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

[Interpreted] Welcome, everyone. Good afternoon. I'd like to welcome you to the conference for the media, investors and analysts on the TAURON Group Earnings -- TAURON Capital Group earnings for Full Year 2023. Today, we have a full management board review that includes Grzegorz Lot, President of the Management Board; we have Piotr Golebiowski Vice President of the Management Board for Trading; we have Michal Orlowski Vice President of Management Board for Asset Management and Development; Krzysztof Surma, Vice President of the Management Board for Finance. Let me break the convention today. And I will ask the President since I'm meeting for the first time in this group to have a few words of introduction. Mr. President, Mr. President, let me turn to President, Grzegorz Lot, to say a few words of introduction, if I may ask.

[Interpreted] Good afternoon, ladies and gentlemen, dear shareholders ladies and gentlemen, representing the media. For us, it's a great pleasure and honor an enormous challenge. So thank you very much for the time that you are spending with us and for the capital you're investing in us. We will introduce ourselves in a moment, what we do, what we want to do. And since the most important thing is business, I will hand over the floor to my colleagues from the Management Board. Gentlemen, let's say, what capital we have at our disposal.

[Interpreted] Ladies and gentlemen, welcome, on my name is Michal Orlowski. I'm the Vice President of Management Board for Asset Management and Development. My background -- educational background is finance and management. I'm also a holder of CFA certificate. I joined TAURON for the second time. My last position I held at the company is the Director of former and acquisition of these investments as well as the Head of -- President of the Supervisory Board of the subsidiaries of the company over in the side dealt with strategic investments in Middle East, Western Europe and Poland, working for customers in those countries in [indiscernible] related to investments, transactions -- capital transactions, equity transactions and renewable energy. Thank you. I hand over the floor to my colleague.

Welcome, everyone. My name is Krzysztof Surma. Regarding education, similar as Michal, I'm also -- I'm also a finance guy, I graduated from the business management and finance at [indiscernible] member. Regarding cooperation with the group, I've been working for the group for more than 23 years. I went through all the ladders of the career starting from the [indiscernible] specialist to the President. Since 2009, I've been holding the position of Financial Director at TAURON Polska Energia. And since August 2021, I had a pleasure to manage the entire finance area and perform a position of Vice President for Finance. My everyday life work, I manage the finance, controlling and also purchasing now.

Thank you. Good afternoon. My name is Piotr Golebiowski. I'm the Vice President for Trading. By education, I'm an engineer electrician -- electric engineer. My experience in the power industry, which dates back to 1995. For 28 years, I spent working for power industry. [indiscernible] on 12 years. I'm a holder of MBA degree. I've been specializing in the hedging strategies for generation assets, supply assets, sales on the retail market and risk management in the power industry. Thank you very much.

Thank you very much for the introduction. Ladies and gentlemen, we are happy to be with you, but the first conference -- live conference, in-person conference for a number of years. So let me remind you that the presentation, of course, is conducted in Polish, but it is simultaneously interpreted into English. Outside of the broadcast, you can also listen in to today's meeting via teleconference mode. In parallel, for everyone who are in the room, in parallel, the questions can also be asked via the website of this conference call to questions already coming. If you have questions and you're listening to us and you have some inquiries, please send them to us. Next to me, I have Pawel Gaworzynski responsible for Investor Relations at TPE. My name is Luca Jim. I am the press spokesman of Group. So over time has come to start the presentation of the presentation a traditional Q&A session. Let me start by providing the large-scale overview -- let me just introduce myself yet. My name is Grzegorz Lot. I'm holding the position of the President of Management Board, CEO, but the ambition to be a leader of energy transition and the transition regarding human transition. That's the signal for my colleagues to move on to the next page, where energy transition, technological transition and also traditional regarding the organization people. This is the biggest capital -- the organization is always people, their passions and competencies. And this is -- I'm an engineer graduate [indiscernible] technology, I'm holding an MBA degree. I used to work for Vice President for Marketing and Sales in the TAURON Group. That's my domain. The marketing strategies, customers, new products and sales. For 10 years, I spent working for [indiscernible]. The last 5 years, it was TAURON Polska Energia. And since March 7, myself and the team of my distinguished colleagues, we are representing TAURON Group. I do hope that's how we'd like to bring the company to the leadership position in our countries. As I mentioned, our goal is to drive the competitive advantage. We have identified specific assets, people are the assets, renewables is where assets -- conventional assets, the distribution growth is the biggest value group of the company, which is almost 6 million customers that we have to arm with green energy at very reasonable prices. The business core. This is an important prospect. How we're looking at the business. How we look at this group. How we look at the future of this organization and the business core is almost 6 million customers connected to distribution grids that are purchasing electricity from TAURON Group. An ideal solution would be for energy electricity to be 100% green and to come from our sources. The business core is the place that generates the biggest value around which we want to grow our organization. On the subsequent slides, I will show our point of view, our perspective, but this is the main message I wanted to convey. What is our core, how we want to develop, grow, expand, how we want to create the value of this group and for our shareholders. We've been together for 40 days. It's a fantastic time to sum up certain activities that we undertook. We are full -- still full of energy, green energy. We've managed to organize a number of things. Now we are focusing on developing the organization. The results we are building with team. This team will be the basis for achieving afterwards, the goals related to development, acquisitions and creating the value for customers. Creating value for us -- these are four main perspectives that we are presenting today. But of course, they'll be modified as the knowledge of the organization expands and the further business ideas. The first thing is, that everything we do has to generate a sustainable economic value for our shareholders, for investors, that's the first thing. Second thing, that is to bring tangible value for customers, these are the two perspectives. Shareholder and the customer is a Holy Grail for us. And from that point of view, that's how we view this business. The second thing is that we have to develop an organization, along with its culture, corporate culture, that will be understanding our goals, the market, the customer needs, the shareholders' needs, and this will be the sustainable value. But irrespective of who's managing this organization that this should persist and build value for a number of years ahead of time. That's our perspective. Another thing that we already know and we are committing ourselves, we are focusing on very strongly versus the growth expansion of resources, renewable sources. Not only in the form of photovoltaic wind hydroelectric plants, this is a full ecosystem because today, renewables also and historic facilities. Renewables also include the distribution grid, the renewables, storage facilities grid, that's also appropriate. Supply of electricity to the final consumers and creating value, especially when you take into account the new introduction of the new balancing market model, the appropriate placement of energy to the appropriate group of customers. And accounting for those two perspectives will be [indiscernible] factor for developing and growing the economic value. And lastly clearly important, last but not least, prospective employees, 20,000 people, our managers in the organization. We are responsible for creating the job, work positions for those people that we have, but the ones that we gain and bring about a situation whatever the person on the joint agent works for the benefit of our shareholders and customers with passion and pleasure. These are our ambitions. Okay. Thank you very much. For the next slide. Definitely, you will be asking us during this final session, Q&A session, and we are looking forward to that. What are the main growth prospects, expansion prospects we see now in this year and the subsequent year. The first thing that I've been mentioning all along and that probably also comes right from my experience, my character as a customer. A customer in the middle of a center of attention, almost 6 million customers. We have a number of ideas. I will not be selling them right away to you, but this is the first perspective. The second thing is the issue related to spinning of core assets outside of the organization. And this is a very specific issue. Let me explain. I can see even see the questions that you will be asking in a moment. I'm already a spoiler. I see on the screen. 2050, ladies and gentlemen, 100% of customers in Europe will be purchasing electricity or consuming green energy from nuclear from renewables, 2050. So 24 years ahead of us. 2040. We know what will happen on that year. It's 14 years. So please think how many things we have to do, how little time, how important is to start it now here now. So for our group to offer to our customers, the 6 million of them, the green energy, we have to be able to invest in the renewables energy sources, build the ecosystem of energy storage facilities in the best really large amount of money into the distribution grid. It's throughput flexibility. We want to have to make our heat supply green for that. We need a gigantic money with a good offering to get such sources of financing. We have to bring about the situation so that in a reasonable manner, so-called just transition is being talked about. We take this into account fully also in -- from the social financial and technical point of view to spin off core assets, generation assets outside of the group. We have experience. We have spun off the mining assets. We have experience in that. We have prepared assets, generation assets in a specific group. So our organization is very well prepared for that. We did a lot of homework for a number of years. We've been working on that. So we have an interesting adventure ahead of us. Of course, probably will be working out the detail -- talking about the details during your questions, the decarbonization of heat industry, one of the biggest entities that is offering distribution, service and the heat supply service. It's a very important thing, but also very difficult to be a renewable assets and the storage facilities and the growth of expansion of a distribution segment. It's all interrelated to one another. If you look at -- to invest in renewables, to manage this energy very well, we have to be able to accumulate and place this energy summer. So therefore, heat is a natural element, a natural storage facility for our energy. The distribution necessary to carry out the transition and also the storage. We're not talking about the large-scale storage, but also the distributed facility -- storage facility. [indiscernible] customers, think about how big potential that creates for distributed and storage. Financial stability. I don't have to convince anyone about that. My colleague is very awful [indiscernible] in this area. Anything we do is subordinate to those issues and we are grateful to him for that. I mean extremely important for us thing is we are very much focused on the shareholders, enormous respect, as I said, our goal is to develop to create the sustainable economic value for our investors. Therefore, a simple statement from me, but during each meeting that we'll be holding, if we are able to physically do it, we'll be directly communicating with you we'll be reporting to you. So this is for us, very important, a bit stressful, but very important event. We also know one more thing that we are raising now to a very strategic level is ESG. So anything that we do now in the organization, 40 days, we've been doing that. Although if you ask about specific actions, I can already say -- mention a few of them ESG. So any investment in this change anything, any decision has to be taken from that point of view, because over the next subsequent years, the company will not get financing, we'll not be able to expand. If it doesn't meet those parameters. So we are very seriously approaching, but we're not questioning the ambitious climate goals, social goals we simply accept them, we know they need to be implemented, accomplished, and we focus on accomplishing them. So thank you very much. I hope I didn't bore you too much. I have many to inspire you. I'm awaiting the difficult questions. Let me hand over the floor to Krzysztof.

