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

Welcome, everybody, very cordially at the conference for media investors and analysts on the earnings of TAURON Capital Group for the first 9 months of 2022 and the third quarter of this year. Let me, first, introduce the host of today's meeting. We have President, Pawel Szczeszek, President of the Management Board of TAURON Polska Energia and Mr. Krzysztof Surma, the Vice President of the Management Board, responsible for the finance, the CFO. My name is Lukasz Zimnoch. I'm the press spokesman of TAURON Polska Energia. Traditionally, the basic information, the presentation will be conducted in Polish with a simultaneous interpretation into English. Outside of the broadcast, you can also listen to today's meeting via the teleconference mode. I'd like to ask you -- encourage you to ask questions via the form available on the broadcast website. The only option to ask questions is to use this form. So the time has come to make a presentation, and then there will be a question-and-answer session. So Mr. President, please have the floor. The floor is yours.

Thank you very much. Ladies and gentlemen, it's a great pleasure for me to welcome during the earnings conference call on the TAURON Group's results for the first 9 months of this year and for the third quarter of this year. In my part of presentation, I will describe the financial situation of the Group, highlights the events that took place since we last met in September and the capital expenditures, while the CFO, Mr. Krzysztof Surma will present the macroeconomic situation and the detailed financial results, broken down into the individual lines of business of our group. Let's move on to the Slide #2, the key data for the first 3 quarters of 2022. On this slide -- Slide #1, excuse me. On this slide, we are presenting operating and financial results achieved by TAURON Group in the first 3 quarters of 2022. The financial results during this -- the period under review were under the pressure of a situation on the energy and fuels market. The rapid growth of electric price -- electricity price and gas and coal are reflected in the sales revenue posted. On the other hand, we have an increase of operating expenses. So the earnings were strongly impacted by the outage, the shutdown of a 910-megawatt unit in the Jaworzno, which led to the need to repurchase electricity on the power exchange in order to fulfill the contract that TAURON Group signed. As a result, the net profit that we posted was lower than a year ago. The EBITDA for the first 3 quarters of 2022 went down by 23%, down to PLN 2.8 billion while the net profit fell by 14%, reaching PLN 395 million. We, however, increased significantly the capital expenditures. They went up by 33% and achieving PLN 2.6 billion in the reported period. The volumes posted by the group in terms of electricity production and distribution were relatively flat, while regarding the operating data, a 14% decrease of heat production is not worthy, which was a consequence of warm winter at the beginning of the year and an 8% decline of commercial coal production, which was due to the need to carry out some retooling of headings at the coal mines owned by TAURON Group. Let's move on to the next slide. On the next slide, we are presenting the data that covers only Q3, the third quarter of this year. Similar as in the data for the first 3 quarters, you can see an increase of sales revenue and the decrease of profits. The net debt-to-EBITDA ratio came in at 3.3 at the end of third quarter. We're looking at the changes in the operating data in the third quarter electricity production and distribution and supply and noticeable the declines, which are, first of all, the result of decreased business activities, business operations that will be elaborated upon by President Surma. A 30% decrease of commercial coproduction is a consequence of what I mentioned before, the need retool the coalfaces, and the cumulative effects were seen in the third quarter of this year of such activity. Let's move on to the next slide, the summary of the highlights of the most important events of the first 3 quarters. On this slide, we are presenting the most important events that took place until the date of publishing our earnings for the third quarter, namely today. Since the majority of them I already described when we were presenting the earnings for the first quarter and for the first 6 months of this year, let me focus on the most recent events now. As indicated on the slide, the Green Turn of TAURON is beginning to pick up steam. In the third quarter, we completed the construction of 2 wind farms, Majewo and Piotrków, with total capacity of 36 megawatts. We also purchased new renewables projects in development, with the goal [ of electricity ] about 70 megawatts. It's worth mentioning here that at the advanced stage of analysis, we have several [indiscernible], both wind and photovoltaic projects, with a total capacity of around 600 megawatts in accordance with our strategy. By 2025, we want to have 1.6 gigawatt. So 100 megawatts in renewables and, by the end of 2030, as much as 3,700 megawatts in the renewables. The breakthrough from the point of view of our transition and the transition at the same time, a long-awaited event, was the signing of a contingent agreement of divestiture of our TAURON Wydobycie subsidiary to the State Treasury. The transaction should be finalized at the end of this year, probably on the 31st of December or January 1, next year. Currently, we are waiting for the fulfillment of the last suspending condition defined in this contingent sale agreement. In parallel, the process of spinning off the coal asset, generation assets to the National Energy Security Agency, the spinning off of the majority of the core assets out of TAURON is the most important strategic project in our company over the last few years. Its completion will unlock the CapEx potential of our group and will clearly significantly markedly bring us closer to the achievement of the Green Turn objectives. Also worth mentioning about the affirming of Fitch Ratings long term -- TAURON's long-term domestic and foreign currency ratings at BBB, with a stable outlook. It's also a pleasure for me to inform you about the best of the best for the high quality of annual reporting in the competition run by the Institute of Accounting and Taxes. Let me now hand over the floor to President Surma, who will continue the presentation. Thank you very much.

