] implications we may expect regarding the [indiscernible] segment as the share of dynamic tariffs going.

The margin is neutral. So the pricing dynamic tariff thing is following they had market price. So if margin is [indiscernible] the number of megawatt hours taking advantage of the part of dynamic tariffs will not reduce that margin or not increasing that margin either so -- but it's neutral. So we do expect that the number of customers will be rising, and we are, I think it's an opportunity both for us and for the customers. It's an important thing, but got mentioned that if we get engaged, the society get the customer on the other hand, there will be supply on our side. So it might be followed by technology. That's why the [ AMI ] meters that were [indiscernible] investments of distribution [indiscernible] we provide to the customers of systematic education means that frankly today, any household today, any company systematically because as of the end of your 50% of customers will have [indiscernible]. We know exactly how much of this [indiscernible] if you link it with the price of [ electricity given hour ]. [indiscernible] So expect the new customer -- new technologies will come, but so-called smart home has already been implemented. But regarding the way it works, still a lot ahead of us, but [indiscernible] between the others [indiscernible] information about the consumption [indiscernible] tools will come to being [indiscernible] the devices instead of us. For us, we do it ourselves. But there any change requires some change some time. [indiscernible] happen in a single day. [indiscernible] happen for us, for now, it requires our own behavior about [indiscernible] engagement, but in some time, the technology will provide support, but competition is the best solution. So it will all happen quickly. Thank you. Coal assets are written [ down to 0 today ]. Part answer to this question. As I said, at the unit level, all shares in conventional generation [indiscernible] 0, [indiscernible] versus the consolidated statements the answer is no, the main part being [indiscernible] and the total value of all these assets [indiscernible] the group is about PLN 2.8 billion.

What contribution to the EBITDA [ initiations ] and came from the [indiscernible]. How much did it come [indiscernible] in the second quarter of 2025, the effect on the [indiscernible] buyback and [indiscernible] market generation renewables?

Regarding -- I don't have data regarding quarters. But for the first half, we earned on [indiscernible] buybacks, about PLN 100 million. Let me remind you that [ the interested buybacks are ] taken place due to the lack availability rate [indiscernible] and we have a contract that can [ transfer it to ] the different units, organizational variable costs are higher than electricity price, [ and be of the cases ] when such buyback takes place. I don't know about [ 1.7 terawatt hours ], we bought back in the first 6 months. I'm talking about [indiscernible] generation, but also the heat and renewables segment assets.

Just to add 1 must say that looking at this market in a comprehensive manner. I cannot just say that here, it's better to sell. He is better to buy back. Of course, at the end of the day, that's how we -- what we do, but it's a mix of different actions sale on time. And [indiscernible] buying back the electricity, of course, value spread on the buyback was declining because the prices were declining. So if the price is higher than the room even in [indiscernible] negative prices is beginning to get smaller. So respectively smaller space, but it's a mix of an impact. As I said, I'm talking about generation earnings were impacted by the buybacks and the [indiscernible] margin on electricity sold, increase of the volume and the results from the balancing market. And of course, in the [indiscernible] optimizing, so what we can achieve this result in that line of business as good as possible.

Thank you. The next question we have from [ Mr. Andrea Balsky ] from [ Brokerage House ] [indiscernible] The first half would say, why did you take advantage of a small portion of cheap financing from the National Recovery Plan despite [indiscernible] December '24? What is the schedule of transferring successive chances to TAURON?