Regarding the key financial data, this data is very good this year. Historically, the group topped PLN 50 billion in revenue, including PLN 8 billion in compensation payments regarding EBITDA. For the first time, we managed to achieve EBITDA more than PLN 6 billion billion of EBITDA for 2023. We also achieved substantial net profit at the consolidated level, about PLN 1.7 billion, and the CapEx also went up substantially year-over-year, about 10%. Up here, we came in at PLN 4.4 billion approximately, and the net debt-to-EBITDA ratio, maybe not historically low, but still a lot versus the recent earnings of the group. This net debt to EBITDA is very important. My colleague mentioned this financial stability is key for the group. Of course, each of these data items, I will expand upon further on during the presentation, gains very good financial data. The background of good financial or operating data has been a little bit weaker. Regarding the distribution, we have a decline by almost 4% year-over-year, down to 51 terawatt hours. So regarding good operating data. Here, we have an increase of renewables production. However, it was a bit helpful, but also the new investment projects are helping, but we are implementing by our group. Regarding the coal-fired existing production, here, unfortunately, we have a decline, unfortunately, year-over-year. I will expand on that when I discuss the macroeconomic situation regarding the heat situation here, slight decline year-over-year. And unfortunately, the heating season were a bit warmer. The outdoor temperature was a bit higher than usually. So automatically, the heat sales declined. Regarding the sales of electricity, this year, it was quite flat, stable. The difference is 1% year-over-year. Let me hand over the floor to my colleague, who will discuss the trading situation -- market situation on the electricity market and then I'll move on again to the financial data.

Ladies and gentlemen, a bit of a retrospective view because a lot has been happening on the market. In front of you, we have four charts showing the electricity prices performance of those prices, the gas prices, CO2 emission on [indiscernible] prices and the coal prices. So the four parameters that we are looking at with a lot of attention. And this is due to the fact that our trading strategy is closely correlated with an anticipation of the trends on the market. And in a view of those trends, the hedging securing our trading margin. So afterwards, when we discuss the financial results of the individual segments, you will find the reference there to the reasons for the given results. Ladies and gentlemen, let me remind you, and that's why those charts are of 2021, 2023 time frame, that what result will be achieved in the given year determined by the trading strategy developed ahead of time, even 3 years ahead of time. That's what -- how it happened. Working as part of risk management and policy, especially trading risk policy -- management policy via guided by sustainable or balanced and stable risk appetite when we take the trading decisions. So moving on to the characteristics of what has happened to electricity prices, let me draw your attention towards very unstable year 2022, the year of Russia's invasion against Ukraine. In spite of a fact, but it all began to develop in collection of the prices already in April. We had already first symptoms back in 2021. If you remember, at that time, there was an issue of an extension of North Stream 2 license and this had an impact upon gas prices and subsequently the electricity prices because of the correlation. But the gas prices -- European gas prices have an impact somehow on all the indexes on the Polish market. And subsequently, there was this boom, above standard increase of electricity prices. Let remind you that the prices -- the peak prices of 2,500 and peak prices were even 4,000 of electricity. Same thing happened on the gas market with a slight delay. The price went up to more than PLN 1,400 per megawatt hour. Of course, everyone was concerned about that because there was a deep energy crisis underway worldwide and on the Polish market, all those indexes really went sky high. However, taking into account what assets we have, what production of this do we foresee from our generation assets, both conventional and renewables. We're trying to hedge ahead of time the margin for the 2023. That's what happened. Simply, we sold volume, taking into account, of course, the hedging of the foundations with CO2 and coal. And moving to 2023, we had about 80% of the volume secured. This later led to what we see on the first graph in the left upper corner, the spot prices are shown with men that we were beneficiary. We're able to naturally take advantage of electricity buybacks that generated the appropriate level of trading margin. Of course, the consequence of that is the fact that the inventory of coal is a natural consequence of that. As of the end of 2023, we had inventory of around 2.5 million tonnes. And that was a natural consequence of the fact that this call due to the economic situation and an attempt to build a stable level of margin was left on the stockpiles. We'll be Coming back to that. In the upper right-hand corner, you can see the situation on the coal market, the 2 indices. The PSM index and one, which is an index that generally characterizes. This is the index that is used on the Polish market. So weighted average from the transactions perform on the Polish coal market calculated exports after the Mandesh's closed. So that's why we have a situation where in July 1, the price level from PLN 10 per gigajoule gradually -- linearly was going up. But through the negotiation of coal contracts, there was a step up. So it's PLN 30 per gig, you can see the peak. And this throughout 2023, that level was maintained whereas the other prices reports, this is the Quad Financial Index. And here, through the -- based on this mentioned about the energy crisis, this level went up very quickly, coal price level up. So closely correlated the decision, the gas markets or the consequences as follows: if gas prices and that's what happened through the quick filling up of storage facilities began to build. So this is followed by the level of coal prices and subsequently in September, it became to drop. It turned out the session is that gas storage facilities have been filled up. We knew that around 83% on the European market, but we filled up in Polish market, about 95% filling was achieved so the prices started dropping. So now [indiscernible], but in 2023, we received the ARA prices and the index ARA is well below the Polish PSM 1 index. And now it will become stable because it will stabilize because we have a situation over today, we can say that the coal prices are going down. And this will lead to a certain trading strategies and actions to be taken in the subsequent year. So regarding the CO2 emission allowances prices, it's in the sideways trend. It was within the range between EUR 60, EUR 100 per ton, and it's been moving within this range around EUR 83, EUR 88 for the December '23 product. Regarding the gas prices, the situation after -- the strong surge -- dramatic surge in 2022 came back to normalcy. We have around -- we had prices around 220 million on the spot market. On the forward market, it was about 300 in 2023. So the index we deliver in 2024. We -- one can say that if one can say we've had a certain first crisis. We have [indiscernible] behind. Now the situation is a bit stable. To sum up, the trading results of a generation segment. Related to the fact that we've been developing hedging for a position in about '21, 2022, which resulted in the adequate results in 2023. The same applies to the supply segments of our retail supply we were entering the year with hedging at the level of about 90% for most customers, the business customers is hedged back to back. So in that case, it was about 65% of hedging level. A lot of customers are using now a very [indiscernible] product that is index to the forward market price, the spot market price. That's why it was all -- those positions were additionally hedged during the 2023, which resulted in a relatively stable level of margin of both segments. After a brief market presentation, move on now to the macroeconomic section very briefly, and then I'll move on to the data for the specific segments. Regarding the macroconsuation, last year, it was adverse. It was unfavorable. PMIs never topped the magic level of 50 points. In addition, the GDP growth rate was around 0. All of that led to the decline of electricity consumption in Poland, which reached almost 3% decline with automatically has an impact upon the distributor electricity within our assets within our data distribution segment, additionally has an impact upon the production of [indiscernible] Poland. The second factor was an impact upon this actually production in Poland was the export and the imports. You remember the 2022, as [indiscernible] mentioned, when the prices were very high. Poland was an exporter of electricity to the neighboring country, [indiscernible] changed. Poland became an importer of electricity and those two factors, both a decline of consumption in Poland plus imports [indiscernible] to Poland, led to decline of the production by energy sources, but it was spread, not uniformly. We have privileged sources, the renewables that has a priority in the [indiscernible] order that are used on a priority basis. And here, year-over-year ablation went up by almost 30%. Subsequently, we had a growth with a declining market of a gas source. And here, the answer is quite obvious. It was also shown in the previous slide, a significant decline of gas prices led to the situation where the margin on the gas-fired units was higher than were coal-fired units that automatically those units were also used more frequently than the coal-fired units. These 2 sources of renewables and gas sources led to a substantial decline of the production by the coal-fired units, both lignite fired as well as hard coal-fired and the first time in history, we have a situation of where the production for coal-fired units is below 70%. Is -- there is significant change versus the previous years. Here, we're also drawing attention to that because this has a major impact upon the production by our units at TAURON generation segment, but are coal-fired, hard coal-fired. We move on to the financial data. Here, we have a significant increase of revenue year-over-year. As I said, historical high PLN 50 billion. This PLN 50 billion, first of all, was caused by the price increases. That's why it's important to understand the slide before, we are hedging out of electricity in the preceding year. As a matter of fact, the electricity and the revenue basis from the electricity that we see in 2023 was contracted way back in 2022. That's why we see the increase of revenue year-over-year. That's the first major reasons. The second major reason is an increase of distribution rate -- tariff rate. We just had a positive impact on our revenue and the third thing about incidental when considered to the legislation related to ensure the compensation payment. These 3 factors meant that we achieved such a high level of revenue. As a matter of -- as at the same time, the group generated a solid profit close to PLN 1.7 billion at a consolidated level. This is very important. This is not a stand-alone figure. But regarding EBITDA itself, this EBITDA after we strip out the one-off factors. A typical ones, it went up year-over-year by more than 50% to a value of close to PLN 8 billion is one-off factors. I will be elaborating on more in detail when discussing the individual segments. Regarding the result of specific individual segments led to drawing attention to the most important parameter, namely the EBITDA here invariably, our most important, most significant segment in the distribution line of business. Last year, EBITDA more than PLN 3.5 billion. For a number of years, EBITDA of the segment represents around 60%, 70% of the total EBITDA last year, close to 60%. Last year, one may say a bit unique, very high EBITDA generated by the generation segment, but I will expand on that when discussing the results of that segment. And one very important piece of automation EBIT in all segments were both positive, which historically didn't always happen. However, from the time when we got rid of coal mines, this EBIT has been positive in all of our segments. If we move on to summary year-over-year of the EBITDA growth, the key 2 segments that generate -- contribute most to this change to this growth from PLN 4 billion to more than PLN 6 billion of reported EBITDA. The key segment is the generation segment. Second one -- second segment is distribution here also, I will expand on that, elaborate on that when we discuss the specific segments. Moving on to our most important segment, namely the distribution line of business. Here we are dealing, first of all, with one-off event. This one-off event is the upper adjustment of the cost of the grid losses. This is not intuitive as a matter of fact because the cost of purchase already exists before but grid losses went up year-over-year. However, the fact that this cost went up year-over-year, we have a model that is applied by the President of Energy Regulator office, and that's how it's reflected in our report that we are adjusting the actual electricity in at 2 points in time December and January. And since not all -- well, to rephrase, the sum of the revenue is recorded according to the actual consumption and some of it is estimated. Then when we make a reestimation revaluation in January and this readjustment of selling electricity leads to the reduction of grid losses. The December grid losses actually go in to the price of the previous year. And subsequently, we are calculated according to the prices of 2023 in December, we had set the prices of 2022. This recalculation leads to booking out of some of loss, some of that balancing difference because it's booked at a higher price. It means it leads to the actual positive effect on the EBITDA, this positive effect. I'm drawing attention to this because when the significant change of this take place, it will be -- stay with us for a year or 2 unless we develop jointly with President of Energy Regulator office, and the auditor, a new model just as in 2023, it is effectively improved the EBITDA results in the distribution segment. But due to a decline of electricity price in 2024, it will be having a deteriorating effect upon those results. So we've stripped out those -- that effects from the distribution results then the distribution segment results will be comparable year-over-year. But we have also the one-off event, those one-off events is the regulatory account settlement. The settlement of the regulatory account is the settlement from 2 years back. So when the volume of electricity distributed is higher than the one that was assumed in the tariff when the surplus of the revenue from that is the positive of the regulatory account and then plus 2 years, it will be accounted for on a positive or negative manner and that point in time it was sold, but we had distributed more electricity and invested under the tariff. So it had a negative impact upon the regulatory counter second bar as we look to volume of sales, PLN 210 million now start or start to the result of -- for 2023 because the volume of electricity distributed by our grid was lower than the 1 assumed under the tariff effectively, it will improve the result of 2025. The key, however, for the entire segment part of the result is a margin on the distribution service. Here, we were dealing with a growth of WACC year-over-year. It went up to [ 8.5% ] in 2023. And as a matter of fact, it generated a substantial significant increase of the result. And 2024, this effect will also be visible. Regarding the key parameters, quality parameters in the distribution segment. Here, similar as in previous years, the parameters were fully met, either at the level equal to the target or within the permissible deviation from the target and important piece of the mention is that due to the quality parameter, there will be no reduction in the subsequent years of the tariff because all quality perimeters were met. Moving on to the Renewables segment. Here, we were dealing with an impact statural legislation impact. Let us remember 2023, where electricity prices were blocked and the renewables at a certain level, which meant that year-over-year, we were dealing with a significant decline of EBITDA for that reason. However, on the other hand, we have a very positive effect. Year-over-year, we are having an increase of electricity volume electricity produced by renewables. This increase of volume is due -- better due to the good hydrological conditions, namely, we had a higher production output by the hydro power plants. At the same time, we had a higher production from our wind farms. The impact of the newly commissioned capacity and a good fourth quarter regarding the wind strength. The windy conditions. The negative impact comes from the decline of the prices of the green certificates. This is, first of all, due to the fact that the redemption obligation of the supply companies was reduced due to the reduction of demand automatically, the prices of those certificates went down. If we move on now to the Generation segment here, quite a complicated bridge. However, I'll try to explain it. In 2022, we were dealing with very atypical events. Our unit at Norway [ average ] now instead of generating and generating positive electricity and the positive results of the group. Unfortunately, underwent the failure. And due to that failure, we had to repurchase electricity that was contracted from that unit. We are repurchasing, but electricity at a relatively, at a very high price, it was 2022, a year of the [ war, ] as Piotr showed on the previous slide. Therefore, we generated a substantial loss on those buybacks. It reached almost PLN 1.2 billion. However, that loss was partly mitigated by -- offset by the sales of carbon credits since the unit wasn't operating and the carbon credits were purchased. We resold those carbon credit because we bought at a lower price than in 2022 where price was on the market. And as a matter of fact, if we stripped out those 2 one-off events, we could say that the starting EBITDA to come back again to the 2023 was the EBITDA in the region of 0 EBIT -- above 0. But in revenue 3, we had a number of positive events and a number of one-off events, but also to a large extent, substantially the extent had a positive impact upon the results. Let's start with the one-off events. One-off events, the strengthening of PLN exchange rate, which meant that the valuation of the provision for the purchase of carbon credit that's related to electricity production was effectively valued at an operational level lower. So the reverse result was since we are hedging it fully with forward transactions on the functional level, the result was reversed opposite. And finally, we signed a settlement agreement with Rafako. We got damages, payment of damage. We mentioned that during the previous earnings conferences, both as part of settlement agreements with Rafako, but was the damages from the good performance bond damages in a smaller part from the insurers. The second negative one-off event was a write-down on the related to the assets at TAMEH subsidiary, we're informing it during the current report at the end of 2023. Liberty Ostrava stopped paying to TAMEH Czech subsidiary. It was a daughter company of TAMEH joint venture with Mittal. And then as a result of that, TAMEH Czech subsidiary, announced its insolvency. And therefore, we rolled down practically or out of practically all assets in that company, both receivables and the substantial part of the fixed assets, which led to the negative impact year-over-year on the EBITDA of more than PLN 300 million. That's all regarding the one-off events. However, the key bar, the margin of electricity. This comes from what Piotr mentioned in 2022, we hedged a substantial portion of electricity from that unit and subsequently, that margin is out of electricity sold at a high-priced market, it was generally in 2023, generated both in the formal electricity produced as well as in the form of buybacks on the electricity market as well as in the form of forcing by of TSO introduced on the balancing market. That's why such a good result year-over-year. Of course, we talk about outlook for 2024. So the situation will not happen again. Moving on to the Supply segment. Here, the results year-over-year at a very similar level to small one-off events. As a matter of fact, the transfer of the entire Well, when a portion of purchase of coal for tower generation directly to the nation related to the other process, therefore, in this segment, we eliminated the margin on coal. The second one-off event is the impairment charge, a substantial increase of nominal electricity prices meant that the increase of receivables also went up for the write-down, but we book also due to the model that we apply also went up. In addition, the litigation dispute to one of the counterparties led to a one-off event. So regarding the marginal electricity. This -- you can see a small increase year-over-year. But inside of that, there was a lot of happening, much smaller return on the SME segment. We blocked certain captive at a certain level, a bit higher increase in the tariff last year because we're fully passed on fully covered last year, the same year-over-year, an increase of margin on business customers in the region of PLN 100 million. Moving on to the slide related to debt and financing here, good piece of formation I mentioned at the very beginning, the net debt-to-EBITDA ratio went down to 2. level, the main driver behind the decline of the ratio was EBITDA, led to a situation where we have this leverage rate at this level. So more than PLN 6 billion of EBITDA meant that we had a leverage ratio close to 2, but the negative impact came from the debt issue. First of all, we are dealing with have an increase of working capital. And this was brought about by the increased coal inventories that we mentioned already as well as a matter of recording revenue from compensation payments versus the actually paid out competition some of those components for paid out until April this year. That's why this cash flow was shifted and led to the increase of debt level. And now let me hand over the floor regarding the hand over the floor to my colleague, Michael will present the CapEx of the group.