Ladies and gentlemen, in terms of the macroeconomic environment during the year, the conditions have been very diverse but have varied. PMI, especially which indicate -- way ahead of the economic situation in Poland, we have a significant drop of about 40 points. Everything below 50 means a significant economic slowdown or a recession in the near future. A second important indicator for us is the electricity consumption in Poland. And here, for the first time since the pandemic shutdown of our economy, we are dealing with a decline of electricity consumption in the quarter 3 of this year. In terms of electricity production itself, since Poland still was a net exporter over the first 3 quarters of this year of electricity, so we are delivering an increase of existing production despite the decrease of the consumption in the quarter 3. And an important piece of information is the fact that we have a significant increase of the renewables production output, mainly as a result of a strong increase of PV panels installed even among households. Addition, we are dealing with a significant decline of production from gas, which the reason being quite obvious, the Russia's aggression against Ukraine and an increase of the gas prices on the market. This, you can clearly see it in the results for the first 3 quarters. And an important piece of information is a transfer of the production between the hard coal and lignite. It's also due to the higher prices of hard coal and the limited supply of coal on the market, especially in quarter 3 -- in Q3. Moving on to the results of our group. We are dealing, on one hand, with a good result, almost 50% increase of sales revenue. However, the bad information is that this increase was accompanied, at the same time, by more than 50% increase of the operating expenses of the cost, which had effectively led to the decline of the net profit year-over-year. The net profit reached, after the first 3 quarters, around PLN 400 million. In terms of EBITDA, EBITDA adjusted by one-off events related to the transactions on the CO2 emission allowances market, which was one-off transactions in '21, '22 and the effect on the provision for the onerous transactions meant that PLN 3 billion was a recurring EBITDA. And it was at the first 3 quarters -- as compared to the first 3 quarters of last year, was lower by about 10%. Those weaker results especially seen in the results of Q3 alone, you can see that in Q3 alone, we reported a loss at the consolidated level EBITDA year-over-year was very low. The details and the reasons for this event, I will elaborate upon when I discuss individual segments. If we move on now to the global results of all individual segments. The key segment is the backbone of the entire group is the Distribution line of business here, stable positive results year-over-year. And negative impact on the earnings was -- came from the Generation segment this year. And also, it's worth -- noteworthy to look at the Supply segment, which, after 2 weak quarters, rebounded. You must remember that this segment includes several areas of operations, and all those areas of operations had a positive contribution to the group's EBITDA in Q3. If we look at the Q3 alone results, here, you can see it even more clearly: the weak results of the Generation line of business and the relatively good earnings generated by the Supply segment. I will elaborate on the details when I discuss the individual segments. If we look now at the EBITDA for the first 3 quarters of 2022 versus EBITDA for the first 3 quarters of 2021. Here, we can see that clearly but practically all the segments made positive contributions to the EBITDA except for the Generation segment. This segment was so negative, but unfortunately, the positive contributions of the other effects were offset by this negative impact of the Generation segment's results. If you look at the Q3 alone results here, we even have a smaller number of segments that made positive contributions to the group's EBITDA. As a matter of fact, we are saying that it was Supply and Mining segments. However, in the Mining segment, as we mentioned before, we are saying anyhow about the negative EBITDA in Q3. I will elaborate on the details when I discuss each segment. Let's move on to the Distribution segment. Our key subsidiary, here, we have a stable growth year-over-year. EBITDA higher by about PLN 100 million. Here, an important piece of information is such that this EBITDA was positively impacted by the higher rate of fees for electricity distribution. However, the negative impact came from the cost, wages -- cost of wages, cost of external services, outsourcing and the cost of taxes paid on the grid assets. If you look at the Q3 alone in this segment here, the first 2 effects that I mentioned also had the same impact. So we are dealing here with an increase of revenue due to the increase of rate approved by the President of Energy Regulatory Office for the year 2022, on the other hand, the negative impact coming from the cost of wages, payroll costs and the external service costs. In addition, what's worth noting in this third quarter is the reversal of the cost of covering the balancing difference in the previous 2 quarters. We had a positive balance of the upward adjustment. Here, in Q3, we had a negative. It's a downward adjustment, so it had a negative impact on the results of the Distribution segment. But all in all, it offset the positive impact of first half of this year in this respect. And the second effect worth noting, which also correlated to the decline that I mentioned at the very beginning, the consumption of electricity in Poland is more than 3% decrease over distributed electricity volume, which had a negative impact upon the results of the Distribution segment. If we look at the key parameters, here, practically all of them have been met, have been maintained. So basically, they shouldn't have a material negative impact on the future tariff in the Distribution segment. Let's move on to the renewables segment. Here an important impact came from the increase of the prices, both on the electricity market as well as the property rights market. The -- this -- those price increases had a net positive impact upon the EBITDA. In terms of the volume of electricity generated from renewables, it's very -- it's almost flat year-over-year. However, there is an important allocation between individual segments, a much higher production output from the wind farms. Let us recall that in 2021, the production of the wind farms was historically low. This year, we returned -- rebounded into solid historical average. However, we had a very low output -- production output from the hydropower plants, a low level of the waters meant that the production is the same, but the source of its generation has changed. In terms of quarter -- Q3 alone result in the renewables segment, here, we are dealing with the price effects still being positive on the earnings. However, we are dealing with the significant material decline of volume mainly from the output on the hydropower plant. It means that year-over-year, the earnings are very similar. In addition, we had slightly weaker results on the prices of the property rights, which, as a result of the [ accounts ], led