Answer this question [indiscernible]. First of all, we have this mechanism of refinancing and this refinancing is applicable to any spending. First of all, we incur an expense in order to get any refund. So it's not [indiscernible] paid at up front end. Then it's accounted for, [indiscernible] we have to make an outlay and then to get the free fund in the [indiscernible] . First tranche, we had [indiscernible] small amount, some [ energy groups ] [indiscernible] amounts. They could go back to 2022. However, there are certain exceptions. Exceptions for [indiscernible] we couldn't use funds or any European funds. So since our group in the past was using a lot to [ partly ] the subsidies. But first of all, the [ EIB ] funds. So [indiscernible] one of a single large fines [indiscernible]. So we can only take funds that we spend on [indiscernible] funds that we spend going basis also reduced. First of all, by the subsidies that I mentioned and the potential use of other EU funds. However, at the same time, they have a certain category that [indiscernible] such categories [indiscernible] transportation, some things, they do not -- are not eligible for those funds. But what we can say is definitely you will substantially speed up the drawdown of those funds in the subsequent years. And the position of the first tranche. So by PLN 11 billion that we signed a contract in December, as we said, we intend to spend it will be [ roughly 4 years ], if you had to add [indiscernible] that we signed this year, so almost [ PLN 16 billion ]. So in total, we're planning to spend it or draw down those funds within the next 6 years because also a natural question right is wherever there's a risk, but those funds will be lost. Now because the maximum time frame is [ 2036 ] [indiscernible] funds. So if we say 6 years before 2030, we plan to take advantage of all of those funds.

Thank you. Next question. How much could be the [indiscernible] the second half of 2025 and 2026?

Let me say as follows. It's a uniform distribution. So the effect, as you can see, it was almost PLN 180 million year-over-year. [indiscernible] 6 months what we said, what we show. So it will be a [indiscernible] distribution in the subsequent 6 months. But as of now, we are not providing that forecast for 2026. Of course, 1 could try to do that because I said, it's a matter of going back 1 year back because in 2026, we'll be talking about 2024. But as of now, we didn't provide these estimates. I don't know probably we didn't make such calculations anywhere.

Major CapEx plan regarding 2 [indiscernible] coming years, what CapEx per [indiscernible] should expect today and what capacity you are assuming [indiscernible] average.

Regarding [indiscernible] less than [indiscernible] region of [indiscernible] that was a range for a [ small product that ] we [indiscernible]. Regarding capacities themselves, capital markets required [indiscernible] why [ 170 megawatts of product, ] [indiscernible] market are configured that way. However, in practice, this capacity could vary, namely depending upon whether it's directly connected to the grid or co-located to renewable investment product, its function, its capacity may vary. However, such a typical facilities [indiscernible] work out better in case of today, [indiscernible] configuration in practice, the set of facilities services [ will be implemented will be certainly ] between [indiscernible] indirect capacity with respect to storage facilities colocated with renewable sources. Thank you.

And I have a question that request to comment on the [ rewards ] [indiscernible] should also include in that project of state of the companies in return for the [indiscernible] prices in the future.

One shouldn't comment such statement, but some statements, but the topic is as follows. We are very open to build SMRs on the condition [indiscernible] the commercial technological offers ready. Second thing is that we are very open to PPAs. As you remember, [indiscernible] are saying we are building our assets, our balance. But based on the product [indiscernible] we are open to any type of forms of cooperation [ so either on the JV projects, ] we can do on a partnership basis. So that's okay for us, and we have it scheduled and plan, but we also opened to sign the futures contracts [ on the IPP conductor ] to sign such a PPA contract on a very specific one. The goal is [ that 24% to 300% of ] it is [indiscernible] should be green, cheap electricity, green electricity, green [indiscernible] renewable, but also [indiscernible] That's how we presented it. Therefore, it's in -- of coming up with a model, how electricity by [ nuclear ] power plant is sold, it's going to be under the PPA. So on the exchange that's ahead of us. We can trades in various forms, if you can [indiscernible] our customers [indiscernible] this climate neutral as well as possible price and when we can sit down at the table and negotiate. In connection with [indiscernible] in real terms, the wage increases. We are praying for negotiations on wages. I will not comment on that because one of my colleagues could ask [indiscernible] question. Well, good financial results and the growth of the company is a derivative of strong cost discipline. So compensation must be in line with the market, follow purchasing power for us as employees, but also inflation-related issues, but we have all of that in front of us. We definitely want to compensate our workforce in line with conditions. [indiscernible] employer and to have this to be named as their employer of choice, preferred. Minimum wages does have an impact. [indiscernible] impact, but it's not something that determines the financial results. So always has some impact, but those ties and majority of regulations are not tied to minimum wage. Definitely, we'll have to [ take best into ] account, [indiscernible] minimum wage, but doesn't have -- doesn't distort the operations. It's not a major impact as we spoke before about other parameters, but it's happening, but it doesn't break down the system.