[Interpreted] Ladies and gentlemen, let me start with an overall summary of CapEx, integration. Following that, I will move on to the renewables and give you more details regarding the renewable investments that we are currently implementing. Regarding our total CapEx. It went up year-over-year by 10% and it reached PLN 4.4 billion level. The biggest segment regarding the CapEx was the distribution line of business, which, according to the share in the structure of EBITDA we allocated 63% of CapEx to distribution last year. The majority of that CapEx was spent on the construction of new grid connections, about PLN 1.5 billion. The second largest part was the modernization and the replacements of a grid assets. However, the PLN 163 million was allocated to the installation of smart meters that we have more than 90% in our distribution grade. And we are on the good path to fulfill the regulatory requirements regarded to bad. The second biggest segment regarding location of outlay towards the renewables. I will move on to the details regarding the information of specific products in this segment. The majority of allocation went for PV farms and wind farms, small allocation, PLN 19 billion to hydroelectric power plants. In the Generation segment, the CapEx was PLN 568 million. Here, PLN 303 million was allocated to TAURON Generation subsidiary. It was allocated for replacements and refurbishments, but also companies using overhaul projects and completion of a 110-megawatt unit in Jaworzno. This construction of these units from the physical point of view was completed on March 21. This year, we completed all the acceptance tests with [ ease. ] SO -- and so point of view of investment project point of view, we consider the product to be have been completed. And then we have a number of investment projects related to the heat industry and connecting new facilities to the grid, to the network, expanding of heat market categories by adding Ligota Low Emission Elimination Program but also included connecting to the TAURON network also the construction of resources [indiscernible] expenditures on other segments came in at PLN 141 million. Here, the biggest CapEx was allocated to IT investment, PLN 278 million and then PLN 97 million to maintain and expand the lighting -- street lighting as part of a new technology subsidiary and PLN 40 million for the business service center. First of all, spending on the fiber optic network, coal finance as part of Polish digital operational program. And now moving on to the Renewable segment. Let me start with the overall time line of the expansion of our capacity and move on to the specific projects that are underway. So one can say that the green turn of TAURON on has accelerated, and we are implementing a number of investment projects. At the end of 2023, we had 696 megawatts of installed capacity in renewables. In 2023, among others, we completed the construction of photovoltaic farm biz 37 megawatts. We are working on preparing the second stage of this project. We acquired and we started the construction of within the special purpose because of the hold of PV and wind farms capacity of 235 megawatts. And also we have a certain joint undertaking with that we'll be aiming to prepare an offshore approximately 1 megawatt wind farm on the Baltic Sea. Now in 2024 we have 8 renewable product with 364 megawatts capacity underway, and we are planning to complete the construction of a product that well to our generation makes 176 megawatts. Therefore, looking at the lot is being underway. Now, the planned capacity at the end of the year is 873 megawatts in renewables. What's important, as President Lot mentioned, we'll be working on accelerating this direction. We have a number of projects in the pipeline at various stages of development related to the wind energy PV farms. We have both clean projects, product as polling projects in connection with our existing sources as well as assuming the construction of both photovoltaic as well as wind sources using the new CapEx as well as the energy storage facilities and renewables projects related to the storage facilities. So on one hand, we'll be working on increasing that number, introducing new projects for implementation. Whilst on the other hand, we will be looking at further acquisitions, both at the relatable level projects of level of the assets that are already in operation. But here, the negative of our involvement and potential involvement will be, first of all, dependent upon the evaluation of profitability investment projects and the due diligence results examination of such assets. Moving on to the product that are currently underway. Now our biggest project is the wind formation that the -- for which the plant completion date is Q3, Q4 this year. The form is moving ahead in line with the time with the schedule for other products also in the pipeline of [indiscernible] will be commissioned to Q2, Q3 2025. [indiscernible] Q4 2025 [indiscernible] this year still. So in total, now in wind, we have underway 164 megawatts in implementation. Regarding photovoltaic farms, we have 199 megawatts underway, Balków and Postomino, 144 megawatts will be commenced in 2024 where Proszówek Q2 '24 is at the end of the construction process. it's worth mentioning that Postomimo PV farm is implemented as part of a polling project along with Marcher is an direction, but will be also taking into account, looking at our third site. So much for the CapEx and let me hand over the floor to Christophe regarding the outlook for 2024.