to comparable results year-over-year. If we move on to the segment that had the biggest negative impact upon the earnings of this year and also this quarter, namely the Generation segment. Several aspects should be highlighted here. The first one is the high base level effect. Let us remember that last year, we're dealing with cost-plus contract, which we mentioned several times during the earnings call. That was a contract signed between TAURON and Nowe Jaworzno. This contract led to the transfer of the margin between the Generation segment and the Supply segment and, as a result, leading to better the earnings in the Generation segment. On accrual basis, 2021, there was about PLN 700 million for the 3 -- first 3 quarters of 2021. So we're dealing with a high base level -- high reference level. So if you compare -- have the comparable results year-over-year, you will have to reduce this result, the earnings by PLN 700 million. Nevertheless, even if you take -- adjust for this high base effect, it's materially lower year-over-year. The -- 2 issues. The first issue is the effect of the high coal prices, which had a significant impact -- material impact upon the deterioration of the results of quarter 3. And as a result of those high coal prices and the renegotiated contracts by all the mining companies as well as TAURON Wydobycie subsidiary, TAURON Mining, which means a certain transfer of a positive margin to the Mining segment, meant that, at the same time, we have contracts in place for the electricity supply sales on the power exchange and the fixed price, which means that we are incurring losses. And we incurred such a loss in Q3, which requires setting up a provision over -- also for Q4. This provision will be set up for second half of the year and has continued also for Q4. That's one of the reasons for this large negative result. The second reason is the shutdown of the unit, which is clearly visible. When you look at the results of Q3 alone, we had an unplanned, unscheduled outage at Nowe Jaworzno in August this year. This failure also coincided with the highest electricity prices this year -- reported this year. So the company had to repay the electricity that was sold before at very high prices. So paradoxically, in Q3, when -- there were very high electricity prices on the exchange in the market. And normally, the Generation segment would take advantage of it, could sell additional electricity but was not sold under the long-term contracts -- could have sold such electricity on the spot market at high prices. Instead, we were dealing with a shutdown of the unit in favor of the union, so we had to repurchase. So paradoxically, this segment was a victim instead of a beneficiary of high electricity prices on the market in the third quarter. Moving on to the Supply segment. As I mentioned, talking about the previous segment, we are dealing with a base effect. Here, this base should be raised. So we would have started then from the EBITDA of around PLN 700 million in 2021, comparing -- if you were to adjust it to make it comparable, comparable conditions, we have a bit lower EBITDA year-over-year. Its location is also -- varies. It's different. It's worth noting that we are reporting very good earnings of Czech supply energy, and TAURON Nowa Technologie also reported good earnings. However, the Supply segment's EBITDA was reduced by the gas contracts, high gas prices on the market and the need to purchase gas. And at the same time, a lack of passing on winter increase on the customer -- on to the customers led to the significant decline of the margin in this area. During this period, it's almost PLN 100 million in total. Additionally, a negative -- there was a negative impact on this segment is the profile of the customers, changes of prices during the day or strong movements of prices during the day, which was not possible to be passed on, on to the final consumers, and the G tariff not covering the full cost. It's worth looking at Q3 alone results. Q3, as I mentioned at the very beginning, after 2 weak quarters in the beginning of this year even taking into account the base effect -- base level effect that I mentioned, so the transfer of margin between the Generation and the Supply segments. Here in Q3, [ EBITDA amounted to ] about PLN 455 million. This effect based still the earnings of Q3 would have been better year-over-year. Here, the key issue was the decline of price in September and ability to have [ additional ] contracts at a bit lower price. If we move now on to the Mining segment. In the Mining segment, we are dealing with unfortunately -- well, if we talk about cumulatively, we are still dealing with a positive EBITDA. However, here, the key aspect is, of course, the price effect. The price year-over-year went up materially, both on the market as well as of medium-sized and large-sized coal lumps as well as coal dust sales also -- including also to our Generation subsidiary, but we're dealing with a decline of production volume, which I will elaborate upon more when I discuss Q3 alone. It's important that cumulatively this year, this effect of a decline of sales volume didn't have a direct negative impact on the result due to the fact that in 2021, some of the costs that were activated in the balance sheet were transferred because of the higher sales and the sales of inventories was activated, with a negative result directly in the P&L statement. We didn't have that effect in 2022. Therefore, we had a positive effect of the base level also in this regard. If we move on to the Q3 earnings of the Mining segment. Here, the effect of declining volume had a negative impact. We didn't have such a large transfer of inventory last year into the results. And this effect, as the CEO mentioned in the beginning, was due -- first and foremost, due to the retooling of headings in the Sobieski Coal Mine. We had the peak overhauls of the type and the coalface retooling. Therefore, the mining output -- extraction output from this coal mine year-over-year was very low. However, we expect in the next quarter -- but the extraction outlook will be at the good historical level. However, this -- here, this quarter, due to this retooling of headings and coalfaces, we posted a negative result in the Mining segment, but we assume, by the next quarter, will be better. Moving on to the debt levels, the debt -- net debt versus the ratio -- including the ratio reached about PLN 11 billion. This is due to the difference in the cash balance difference, almost PLN 1 billion. And additional, it's reduced by the level of debt in -- under the hybrid debt bonds. What -- the important -- the key issue, the maturity of loans in December of this year, as we mentioned during the previous earnings conference call, we -- on July 15, we signed a loan agreement with a consortium of banks, which this loan fully enables us to refinance the loan that is maturing, which was the bonds and was concluded in 2015. Therefore, we have no risk of refinancing. And it was important also -- it's worth highlighting also in 2023, we don't have significant -- maturities of significant loans. So the risk of refinancing in the future is mitigated. So here, I'd like to complete this part of my presentation. Let me hand over back to the CEO.