I think is small and is beneficial for you due to the fact that it's lower increase than what you expected before.

Let's leave it for now. That's we have [indiscernible] us. The main element we talked about is inflation is the main parameter. That is our benchmark because [indiscernible] maintain the purchasing power of our workforce, so inflation [indiscernible] we are trying to take this into account. And the second thing is the bonus [ success fee ] and with 2 different perspectives. So how to tie it all up, so people must know what their work is appreciated, but the cost is seen now. And we cannot guarantee that in the future because no one can guarantee anything, but such a benefit regulatory are successful in our operations and motivates all of us to do our best, to be engaged in generating the company's results. The question seems to be a little bit quite important because [ no company each employee ] is tight on the managerial level of EBIT. We have 1 wholly parameter if we're discussing results during the business review meetings. Every employee knows that whatever happens, we had to deliver the EBIT, but this is the component builds the narrative and the way of thinking in our organization. Therefore, we're talking about the fact that on one hand, it's a purchasing power versus [ talent ] development. Second thing is incentivizing and rewarding the workforce for the results [indiscernible] to generate more results. [ I would also has ] impact upon what we do next year because recently, we all have to get involved in our entire TAURON generation business unit to make a lot of effort to be able to take part in the capacity market auctions and subsequently [indiscernible] increase our probability to win those auctions [ without engagement of all ] the people and allowing for changes will not be successful, but I have a declaration from the social side that they will be strongly engaged in competing. So it's also a competition for jobs. So it's competition, so we have to compete and trying to motivate everyone.

Another question. Do you see a potential for reduction of tariff below [ PLN 500 billion coming 2026 ]?

Do we see potential? Well, Definitely, I can see a potential for [indiscernible] price that the customer is consumed today should be significantly below PLN 500. And the [ registration ] as such. I'm [indiscernible] my answer is, we don't have to wait, absolutely, [indiscernible] decision for the legislature and so on. You just entered [indiscernible] click on cheap hours, and you have it. So it's already happening. So I don't just see the potential, but it's already in place. Here now, [ 12,000, ] you said, it's a good beginning, good start. So I encourage to invest in our shares also in -- to use our products. We're moving [indiscernible] from anywhere, it's worth moving -- switching on to you also encouraged to also move to our area of [indiscernible] the cheaper distribution have double benefits, not only distribution, reliable, flexible, available, cheap and green energy from us excellent customer service, motivated people. What else can I say? Thank you very much.

One more question ahead of us. Revenue from the capital market in the region of [ 340,000 ] [indiscernible] fixed cost of operations.

Let me answer this question. Well, first of all, we have to look not just at [ PLN 346,000 per ] megawatt because we're just only talking about some of the units [indiscernible] already is taking part in the capital market for a long time and [indiscernible] we are also part of the capital market. It's not a full calculation. However, if the slide we probably didn't have time to discuss, but it was closed almost PLN 1 billion, generation [indiscernible] [ PLN 950 million ], that was the revenue from capacity market per annum. It's quite close to fixed cost for the segment and you had to add revenue from [indiscernible] say that fixed cost -- being covered, of course, difficult to foresee what the [indiscernible] like, but a major portion of fixed cost is covered by those costs. [indiscernible] [ appropriate call discipline, ] I think, but we should be able to balance it within [indiscernible] itself. So I spoke about the entire generation, [indiscernible] had the Capital Markets auction [indiscernible] all the costs must be covered plus the mandatory CapEx outlays, but relative to the maintenance of those units. So we are profit from the cash outlay side, not from the EBITDA. So we have covered all the questions. We declared that as we are sitting here, we are at your service. So also after the conference, so I think I used to know we'll close this part. We made it even 2 hours presentation plus Q&As. So I hope we have delivered on the task. Ladies and gentlemen, [indiscernible] That's all for today. Thank you very much for coming, both here in the room as well as all of you who have connected with us online, and see you during the next conference. [Statements in English on this transcript were spoken by an interpreter present on the live call.]