[Interpreted] Regarding the 2024 outlook, we have 2 segments that we expect a higher EBITDA year-over-year and 2 segments, we're expecting the reported EBITDA lower year-over-year. Why reported, let me start with the Distribution segment. because in the distribution segment, as I mentioned, we are dealing with a one-off event. This one-off event is the negative impact of a change of balance of the adjustment of balancing difference as its impact was positive in 2023 on EBITDA. Now, in contrast, it will be having a negative impact on EBITDA. And this change year-over-year will be significant. However, if we were to skip this balance aspect, these costs covered -- cost for the balancing difference then, as a matter of fact, the EBITDA year-over-year in the distribution segment will be positive. The positive impact will come from the WACC increase. Here, we have a substantial significant increase. And again, now from 8.5% roughly to 10.5 percentage points. And this will have a very positive impact upon the results of the distribution line of business. A positive impact on the distribution and business should also come from the revenue from other sense resolution of the collisions. They should have a negative -- positive impact neutral, slightly positive impact should come from the volume, I assume, should be roughly flat year-over-year. So this is the outlook for the distribution segment. Regarding the second segment that will be -- but the reported EBITDA will be lower year-over-year. Well, the generation segment and here indications why EBITDA will be lower, we already provided in our presentation. But Piotr and me indicated the significant decline of the press in the market. The margin went down significantly went down, CO2 went down and expect went down even much more. So therefore, the margin electricity will go down significantly year over in the generation segment. And the second negative factor that you mentioned at the very beginning, more and more coal-fired units are being pushed out, especially our 200-megawatt units from the merit or the pushed out of the merit or -- therefore, we can only count mainly up on the first operation of those units. So therefore, volume year-over-year is also weaker means a lower revenue in this segment. Besides one more factor, will have a negative implication. It's already been having effect for some time in last year. But first of all, this year, in new conditions, grid conditions came up. And as a matter of fact, they mean that any forceful operation of units but also operating the cogeneration, generating also heat accounted for by [indiscernible] in a much less beneficial way than the previous year, which means that this will have also a negative impact upon the results of the generation segment. As a matter of fact, the only positive factor in this line of business year-over-year is the increase of revenue from the capacity market. Here in this case, we are dealing with a simple mechanism an inflation-based mechanism increase of the revenue is result of multiplying up to now revenue by inflation rate for the previous year. And that's all regarding the Generation segment. Moving on to the second Generation, namely from the Renewables because before I've been talking about the conventional generation regarding the renewables segment, here we see good outlook. And so in 2024, we have no price cap, so this should have a positive impact upon the results of the segment. The second thing that should have a positive impact is the volume. Here, we are expecting that subsequently commission investment projects in that area will lead to a greater volume and higher revenue and higher EBITDA. But segment, the negative impact on the segment will be caused by -- as it can in 2023 will be brought about by the prices of property rights. Prices, we expect the green gas on average year-over-year. The prices will be lower than 2023, as I said, this is caused by the reduced level of redemption obligation by the supply companies. And now moving on to the supply segment. Here, we're expecting an increase year-over-year. Of course, we we assume the current regulatory environment and the thing with year-over-year should be brought about, first of all, by a decline of electricity prices on the market. There is a decline of electricity prices. On a not fully hedged position in previous years, should generate positive results on EBITDA. Regarding the CapEx level, here, we assume an increase year-over-year. First of all, we assume an increase in the distribution segment and the renewables segment, especially in the -- last one, the CapEx year-over-year should significantly go up. Overall, EBITDA -- reported EBITDA of our group will be lower year-over-year. At least that's how we see as of today, the earnings of the group in 2024. And that's all as far as our present is concerned, let's move on to the most interesting part, namely we'll be awaiting your questions, and we'll be happy to answer them.

Ladies and gentlemen, we'll do as follows. One question will come from the audience. The second question will come from the web. A few questions have already arrived. Let me remind you that you can send those questions via the broadcast website. The first question, of course, from the audience who came, please introduce yourselves and -- not more than 3 questions because we have a lot of questions, then you can easily forget one of those.

[indiscernible] I have 3 questions. the issue of time line for decommissioning the 200-megawatt coal fire units. That's the question with sub questions, let me put it this way. I wanted to ask about the number of such units that you forecast or envisage at the end of last year, I think once the capacity market has expired that you foresee them to be decommissioned. How many employees -- how many people are employed by those power plant by those units that you plan to decommission. How many jobs that implies? That's the first question. Second question, I mean the renewables expansion plan because here from the presentation, we can see that you have close to 700 megawatts of installed capacity. And based on what I've read in the report, this is almost not less than 50% of the target of TAURON for 2050. The question is we have a target for 2050 regarding the large capacity. If it's only 50%, you're able to implement but achieve accomplish target for next year. And I wanted to ask also regarding the car assets. because supposedly, they are available for sale. Yesterday, a representative of the corporation mentioned that of Czech one that those assets are available for sale, but the point is mainly the attractiveness of a sale was supposed to base to be on the location, namely the Horobin Cavena. Those locations are attractive for you from the point of view of expanding or developing new generation sources.

Let me start if you allow me. If I were to phrase cotter attractive and attractive. So I position myself in the potential negotiations. But my colleague will expand on that -- it would not be good. From that point of view of building value for our shareholders. My colleague, Mikhail answer in detail to your question. But let me phrase it this way. We communicated a certain bit of information in line with the C24legal situation A process has commenced to reduce to shut down the 200-megawatt units. This is due to the capacity market issues, profitability and so on. So theoretically, if we do not get appropriate financing of those units than in January 2026, those units should not operate this majority of them. However, we have one declaration and one goal that says the following, but any changes that we do, we've done with respect for environment, both the regional one as well as the social aspect. So at this point in time, we are not discussing the number of people, the reduction of a number of jobs versus not being discussed. So I'll not be referring to the number of people that are working that because the topic regarding the hiring jobs is not on the table now. We have so many investment projects to handle and so many topics to hand the deal with, but now any person at TAURON Group wants to work works and is engaged and wants to be involved with us, definitely has a job. There's no such topic on the table but me emphasize it for shareholders for you for my employees and my colleagues at work. But this is the situation. But what we are communicating, we are aware of the fact that we are brave we are both. We are talking about that situation, but that on one hand, the energy market, electricity market in Poland during the transition period. I don't want to talk about full transition, but there is a kind of like a transitory period where we don't have the strategic number of the green energy sources. We know whether we have to exit coal, we have units that are required at a specific time. And we know that they will not earn money from the generation. We have a solution for that. So that's why we are communicating the situation. And we're looking for a solution. So that handle the session, both from the economic and technical point of view. So over time, now as there is no 0 or 1, yes or no, decision about the shut down the commissioning, but I'm even convinced about that, but maybe in this transition period, transited of developing a new model, those units will be required in order to ensure that there is capacity at the time when there is no wind, there is no sun shine a matter of finding a solution which the matter of finding a financing for those product to maintain this capacity. That was important for me for you to know, but we are communicating that -- we are bold, but on the other hand, we are saying through a determination, but we are looking for a commercial solution of this project, but let me emphasize that it's not possible to discuss now any employee or labor issues.

Okay. So not getting into the labor issues, but let me add information about those units. As of today, we have 10 -- 200-megawatt units in Jaworzno and 2 of them have a capacity market until the end of 2028. Whereas in the other units, this capacity market as part of the current contract expires at the end -- as of the end of 2025. Apart from that, we have 250-megawatt sources in [indiscernible] but best smaller coal units at the [indiscernible] power plant, but we are also using the hard coal. As President Lot mentioned, will be guided by the financial calculations. We'll be looking for sensible solutions to make those units profitable, but also be getting a radio potential difficult solutions if no economic solutions have been found that allow to extend the life cycle from the core point of view. So that's so much regarding item one. If it's okay with you, let me answer the plans for expansion of renewables and chairs asset regarding the renewables, as we mentioned, we'll be trying to accelerate renewables projects. So we have a pipeline that's significantly higher by volume versus what we have now underway. And we have to think about business going to plan them in such a way that they are profitable, but a certain intelligence regarding profitability, especially regarding the PV, the transaction prices were still relatively high for ready-to-build project last year. So far, we are looking for options, but we'll not be implementing nonprofitable solutions in the renewables segment at all costs. So we are working on solutions to find solutions to do projects that will be profitable and accelerate the implementation of our goals, however, not at all course and not in a way that it wouldn't be building the value for our shareholders. So regarding the renewables. And commenting on the last question, namely the chat, let me put this way. We'll be analyzing various options, acquisition options as part of our operations. Each time such an action has to have a business diversification. There must be a business case, we must believe that the satiation will generate value for us, will be positive for the shareholders. I think with one of the elements of those considerations also an option whether or an opportunity can operate under the zero or low carbon or zero carbon formula that product could operate from its case, we'll be looking at the added value to TAURON Group where potential diligence results will be positive and will allow us to grow in a low or zero carbon way.