Thank you very much. Let's move on now to slide related to the capital expenditures. Ladies and gentlemen, as I already mentioned at the beginning of the presentation, in the first 3 quarters of this year, the CapEx went up by 1/3 versus the same period of last year, coming in at PLN 2.6 billion. Based on the data that you can see in front of you on the graph, you can see that CapEx went up in all lines of business of the group. Traditionally, the largest funds, almost PLN 1.5 billion, was allocated to the Distribution segment, with the majority of that amount spent on installing new grid connections as well as grid asset refurbishments and replacements. Again, the renewables segment is worth noting, PLN 300 million on building 2 free wind farms and 2 PV, with a total capacity of 140 megawatts and the overhaul, upgrading, refurbishing of hydropower plants. Versus last year, the renewables CapEx went up almost 6x, which demonstrates that, as I mentioned before, that the Green Turn of TAURON is picking up steam. More than PLN 270 million was spent on -- in the Generation segment, mainly refurbishment and replacement of assets, also investments in the new capacity expansion and growth of heating districts and connecting to the heat. The network of new facilities in the Mining segment, the majority of funds was spent on the production preparation, the refurbishment and replacement tasks. The balance of CapEx mainly related to the IT infrastructure came in at slightly less than PLN 300 million. Here, I would like to finish our presentation. Let's move on now to the answers to your questions.

Yes. Ladies and gentlemen, a lot of questions were sent. I will try to read them one by one, unless some of them will be repeating themselves. The first question, what items and what values are included in the other services bar -- Distribution services in the graph showing the EBITDA for the Distribution segment?

I will try to answer this question. With respect to this, let's say, bar on our graph in our presentation, there are 3 key items included in that area. The first one is the labor costs. And as I mentioned also, this is also the order that's -- is -- reflects the amounts, the value. So the key issue is the increase of cost of labor. The second issue is the increase of external services costs. Those external services, outsourced services include also service provided by our subsidiaries. What I mean here is with TOK and WGT and other support subsidiaries that are part of our group. And the third category is the increase of the tax costs.

Okay. Next question, the Distribution segment, the bridge EBITDA graph by values. What is the adjustment balance in the cost of grid losses? What does it include? Why is it so high? The adjustments related to estimates, so what assumptions that were taken into account when making this estimate?

[ We're ] not exactly in line with the reality. And why did you -- those assumptions were so different from the reality. However, the balance of the adjustment, let me start with the results of Q3 alone, came in at around PLN 60 million. And this time in this quarter, it was a negative balance. If we talk about the very fact how we calculated that, let's remember that this is a balance versus balance. And as a matter of fact, it is based on the estimate of customers invoiced during the given period. There's a reference to the price of distribution service in the given period. So it is not so, but we make an estimate on this. Then we adjust this estimate because it was wrong. But because of the balance in the given period is different from the -- at the end of the similar period. It is worth mentioning here that, for instance, the balance changes recently has been -- has changed, mainly due to the issue of invoicing the prosumers. And simply, they were invoiced differently. We also changed the systems in between in the meantime in terms of billing those and settling accounts with those prosumers. So the balance of the adjustment was increased in the previous period, decreased in the current period. So one can say that in each period, another period with adjustment balance will be different and for different reasons. It was not due to the wrong estimates about the difference in the balances in the individual periods.

Another question. According to the company, October 27, loan, the freezing of prices and the regulations of the 9th of November will allow for covering all the costs in the trading line of business. Is the company ready to take over collapsing independent electricity suppliers?

Well, to answer this question, we have to know what will be the level of the tariff agreed upon with the President of Energy Regulatory Office. As of now, we are assuming when all the justified costs according to regulations will be covered, will be included in the tariff. And for us, the results of the segment should be a positive, let's say, should generate some minimum margin. But of course, in order to answer this question, we would need to receive information on the tariff. The tariff should be approved by mid-December at the latest, so we are waiting for this piece of information.

The next question. What's the opinion about the Management Board, EBITDA in the Distribution segment for 2023 -- '22, '23? What are the factors behind such opinion? And according to the Management Board, the volumes and so on, how these factors will be evolving in this segment?