[Interpreted] I think that's it in an answer to the first question. So now questions from the web that you have sent to us. Questions -- the 2 questions regarding Polenergia. Well, the company will be aiming to find an amicable solution of court litigations with Paneras. And another question for regarding the same issue, starting from 2015, the company TAURON has been in consultation with 1 group subsidiaries. When does the company assume that the disputes will company and then the damages will be resolved? Up to now, judgments rulings were not beneficial for our group number group, it doesn't set up provisions related to that. Why? Let's start myself, Krzysztof will explain to you the financial issues to what the situation is. Well, ladies and gentlemen, as I'm referring to a previous project investment. A matter of buying some assets will be -- is analyzed by us in such a way how will this impact upon the value of capital invested in company. So in the value -- on the value of our company regarding the issues related to Polska Energia company and the disputes that we have will find a solution that will be best for the shareholders and the company. I will not answer the question how it will be done in detail because I said we've been 40 days on board here. This topic is important. We are analyzing it. You can see how we operate partnership, mutual respect and finding a joint solution is always best -- a common solution. Therefore, if we're able to find solution that will satisfy both parties. This is good for the company and for the owners, that is the best solution. So we're always looking for a solution in a partnership manner. In the majority of cases, it is possible to be achieved by what are situations that it's not possible to be achieved. And we do believe that we are able to complete -- to finalize it successfully, but the details are still ahead of us. this pro underway. I don't to give you a yes or no answer, especially within the question as you wrote, but this is a dispute, therefore any declarations regarding negotiating tactics should be a part -- a confidential element at least. Krzysztof, yes?

[Interpreted] I probably refer to the second question regarding the dispute. First of all, which would clarify that the dispute is at 2 places. The dispute is between one daughter company, as a matter of fact, versus TAURON Polska Energia and the PEPK of TAURON subsidiary. It is important because the judgments, the rulings that were issued versus -- regarding the daughter company, not TAURON Polska Energia itself. Here, the dispute is still at the first instance level. important piece of mention is the fact that these rolling are regarding the principle, not the amount. So the legal point of view is of substantial port synthetically important, but even more important thing is the dispute is very highly complicated because also our daughter company also sued Polymer lawsuit against Polska Energia due to when normal to perform other contracts that Polska Energia was supposed to implement for a benefit of our daughter company contracts, but the court told them to perform. So the issue is very complicated. So any solution that will generate value for the company will be taken into consideration by otherwise. The provisions have not been set up. We set up provisions when we are convinced that certain outflow of funds will occur over the hyperbole such enough funds will occur. And based on what we our opinion is and what our love thinks the probabilities, the gentlemen is that the pro of winning is higher than losing. So as long as we have the judgment and the low firm help his opinion. Let us remember that the certified auditor is also looking at those opinions and look also getting an opinion from its own law firms. And as of now, everyone shares this opinion, this position. So as long as -- this is our opinion where position is, and there's no negative ruling final binding ruling is not issued that would obligate the company to make payments so long, there no provision set up for that.

[Interpreted] Question from the room from the audience, please. At the end of the room, yes?

[Interpreted] Can you hear me? Pawel Puchalski from Santander. I have -- let's start with 3 questions. What are the company's plans regarding energy storage or what capacity will be place on the first auction this year, maybe? Second question, what about TAURON's plans that we once announced regarding the construction of 2,000 megawatts in gas-fired capacity? And the third question, everyone is now emotional regarding what is going to happen to the tariff price of electricity, but taking this opportunity, I'd like to ask a question. Bill paid by the consumers to go up by several moment doesn't. I'm curious what will happen to the tariff distribution tariff. I understand the tariff tis to change somehow Don't you see a risk that the distribution tariff will be reduced. So -- but the overall invoice should go just up just by more than a dozen or so PLM?

[Interpreted] Let me start answering your question regarding the energy storage facilities. Now we are in the process of developing our own facility storage facilities. We have a number of locations in the group regarding the detailed capacity per auction. Finals will be still -- still need to be made. We are more about hundreds, tens, hundreds, not megawatts with a project that we plan to certify for the opacity market. But independent of that, we are working on the product that will be added to the potential renewables product that will be part of our acquisitions. This is all the things that we are talking about, we had some gratification for some of the sites. But regarding details, they probably still depend upon certain decisions that we'll be making over the next few months. Regarding the second topic on correctly, the is about the gas investments. Historically, we had a project to build a unit large scale in Magica. Now we are analyzing the options for the site. We're analyzing various volumes or magnitudes of sources that could be placed there. We are in the process of analyzing the such investment product we should implement. But let's say that there are also variance with smaller social that we're seriously looking at in this side -- at this site. So as of today, we don't have large-scale projects that would be at the levitation stage regarding West 5 projects. And also, we are considering various direction, but it will allow us to produce electricity in the generation mode, but as I said, a large-scale utility scale gas-fired power generation is not being implemented now. Regarding the third question about the tariff, I would hand over the floor toGrzegorz Lot.

[Interpreted] ladies and gentlemen, before I comment on what can be ahead of us, let me mention 2 things. But first of all, in our understanding the regulators trying to find compromise all the interests of stakeholders in this case, the companies and the trading companies or distribution companies. And the point is that the increase tariffs should always reflect the cost of the operations of utility companies and by economic position -- financial position. The second topic probably know well what I'm driving at is the fact that irrespective of what the level of now is on the market -- on the spot market or in the intrayear so-called -- the majority of the toy well the majority of it for customers, we have hedged already, therefore the relatively small impact of a declining pressure on our profit and loss account and not lead to any windfall profits -- excessive profits. So regarding the procedure. Well, of course, this is a piece of information is public secret, but this process underway. Over time, we are strongly involved engaging in this process along with the Ministry of State Assets. We are thinking about the best potential solution, a compromised solution that would give us an opportunity for us to exist to operate in an economic manner to sell electricity. And at the same time, we'll give the customers with level of assets that leads to stability regarding the mining of obligations, paying of invoices. So but there's no situation that but due to too high level of electricity prices to the stability of obtaining the products such as electricity is affected. So the important thing is that we are talking about the fact that by the middle of this year, we have prices frozen. So we have PLN 39 tariff in the past related to the trading operations and the prices frozen around balance, we get as part of settlements management as compensation made in the second half of the year. We are talking about now, but the freezing can be limited. There are various options still on the table, and that would mean that the supply subsidiary will not be able to access to such a level of compensation payments that has an impact, of course, upon our financial results, financial earnings stand-alone TAURON as well as consolidated earnings. And this is an element now of our considerations, our discussions. Definitely, we expect that some changes will take place regarding the tariffing. Regarding tariff, you have the right to observe this tariff, there was no freezing of prices, but requires an increase -- calls for an increase in the level of price and the level of costs that would not be covered at this point in time, but we treat this obligation to the customers, but the average level of trust prices, including the distribution tariffs should not go up by more than a certain amount. Then in my opinion, you should look at it in conjunction with [indiscernible] part increasing the price for what we've seen in the distribution part. Now the question that was sent to us what is the net debt of the company. Net debt is roughly PLN 12.9 billion. Let's go back to the questions from the audience.

[Interpreted] [ Rafal from Portal high-voltage PL. ] I would like to ask 3 questions. The first question is regarding the tariff and the draft law. Don't you think that it may happen so but the prices keep falling, then next year, the President of Regulatory Office will ask you to reduce the tariff. And then in that situation is contracting optimistic contracting may turn out to be too optimistic because the Draft Act gives such an option for the President of Energy to office. Just to say, in Momen this contracting is applicable to 2024, 2025 also measures that was contracted already, yes, correct? And the second question regarding the 200-megawatt unit. So recently, Enea, I think demonstrated by the time of operating 200-megawatt units below hours. Can you disclose how much time you 200 megawatts when you're operating within some range because load varies. Is it below 4,000 hours or maybe below 3,500 hours. And the third question is regarding the potential changes to the distribution it's common knowledge that the caution part said before the elections about the spinning of distribution assets? This topic is not really talked about anymore. In your opinion, what impact upon the operations of the company would have the potential change of the model of financing that grew by the distribution segment simply limiting the ability to pay out the dividend by the distribution segment to the parent company and taking out the distribution segment from the cash polymer?

[Interpreted] I'll start. As you can see, we are discussing in the meantime, who is able to give the biggest value for you answering the questions. First thing, that do not argue with a regulator and the owner, but the first principle, therefore, ladies and gentlemen, since -- I will not be commenting on discussing well law but has not been signed into law yet. Let me say one thing. Of course, on this law signing signing to law, and I can declare if once it becomes low, get the best out of it for our shareholders. Of course, we respect for the customers because this is the most important thing. So on 1 hand, -- it's a matter related to the fact to follow the law, be in line with the loan pecan do business on the other hand. So definitely waiting for this final decision. However, it is also important, but our view is that we -- our opinion that the free market is the best regulator, the best solution. And in the medium and long term to be profitable for all of us. I'm talking about the customers and investors, free market, namely market price, namely the real margin, namely -- that means also competition, stimulating competition, the biggest bargaining position, biggest opportunities for customers. So looking in the long term, I think, came of opinion that the 3 market-based solutions are best, especially that we understand also this issue related to the regulations we had so many years of phrasing of the price, it will be difficult to allow that it is out of control for all of us, and the customers would have very high invoices. That's not the point. But looking ahead, we should be getting closer to the market-based price and free this segment -- liberalized this segment especially taking effect. But in the moment, the balancing market model will change the portion of renewables in the energy mix will be getting higher and higher. And therefore, the price differences between the virtual seasons and the time of they will be getting bigger. And there will be more and more need for the so-called impulses and engaging customers to see demand optimization as any sector we'd like -- we'll be trying to convince the customers to shift that consumption to the time when the strongest and the energy that is cheaper for meals is available. The dynamic tariffs are strictly connected to the price of electricity. And the success of implementing the dynamic or time-based tariffs is not just the technique, but the prices that are diversified and incentivize the customers to respond to their needs. That's one thing. I don't know if I answered the question. Maybe not in a way that could be put in the headlines. A matter of contracting for 2025, but Piotr will answer that.