Well, in terms of results for 2022, we can still refer to here, as of now, we are assuming flat earnings in the Distribution line of business, which is visible after the first 3 quarters. The factor that could have a negative impact upon the level of these earnings is the volume of electricity distributors. As I mentioned, Q3 was relatively weak in this regard. And we are dealing with an economic slowdown. So this may have a negative impact upon the earnings. Nevertheless, the full year result will be flat or slightly positive, slightly up year-over-year. In terms of 2023, first of all, the outlook in this regard is presented usually during the presentation of full year results earnings conference call. And we are waiting, as I mentioned, talking about the trading line of business, waiting for the final decisions of the President of Energy Regulatory Office. The model is being finalized for the Distribution segment. First of all, WACC and the level of WACC for the next year is being discussed. And the second issue, the level of covering the cost of purchasing electricity for the balancing difference. These 2 issues are key. And to answer the question regarding the prospects for the segment, we have to get the information from the President of Energy Regulatory Office, which I do hope will happen by mid-December at the latest. And then when we will be presenting the full year results, we'll be able to provide the outlook for 2023 for the Distribution segment.

The next question is, theoretically, the Generation segment were to be consolidated for the whole 2023. So the EBITDA of the segment in '22 could have been better than revenue from the capacity market?

Well, here, first of all, let us remember that we are continuously dealing with the NABE, National Agency for Energy Security. So the basic assumption is that the Generation segment will be transferred to National Agency for Energy Security. So that is the first piece of important information. Second important piece of information, we are dealing with legal acts and then the act of law and the regulation that impose certain price caps. However, the key issue to answer this question is the price of coal for next year. And the negotiations are underway regarding this topic with the key mining companies in Poland. So to answer that question, what's the outlook for 2023 in the Generation segment -- conventional generation segment, so as a matter of fact, we will have to know the final price of coal.

Another question, does the company similar to PGE expects WACC in the Distribution segment to be at 7.8%? What is the risk that it will be set at a lower level?

As I answered in the earlier questions, the application of a company regarding the tariff for next year, including the WACC level, has been submitted by the company. We are awaiting a response of -- feedback from the President of Energy Regulatory Office. I don't want to give you a statement whether this is the level that PGE mentioned or not. I assume that within next month, we'll be able to provide disclosure information. And this information will be published as a public information.

The result of the Supply segment in 2023 should be positive? Or are you considering setting up a provision in the segment in Q4? At what level or at the order of...

Which segment?

Supply segment. Let me answer -- ask the question again, the result of the Supply segment in 2023 should be positive? Or are you considering the provision in this segment in Q4? And to what level?

As I mentioned, we are dealing with this act of law, which regulates of a maximum profitability of Supply segment. Of course since we are talking basically about the Supply companies, let us remember that the Supply segment, our case is both TAURON Nowa Technologie, the Czech supply company, TAURON Sprzedaz, TAURON Sprzedaz GZE. I understand the author of the question is mainly referring to TAURON Sprzedaz and TAURON Sprzedaz GZE subsidiaries. We are dealing with the act of law. Both the act of law and the regulation determine the maximum level of profitability in this segment. We are talking about 3%. But the key issue, as I mentioned before, is the issue of tariff approved by the President of Energy Regulatory Office since the prices for individual consumer households have already been agreed upon, whereas the compensation and payment for trading companies will be dependent upon the tariff approved by the President of Energy Regulatory Office. Only at that time we'll be able to answer this question, what will be the earnings of the Supply segment subsidiaries.

The next question, how much net debt is assigned -- allocated to the assets that are being transferred to National Agency for Energy Security?

Here, it's worth mentioning, which we already -- we emphasized, historically, at TAURON Polska Energia, we have a central financing model in place. The entire financing is directly drawn down by TAURON Polska Energia. There's no direct allocation of debt to the individual segments. So as a matter of fact, the issue of allocating, assigning the debt is more of a secondary important because we'll be talking more about the intra-group debt, whereas the key issue in case of a transfer of the assets to the National Agency for Energy Security is the valuation. As a matter of fact, it will be up to the -- depending upon -- the valuation of the level of debt will be dependent upon the valuation because the parties could agree upon the higher or lower allocation of the debt agreed between the parties. So the key aspect is the valuation, how much money we could get, how much going forward assets that will be transferred.

The next question. Will TAURON be able to post EBITDA profit in the conventional generation of electricity in 2023 taking into account the latest decree of the government?

Here, in terms of the regulation itself, the regulation specifies the maximum profitability of segments. So to every megawatt hour maximum margin of first degree, profit to cover the CapEx and the cost of financing in the level of around PLN 50, additionally 3% calculating based on the price on the spot of balancing market in the subsequent years. So it's not possible to describe it directly, but the key issues to the price of coal, hard coal could be passed on, could be transferred and the price of CO2, which will allow us. And so the key to the answer, whether the segment, what the result of the segment will be would be the volume of electricity sold by this segment. And of course, achieving such -- obtaining such price of coal, which will allow us to generate positive CDS, positive margin in this segment, which will allow, at the end of the day, to obtain -- achieve profitability indicated in the act of law. So today, it's not possible, as I mentioned before, to determine the earnings results of the segment, having not finalized the negotiations with the coal mines.

Okay. So the next question, supposedly, the trade union members from TAURON -- Wydobycie TAURON Mining subsidy want PLN 10,000 for each employee for getting transferred from TAURON directly to the State Treasury company.

Our talk's underway with the Management Board of TAURON or the management of the National Agency for Energy Security in connection with planned sale of TAURON Mining subsidiary to the State Treasury. We're talking both to the workforce of TAURON Wydobycie subsidiary as well Management Board of TAURON Wydobycie. The workforce asks questions about the future of this entity, of this company while it becomes a State Treasury company. The workforce put forward certain expectations, both of financial and nonfinancial nature, but talk's underway. We want to complete this transaction by way of -- and coming to an understanding agreement with the workforce.

Next question is related again to the finances in 2023. Should we expect a significant increase over financial costs?

Well, of course, as I mentioned, we are giving this outlook during the presentation of the full year results, but it's not a big surprise here if I say that the increase of the costs will take place. It is mainly the consequence of base. So increased cost, the increase of WIBOR rate. Let us remember that last year, WIBOR was around 3%. Today, we are dealing with -- we're talking, in our case, the main factor being the 6-month WIBOR today, the 6-month WIBOR is around 7.5%. So taking into account the fact that some financial costs are delayed, lag behind. So the WIBOR is set 6 months ahead of its actual implementation. So partly in 2022, we're taking advantage of lower cost of financing as a base effect, considering the base effect. Similarly, next year, we'll have to pay some interest according to the higher cost of financing due to the increase of the WIBOR rate. The loan margins are at a similar level year-over-year. Here, of course, it's worth noting the level of financing that we have according to the fixed rate, and the cost of financing here will not change. An important piece of information is that for some transactions, especially for the loan that matured in December this year, we had a transaction based on the fixed interest rate, the IRS transactions. Those transactions will expire. They were concluded at a lower interest rate level, and thus versus -- with respect to some part -- a certain part of this financing, the cost will go up since the fixed -- from fixed rate based on the IRS instrument, we'll move on to the floating rate and based on the current WIBOR level quoted.

The next question. Has TAURON secured -- hedged to the price of coal for its power plants, combined heat and power plant after the Mining is transferred to the State Treasury?

We have contracts in place active, which irrespective whether TAURON Wydobycie and TAURON Mining subsidiary is part of TAURON Group or outside, those contracts are in place, are active. And we will also be in place and working next year both for our power plants and combined heat and power plants.

Time has come for the last question. How, due to the transfer of the assets to the National Agency for Energy Security, will be the bonds and the loans at TAURON?

As I mentioned, the issue of loans and bonds doesn't change. The party for the financing agreements in the majority of cases is TAURON Polska Energia. And TAURON Polska Energia will be -- as it happened before, so far up to now, we'll be servicing this financing. So the key issue during the transfer of the assets to NABE is the question of the price that we managed to obtain during this transfer for those assets. And we can imagine that on transitional basis, taking into account our strategy and the growth and the transition towards the green energy and fixed CapEx in the distribution, so the cost of CapEx will be high in the long term. But on a transitional basis, we can imagine that especially those loans that -- well, the RCF that we can fluently pay them back and then draw more funds. Partly, those loans could be paid back from the funds that we get from NABE. So on a transitional basis, that could reduce the debt level of the group. But the key issue would be the price that we obtain for those assets and how this payment will be spread over time.

Ladies and gentlemen, this way we have answered all the questions that we have received already today. I'd like to invite you to our next meeting directly after we publish the report for the full year 2022. After, we will inform you about the date of this conference in traditional way. So thank you very much for this meeting, and see you next time.

Thank you. Goodbye. [Statements in English on this transcript were spoken by an interpreter present on the live call.]