[Interpreted] Well, here, the answer is simple. I prepare myself of this question, we have 23% of electricity purchased for 2025 now. We have started hedging this portfolio in January. And we have linear roughly assumption regarding the hedging. However, definitely, what will happen as part, we enter into laws act will have an impact upon the pace of the scope because you know there is a version that's being considered offsetting the tariff level for the time frame longer than the end of 2024. So depending upon what will happen there Definitely, we are considering and probably sat option will be on the table. We evaluate or consider acceleration of the contracting so as to hedge ourselves against the market risk ahead of time before -- by the middle of the year. But don't you think that if everyone accelerates now the prices will go up. That's the real risk. Let me note that we still have a situation where since December 2022, the Polish product exchange obligation has been abolished where companies can hedge positions outside of the exchange market. So I think it's a formula that will -- that may mean -- I'm not saying that this is definitely going to happen. It may mean that the level of price will be at the right level. But provocatively, I can say that it's probably good but the prices were to decline, then trading companies will be able to head this product cheaper for final consumers in the tariff price will be or simply for 2025. Yes, but it can go up to if everyone starts now buying, so the demand will go up in any direction, we want to optimize this purchase. Definitely, if we are talking about the issue of accelerating the tariffing for 2025. As I mentioned before, our strategy of balanced approach to risk management, we'll be trying to a large extent, to hedge this position this year despite the fact that we are expecting where the spot prices will be lower than 2024. To add to that what's just how much on the power exchange, how much over OTC. Yes, we had a strategy, but we will not answer this question. With all your respect for the shareholders would reduce our competitive advantage. We can -- we don't want to do what that was shown on the first slide. Let me put it this way, if I may join the discussion. It's 1 of the basic or the most important elements now that we are working on is the fact that any interference into the model that is in place leads to this type of impulses or threats. It is so, but the situation is that this we have to face it. I think that this law is a final version will be published as soon as possible and approved. We have to get into the details regarding that, go through the entire process negotiations with energy code office with the President of the Energy Regulatory Office. And we'll see. So this is all underway. It's difficult to declare now anything. We have to be a reasonable manager and that's it. We believe in the wisdom of regulator, the western or the market and the wisdom of the owner, and this is the direction we are taking -- we are following. 200-megawatt units. Let me put it this way. Yes, go ahead.

[Interpreted] I can put it this way. The first thing, we are observing the load of 12 megawatts unit is dropping. Even year-over-year, 2023 was given a decline of load of our 200 to 100-megawatt units. I don't want to give you any details. But 4,000 hours, I would say, is that digits relatively high number, looking at realistically at what the load of this unit is. So we are looking at the full of equivalent, our figures are lower and we can see what the process is moving forward. It's progressing. This year, the more renewables we have in the system by more 200-megawatt units are being pushed out. Therefore, it's a phenomenon that will be more visible in the coming years. And that's why the discussion and our opinion about the potential decommissioning in case of the lack of support because without the capacity market support those units will not be able to send themselves from the market. Distribution that you have seen on our slides is our due in the crown of our company. Distribution is necessary to operate. On the other hand, it is indispensable to create a strong business model based on the customer distribution, renewables, interstage facilities and so on. So we are not analyzing or planning to spin off distribution supply. We are strongly tied to our colleagues from the distribution line of business being tied distribution assets and our plans in the strong growth, strong expansion we want to do everything but the profit, the value of the capital that is generated by Distribution segment is allocated in development and expansion and growth. This is the best solution. And that's it. What is the dividend from the distribution segment envisaged for last year? Regarding the dividend from the distribution last year, it wasn't paid out. that 1 piece of information. I want to kind of explain the issue of payout on payout of dividends from the segment. So we have a central financing model. The distribution doesn't get financing on its own this business financial in the group. As a matter of fact, the simple thing is the level of CapEx in the distribution line. But of course, it could be financed internally for a lack of a payout of a dividend of potential additional financing from the point of your group. It can be fully financed from by the group, assuming that the dividend is paid out. So the very model has paid out or not paid out doesn't have such big importance that the market may think. As I said, last year, it wasn't paid out. Here, let me say this cash flow in the distribution segment. I am basing myself on the data that's available, that's very publicly available for data for 2023. This cash flow in the distribution segment 1 I can say was close to zero, so the level of generated cash versus the cash invested was fluctuating around 0. So it's difficult to speak -- to say whether somehow we made a more difficult or less difficult to maintain the level of CapEx in the Distribution. This level is dependent upon the CapEx program that we agree upon and the expectations, not based on the payout of the dividend itself. And referring to a question about the model of financing for the group, you mentioned our model -- entire model is based on the consolidated EBITDA of the group. It is not so is based on the individual subsidiaries. However, it's based on the consolidated EBITDA. So irrespective whether the dividend is paid out by the distribution or not. It is, in fact, included in the model and from the financing model by the banks, it is tried as it is as part of one group, but banks are not asking us whether dividend in a given year was paid out. And based on that, give us financing or not. Similar the question about the cash flow. Let's remember, cash flow is an operational tools as a matter of fact, it optimizes the flow daily flow of cash within the group, but it's not a source of financing in the medium or long term in the group. So therefore, in a given the shortage in one subsidiary in the second subsidiary has a seat, so we effectively balanced it offset within the group. And this way, we optimize the financial costs. However, the cash not the former to be used for feeding cash in the medium or long term, one segment based on the money from other segment. Have I answered your question fully?

[Interpreted] Yes.

[Interpreted] So now over time, another question from the web. Do you have any projects to be implemented using the funds from national recovery plan? What products will you apply BGK.

[Interpreted] Let me answer this question. We are opining that national recovery plan can be a big opportunity for TAURON Group. We are getting very using financing from that plan in various areas, the energy support fund, but the biggest part of money is to be located to PLN 17 billion or where this to be used loans, definitely for us gets opportunity regarding the distribution segment. Details are not known regarding the way we and will be allocated the BGK bank is to be the operator or we will be closely watching it. And our intention is that we should finance the biggest possible portion of CapEx in the distribution using the 8 funds using the funds that could be allocated as part of a national recovery plan. Also, we are working and partly still working on that. We have some of them is very a number of projects in the heat area and restore facilities, renewables and monetization of the lighting or management lighting management assembly also use finance -- user funds from the national recovery plan. We hope that the detailed rules for locating these funds will be developing the post as soon as possible. And the biggest area with respect to the use of the funds, we assume that the distribution will be by the area. But also, we want to support other segments as well, using those funds.

[Interpreted] Questions from the audience? Yes, excuse me.

[indiscernible]. I have 3 questions. The first one is don't you think that it would be good to revise the model of reporting in the distribution because your result after individual quarters. It was very variable and the first one was around PLN 1 billion. And the fourth dropdown dropped to PLN 100 million other utility camping reported this way. So on to see what this model could be more stable. But -- question one. Recently, we had a of confusion regarding the coal assets and maybe instead of again asking about some speculations let me ask realistically what is happening in your daily work today. I don't know whether you're preparing the strategy only for your assets or in cooperation with AV Energy groups, we are preparing a joint strategy, a common strategy or owner of that process is more of a minister or you just supply data? That's the second question. And the third question also in the context and inspired by the discussion about the tariff and generally crisis sales Don't you think that a bigger problem for you is becoming the short position on electricity supply, definitely high on emphasis on the tariff, biogases segment is really under fire recently. So that's my 3 questions.

[Interpreted] Let me answer the first question. That's true. You're right. This quarterly distribution is not uniform in our segment. We, of course, also are looking at that. To a large extent, it stems from the prices, whether the company or the cost of a balancing difference that the company has to incur now. Of course, we are dealing with very strong fluctuations year-over-year on 1 portion I already mentioned during my present part of the presentation, you stems from the model of juice personal model, at least the companies that is the biggest one, has a similar modern planes. I'm talking about the changing the balance of the adjustment regarding the second issue of this nonuniform distribution quarter-to-quarter, we have uniformly distributed revenue and non uniformly distributed the cost of the balancing difference. The cost of the balancing difference is much higher in winter quarters, one can say. So in Q1 and Q4, especially, you can see that it's visible in Q4 and much lower the cost of a balancing difference happens during the summer season. We are discussing jointly with the company, how to -- a subsidiary, how to spread it more evenly and it's possible. But in the subsequent years, we'll be showing a more uniform distribution. But as I mentioned, this is stable uniform distributed revenue over the year and nonuniform distribute cost of the balancing deference. But as a matter of fact, meant that we had a weak result in Q4 and much better results, especially in summer quarters. Okay.

[Interpreted] Another question, coal assets. a favorite topic. We are focusing on TAURON, on TAURON Group. So anything we do is related to this company. And on one hand, we are looking at how to implement growth strategy, renewables, grid and customers orientation. That's one perspective. And this is short, medium and long-term perspective, short-term perspective is the 200-megawatt units that we have to fine solution, how to finance the maintenance the operational to find other solutions such as decommissioning. But we are analyzing it until we are fighting to sell this capacity on the market for the economy because we know it's needed. That's 1 point. Regarding the overall worldwide global model Poland-wide we are reading in the newspapers and the Ministry of Climate or Ministry of State Assets is the owner of that process. I would rather not speak about this topic. Because I can read it in the newspapers, all this information, we are focusing on our company, okay? Okay. The final question, have intention -- you had the intention regarding 2 issues. Let me -- I suppose what you're referring to -- let me explain on that. Regarding our operational business. So we are hedging the positions based on the risk in rental position. So we're trying to hedge any supply subsegment separately, but assuming that this is the most probable item to be hedged. And regarding the mass customer segment, this is a formula of a gradual follow market formula. But regarding the business customer segment, this is a back-to-back. So any contract on the sales market, on the supply market has an equivalent contract on the purchase market. Of course, with a certain risk mandate, there is some mismatch between this issues, what products are tradable, for instance, quarters, months and so on. And there is some open position, but we are trying to take advantage of the correlation effect and hedge it with other products. And I'm staying unequivocally here, but we are applying not a short position policy, but a neutral position policy. But you're probably referring to our simplified balance of production from the Toro generation assets versus our sales supply portfolio. But through -- but I was stable, and we expect that over the next some time, stable production will be roughly between 10 and 12 terawatt hours is the volume. Renewables volume goes up, will be increasing. But as of today, I know that over the next few years. The 12 terawatt hour level is production output, but we will be able to generate and the demand, as you know very well based on the portfolio. It's 30 terawatt hours. So we have to buy a lot on the market. profitable trading place is for us the Polish public exchange, generally anonymous platform. So we think that this is a place where safe trading can take place. Of course, the entire margin economy is burdened, some is cumbersome, but it's a good platform because of the security of the transactions. And of course, inspiring the market participant to create on this platform gives us something that cannot be over appreciated in a stable market index. So this is something that we use as a reference in cooperation with the customers, to develop products to apply pricing models, negotiations. A very important thing. So I mentioned before about the pecanobligation regarding the direction. We have the opinion that the public exchange oration could make sense if there's no other way to stimulate to market that in -- to trade on the Polish Power Exchange. That's how I put it in an arbitrary manner. However, it doesn't mean that, that will not be willing to take advantage of a bilateral market for hedging our positions. Definitely, we will be applying various forms of long-term contracts, the local PPAs. So this is how we'll be stabilizing this market. But I agree with you that having a trading position. Regarding the short structure is a certain challenge that or entities that have a long formalin place. It's clear that we'll be forced to purchase more electricity from outside the group.

[Interpreted] Another question from the web. Net debt increased quarter-over-quarter was driven by the net working capital. Can you confirm -- is it related mainly to state compensation well, will this movement reverse. And net debt went up quarter-over-quarter. It seems that the reason was the change of working net capital net working capital. Can you confirm it?

[Interpreted] It is related mainly to the compensation payments received from the settlement manager. When will the situation reverse and normalize? Well, already during the presentation, I said that the deterioration of ratio is due to the worsening of working capital position that's through that's related to settlement of the compensation payments. They're applicable to last year. We are being settled this year. We expect that due to the planned expiration of compensation payments, a lot is dependent upon regulations. It's a matter of being reversed on the net capital, that should take place this year. And the question from the audience.

[Interpreted] I wanted to refer again to the statement of President of Wokabout the renewables and the pipeline of the product understood that -- the pipeline is greater than what is being implemented. So for 2 questions, if I may. What's the order of magnitude of product that you're looking at regarding acquisitions and does it mean that you have a chance to have the level of green capacity in to be higher than what we are showing and what that level could be?

[Interpreted] Let me put it this way. Our pipeline is made up of several segments. The first segment is the own in-house development, and this is what we have communicated historically, the PV farm in Myslowice have an approach to do the second stage of more than 50 megawatts were doing such development commercially outside of land owned by TAURON Group as part of along subsidiaries. So is a of the pipeline, we also have a so-called hybrid development of contracts with developers that are related to the purchase of product ones they get better to build stable we have a connection earlier. We wait for product to pass all the milestones and bring that projects we acquired, but we are also looking at the acquisitions of product that are ready to build formula. So we have full permitting process behind and the acquisition of the projects that are already in operation or under construction. I don't want to refer to the detailed figures because this pipeline is live every day, taking [indiscernible] So I can -- there are definite stages of development. Some of them have no connection impairment yet in place. So looking at the first quarter portfolio several times higher than what we are implementing. So this is the order of magnitude, but doesn't mean that all those projects will reach the implementation level as part of funding process, especially with respect to the grid connections permits obtaining of various permits. Some products will be disqualified. So what could be included this year is already in operation farms. So we're looking at a duration we have different stages of progress, but we don't want to make the clarion because we have to have a good relation between the purchase price and the profitability ratio assumed by TAURON. So it difficult to -- if we can manage to invest process, what we declared as the result of today's pipeline, we'll try to increase it. But the 3 parts of the portfolio we are growing will not be contributing to this year because the construction process that will start this year will materialize next year in 2026. However, we managed to do an acquisition, we'll be trying to do it, but it has to be profitable. It has to make sense from the point of view of building value, creating value.

[Interpreted] Let me just add another question. I'll try to -- ready to build and ready, what is the pool of projects that you're looking at?

[Interpreted] let me put it this way, we've read the products as transactions that are being initiated then there's an offer of nonbinding offers diligence, binding offers. So usually, it's a very short period of time, usually single product at as part of a transaction that pulls the life of diners start and fall out of the pool. So it's alive. It's not a longer pipeline. However, the projects -- ready-to-build projects at an early stages are products that are maturing for longer time at different stages. So therefore, we're talking about much higher values at least at various stages of development, hundreds of megawatts or maybe even more that being prepared for the potential ready-to-build transactions have a very could materialize at various points in time, depending upon the permitting process evolutional trajectory.

[Interpreted] Okay. Another question from the web then. How is TAURON preparing for the change of -- the Directors a new SRS disclosures?

[Interpreted] Of course, and we understand that starting from next year, we'll be obliged to report in this regard. So we'll be reporting for 2024. We have set up a special team for that. as the group also wherever we have doubts we'll be using the knowledge of external advisers. However, a much important thing is that the entire team is working on make that report -- be able to publish this report. Next here another question from the audience.

[Interpreted] I'd like to add another question of what level of working capital we're talking about this year? And the second question Doron has shined the offshore product. Is it planning to develop it on its own, take part in the auction? Or will it be as part of a consortium of PG and some other partner? Or first thing, if your question was rate about the net debt. However, I would be a bit curious here because I would be very happy to see in your presentation that overall, the total net debt, including the green bonds, but also of unpaid invoices for CO2. Here, I don't want to clarify another company here, but another energy company presented this way, the economic net debt. If we open to the customer and our customer is also a fund and so on. So it will be worth to show it towards the true debt.

[Interpreted] Well, working capital, we expect the reversal of this working but will not be spelling out the detailed values. We just provide estimates. So here, I will not give you a precise figure but definitely will be done better than last year. Let me answer right away, the economic net debt. We know the presentation of another large energy group. I understand that they're showing in bases remember, show emission allowances and the provision for it has a much different weight than TAURON Group. Of course, we could consider -- the presentation will discuss it in the context of a customer open attitude regarding the hybrid bond Well, I can give you in the reported stated, it's provided, but that's true, 1 would have to a number of pairs of a node to get to that, the level is about PLN 2 billion. So this is -- would be the difference between net debt if it were to be increased by the hybrid bond. Of course, with some error for margin because some of the bond -- some of the debt is in euro, depending on bond -- FX rate as of in of the year, that's at least the order of magnitude. I will respond to the question regarding the offshore. As of now, we are 45% partner in the [indiscernible] used to be Picor LTD. So we are partnering that venture jointly with PG. One could say that -- the development alone by Toronto day's ownership structure would be detect, but we are in the process of discussing structuring this product along with PG. Our attention is that jointly as part of shareholder group to bring about the product to be ready for auctioning and ready for development, for construction and carry out this project. But as I said, we are in the process of working out the details of the model for the implemention of this project.

Okay. And the question from the web. Does TAURON don't want to increase its role on the heat market?

[Interpreted] Let me answer this question as well. I would look at the heat market from several points of view. The first question is that we are the owner of a heat district networks, including Silesia and Dabrowa metropolitan areas where it feeds a large portion of it's area. So the cities of Halo Katowice Dabrowa Górnicza Sosnoweic. So this is a large districting network system, but we want to organically increase the number of customers connected to the network, the districting network is a good competitive solution. Also important from environmental point of view, we'd like to organically increase the number of connections to the network. The second element is our generation assets for the district heating network. Now a large portion of customers as part of Silesia and Dabrowa metropolitan area is supplied from external sources, we know where the heat market must be decarbonized, transition, transform, and we are working on various concepts regarding the product serial depending upon the port of those investment post may happen better it'll be more effective, more profitable to increase the number of our in-house sources in the district network, but it all will be the result of economic calculations. And this way, our sharing with our detecting network where we have a network could go up. So we want the districting heat market to grow organically. We'll be looking for alternative solutions as far as generation services are concerned, but also had an impact on increase of our heat generation.

[Interpreted] I have questions from the audience.

[Interpreted] I'd like to ask refers to the answer on the issue related to electricity prices, the draft act draft law. Both you've seen this draft that's already published. And if I may get an answer from you, confirm or deny. I understand you'll be paying some charge, some allowance due to the fact that maximum price -- the price capital is in place better compensation payments, compensation payments, there will be some right of some charge, some allowance because I, frankly speaking, I wasn't able to find out based on the draft, maybe you can confirm or deny that. And also regarding the semis, I understand that you are contracted for next year for the delivery in 2025, 23% contracted. And I understand that by the middle of May at the time when you have to submit your target applications to have a majority of this volume contracted for 2025.

[Interpreted] Regarding this comment on the draft act of law, I'm not able to answer your question with several uncertain unknowns yet we ourselves do not know the details, operational details, how to conduct to implement this intention that in the law, the act of law, Definitely, it will happen this way, but now price gaps rating price of 500 comes up. And in reference to that, and the freezing between 500 and some Y price will take place. But the why price is not known yet. So -- we don't know what level it is if -- it wasn't for the poor departure from freezing price freezing, then we say the difference should be naturally between 500 miland739 simply, simple as that. I suppose it's not going to be that way. But regarding the issue of what you touched upon, the second question, what we are planning to do regarding the level of hedging. Now for now, the 23% level that gave us the comfort. But if we had until we endear, we'll reach around hedging contracted expecting that on the spot market, we have to optimize its position in 2025. This is a level of hedging -- market rest works for us. Any form of accelerating the metric process of approving let will introduce certain paint system into the model itself, then we'll have to accelerate very quickly. With hedging, both on the forward market as well as taking advantage of the opportunity ability to offset the net position from the generation position because that's probably what we'll be doing because we want to avoid this being exposed to risk. We don't find ourselves in a position where we on sales price and due to some uncontrollable impacts on the ATS where this price will go up and we'll not be able to make it quick actions to stay within that position, but we have -- we are exposed to. Okay. So another -- I do hope I haven't made a question from the estimate of related to grid losses and then cash or noncash elements. So in Polish, can you -- we gave an estimate for this year regarding a negative impact related to grid losses in the distribution segment as is a cash element or a noncash element. I understand this is applicable to the one off you then generated around PLN 600 million EBITDA in 2023. So we price effect regarding the balancing difference balance. I expect this year is going to be around PLN 400 million. This is what should be the estimate effect. However, this a noncash impact. Okay. And if any questions from the audience, I can see. So another question?

One more question if you allow me a bit philosophical. The electricity price free system as a principle, as of the end of 2022 was to be self-balancing, but was the argument. And your profit of PLN 8 billion from the compensation payments and more than PLN 800 million of a chart of the write-off didn't balance, didn't offset. So I wanted to ask about the reason why didn't the system sell balance itself and the budget had to add PLN 12 billion for last year to the system that was supposed to self-balance itself?

[Interpreted] Well, let me answer touching a number of issues related to that. First of all, PLN 8 billion was not profit, PLN 8 billion was revenue. So that's a major difference. Regarding the difference between PLN 800 million charged to the fund and [ PLN 8 billion ] in our group. But let's remember that as the principal charge was done in the trading and the donation segment, whereas the compensation payment -- compensation payments were applicable mainly to the [ de-tariff ] and to a small extent, SMEs and GST. I take in account of the generation line of business versus supply segment position. As you noted earlier, we have a big disproportion because of the generation segment and the Supply segment. That's why the difference. However, the system question is not to us, as a matter of fact, the system was supposed someone who made this calculation at the central level was supposed to self-balance itself. So what was to balance itself from all generating units plus the payout of compensation payments and the profits from trading companies. It's not a question only to TAURON, whether, it was calculated correctly. The question was PLN 800 -- 8 billion because it confused often it was a matter of fact, the difference. I'm thinking about the [ de-tariff ] the difference between the customer had invoice over PLN 100 plus and what was agreed upon in the President of Energy Regulatory Office tariff. The tariff was based on the cost of electricity hedge and the justified cost of supply segment. So it's not so that we got PLN 8 billion in revenue. We got a compensation payments between the difference. We think what the customer had on invoice and what we agreed upon in the tariff from the President of Energy drugs, that's what the amount came from. As I mentioned, we are 1 of the largest players on the supply market and the small player in part our larger generation company on the generation market. That's why this proportion between the amount charged to the fund and the compensation payments received.

[Interpreted] And now question from the web. What about the plans regarding the dividend from the profits for 2023 and what dividend policy in the future?

[Interpreted] Well, let me also answer this question. Well, regarding 2023 -- that's why I was emphasizing that we have a profit at the consolidated level, but the dividend is paid out from the stand-alone profit. We had a loss on the stand-alone level. So this year, we will be asking the General Meeting of Shareholders to cover the loss incurred at the stand-alone level from the supplemental a regarding the dividend policy in the subsequent years, of course, we have clearly laid out dividend policy and we will be doing our best. But in the future, when the shareholders get the dividend. Of course, we have to do it sensibly. So we have to -- up to now, the company has been relatively highly indebted, but I do hope that thanks to the implemention of our CapEx projects, will have an increase of the value for our shareholders from the point of added value of the group and the potential increase of the share price on the exchange. Ultimately, the group would like to pay out dividend for shareholders.

[Interpreted] Okay. And now then, why the Distribution segment EBITDA was only PLN in quarter 4 '23 and the balancing difference, the valuation seems to be positive in 9 months on full year. So in Polish, why the EBITDA of the segment in Q4 '24 was only PLN 100 million? Why the balancing difference seems to have a positive impact in Q4 last year? Include -- when you deduct the value for the entire '23, the value for the 9 months of '23.

[Interpreted] Well, it's difficult to have an unequivalent response to this question, but I understand that the assumption of showing the quarterly results is to show it quarter over course we are showing, as a matter of fact, Q4 2022 versus for 2023. And the main element differs with the difference between the 2 quarters is truly the cost of the balancing different as I said before, there was no uniform distribution of that over the year, but also a high price of purchasing electricity for the balancing difference for the grid losses to be precise. And the difference year-over-year is PLN 800. So in Q4 last year, the cost of purchasing this was PLN 100 billion lower. And in addition, it's compounded by an increase because this year, quarter-over-quarter, that was very higher, the grid losses were higher. So if you had to add the volume multiplied by the price increase quarter-over-quarter, it led to such a big difference. And as I said, why between quarters, the difference because we have uniformly spread distributed revenue. So revenue in 2,023,000,000 was significantly higher due to an increase of the tariff rate. However, we have a nonuniform distribution of a balancing difference of the grid losses nonuniform over the year. And we are reporting not also not in a nonuniform way. And as I said, adding to that a significant increase of the price year-over-year, that's why the big differences between the quarters.

[Interpreted] Okay. I declare with the last questions we have. So I'll inform you that this is the longest conference we had over the last 5 years that we have so that you know what you're taking part in a historical event for TAURON. You're declaring gentlemen, that the first of the last 3 questions. You're declaring think of shareholder interest for years, TAURON has been implementing CapEx projects well below the cost of capital. But will this change?

[Interpreted] Let me answer this question. I partly disagree with this question because the biggest CapEx we are allocating to the distribution segment that is based on the regulatory WACC that in our point of view, compensates offset the cost of capital regarding the CapEx product investments in the renewables here also were no write-downs. We have the opinion that we are this investment has the appropriate level of profitably. Of course, the group had certain investments in coal asset that was partially written down. And definitely, that was related to some of the projects. Let me answer that. We as a management board, first of all, are guided by the economic ratios. We have an investment committee, we had 3, 4 members of the management board and the key directors. At this time, we are evaluating the profitability of giving projects based on the discounted cash flow formula also related to the very population of the product or what's important are we trying to optimize this project potentially regarding the selection of the best projects that have been implemented. Of course, entire economic evaluation of those products is dependent upon the assumptions. And here, we are trying to work intensely to a realistic approach to the assumptions, especially the earning trajectories, which are a key element of elements we look to the generation also other operational elements into benchmark them versus the assumptions provided by the external providers. The assumption is based on our current investment projects, the assumptions based on the construction and contract in a number of other agreements, contracts that are concluded at the stage of preparing a project. First of all, I don't think it's a true statement is true regarding the majority of the CapEx projects historically in the group. Secondly, we are declaring that each time we are guided by the economic calculations when choosing the investment project for capital allocation.

[Interpreted] The penultimate question how do you evaluate what would be the compensation payments for you in 2024, 2024, for the G tariff? Will you be on the positive side versus the frozen 500 frozen tariff of H500 per megawatt versus your hedged price?

[Interpreted] Yes, that's our opinion. That's what we think. Now the development is such that it seems that -- the cost that we incurred to hedge the 2024 tariff will be included in the compensation payment -- covered by the company payment. That's what we hope, but it's not our own judgment, but this is what will actually happen.

[Interpreted] and ladies and gentlemen, the final question this year with sustainable development report was partially printed for ESRS guidelines.

[Interpreted] Well, ladies gentlemen, we have an assurance that all the reports but we have prepared to meet all of the legal formal requirements. So this is a requirement for this year. But I guarantee it's how it was. However, if it was 10% required. So definitely, we are preparing those reports in account all the requirements that will be done for this in the subsequent year. One-to-one implemented or maybe based on the future convention of the future requirements. I hope this is sufficient explanation.

[Interpreted] Let me add. Like I mentioned for 2025 will be fully publicizing in compliance. According to the sir, we have to audited, we have report. This team is preparing this for this report for next year. So next year, we'll be fully compliant with the ESRS guidelines.

[Interpreted] Okay. Ladies and gentlemen, you asked all the questions we answered all the answers. Thank you very much for this meeting. We wish you a pleasant weekend. Let me just am inviting you to the next meeting directly after publishing the Q1 2024 report. Will notify you the data of the company in an additional matters. Wish you a good weekend at we can before pleasant weekend. Finally, in the beginning, I told you one thing that people are the power. So let me put it this way, but the team but sitting in front of you here, will do a bed that you as shareholders are happy and proud that you hold our shares. And briefly, just to know how we operate. The summary of this guy is building and looking for new assets and making sure that our greatest operational this guy is collecting money for it and reporting how we are doing what we're doing in pit is packaging it all hedging at all and delivering to the final customers. So combining assets, combining customer and doing a reasonable return on that. This is the free. I'm trying to provide support for my colleagues and not to be obstacle for the operations, but I declare once again that will be in this group this team for the subsequent meetings, and I invite you to the next meeting. So I'm looking forward to a further difficult challenging questions. Thank you very much.

Thank you. [Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]